0

Pitching advice for startups

Last weekend was the 10th Startup Weekend event. A sell out, with 118 people attending. From their 1-minute pitches, 15 or so teams were formed Friday night, who dutifully worked their way through their idea(s) before presenting in front of judges Sunday night. Most of them had a working product and some even had revenues by that time.

Earlier on Sunday afternoon I presented to the attendees on what the judges love and hate in pitches. Here are my slides, and also if you want to watch my talk, it was also recorded (20 minutes).

Here’s my basic advice:

  1. Know the criteria your judges (VCs or whatever) are judging you on. For Startup weekends it’s 3-fold: the business model, customer validation and execution & design.
  2. Start with the problem – preferably a huge, global problem. A problem that you just have to scratch, the itch is that strong. Define, describe and explain it, clearly. For if you are not solving a problem, you are not creating any value, and if you don’t create value for a customer, they are not going to pay, and if they are not going to pay, you ain’t got a business. So, on your first slide – explain what the big hairy problem is. And how you’re going to solve it.
  3. Explain how you have validated your solution – what evidence do you have that customers have this problem, like your solution, and will use and pay you for it? Surveys are nice, but usage of your piece of tech is better. And actual dollars from paying customers (not your Mum!) is best. Only when people are parting with their cold, hard cash do you know if there may be a business in it.
  4. Explain why you and your team are going to be the ones to solve this problem. Investors mainly invest in people (not an idea), because they understand that ideas can change but you remain. Above all the other opportunities they pass on, they have to believe that you have the determination and grit to keep going, when the going is really, really tough. Which it will be, often. So provide evidence of your toughness under pressure, and how the super blend of your amazing team is perfect for the challenges ahead. This should come across in your voice, your manner and your tone. You sound confident, but not overconfident. Strong.
  5. Don’t do crazy valuations or overly confident projections. Banish all ‘hockey stick‘ cash flow and revenue charts, showing slow, low revenues then some astounding take off to amazing heights after only 18 months. Rarely, if ever, (never?) do startups actually take off like this. It can take years of trial and error, pivots and tantrums, to get to a position where you are even paying your way, let alone making super normal profits. It did for AirBnB (who launched 3 times), Google (who had no business model for years) and many other very successful unicorns.
  6. Beware the ‘China number’ syndrome. ‘Oh, the market we are entering is a $20 billion market… if we’d only grab 0.05% of it, we’ll all be multi millionaires!’ This is lazy. Tell me how you are going to get your FIRST paying client, and why they will pay, and then tell me how you are going to get your 10th, 100th and 1000th… Explain, in detail, your customer acquisition strategy, and how you will scale.
  7. Do a great demo of the tech you have built, but better to do this through screen shots, not through live demo, which is fraught with problems in a live environment in front of 100+ people and judges looking on. Make it swish, have a great UX and show off the elegance of your solution. Mention what you would next do, and like to do next, given more time.
  8. In your slides, don’t inflict death by powerpoint. Use images rather than words. Use as few bullet points as possible, with a large easy font. Not too fussy, the slides are supposed to be a visual aid, not a crutch for you to lean on. In a 4 or 5 minute pitch, you may have 6 to 8 slides.
  9. Enjoy it. Smile! Engage your audience and the judges. Allow your passion to shine through.
  10. Practice, practice, practice. You should be able to nail your presentation after a few run throughs (at least half a dozen), and your timing should be bang on. There is no excuse to be rushed towards the end. Take things out if they are peripheral. You can always refer to other points during Q&A time. Aim to be word perfect, no ums and errs, no awkward moments, just one strong, believable logical argument with evidence.

Hackathons, like Startup Weekends, are a great way to condense months of learning into a 54 hour period. All the trials, tribulations & tantrums are smashed into 2 days… little sleep, anxiety, things breaking, things not working, arguments, chaos, and even triumphs… I highly recommend them.

0

Post Truth or Expensive Truth?

Do facts matter anymore?

The person who would go on to win the 2016 US Presidential election made statements that were true (or mostly true) only 15% of the time over the election cycle. His opponent’s statements were true or mostly true 55% of the time. Fake news was shared more than correct news. Last year, the Oxford Dictionary made “post truth” its word of the year.

Yet this phenomenon is not new. At a recent UWA lecture by Stephan Lewandowsky provided analysis that showed how Fox News (in 2010) misinformed twice as much as other news outlets (running stories on Obama not being born in the US). Even earlier, in 2006, Republican supporters in the US believed there were weapons of mass destruction found in Iraq, even after a report conclusively found (in 2004) that no such things were ever there, or found.

Post truth politics work, it would seem.

Two thirds of white males voted for the current US President, and he actually did better than his opponent in the mid-income range. The poorest actually voted for Clinton.

Despite all the lies and half truths, on both sides, supporters of each candidate believed their person was telling the truth 94% of the time. Research has shown that preconceived support is the largest determinant of whether you believe a proposition or not.

In other words, it’s become tribal. Even if supporters are shown that their candidate has told a lie, they accept this, and it does not change their support.

We like to hear good news – it’s only natural. We prefer to hear information that marries with our view of the world. Facts that differ with our own values and inner held beliefs are uncomfortable, and on the whole, we prefer not to be uncomfortable. We’re wired that way. When your team is being belted in the game, you might switch off in disgust, or start walking down the aisles to beat the traffic home. Why prolong the agony?

And then along comes social media, and we can gather whatever information we want. We can live in a cocoon of information that pleases us, whether it is true, biassed or just plain made up. In fact, Google and Facebook’s algorithm’s serve it up to us, because they know what we prefer. They know what we will pause and comment on, click and share.

Now, I’m not blaming the media, or social media, or tribalism, or how we are wired … it is what it is. However, we need to recognise this, if we are to deal with it. Because if not, then we are moving into a world where facts don’t matter, and that’s dangerous.

The trouble is that opinions are cheap and facts are expensive. Worldwide, media is trying to find a business model that will pay for facts, now that the former business model (classified and display advertising) has moved online. Some media don’t care as much as they used to about facts, and peddle opinions, or just promotions.

Yes, media should have seen it coming, but that’s easy to say in hindsight, and what move should they have made anyway? Were they always going to be bowled over?

True, truth is in the eye of the beholder, but we have seen instances (at the highest level) of just plain faced lies (proven lies) being waved off and ignored, as if at least trying to say things as they are is in itself unimportant.  It’s not how things are anymore (people don’t want that), it’s how they make you feel.

I don’t know what the answer is, but I’m out there looking… answers on a postcard please.

0

Is your twitter account yours?

Does a company have the right to your twitter account after you leave their employment? Are they in control of what you send out while you work for them? Should they be? Can they be? Does it matter?

These questions have vexed many a business owner and manager, and I’d like to share some of my own personal views on the matter.

I believe that if a member of staff has their own twitter account, with their own name, whether created before or during their employment with us, it is their property.

Take for example, someone called Jo Smith…

If their account handle is @josmith, that is their name, and they will take it with them if and when they leave. The account itself is not company property, nor are the followers of that account.

If they tweet as themselves, they may tweet about their work and/or their own life. Being employed is part of their life, but not all of it. I would ask that if they tweet about anything official, something about us, and even perhaps about something unrelated, they do so with all due respect and realise that as part of their life is being employed with us, they take that into account. I would ask them to be courteous and wary of what they post, and that everything they send out (once sent) is permanent. Even a deleted tweet can be retweeted (or screenshotted) before you get a chance to delete it.

We provide coaching tips and guidelines to all staff members, and sometimes sessions, on how to use social media at work – the traps, the way it can work, how it can benefit their and our brand.

I believe a twitter account is very different to a staff member’s official email account (which absolutely is company property, including its name being that our company brand forms part of the address, and is run off our servers).

When and if Jo moves on from our employment, he or she can take their twitter handle and account with them … but not their email account. Their own name is Jo Smith and belongs to them (not the company), and so @josmith, and all its followers, moves with them.

To be honest, their twitter account is not much use to me after they leave anyway, even if I insisted I retain it. Their contacts, or followers, followed them for various reasons, and enjoyed (or not) their content. I don’t believe I have the authority to take over their persona, even during their employment with me, and certainly not after it. Even if I did, what would I do – carry on tweeting as them? Change the name and twitter handle? That’s deception.

I have noticed some companies (such as the ABC) have some of their reporters use a twitter handle such as @josmithABC, which presumably is created when they join, and ties Jo’s twitter account to the ABC, and only the ABC.

I actually don’t follow this policy because, what happens when Jo leaves the ABC? Are you going to rename his twitter account, take it off him, and give it to someone else? Shut it down? Plus, if you do this with all your staff, then they will have to start their accounts from scratch, and it can take a long time to build up connections and followers. What happens to their personal ones? Do they now run two?

I would argue that when Jo joined me, he or she brought with them everything learnt prior. Their skills, experience and yes, even their social media nous, was what I was hiring. When they leave, that walks out the door with them. When they arrive, I benefit from all their former employment and education and experience (this is what I am hiring, after all), and when they leave, that leaves too.

I try to treat all staff the same. If they have their own social media accounts (most have several), then our social media policy does remind them that whenever they use it, part of their audience knows they work for us, and for them to be respectful of that. We have a public persona, a brand, and that needs protecting, and hopefully, building upon. They do too.

On my own twitter account, which I started in 2009, two employers ago, I clearly state who I am, and that any views are mine and not of my employer. However, I always try to use my accounts to the best of the company’s goals, by liking and sharing content (but overly so, so as to annoy my followers) as part of my overall social media strategy.

See > https://twitter.com/ChazGunningham

Social media has developed into an important communication tool, and like the computer, phone and pen and paper before it, has its own foibles, pros and cons as compared to other forms of communication. What one needs to remember is that this form of communication is now permanent, and that proper staff coaching, including providing clear guidelines, tips and traps, is essential these days.

0

A watershed moment for Perth tech startups

Dr Marcus Tan addressing the ‘Digital Disruption in Health’ YOLK event, last week

This week it was revealed that local tech business, HealthEngine, had raised $26 million from global venture capitalist Sequoia Capital.

This is notable for a few reasons:

  • it’s the largest private sector investment in a local tech startup
  • the first such investment from this Silicon Valley VC in Western Australia, and their second in Australia (after investing in Melbourne-originated LIFX)
  • the same VC that has invested in such global successes as Google, Apple, Whatsapp, Stripe and AirBnB
  • the business is headquartered and will remain (as far as we know) in Perth
  • the investment reduces the need for the company to do an IPO & keeps the business private

On so many levels, this is a knock-it-out-of-the-park deal, made all the the more notable in that the co-founder and CEO, Marcus Tan, has been a fixture on the local startup scene for 7 years or so.

I remember first meeting Marcus when he was a fellow mentor on Perth’s first Startup Weekend in September 2012. The 10th such event will be held next month. The more I got to know Marcus, the more impressed I was.

Not only a cofounder and CEO (he’d put together the HealthEngine startup in 2006, developing it from his lounge room), he was also an angel investor himself, and a philanthropist (being behind the Global Meridian fund raiser for local worthy causes). He was one of those who set up Perth’s second co-working space for techies, Sync Labs (now run by Spacecubed). He has been basically everywhere in and around the sector in the past decade, as well as a practising GP. Is there nothing he can’t do?

A week last Friday I moderated a session down at the Old Swan Brewery (see photo above), on the topic of digital disruption in health, and he was quite brilliant on the panel. His deep intelligence and soft spoken authority came across (as always), and anyone that met him and heard him cannot but be impressed.

A few years ago I invited him to be a guest speaker in my eBusiness MBA class. Along with many gems of advice, I remember him saying that that Australia is of a certain size that one online business can totally dominate a sector. Realestate.com.au (REA Group) has done this in real estate, and is one of the most profitable online real estate businesses globally. A larger country, such as the States, he argued, is almost too large to have one business dominate. It was clear he was out to dominate Australia, and this week’s funding probably allows him to complete that mission, while looking out for regional and global market expansions.

It could not happen to a better person, and I wish him and HealthEngine all the best.

What this also does is demonstrate to other local tech startup aspirants that a good tech idea, well executed, can be built from Perth. Apart from traditional ICT businesses like Amcom and iiNet, we’ve not seen evidence of this being done. You can also bet Sequoia and others will be looking at Australia, and maybe even Perth. To Atlassian and Canva (Perth originated, but now Sydney based), HealthEngine is now added as the next possible Aussie ‘unicorn’.

Be inspired Perth tech startups up, for you could join the list sometime soon…

0

When the World Wide Web Conference comes to town

The World Wide Web conference, now in its 26th year, hits Perth this week. The last time it visited Australian shores, in 1998 in Brisbane, a certain unknown couple of Stanford PhD students with an odd-sounded company name presented a paper showing how they were going to revolutionise the world of online search.

Yes, the Google guys, Larry and Sergey, delivered what is now believed to be one of the all-time classic papers about the web. The conference itself was initiated by such luminaries as Sir Tim Berners-Lee (the inventor of the world wide web) and others a few years earlier.

19 years since it was in Brisbane, it has travelled around the world (next year it’s in Lyons, France, last year it was in Montreal, Canada) and moves into my home city this week, with 400 sessions being put on at a dozen different locations, mainly centred at the Convention Centre.

Looking at the agenda, it is geek heaven. What next big thing will be presented this week? There are topics ranging for the semantic web to AI to data visualisation to machine learning. There’s a session entitled ‘Is Tofu the new cheese of Asia?’ and ‘Web-based surveillance data to improve influenza forecasting in Italy’. Some pretty obscure stuff. I love it!

On Thursday I get to interview on stage 4 senior tech people from Google, LinkedIn, Wikipedia and Snapchat. Can’t wait. 375 people are booked in for that event.

As we rush headlong into the future, it will be interesting to hear from these incredibly smart folk about what type of future we are hurtling towards. You get the feeling, like the 2 PhD guys in Brisbane in 1998, that the future will be moulded by some of the 2000 tech people descending on Perth this week.

0

How to win those important moments

There’s a moment, a fleeting split-second, when you’re tested and everything suddenly seems on the line. It sharpens your focus. It’s now or never. Pressure on!

Some people attempt sheer off the cuff bravado, roll the dice and get away with it (or not). Others stumble, nervously panic and whimper a little. Some seem to know what to do, what to say, and do it with aplomb as if shelling pees.

Whether it’s at a crucial point of a negotiation, a tough question put to you live on TV or a fast cricket ball hurtling towards your stumps, how you handle the next split second can make or break your month, your career or your team’s chances of winning the grand final.

Justin Langer, current coach of WA cricket team, and former Australian test batting legend, likes to remind his players that if they don’t put themselves under pressure in practice, how can they handle the pressure of a real game? Because being put under pressure in a game is exactly the situation they will be put under, and how they handle that moment, is important.

This reminds me of my last game of cricket, played about 10 years ago, coincidentally one in which the same Justin Langer played …

OK, a wicket has fallen, and my heart jumps as I realise I have to bat now. I’ve been padded up for a while, watching the bowling and now it’s going to be my turn. I start to walk out, practice a few off drives, blink up at the sun, skip to get my feet moving. I pass the outgoing batsman. Bad/Good luck we murmur to each other. Arriving at the middle, I look up at the umpire and ask for middle and leg. Marking my guard, I glance around the field, to see faces staring looking back at me disdainfully. 11 of them. Plus 2 umpires. I acknowledge my team mate at the other end. I twizzle the bat in my hands, look up at the bowler, who then starts his run up. The pitch looks lighter than I remember, and broader, and far away from the boundary edge from where I was just a minute ago. All eyes are on me. Concentrate! watch the ball, watch the ball.

There’s a split moment after he delivers the ball when I have to decide what to do. As the ball is in the air, I try to pick up it’s trajectory. Can I leave it alone? Please for my first ball, I just want to either leave it alone, confidently, or play a resolute defensive shot. Feel bat on ball. Get to the end of the over unscathed, or even better, tickle a single somewhere and get up the other end and off the dreaded nought.

The young strapping fast bowler delivers a thunderbolt, yorker length and I can’t react in time. I hear the clatter as my leg peg is knocked over. Golden duck!

I barely saw anything, and barely moved. I froze. I’d been playing cricket for 30 or more years, had scored a good share of runs in that time, but nothing saved me that day. Castled. First up. Good nut. Cue trudge back to the pavilion. As I walked off, I think I knew that my eyes had gone, my reflexes has gone, and golf was going to be the pastime from now on!

I now coach my son’s Under 13 team, and yesterday they lost to a very powerful, all conquering team of older lads. They tried as hard as they could, but for the team as a whole, the gulf was too wide. They’d not been close to being bowled out all year, but yesterday they were knocked over collectively for less than one of the players had scored individually in a recent game. They will be stronger for it the next time.

My last ignominious innings was preceded by 10+ years of no practice at all, so blaming my 40+ year old eyes and reflexes is a cop out. I play golf most weekends, but apart from the occasional 5 minute blast on the driving range and swinging of a few clubs a few minutes before my first drive, I don’t practice. No wonder it can take my game a few holes to warm up. And in any case, the driving range in no way resembles the pressures and situations you encounter on the golf course, among thick bushes in a bad sandy lie with swirling gusts of wind when you’ve already had 3 shots.

If you can going to win these micro moments of importance, in a negotiation, a sales call, a board room, live on TV or on stage or in sports, you need to practice, and put yourself under pressure during practice.

In my U-13 cricket team I know exactly who has practised well all season, and who has not. Those that have come on this year, have practised the most. Those that have not, have stood still.

People say to me (which is very nice of them) that I ‘own the stage’ or am a ‘natural speaker’ when I am doing a presentation or moderating a panel discussion. Believe me, at school, I would go bright red if the teacher so much as looked in my direction. I was a geeky, awkward and slightly overweight 12 and 13 year old, not very confident, a bit shy and hated any attention in class.

This other cricketing memory from that time, 40 years ago one English summer, pretty much sums it up…

My year’s cricket team was playing the nearby rival school across town, and we were in trouble. We had no chance of winning the game, so had to try and last out the day, batting for a noble draw. I was last man in, and in the last over, had to face a few balls to deliver us that result. I don’t remember the ball being delivered, but I do remember closing my eyes and lunging forward to try and play the most immaculate forward defensive shot ever played. By the time I’d opened my eyes (I swear this is a true memory) the opposition team was walking off in celebration. I looked back, and my stumps were intact. I remember the ball hitting my bat, quite well… but then it must have popped up for a catch, which was taken. I had not seen my calamitous shot or the catch being made. Eyes were closed in defiance. Game over, we had lost.  

And yet, within a few years, I had grown in confidence, become a useful batsman and played some serious club cricket in the UK and Singapore. I even made 7 appearances for the Singapore national team and have a page on the CricInfo website that proves it so.

In between there was lots of practice, lots of mistakes and lots of games. Even though I was not particularly gifted, I loved the game and worked at it.

As I grew in confidence as a teenager, I learned how to speak in public too. I practised. I still do. Every time I am going to speak on stage, I have spend hours honing the slide deck, the talking points, the words and stories I am about to say. If the event is video’d, I watch it back and criticise my performance.

It’s boring, but it’s also 100% true that performance is borne from practice. The right type of practice. Those that try to wing it on the night may fluke a few wins here and there, but more often that not they will be caught short and won’t reach their potential. Same for final year exams. Those that put in the effort, and importantly, practice like the real thing, putting themselves under pressure during practice (such as doing timed exam questions), will be more able to handle the slings and arrows and random things that are thrown at you when the chips are down and the thing is on, for real.

I am amazed at sales people who baulk at practising their craft, honing their phone technique or role playing their sales meetings. It’s critical. So much learning results. Similarly, startup founders who cannot articulate their obvious passion into a clear, sensible business case for potential investors. Or business leaders with hopeless presentation skills, droning on through boring bullet point laded powerpoint pages.

So, take it from Alfie. Put yourself in a game situation, under pressure as you practice. And when the actual moment comes, and when the next move you make, or words that come out of your mouth, determine whether you will win or lose, you’ll be much more likely to win.

0

10 military strategies that work for business

I attended the graduation of the first cohort of WA Leaders the other night, and former military man and successful business owner Johnathan Huston (Croissant Express, Tint-a-Car) presented on the 10 most important principals of war.

He claimed that these 10 principles were the same for business, and in order of importance are…

1. What is the purpose?

An organisation must have a clear singularity of purpose. Keep it simple. Don’t spend lots of time with plans, they’re not read. Make the purpose clear to everyone. Allow people to make the decisions according to the purpose. People can make mistakes. As long as they were trying to get the purpose, celebrate!

2. Maintenance of morale

Make sure everyone is focussed on the job. This is far more important than having the best materials or equipment.

3. Offensive action

You cannot sit back and be defensive. Keep moving forward.

4. Concentration of effect

Make a big impact in a targeted manner. Don’t spread your marketing spend all over the year, have some strong attacking moments at key times of the year.

5. Economy of effort

There’s never enough resources, so efficiency and effectiveness  is key. Look how a few people hi-jacking planes made a huge impact on 9/11. The US ended up spending trillions of dollars over the next decade, and allowed the enemy to fight them on their own field, which was the aim.

6. Maintain momentum

Keep it up. Make sure you are pushing forward with sustainable, repeatable, cash flow positive projects.

7. Security and surprise

Ensure you have IP protection. Make your opponent box at shadows.

8. Flexibility and cooperation

Seek alliances and partnerships for mutual benefit.

9. Admin

Have great systems and processes. Make sure you can scale. Don’t be overly dependent on too few people. Have redundancy built in.

10. Maintain and reconstitute a reserve

Keep an ace in your pocket. Have a secure line of credit that you don’t use. So you can pounce when you need to. Be agile.

Looking at these, I probably have to agree. The purpose is the single most important factor. As Simon Sinek argues, find your ‘Why’. People buy your why. Everyone in the business has to know what the clear purpose is, and it should not have to be written on the wall to remind people. It should be built in.

Certainly,  motivation of staff, or rather, selected switched on self-motivated people, who will keep pushing and not give up, is also key, so this slides in at number 2, after the clear purpose.

I don’t think the 10 are necessarily always correct, nor in the right order definitively, depending on the type of business and industry. Business is not about conflict, it’s more about competition, and also cooperation. There are clear differences.

Military action is usually judged as either a win or a loss, with the ultimate goal being a win with the least effort (or casualties/cost). Judging a success, or a win, is sometimes harder in business. For some businesses, being around as an organisation may be reason to cheer, but in the military being around next year is not really the goal (because, if that was the case, don’t go to war at all).

The 10 do serve up some interesting points however, so are worthy of a look.

 ~~
Photo Credit: http://www.politico.com/news/women-in-the-military 
0

Perth: 2 degrees of separation

If you’ve ever bumped into someone you’ve not met in ages, out of the blue, you may have got to thinking how many you may have just missed. The law of averages would seem to suggest that for everyone you suddenly run into, you must miss many more.

Last week, I skipped through our foyer not really noticing anyone in particular, when I heard a voice saying ‘Charlie Gunningham!’ I looked up and there was someone I’d not seen in 16 or 17 years (we figured it was the year 2000 or 2001). ‘Are you here now?‘ he asked. ‘Yes, I’m the CEO! Where are you now?‘. And so on. He hardly looked any different, and he said the same of me (obviously, our eyes were worse for wear).

This seems to happen to me all the time, almost everywhere I walk around this fair city. While it could be that everyone is linked by 6 degrees of separation, in Perth I reckon it could be 2.

Try this at your next business networking event. Go up to someone you do not know, and introduce yourself, asking them why they’re there. Once you start chatting, you will probably find that, unless they are totally new to Perth, you have a common acquaintance. It’s something I like about this place. While the population may have ticked over 2 million, it still has a ‘smallness’ about it. Almost everyone seems close.

Another important element to this is you simply cannot afford to burn any bridges. Ever. There’s no point (even if you never see them again) getting in a strop, or being rude, or getting flustered, with anyone, at anytime, no matter how unreasonable they are.

I’ve had people be extremely rude to me over the years, and have been subject to things in business that I would not wish on anyone, but it’s always better to raise your chin, let it run off you like water off a duck’s back. In the main, people are good, not greedy. People want to do the right thing. But there are exceptions. And I find it odd that they do not have the emotional intelligence or self awareness to understand what they are doing, and what others think of them.

Someone I’ve known for years thinks he’s God’s gift to business, and he’s had some success (to which he should be justifiably proud), yet the way he acts puts people off, even those who know him well. His reputation is poor, and people tend to steer clear, or do that eye roll thing when his name is mentioned. People who do not know I know him, tell me things about him. He has no idea people think of him this way.

Reputations are made very slowly, and can be ruined quickly.

Those that seek to take short cuts to grab a goal themselves will never get the long term prize. In Perth, or anywhere, it’s simply not worth behaving badly. Everyone knows someone who knows you. It’s 2 degrees. Tred carefully, do the right thing and more good things will be returned to you.

That guy I bumped into in the foyer? As it happens he was there to listen to a proposal from our sales team. How I behaved 16 or 17 years ago with him may just help get a deal over the line this month. What goes around, comes around.

Photo Credit: http://www.azquotes.com/quote/1096820 

0

It’s blockchain, stupid

dilbert-chain

7 years ago I visited a New York real estate technology conference, and one of the main themes was the emergence of the mobile economy, and how important smartphones were becoming. On returning, I wrote one of my first blog posts (‘It’s mobile, stoopid‘) on the Business2 website, the first comment of which still reads: “I don’t think so…”

3 years earlier, Apple’s iPhone had heralded the onset of the smartphone era, and business was never going to be the same again.

Wind on to today, the smartphone is everywhere. This device has changed how we communicate, receive information and news, take photos, and how elections, products and almost everything is determined. Half the world wide web traffic is now over a mobile device. We’ve got access to all the world’s information, anywhere, anytime.

Back in January 2010, we did not even have the iPad, Samsung or Android phones. Many of us were not yet on Twitter. Instagram (established in October that year) and Snapchat (2011) did not exist.

Snapchat went public last week, and by the end of its first day of trading, was valued at US$33 billion.

Just take a moment to think about that.

An app, mainly used by kids to send quick greetings and filtered photos of themselves to each other, with hundreds of millions of dollars of losses, is worth more than all but 8 of the 2,000 publicly listed companies on the Australian stock exchange.

Snapchat, who famously refused a US$3 billion offer from Facebook in late 2013, is worth more than Woodside, Woolworths, Macquarie Group, QBE, Coca Cola Amatil, the REA Group… way more.

Snapchat, something dreamed up around 5 years ago. And it only ‘exists’ on a smartphone. Such is the power of the mobile/smartphone platform.

And so we turn to 2017, and as we move inexorably to the end of the current decade (less than 3 years now til 2020!), what will be the next big thing?

Some are tipping the Blockchain.

A whole world of mystery surrounds the blockchain. It is not easy to describe, or explain, and even its inventor is a mysterious Japanese person (persons?), who was (were?) rumoured to be living near Esperance.

You may have heard of Bitcoin, the online currency built off the blockchain platform, itself something invented only recently, after the GFC in 2008. But the blockchain (like the world wide web itself) can spawn many applications beyond bitcoin.

Simply put, the blockchain is a secure online ledger, providing permanent asset transaction summaries. Each asset, and each transaction (buying or selling) has its own ‘block’ linked together in ‘chains’, hence the blockchain – a line or even matrix of blocks chained together.

The key point to remember is that each unique block (a time stamped record) cannot be altered, ever. This is because this record is sent out to all the millions of computers around the world that are linked to the blockchain. Once sent out, it cannot be altered. It’s a permanent record.

The implications of this are that any asset transaction (such as transferring money or property or a contract or a share) can be uniquely recorded, and be immutable, irrefutable, unchangeable. This process can also happen quicker, and cheaper, than using a traditional intermediary.

So, potentially whole rafts of intermediaries (such as banks, real estate agents, any middle person really) can be disrupted away by the blockchain. The blockchain gives confidence to those involved in transactions (buyers and sellers) in the same way any broker or middle person might have done so up to now.

The reason the blockchain is so strong, and unhackable, is that as it is made up of individual blocks, that exist on millions of computers, simultaneously. In many ways, it has characteristics of the world wide web itself. Interspersed, with no single person in control. Anyone trying to change anything would have to have control of all those computers with access to a blockchain, and all blocks, at any one time. This is deemed impossible, and gives the blockchain its inherent power.

Once people start to recognise the simplicity and strength of the blockchain concept, they will start to trust it, and use it, to transact. Once this happens, banking, real estate, contracts, voting, stock trading, car exchanging and almost every market which involves ‘assets changing hands’ (which is what markets essentially do) could be disrupted and changed forever.

So, the blockchain could be the next biggest invention since the world wide web itself.

For hundreds of years we’ve had intermediaries help us with most of our transactions, as it’s too hard to run around and meet everyone in the market, and do it all ourselves. If the blockchain can do this for you, who now needs these intermediaries?

Yes, this may seem far fetched, but then again an app that makes funny filters for kids is now worth US$33 billion, and counting. 10 years ago, the devices on which it sits did not exist.

Remember also that Apple, almost bankrupt 20 years ago when Steve Jobs returned to the helm in 1997, is today the most valuable company in the world, at US$617 billion. Google, which did not even exist in 1997, is worth US$532 billion, and is the second. Rounding off the top 3 is another tech giant, Microsoft, at US$483 billion.

All these companies, and millions more, rely on the world wide web for their existence, something that did not exist until 1990. With the blockchain now out in the cybersphere, what else will be changed in the next 10 and 20 years? Perhaps pretty much everything.

~~

If you want to know more about the Blockchain (I’d strongly advise it), watch this 18 minute TED Talk by Don Tapscott.

0

Outlook for WA business in 2017: better!

sunny times in WA

In a talk I delivered to the Western Suburbs Business Association last week, I struck a cautiously optimistic tone in regards to the prospects for business in WA in 2017. Most of those attending seemed to agree that things had been picking up of late, and perhaps in 2017 we would all just get on with business, and not worry about post mining-construction doom and gloom.

Here are the slides from the talk.

As always, start with a story, so I began with one of my favourites about the motorcylist in June 1944, having to turn around a convoy of armoured vehicles and trucks on a rainy country road just north of Portsmouth, UK. To find out out he did it, read this post.

The 3 main lessons from this story are:

  1. If you’re going in the wrong direction, admit it! (most managers can’t)
  2. Think about what direction you should be heading in (hint: the trend is your friend)
  3. Make sure you stick to the new direction (no returning to old ways)

While Nokia and Kodak famously did not find a better path, Samsung and Apple most notably did.

There’s no doubt that 2016 was a difficult year (for most, but not all, in businesses in WA). Apart from all the celeb deaths (no more than usual, statistically), we had the Brexit and Trump election shocks, more senate issues for PM Malcolm, a sluggish local economy  and the media got smashed (SCOOP went under, and The Sunday Times was bought by The West with barely a whimper).

In fact, 2016 was a relatively good year for WA stocks, as shown by the ‘BN30’ index of 30 representative WA ASX-listed companies. Starting the year at a base of 100, the BN30 ended it 20% higher at 120.

There was some good news around in 2016:

  • the US economy grew, and markets hit new records
  • US CO2 emissions were the lowest since 1991
  • The Giant Panda is off the endangered wildlife list, as are Tigers
  • Poverty levels fell, to their lowest levels
  • The Colombian government signed a peace deal with FARC

But there’s no doubt, some sectors in WA did it tough in WA:

  • Mining services
  • Retail
  • Property
  • Recruitment
  • Business Services

Mainly because:

  • WA population growth has stalled
  • Mining construction boom ended
  • Digital disruption
  • Uncertainty about the future

…. all fed in to lower business confidence, lower investment, less new jobs created.

Despite all this, unemployment peaked at 6.1%, and GDP grew (for the 25th successive year.)

There were some bright spots in the local economy:

  • ICT, tech and digital businesses did well
  • Professional services did OK as activity continued
  • Annuity (SaaS) businesses were fine
  • Agribusiness
  • Some miners, especially iron ore, gold and lithium were hot

On that last point, it should be noted that the mining boom is not over, even though the construction boom may have over. Mining, as an industry, is three times the size it was 10 years ago. It’s just that they are not building as many mines as they were during 2004-2012.

FMG’s share price rose 250% in 2016. Atlas Iron, once the darling of the stock market, and then pronounced dead, saw its shares rise from a penny to 4.5c. Long way off its prime, but still alive. For many, this signalled all is not lost. Atlas started paying down debt. FMG could be debt free soon.

What has great potential in WA business?

  • Tourism
  • Education
  • Aqua/agriculture
  • Mining/bio/tech startups and software
  • Many other industries

So looking to 2017 and beyond, there is much to be thankful for, and positive about in business in WA.

Much of what happens is in the mind anyway. If we think it, it may very well happen. We can create our own future, and we can certainly determine the success of our businesses by the attitude we take.

Plus, we live in paradise, lest we not forget. The sun is shining. The beaches are gorgeous. As is the wine.