Apple is about to open a new front in the ongoing war against online advertising. The new version of its mobile operating system, iOS 9, will support ad blocking by Safari, its mobile web browser. A study by Adobe and pro-advertising company PageFair finds that the popularity of ad blocking extensions in desktop web browsers is responsible for US$22 billion in lost revenue to the websites that host ads. They estimate that there are now 198 million users worldwide actively blocking ads. Amongst 400 users surveyed by the report’s authors, the main reasons cited for using ad blocking software were avoiding privacy abuse by targeted advertising as well as the number of ads encountered when browsing. A typical message from a website about the use of any ad blocking. TheGuardian.com screen grab The practice of trying to guilt users into switching off their ad blocking software when visiting sites doesn’t appear to be working and the display of messages to ad blocking users by web sites has diminished. Ad blocking apps that will be available for Safari on iOS 9 are already being made available to beta testers. One such app, Crystal, not only blocks ads but experiments by the developer has shown that using this ad blocking software speeds up web pages loading in the browser by four times. This also results in a significant reduction in data being used, which is significant on a mobile device using cellular data. Another ad blocking app Purify that is also in beta testing appears to also block ads on YouTube. The stand out, and that’s precisely why so many people block them. Pascale Kinchen Douglas/Flickr, CC BY-SA Ad blocking on mobile is not completely new Ad blocking has been available for some time on Android for users of the Firefox mobile browser and for Google Chrome. In the case of blocking ads by Google Chrome, an app needs to be installed which is not from the Google Play app store. Ad blocking has also been available on Apple devices but have worked by blocking access to certain domains that serve up the ads. AdBlock for example works by pretending to be a virtual private network (VPN) connection and filters out access to specific sites. This of course only works if the list of sites to block is up-to-date. It also doesn’t allow for “whitelists”, which are sites that are allowed through because they are deemed “acceptable”. However, the move by Apple is going to boost ad blocking on mobile dramatically because it is going to make the process of doing so that much easier. This has advertisers, and sites that make money from advertising, increasingly worried because it raises their costs in terms of creating ads that are less intrusive and deemed more acceptable (although this may still not convince the public to view them). Apple’s iOS 9 is due to be released later this year and will include content blocking. Apple For Apple, though, the move to allow ad blocking gives iPhone users a better browsing experience at no cost to Apple. Apple makes no money from online advertising through mobile browsing. And, of course, its own ads that are served up through apps are unaffected by ad blocking software. As a bonus to Apple, the company who is most affected by ads being blocked is Google, which derives 90% of its revenue from advertising. Apple is able to increase the level of privacy it offers its customers without directly getting involved itself and risking annoying companies that rely on revenues from advertising. The advertisers' dilemma Many ads can be deliberately deceptive. Create Meme It is hard to feel sorry for the advertisers and the sites that resort to displaying targeted invasive ads, such as those sold by Google, Facebook, Yahoo and others. These ads are designed to target individuals based on information gathered about them as they use the internet. So not only are they annoying, but they are exploiting people’s privacy. Adding insult to injury, the inclusion of ads slows down web page loads and potentially ends up costing end-users money by using their data allocation. The argument that content providers are only able to provide content based on the exploitation of their visitors is not a good one because it implies that those visitors signed up to an agreement to view ads in exchange for the content. Of course, users generally do no such thing. And given the explicit choice, might easily opt simply not to visit the site. Most users don’t necessarily mind being provided with information that allows them to make a reasoned choice about a product when they have decided to buy it. But advertising that tries to persuade a consumer to buy something they weren’t considering buying is a different matter. Once advertisers do more of the former and less of the latter, perhaps ad blocking will no longer be necessary. David Glance is Director of UWA Centre for Software Practice at University of Western Australia This article was originally published on The Conversation. Read the original article.
It is a year since I last wrote about Adobe Flash and why everyone should stop using it. Since then, the leaks from the hack of the mass surveillance company HackingTeam have revealed three serious bugs (called zero-day) bugs) in Flash that they were exploiting to take over victims’ machines. It is likely that more Flash vulnerabilities will be revealed as security researchers work through the documents the hackers removed from the HackingTeam. The leaked exploits have already appeared in hacking toolkits and are presumably already being used on the general public. Since these bugs have come to light, both Mozilla and Google have blocked various versions of Flash from running on their browsers. Other companies are removing Flash from installs on new computers. The momentum behind the movement to rid the web entirely of Flash has picked up with the Facebook’s Chief Security Officer Alex Stamos saying: It is time for Adobe to announce the end-of-life date for Flash and to ask the browsers to set killbits on the same day. The reality is, there really is no reason for Flash to still exist or be supported by modern browsers. Steve Jobs made this point in 2010. Unfortunately, the reason that it still persists is because Adobe still makes money from it, a large number of people can’t be bothered changing how they produce their ads and websites and an even larger number of people are still running versions of software that is too old to run the modern replacement for Flash, HTML 5. The latter group probably also can be split into those who can’t be bothered to upgrade and those who can’t afford to. One has to believe that Flash has become a huge liability for Adobe. Being known as a company enabling a large part of the Internet’s security problems is not good reputationally. However, Flash is still a part of its Creative Cloud product suite and so it seems that any moves to abandon it won’t come from Adobe voluntarily. Usage is decreasing, albeit not fast enough. Flash is still used on around 11% of websites. This is down 2 - 3% from a year ago. The environment has changed however, even from a year ago. Mobile is rapidly becoming the dominant platform for accessing the Internet and these devices don’t run Flash. More importantly, the pervasiveness of government surveillance and cyber-crime in general has become all too apparent, even to the general public. Whilst, surveillance by our own governments may not impact everyone, cyber-crime has become so prevalent that the public is becoming more security conscious. This is being helped in part by companies making security and privacy a bigger part of what they do and simplifying access protection with mechanisms like fingerprint recognition on mobile devices. Another factor is that Flash use is tightly coupled with how annoying and intrusive ads are displayed on websites. Removing Flash may be an inconvenience for accessing a small amount of functionality, but users actively removing and blocking ads has become much more common. As more ads get blocked, the incentives for advertisers to use Flash to create web ads diminishes significantly. If you do want to remove Flash, and as a security measure, it is really advisable to at least limit its use, there are a number of different ways to disable it temporarily or permanently. An added benefit from removing Flash is that you won’t have constant messages asking to update it as daily security flaws are discovered and fixed by Adobe. David Glance is Director of UWA Centre for Software Practice at University of Western Australia. This article was originally published on The Conversation. Read the original article.
Nitro’s Sam Chandler explains why it no longer makes sense for Australian startups to move to Silicon Valley3:41AM | Friday, 27 March
Sam Chandler says there are two key reasons why it no longer necessarily makes sense for early-stage Australian startups to relocate their headquarters to Silicon Valley, as it did after he launched Nitro a decade ago. Last week, in the first of a two part interview with StartupSmart, Chandler discussed what it was like to launch Nitro in 2005, during the early days of the Australian startup ecosystem. A couple of years after the launch, at the height of the global financial crisis, he decided to move the company’s headquarters to San Franchisco. “We opened the office in January of ’09 with five of us, and it’s now around 105 people, so it’s been pretty amazing to see that growth. It was a talent issue and a capital market issue. We couldn’t find the talent we wanted in this market at the time. There was a real lack of experienced software sales professionals or certain kinds of web development professionals. We know the talent pool in the Valley was very rich and we knew if we ever wanted to raise we could,” Chandler says. But Chandler says despite Nitro’s success, his advice to current generation entrepreneurs is that the reasons do not hold true today, for two key reasons. “The first is the rest of the world has grown up. So if it was it was like the difference between civilisation and the dark ages between the Bay Area and Australia in 2005, it is not the case today,” he says. “The relative difference between those locations and Bay Area locations are much, much less. There is such a wealth of content online and if you want to be an entrepreneur, you can teach yourself to be an entrepreneur. If you had to go to Silicon Valley to get that stuff in the old days, you don’t anymore. “The second thing that has changed is that the Bay Area is now so expensive and so competitive that it probably doesn’t make sense for a lot of early stage startups to move there. If you’re already there, sure, start a company in Silicon Valley. “But it is so expensive today that unless you have cash flow already, lots of investment, or some really specific reason or need to be in San Francisco as a base, you’re much better off using it as a strategic base for business development, partnerships or sales – something that leverages the unique place that Silicon Valley is. Because it is a very expensive place relative to every other location on Earth now – and it’s not going to slow down. “There are a few companies in Silicon Valley that can afford to buy whatever talent they want. But the problem with any startup is that you are competing against those guys for talent. Sure, they guys who work for a startup that’s just three people in a room aren’t the same guys that work for Google, but once you get a little bit bigger, you are competing against the best funded companies on Earth.” Chandler says the high price of Adobe’s editing software created an opening in the market. “Nobody wakes up in the morning and says they want to start a PDF company. We didn’t – we launched Nitro Pro because we recognised that businesses were working really inefficiently. “Whether it’s research we’ve commissioned, or it’s IDC or Gartner, all these reports say the same thing, and that’s most organisations waste around a day a week on document productivity challenges. Those bad habits have been in place as long as we’ve had the PC.” Now with over half a million customers under its belt, Chandler says the company is shifting its focus from selling desktop computer software to the booming cloud-based document collaboration segment. “We feel like we’ve had our first chapter and now this is our second chapter. Our first decade and first chapter we’re really proud of, but we’re even more excited about chapter two. And over the next decade, you’ll see us transition from what we were known for – desktop productivity tools – to a business solution that is really a platform that users trust to share their documents on.” Follow StartupSmart on Facebook, Twitter, and LinkedIn. Buy tickets to the 2015 StartupSmart Awards.
As Click Frenzy launches for its third year on Tuesday night, its organisers are hoping it’s a case of third time’s a charm for the beleaguered online shopping event. After the disaster of the first event in 2012, where the website crashed minutes after launching, co-founder Grant Arnott told SmartCompany Click Frenzy has “shrugged of some of the teething problems” since then. “We’re very confident and happy to have all eyes on us this time,” says Arnott. “We know we’ll have our critics… But we’re as ready as we can possibly be.” Arnott denied the site went down or had any service issues last year, saying reports the site had crashed came from a very small number of localised issues, which were picked up and blown out of proportion by social media. “It didn’t [crash] and we have records to prove it,” says Arnott. This year’s 24-hour event will be a massive jump on the scale of the previous two years, according to Arnott, with between 1 million and 1.5 million visitors expected to participate between 7pm Tuesday November 18 until 7pm Wednesday, November 19. “Well up on previous years in terms of the quality of the deals, the quality of the retailers and the number of deals,” Arnott says. More than 300 brands have signed on in a vote of confidence this year, and Arnott says research by Adobe has forecast the event may generate up to $200 million in sales. To deal with the increased size of the event and to guard against any potential bellyflops, Arnott says the event has changed its web and cloud service to leading provider Amazon, and has done a complete overhaul of the site’s internal architecture. While Arnott says Click Frenzy “pales in compassion” to the tens of billions of dollars generated by the Chinese online shopping event ‘Single’s Day’, he says the event is becoming an important fixture on the Australian retail calendar. “This event is internationally recognised,” he says. “It’s in its third year now, which shows this wasn’t a one off thing.” Arnott says a number of small retailers are on board this year and he expects an excellent response from consumers. “Customers love it because they can find all sorts of hidden treasures. It mixes the smaller end of town up with some of the major retailers and department stores,” he says. This story originally appeared on SmartCompany.
Which technology is best to use in launching a new site or web application? There was a time when I would answer this question by getting into the details of the various features and performance characteristics of a given platform, but over the years I’ve realised it’s really not a technology question; it’s a people question. The issues are: who is going to build it, and who are you going to want to hire to continue to build it? Anyone who has been around software engineers (or any engineers) knows that a truly great engineer is worth many mediocre engineers, so if you’re starting a technology-intensive business, it’s critical that you be able to attract high calibre people. For instance, Adobe ColdFusion (formerly Macromedia ColdFusion, formerly Allaire ColdFusion) is an extremely productive platform for building web applications — in terms of getting something done quickly it’s great, but good luck finding great engineers who want to work with ColdFusion. Deserved or not, ColdFusion has a reputation in the industry for not being a “real” programming environment (there’s a whole other discussion to be had about the perversely inverse relationship between the ease-of-use and productivity of a programming environment and the credibility it receives in engineering communities). Most software developers wouldn’t want to be forced to work with ColdFusion for fear their other skills would atrophy. This is not a statement about how good ColdFusion is as a technology; it is a statement about the realities of putting together a team. This is a nuance lost on a lot of entrepreneurs and managers who haven’t done hands-on coding before — the tools you choose define the nature of the team you will build moving forward, and in most cases it’s extremely difficult to switch gears. To be fair, this nuance is also usually lost on engineers, who can easily burn a lot of cycles debating the merits of Ruby vs PHP vs Java vs ColdFusion vs every other thing. In the end, the tools listed here, among many others, are mature enough that they can all serve well to create web-based applications. Some might take longer, some might not scale as readily, some might not integrate with other technologies as easily, but from the standpoint of “can it be built in a reasonable amount of time and be production-ready and reasonably scalable” the answer is yes in all cases. The best technology to choose is the one that creates the culture you want. Nathan Dintenfass is a product executive living in San Francisco.
Apple is set to raise the prices of apps sold through the Australian app store by up to 30%, raising the average price from 99 cents to $1.29. According to the email sent to Apple developers earlier this week, the price hike is due to foreign exchange rate fluctuations. India, Turkey, South Africa and Indonesia will all see similar rises. Chris Kettle, the coordinator of Mobile Mondays Brisbane, a community of several hundred app developers, told StartupSmart the price rise was an issue developers would need to factor into their business models. “On behalf of developers, in my personal opinion, for apps and in-app purchases that are seeking a causal purchase then the price rise will have an impact,” Kettle says, adding it’s too early to know if the extra 30% revenue will offset the reduction in purchases. “For premium App developers who offer a quality product, I don't think the price rise will stop people purchasing their product.” Kettle adds the issue could stoke conversation about Apple’s commission on apps sold on their platform. “People often say they feel Apple taking 30% is a lot. However’ I think the access to a global market of millions and the collecting of revenue on the developers’ behalf is still great value.” The news comes almost a year after a parliamentary enquiry into why technology prices charged by large tech companies such as Adobe and Microsoft are significantly higher in Australia.
When two-year-old Envato received a firmly worded legal letter from tech juggernaut Adobe in 2009, the team thought their business was over. “We were terrified. It was just, oh my god our company is about to be demolished. Terrible things are going to happen and our world was rocked,” co-founder and business intelligence director Vahid Ta’eed told StartupSmart. Launched in August 2006 by four co-founders in Sydney, Envato was originally called Flash Den, after their first marketplace that connected buyers and sellers of Flash content. Despite registering a logo including the word “flash den” when they launched, they didn’t attempt to trademark the word until 2009. This is probably what triggered Adobe, which owns the trademark for “Flash”, to send the young company a sternly worded letter. “We got a concerning, and I would even say ugly, letter from Adobe’s lawyers. I still remember reading it, my heart was beating crazily and sweating,” Ta’eed says. According to Ta’eed, the letter informed Flash Den of a series of legal consequences if they didn’t change their company name, website and trademark swiftly. “They were a massive company. It felt like the Borg had come and we were about to be devoured,” he says. (For those who may not watch Star Trek, the Borg are an alien race that forces other races into their collective by turning them into cybernetic organisms.) Flash Den was managing four marketplaces with a team of 15 who had worked hard for two years to build their brand. “We worked through the panic. At first you’ve just got to get past the denial and anger, but then we realised we wanted to switch away from just selling Flash anyway, so maybe a forced branding change wasn’t such a bad thing,” Ta’eed says. They renamed that particular marketplace and their business from Flash Den to Active Den, which enabled them to include emerging technologies such as Microsoft’s Silverlight. They negotiated with Adobe to keep the Flash Den domain for a few months so they could redirect users to their new site. “We’d spent two years and didn’t want to just vanish,” says Ta’eed, adding the Adobe team were actually pretty good about the situation after their first exchange. The team decided to be transparent about the issue and communicated the brand change through a concerted PR effort that included stories in TechCrunch and the Washington Post. “We’d moved beyond just Flash, but we were still that brand, bolted onto that word. To move beyond it was challenging but as a start-up you do what you have to do,” Ta’eed says. The plan had always been to build a portfolio of marketplaces selling online content such as website templates and stock photography. Armed with a deeper understanding of trademarks and a more nimble approach to branding, the Flash Den team went on to explore new company brand names. They originally explored the possibility of rebranding to Eden but abandoned that plan due to the difficulty of trademarking a common word. In 2010, they bought Envato for about $1000 out of a catalogue of brands, complete with the brand, domain and first logo. “I remember when we picked it; I wasn’t convinced we seemed like an Envato. But now it feels like we’ve always been this,” Ta’eed says. Armed with a new brand, they went on to launch four new marketplaces. The team never took any external funding. “Being entirely self-funded is pretty cool. You get to make your own decisions and your own mistakes, which you learn from and live with,” Ta’eed says. Envato now employs over 100 people in Melbourne, with another 100 scattered around the world. In seven years, they have paid out over $140 million in payments to the marketplace “authors” or content creators.
Facebook is 10 years old today. It’s time for birthday celebrations for the social network with 12,800,000 Australian users and 1.19 billion users worldwide. But it’s also time to reflect on 10 interesting things you don’t know about the social network. 1. The social network makes more money now from mobiles than PCs Facebook is worth around $US135 billion and has successfully made the shift to focusing on mobiles. In Facebook’s fourth quarter earning report filed on January 29 this year the social network disclosed that for the first time sales from ads on mobile phones and tablets exceeded revenue from traditional PCs. In an interview marking Facebook’s 10th birthday, founder Mark Zuckerberg told Bloomberg the shift to mobile was “not as quick as it should have been”, but “one of the things that characterizes our company is that we are pretty strong-willed”. 2. Facebook tried to buy Snapchat In 2012 Facebook bought Instagram for $US1 billion even though the photo sharing app had no revenue source. Zuckerberg described the deal as a milestone, saying "we don't plan on doing many more of these, if any at all"; but last year, Facebook reportedly offered $3 billion to buy Snapchat. On two occasions. Snapchat refused the offer. 3. Paper has just launched Facebook’s latest creation is a newspaper-style app called Paper. Paper includes photos, friend updates, and shared articles in an image-heavy, uncluttered way. The stories are picked and ordered based largely on how much they are shared and “liked” on Facebook, with a team of human editors ensuring that the content comes from the right sources. “Paper makes storytelling more beautiful with an immersive design and full-screen, distraction-free layouts,” Facebook states. 4. Zuckerberg and Facebook are all about goals Zuckerberg told Bloomberg he has lots of goals for Facebook and for himself personally. Facebook’s founder has in previous years vowed to learn Mandarin (2010), to eat only animals he slaughtered himself (2011), and to meet someone new each day (2013). For 2014 he intends to write at least one well-considered thank-you note every day, via email or handwritten letter. “It’s important for me, because I’m a really critical person,” he says. “I always kind of see how I want things to be better, and I’m generally not happy with how things are, or the level of service that we’re providing for people, or the quality of the teams that we built. But if you look at this objectively, we’re doing so well on so many of these things. I think it’s important to have gratitude for that.” Story continues on page 2. Please click below. 5. Voting is the most talked about topic on Facebook The 10 most talked about topics on Facebook in 2013 by Australian users were ‘vote’, Kate Middleton, cricket, Kevin Rudd, Grand Final, Election, GST, Lions, Tony Abbott and Big Brother. 6. It’s set to compete with Google Over the next five years, Zuckerberg wants Facebook to become more intuitive and to solve problems that in some cases users don’t even know they have. He wants to target the 5% and 10% of posts on Facebook where users pose questions to their friends, such as requests for the names for a good local dentist, or the best Indian restaurant. Zuckerberg told Bloomberg the social network should do better at harvesting all that data to provide answers. A domain which is traditionally the preserve of search giant Google. 7. Users are a devoted bunch Facebook users generally log in to the social network regularly and stay for long periods of time. The percentage of Facebook users that log in once a day is now 76% while the average time spent on Facebook per user per month is 8.3 hours. 8. Facebook is targeting developing countries Facebook is targeting developing countries through the formation of a group called Internet.org with six other technology companies, including Samsung, Qualcomm and Ericsson. The group is looking at simplifying their services so they can be delivered more economically over primitive wireless networks and tapped into using cheaper phones. Zuckerberg says more users in undeveloped countries will subscribe to mobile services for the opportunity to use Facebook, which in turn makes it more economical for mobile operators to improve their wireless networks to support higher-bandwidth services such as online education and banking. He has described early tests as “promising”. 9. Doomsayers warn Facebook could go into rapid decline Researchers from Princeton University published a paper earlier this year suggesting Facebook might lose 80% of its users by 2017 entering a period of “rapid decline”. “The application of disease-like dynamics to [online social network] adoption follows intuitively, since users typically join OSNs because their friends have already joined,” says the study, which is awaiting peer review. Facebook has hit back at the work as “incredibly speculative” and used its own data engineers to use the same methods of "scholarly scholarliness" to prove that Princeton itself was on the brink of extinction. 10. It’s king of social referred traffic Facebook is still the king for social referred traffic, according to Adobe’s most recent social intelligence report. But Facebook is slowly losing ground to other social media, in particular Twitter and Pinterest.
Liquid State got some of the best minds in Australian business to advise it for free: here’s how and why12:32AM | Wednesday, 4 December
What do you do when you’re a fledgling Brisbane tech start-up, touting a product with the potential to wrong-foot all the big players in your industry? If you build slowly and steadily – growing your business and refining your product as your customer base grows – you could lose the early lead you had. Organic growth won’t do. You need to move quickly. You need to burst onto the scene. The sooner, the better. That was the challenge facing Liquid State, a digital publishing company launched in Brisbane in late 2010. It makes software that allows businesses to easily and quickly publish documents in a format that’s built for iPad. The leader in the business publishing space is Adobe. But when publishing a document for iPad using its tools, the end result can be clunky. The dimensions are wrong. That’s where Liquid State came in. Philip Andrews, Liquid State co-founder and CEO, says he and his co-founder Cyril Doussin knew there was a worldwide gap in the market for a product that allowed businesses to leave PDFs behind. “The businesses we had built before had always started small, built organically, gone regional then national,” Andrews tells SmartCompany. “We’d bankrolled that process, which is fairly typical in the publishing business. “But with Liquid State, because of the potential for the technology and the size of the market, as well as the size of the competition, we wanted to have an international profile very quickly.” How can a business go from zero to being competitive with Adobe? By bringing on the best advice. Shortly after formation, Liquid State formed an advisory board, and invited experienced business advisers to join it. They came on a pro-bono basis, with the understanding that they would have a stake in Liquid State’s success. Dylan Byrne, an accountant and consultant at BDO, was one of the first to join. He’s not getting paid for his help. But he tells SmartCompany he didn’t hesitate for a second. “There’s a huge amount of personal satisfaction as an advisor in helping guys like that achieve their goals,” he says. “I enjoy doing the financial thing, but the relationship side of things is the most satisfying part of my job.” Joining Bryne on Liquid State’s advisory board are several businesspeople with specific expertise, including a lawyer, a leading corporate director, and a marketing guru. They’re a calibre of person Andrews says Liquid State couldn’t afford to hire right now. But having them around has made the way ahead much easier. Liquid State recently scored a $785,000 Commercialisation Australia grant to develop their product. Andrews says they couldn’t have done it without their advisory board. “Companies like ours are often nimble and lightweight – and that’s what they try to be. When you’re dealing with larger businesses and agencies that can cause friction. You need really good advisers to get past that.” To get the grant, Liquid State needed complex accounting structures in place. Most start-ups would say that kind of structure is far beyond their capabilities. But Liquid State didn’t. Story continues on page 2. Please click below. “Dylan [Bryne] advised us to set up our accounts that way from the start. That meant the tracking that’s necessary for the grant isn’t a big deal for us – we already had those procedures in place. We could easily meet the reporting and auditing requirements.” Bryne adds another way the advisory board changed Liquid State. International start-ups often try to keep their intellectual property, revenues and costs in different companies, in a bid to protect the important things should their business hit some hurdles. But that has costs. “We suggested a simple structure, because it’s a better exit strategy,” he says. “It’s easier to unwind. If you’re a company coming in and wanting to invest, you’re right to ask what exactly you’re buying. It creates a whole lot of work. And we can manage the risks another way, while keeping the structure quite simple. “One of the other advisers, a lawyer who’s done a heap of venture capital and private equity work, was very clear on this. He said if you make your structure too complicated, there are problems down the track. It was great to have that expertise.” Ultimately, Andrews says, Liquid State was lucky in that both he and his co-founder were older, and have been involved in business for a long time. Andrews himself owns a Queensland-based publishing company, which he’s taken a step back from to focus on Liquid State. “When you’re bootstrapping a company, you have very little money for anybody,” he says. “These guys are helping us structure our business in anticipation of success. But it’s risky being involved in start-ups, and that can be a deterrent for people who hold such expertise. “We’re lucky that we’ve been in business for 20 years. Whenever we’re speaking with other businesspeople, we tend to speak the same language, and that’s not always the case with companies like ours, who can be led by young or inexperienced people. They can have a great idea, but not much business acumen.” Liquid State’s founder leveraged their existing relationships. All their advisers were acquaintances before they joined the board. That was the case with Bryne, who was introduced to Andrews through a work colleague. “We had a lot of rapport, and without trying, we became friends. “Then one day he rang me up and said he had an important question to ask me. When he explained the advisory board, I said yes in an instant. He already had my trust.” Sometimes, the advisory board’s counsel can rub against the grain. But Andrews says it’s worth it. “All the key players in the advisory board are super-experienced with much bigger companies and with far more international outlooks than we have inside our company. Even though sometimes it’s an uneasy fit – we’re an ultra-small company with big, international ideas – it was absolutely necessarily for what we’re building.” This story first appeared on SmartCompany.
The Nitro story: How to grow a software company from five guys to over $25 million in annual revenue10:51AM | Friday, 4 October
Taking on the “gorilla in the room” competitor doesn’t always end well, but it seemed like a great idea to the founding team of now international software company Nitro when they squared up to Adobe in 2005. Since then they’ve grown into an international software company of over 120. Cofounder and chief executive Sam Chandler told StartupSmart they’ll bring in more than $25 million in revenue this year. PDF software may not seem sexy, but it was a major pain point for the five co-founders of Nitro when they first started kicking around start-up ideas. “We had come to understand that Adobe was generating over $600 million at the time in Acrobat revenue on the desktop alone and was growing rapidly. We could see it was going to be a billion-dollar software category,” says Chandler. “We thought it was an industry space that was really ripe for innovation and disruption, and thought that going after the gorilla in the room was a pretty attractive strategy as we thought there wasn’t a lot of love for Adobe out there.” They launched their first PDF software product in 2005 and made their first sale 45 minutes after launching the website. They’ve gone on to release a series of productivity-boosting document management tools since then. They had built their user base up to just under 100,000, generating $1.6 million in annual revenue in 2007. The growth was mostly due to PR campaigns that focused on being the first real Adobe alternative, but growth was beginning to plateau when Chandler decided he was ready to catalyse the business. He pitched a then-emerging strategy that would become ubiquitous for software companies in the coming years. “I proposed a strategy at that time which I struggled to get board support for initially. Essentially it was the concept of ‘freemium’ (free capped service with premium, paid options), but this was before it was a word, or even a concept,” Chandler says. The plan was Nitro would launch a new series of fully functional products with capped use. “So our user acquisition would skyrocket, and we assumed that a certain percentage of those users would need to do more, and when they did they would pay for the premium version.” They did. In 2008 the company made over $4 million. “Freemium has driven most of our growth, although at the time there was a sense that maybe this was just a massive roll of the dice,” Chandler says. “It was basically an SEO strategy. We called it the ‘all roads lead to Nitro’ strategy. Anyone who was searching for anything PDF or document related would find us.” While the idea of giving away software for free was new at the time, Chandler says when he weighed up the potential to reach millions of users against the cost of the media and marketing spend he would need to reach that many via more traditional routes, he says it was a no-brainer. “People really struggled back then to get their heads around giving away software for free,” Chandler says. “The platform has now got over 8 million users per month. Only a tiny, single digit percentage of those pay, but our user acquisition cost is very low. This means our job is to convert the users into customers when they’re ready to do more.” Nitro’s strategy for converting users to customers uses automated, targeted email software, which is the second major factor Chandler attributes their growth to. “The best way to look at the marketing function in a modern software business is to view it like a big funnel with prospects at the top. You then invest in a range of strategies to bring users through the funnel to ultimately become customers,” Chandler says. “We were then, and still are today, quite ground breaking in our uptake of marketing automation. We do a lot of very targeted and relevant email around particular user flows, and that can be customised quite dramatically.” On top of the targeted email marketing, Nitro uses strategies such as interactive product experiences and feature discovery campaigns via free tutorials for non-premium users. Despite the consistent growth, Nitro has experienced some “catastrophically bad” product releases and cashflow issues that put their business at risk. In the video below, Chandler talks about the time they came closest to losing it all, and how they navigated their way back to growth. In 2008, Chandler went across to the United States to launch their office there in January 2009. “I went across on recon, and felt like I was starting again because I was again one guy in a room,” Chandler says, adding he’s from Tasmania and always wanted to play in a big pond. “We looked across to Silicon Valley, saw the talent pool, and realised if we were going to hire dozens of great people, that was where we had to be.” The San Francisco team has now grown to 95 people, and Nitro will be launching an office in Dublin this month to drive growth in Europe. Their hiring and growth plans were brought forward after they received their first venture capital ($3.5 million) funding in May last year from Starfish Ventures, and another $3 million in the May this year. Chandler says the next 12 months will be focused on the launch of a new product and international expansion. They’re hoping to get to 100 million users within three to five years. “We’re trying to build what we call an IPO-able company. My vision of a great company is one that makes 100 million or more in revenue and has 30 to 50% operating margins,” Chandler says, adding while they’re not planning on floating the business on the NASDAQ anytime soon, it’s the most likely exit strategy in the next five years. Chandler adds even though it’d be hard to “give up the baby”, he’s undecided about his own journey with Nitro if it became a public company. “I would have to ask myself, do I want to be a public company CEO? I’ve always been focused on building, and managing is just part of the business getting bigger,” Chandler says. “But when you come very close to losing it all, and we’ve had a few cashflow crises in our earlier years, you’re suddenly more appreciative of what you’ve got.”
A Melbourne-based start-up has been named one of the coolest vendors in human capital management by international technology research group Gartner. CultureAmp’s key product is Murmur, an online platform for managing staff and tasks in fast-growing organisations. The software-as-a-service is used to gather and provide ongoing feedback, track progress and use data to help companies understand their workforce. Founder and chief executive Didier Elzinga told StartupSmart CultureAmp’s success is due to a shift in how people work. “The key to unlocking productivity and getting value out of people is culture and creating an environment in which people can and want to operate,” he says. “If you look at the work we’re asking people to do these days, it’s cognitively driven. So there is a really, really big difference when someone who is engaged and enthusiastic.” With team members in Melbourne and San Francisco and a client list boasting big names such as Hulu and 99designs, Elzinga attributes their growth to having an idea right at the heart of several trends. “We’re on the right wave. A lot of our customers are in Silicon Valley, and what they’ve all got across the board is they’re using data everywhere. And they’re building companies at a ridiculous pace, and the hardest thing to build in a business is people,” Elzinga says. The idea for Murmur emerged during discussions about the lack of innovation in the human resources and people management sector. “In the world of marketing in the last five to ten years, there has been a torrent of new innovations and people doing cool stuff with data. But if you look at HR, there’s been nothing new and different since 1993,” Elzinga says. “It was about taking marketing analytics to how we listen to our people.” The CultureAmp team is focused on developing its core engineering staff in Melbourne, and then developing a presence in Silicon Valley over the coming years. Elzinga says being an Australian start-up can be challenging, but it also helps create the attitudes needed to scale globally. “It’s hard but also good that we don’t have a big enough market here, so we’re forced from day one to think global,” he says. “It’s there if you want it – go and get it.”
The tech industry has been left disappointed after major companies including Apple and Microsoft at last week’s parliamentary inquiry into pricing in the IT sector didn’t deliver any sufficient explanations as to why local consumers pay so much. The organisation which helped push for the inquiry in the first place, Choice, said the companies involved didn’t necessarily offer appropriate explanations and, in some cases, gave “bizarre” alternatives. “Adobe gave some bizarre comments around the personalised nature of its website, and how that somehow justified charging people $1,200 more for its Creative Suite,” spokesperson Matt Levey told SmartCompany. Choice spokesperson Levey said while the pressure placed on these companies by having to appear at the inquiry is in itself a positive outcome, Choice wants to see a recommendation on geoblocking – a tool used by companies to prevent local users from accessing prices used in other countries. “We’re think there’s a strong case for that to be looked at, and we’d like to see some strong recommendations there,” he said. Three major companies appeared before the inquiry – Microsoft, Adobe and in a rare appearance, Apple. Firstly, Apple local managing director Tony King, who is rarely seen in public, shifted much of the blame from the company onto the local rights holders. As a result, he said, local users pay more for iTunes content than in other countries. “Apple must pay the rights holders to distribute content in each of the territories in which the iTunes store exist,” he said. “The retail pricing of digital content is based on many factors and foreign exchange is not a major factor. The main differentiator is the wholesale price.” Apple has faced scrutiny in the past due to the price disconnect between countries. Users in Australia often pay much higher prices for music than customers in the United States. Levey said while this argument did carry some weight, he likened Apple’s market power to the same kind used by Woolworths and Coles to reduce the price of milk. Microsoft took a much more defensive stance, with local head Pip Marlow saying the current prices were set and if customers were unhappy, they could shop elsewhere. “If they don’t like it, they vote with their wallets,” she said, adding there wasn’t a “silver bullet” for addressing pricing issues. Finally, Adobe game some aggressive answers in which it suggested customers could even fly to the United States and purchase products if the end result was cheaper. Local managing director Paul Robson told the inquiry the company’s policy of geoblocking, in which customers are directed to the local store and cannot access lower prices in other countries, is completely valid. “The personalisation is relevant to the experience you get when online. One of our key interactions is to allow [buyers] to talk among themselves and ask them to contribute to the future of our product,” he said. Levey says the inquiry provided “three different approaches but no real explanation”. This story first appeared on SmartCompany.
After months of deliberations and refusals to appear before the Federal Parliament's probe into IT pricing, tech giants Apple, Adobe and Microsoft have been summoned to appear before the inquiry and its board.
Sensis is to roll out a fresh ‘hackathon’ in Melbourne this weekend, including an impressive list of mentors such as Lonely Planet’s Gus Balbontin and Scott Rogers from Seek.
Programmers and designers are being invited to participate in GovHack 2012, charged with the task of delivering government data to the Australian public for the chance to share in $30,000.
If you spent 10 years of your life starting and building a market-leading business, few would begrudge you leaving, especially if you received a reported $40 million pay-out for your shares.
Tablet publishing start-up Reddo Media Services has secured magazine industry pioneer Ita Buttrose as its chairman, with the Cleo founding editor also investing in the business.
A group of four budding entrepreneurs have just launched Navy Design, a digital consultancy with a difference.
Most retailers that sell both online and offline maintain separate stock control systems, and often have to update their online stock levels manually.