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When it comes to generating revenue, Twitter is the most valuable social channel in Australia

7:08PM | Sunday, 6 July

Events e-commerce platform Eventbrite, which officially launched in Australia in March, has released data to quantify the return on investment (ROI) social media is having on those who use it to promote and market their events.   By analysing all sales across its marketplace in 2013, Eventbrite found that a single share on social media generates nine visits to an event page and $4.80 in additional revenue back to Australian organizers. This compares with a return of $3.70 (AUD) globally.   Twitter shares are the most effective generating two to four times more revenue and pageviews than other social channels.   The findings from Eventbrite’s data analysis, which have not included Australia before, offer a great insight into the monetary and promotional value of a customer sharing through social channels – namely Facebook, Twitter and LinkedIn.   Eventbrite’s International Expansion Manager, Elsita Meyer-Brandt told StartupSmart that the findings could be extrapolated to other marketing activities though for their purposes they were purely focussed on events.   “The bottom line is that social media is an effective way for people to promote and generate revenue for those in the event space,” Meyer-Brandt says. “This is especially important for startups trying to build a community around their brand.”   The value of customers sharing on social media   Eventbrite’s data reveals that a share on Facebook, Twitter or LinkedIn drives an average of $4.80 in additional revenue back to the organizer.   Twitter drives the most value at $10.90 per share, followed by Facebook at $4.10 and then LinkedIn at $3.20.   “If you think about it, every share is essentially ‘free revenue’,” Meyer-Brandt says.   Social media is also proven to drive traffic, with a single share resulting in nine additional visits, on average. Again, Twitter leads this trend with one share generating 38 additional visits, while LinkedIn drives 11 visits per share and Facebook drives seven visits per share.   For additional sales, on average it takes four shares, with Twitter again being the most effective channel, with only two shares resulting in an additional sale, followed by Facebook and LinkedIn both at five.     Twitter is the most valuable social channel   Compared to Facebook and LinkedIn, Twitter is by far the most effective driver of revenue and traffic in Australia. Over the last two years, Eventbrite has seen Twitter’s influence increase while Facebook’s has decreased.   Meyer-Brandt believes this is because Facebook feeds have become cluttered and news feeds are potentially becoming less relevant.   On the other hand, she says Twitter is less saturated, meaning less distraction for users.   “The 140 character limit means users often need to click on links to see more information,” Meyer-Brandt says.   Events that have the most social shares   The types of events that see the most value from social media sharing are food events and performances, followed by seminars and music events.   In comparison, conventions and participatory sports events slightly lower value. In terms of traffic, social and food events see the highest number of visits from social media posts, followed by seminars, conferences and then entertainment events.   Eventbrite has processed nearly $3 billion in ticket sales in 187 countries worldwide. Since launching in Australia in 2012, it has hosted over 75,000 local events and recently opened an APAC office in Melbourne.

THE NEWS WRAP: Facebook COO Sandberg apologises for News Feed experiment

7:28PM | Wednesday, 2 July

Facebook chief operating officer Sheryl Sandberg says the company never meant to upset its users after an experiment on nearly 700,000 of them was reported recently.   “This was part of ongoing research companies do to test different products, and that was what it was, it was poorly communicated,” she told The Wall Street Journal.   “And for that communication we apologise. We never meant to upset you.”   Facebook acquires LiveRail   The social media giant has just bought video advertising technology startup LiveRail.   LiveRail connects marketers to publishers on the web and mobile to target 7 billion video ads to visitors per month.   According to TechCrunch sources Facebook paid between $400 and $500 million for the company.   Facebook and LiveRail will share data in order to improve their respective ad targeting.   Tim Draper lone winner of Silk Road bitcoin auction   Investor Tim Draper has bought 29,655 bitcoins from the US government’s Silk Road bitcoin auction.   The government seized the bitcoins following the closure of the Silk Road online marketplace.   Overnight   The Dow Jones Industrial Average is up 20.17 to 16,976.24. The Australian dollar is currently trading at US94 cents.

OPINION: Should Facebook have experimented on 689,000 users and tried to make them sad?

6:45AM | Monday, 30 June

In a move that has as many people puzzled as outraged, Facebook has published research that involved a deliberate attempt to manipulate the emotional state of 689,000 of its users.   Experimenters from Facebook, Cornell University and the University of California, San Francisco conducted experiments over a week period in January 2012 in which they manipulated the contents of users' News Feeds, screening out posts that had emotional content. The results of the study have recently been published in the Proceedings of the National Academy of Sciences of the USA.   In the experiment, users were split into three groups and posts which contained either positive or negative words were screened from the users' news feed. One of the groups acted as a control and had random posts screened from their feeds. They then counted the percentage of emotion words that the test subjects used in their own posts.   The results showed that there was a very small, but statistically significant result. People who had fewer positive posts shown to them reduced their own use of positive words by 0.1% and increased their use of negative words by 0.04%. Conversely, people who had fewer negative posts shown to them increased their use of positive words by 0.06% and decreased their use of negative words by 0.07%.   The emotional responses shown by the unwitting participants in the study are nothing compared to the sense that Facebook, as a private company, has taken another step too far in the use of its network and created mistrust and resentment in its user community.   Although the experiment may not have breached any of Facebook’s user agreements, it is clear that informed consent was not obtained from the participants of the research. The study itself allegedly received approval by the Institutional Review Boards at the researchers' universities. According to the article’s editor Susan Fiske, this was given on the basis that “Facebook apparently manipulates people’s News Feeds all of the time”.   Professor Fiske, a psychologist at Princeton University who reviewed the paper said that she was “creeped out” by the nature of the research. Despite this, she believed that the regulations had been followed and there wasn’t any reason the paper should not be published.   The ethics of good research   We don’t know the full nature of the ethical clearance that was given to the researchers from their respective universities and so it is hard to comment fully on the nature of the approval they were given for the research to go ahead. If this was indeed on the basis of Facebook’s agreement with its users, then it would be fair to say that this was a very liberal interpretation of informed consent.   Facebook’s Data Use Policy only says that it has the right to use information it receives for research. It does not make explicit that this involves actually carrying out experiments designed to manipulate emotions in their customers, especially not negative ones.   Federal US guidelines on human research provided within the “Common Rule” are quite clear about what is and isn’t acceptable in this type of research. It includes details of how informed consent must be obtained and the information, including the risks and benefits, of them being involved. They must also be allowed to opt out of the research. Although Institutional Review Boards are required for organisations conducting research funded by or on behalf the Government, private companies are also signatories to the regulations.   The fact that the researchers and Facebook did not ask for consent suggests that they knew that there would be a backlash when it became public and that it would be easier to deal with this after the fact.   Right now, the researchers involved are not allowed to answer questions on the research and this is being handled by Facebook itself.   What did the research itself prove?   It is not at all clear that the research actually did say very much concerning the transfer of emotional states via emotional contagion as it stated. The measurement of the frequency of emotion words in very short status updates is clearly not a measure of the overall emotional state of the writer.   Even if it were, the results of the experiment found differences of 1 word in a 1,000 in the number of emotional words used between the experimental and control groups. Remember that this is the number of positive or negative words used not the total number of words written. At the level of the individual, these differences are meaningless and hardly a demonstration of “emotional contagion”.   Big Data brings with it the naive assumption that more data is better when it comes to statistical analysis. The problem is, however, that it actually introduces all sorts of anomalies especially when dealing with extremeley small differences that appear in one single measure at scale.   There may yet be another twist to this story. Given that it would be particularly strange that a prestigious journal would publish what seems to be quite weak research, perhaps this is all part of a bigger experiment to see how society reacts, especially on Facebook, to the idea that Facebook believes that its customers are actually just test subjects to be examined at will.   David Glance does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.   This article was originally published on The Conversation. Read the original article.

Facebook data scientist explains why it experimented on its users: We care about you

6:12AM | Monday, 30 June

Facebook data scientist Adam Kramer (aka Danger Muffin) – the man who wrote and designed the controversial Facebook mood study – has put up a public post on Facebook explaining why it experimented on the emotional impact of Facebook on its users.   Defending the work of Jamie Guillory, post doctoral fellow at UCSF, and Jeff Hancock from Cornell University, Kramer writes they did the research "because we care about the emotional impact of Facebook and the people that use our product", but admits the motivations for the study are not clearly stated in the paper. He apologised for the anxiety the study has caused.   “We felt that it was important to investigate the common worry that seeing friends post positive content leads to people feeling negative or left out,” he writes.   “At the same time, we were concerned that exposure to friends' negativity might lead people to avoid visiting Facebook.”   Kramer also outlines the methodology for the research “by very minimally deprioritizing a small percentage of content in News Feed (based on whether there was an emotional word in the post) for a group of people (about 0.04% of users, or 1 in 2500) for a short period (one week, in early 2012).”   The study was published on June 2 in PNAS (Proceedings of the National Academy of Science) Social Science.   Here is the full text of Kramer's post:   “Okay, so a lot of people have asked me about my and Jamie and Jeff's recent study published in PNAS, and I wanted to give a brief public explanation. The reason we did this research is because we care about the emotional impact of Facebook and the people that use our product. We felt that it was important to investigate the common worry that seeing friends post positive content leads to people feeling negative or left out. At the same time, we were concerned that exposure to friends' negativity might lead people to avoid visiting Facebook. We didn't clearly state our motivations in the paper.   Regarding methodology, our research sought to investigate the above claim by very minimally deprioritizing a small percentage of content in News Feed (based on whether there was an emotional word in the post) for a group of people (about 0.04% of users, or 1 in 2500) for a short period (one week, in early 2012). Nobody's posts were "hidden," they just didn't show up on some loads of Feed. Those posts were always visible on friends' timelines, and could have shown up on subsequent News Feed loads. And we found the exact opposite to what was then the conventional wisdom: Seeing a certain kind of emotion (positive) encourages it rather than suppresses is.   And at the end of the day, the actual impact on people in the experiment was the minimal amount to statistically detect it -- the result was that people produced an average of one fewer emotional word, per thousand words, over the following week.   The goal of all of our research at Facebook is to learn how to provide a better service. Having written and designed this experiment myself, I can tell you that our goal was never to upset anyone. I can understand why some people have concerns about it, and my co-authors and I are very sorry for the way the paper described the research and any anxiety it caused. In hindsight, the research benefits of the paper may not have justified all of this anxiety.   While we’ve always considered what research we do carefully, we (not just me, several other researchers at Facebook) have been working on improving our internal review practices. The experiment in question was run in early 2012, and we have come a long way since then. Those review practices will also incorporate what we’ve learned from the reaction to this paper.”   It's not the first time Facebook has experimented on users with a study in 2012 looking at social influence and political mobilisation, which also cites Kramer as an author. 

THE NEWS WRAP: Facebook study plays with users’ emotions

6:14PM | Sunday, 29 June

A Facebook data scientist, along with two university researchers, turned 689,003 users’ News Feeds positive or negative to see if it would elate or depress them.   The purpose of the study was to find out if emotions were contagious on social networks, which they are.   Facebook is able to conduct such a study because of a line in the site’s Data Use Policy which says users’ information could be used for research.   Facebook data scientist Adam Kramer helped run the study and says the company wanted to use the results to make Facebook better.   “We felt that it was important to investigate the common worry that seeing friends post positive content leads to people feeling negative or left out,” he says.   “At the same time, we were concerned that exposure to friends’ negativity might lead people to avoid visiting Facebook… In hindsight, the research benefits of the paper may not have justified all of this anxiety.”   Silk Road bitcoins auctioned off When the FBI shutdown Silk Road, it seized a large amount of bitcoins, about 175,000 of which still remain in US government hands.   In an effort to cash in on these assets, the US government auctioned off nearly 30,000 of them, valued at around $US17.4 million.   The bitcoins were only available for bid in nine blocks, each containing around 3000 bitcoins.   The winning bidders will be notified early this week.   Google delays multi-language support in Google Now   The tech giant had previously announced multi-language support in Google Now would be arriving in the coming days, but a spokesperson has told CNET the company is holding back the feature because of software problems discovered in the final testing phase.   Overnight   The Dow Jones Industrial Average is up 5.71 to 16,851.84. The Australian dollar is currently trading at US94 cents.

Australian virtual reality startup welcomes Google Cardboard, but warns of its limitations

6:37AM | Monday, 30 June

How would you react if Google announced it wants to compete in your sector? That’s the situation confronting virtual reality startup Phenomec, after Google unveiled its Cardboard virtual reality headset during its I/O developer conference.   The announcement of Google’s low-cost headset, which involves mounting a smartphone to a users’ head using a cardboard case, comes as the Australian startup develops its own VR headset, known as VRSmartview.   Watson says told StartupSmart having large companies, such as Google, Facebook or Samsung, getting involved in mobile VR is overall a good thing, as it gets more people interested in the technology. However, there are some significant limitations to Google’s design.   “I call it Occulus Thrift. I like that it’s cheap, made from recycled materials and it’s a smart design… But I’m not seeing much innovation, and it lacks an adjustable mechanism into pupil area distance, which is really important,” Watson says.   Using adjustable lenses so they sit in front of your eyes is essential, Watson explains, because it prevents users getting tunnel vision, which is disorientating.   It’s a key consideration in the design of VRSmartview, which is a head-mounted display case for a smartphone that allows people to use virtual reality in a manner similar to Occulus Rift.   “We’ve been doing a lot of research and development, and one of the most important considerations is creating a lense that can adjust to the individual so we’re developing a lot of innovations to our lense design,” Watson says.   The technology used in VRSmartview recently helped the startup take out the top prize at the recent Start Up Weekend on the Sunshine Coast, coming on top of the 17 teams competing and winning over $15,000 in prizes in the process.   “I’m a student here at USC, and we had an opportunity to pitch at the Startup Weekend on the Sunshine Coast… over the course of a weekend we went from underdogs to winning,” Watson says.   Before recently coming to prominence as a result of Facebook’s $US2 billion purchase of Occulus Rift, virtual reality technology had mostly been used for research and military purposes, aside from a brief period in the early 1990s.   According to Watson, innovations in smartphones mean the technology is now affordable for everyday users, without earlier problems such as pixelations.   “The main research we’ve had is smartphone innovation, in terms of screen display or processing power. Smartphone screens now have ridiculous pixel density so we can use these displays – that are light and portable – without pixilation,” he says.   While the startup is currently focusing on developing optimised head mounted displays, along with applications for their use.   Watson believes the technology is set to emerge as a “very interesting format” for delivering films, with nature film maker David Attenborough currently filming a documentary in Borneo in complete virtual reality.   “I also believe VR news reports would have a powerful impact in imparting a deeper message of the issue being communicated. It’s much more powerful when you can be positioned in the middle of the event,” he says.   “We’re the only guys in Australia working on these VR headsets and apps, so far as we’re aware, and getting others in Australia involved is part of our aim.”

My startup failed, and this is what it feels like…

6:45AM | Wednesday, 25 June

Over 90% of tech startups fail, but I never thought my baby, 99dresses, would be one of them.   If there is one thing that doing a startup has taught me, its that I am much more resilient than I could have ever imagined. Looking back, when I started 99dresses fresh out of high school I was very naive and had zero idea what I was doing. In fact, I didn’t even know what a startup was! I just knew I wanted to solve a problem I personally experienced: Having a closet full of clothes but still nothing to wear.   Since then I’ve survived being stabbed in the back by cofounders, investment rounds falling through, massive technology fuckups that brought sales to a halt, visa problems, lack of money, lack of traction, lack of a team, hiring the wrong people, firing people I didn’t want to fire, lack of product-market fit, and everything else in between.   I learned so much, and yet I failed. I won many battles but I lost the war.   I take complete responsibility for this failure. Were other people involved in 99dresses? Of course. Was any of this their fault? Absolutely not.   The startup press glorifies hardship. They glorify the Airbnbs who sold breakfast cereal to survive, and then turned their idea into a multi-billion dollar business. You rarely hear the raw stories of startups that persevered but ultimately failed — the emotional roller coaster of the founders, and why their startups didn’t work out.   As things were looking bleak at 99dresses I started seeking out these stories, desperately hoping for someone — anyone — to relate to. Failing is lonely and isolating. Every time I’d scroll through my Facebook feed all my startup friends were launching new products on Techcrunch, announcing their new fundraising rounds or acquisition, and posting photos of their happy teams. Ask any founder how they’re doing, and you’ll hear something positive. Whether that’s the truth or not, that’s what we’re trained to say.   I found postmortems of startups outlining what didn’t work and why the company went under, but I was hard pressed to find anything that talked about the emotional side of failure — how it actually feels to invest many years of your life and your blood, sweat and tears, only for your startup to fall head first off a cliff. Maybe its because most founders are men, and men generally don’t like talking about their feelings. Maybe its because failure is embarrassing.   I don’t know why this is the case, but here is my contribution to the cause: my story. This is what failure feels like. I hope it helps.   Where it all began…   Many startup folk say that failure should be celebrated. “Fail fast, fail early, fail often!” they all chant, trying to put a positive spin on the most excruciating pain any founder could experience.   Let me tell you — failure fucking sucks. If I would have failed fast, early and often then I would have given up 99dresses years ago when, in 2011, I travelled to my parent’s place in the countryside of Australia, locked myself away in my room and cried for what seemed like an entire week. I had launched 99dresses in Australia 9 months earlier and received some great traction, but I was losing momentum due to technology problems that I didn’t understand and battling a whole host of other issues.   I felt like I was drowning in a black ocean, and I couldn’t see any light at the surface. I didn’t know which way to swim.   At the same time the Australian press would continue to approach me for interviews. The fact that I was a teenage girl working on a startup in a male dominated industry seemed to garner a lot of attention, and I’d take the interviews that came my way because that was my job. It was my job to be positive and paint a happy picture for the media, who seemed to talk about me as if I was some kind of entrepreneurial wunderkind because of my age and the fact that I had breasts.   This didn’t help my impostor syndrome — the constant feeling that everybody was always giving me way too much credit. I remember one reporter saying “you must be so proud of what you have achieved” and I was completely stumped by that statement because I’d never actually thought about it. Was I proud? What had I actually achieved? We had some traction, sure, but we also had many problems that needed solving. I was just waiting for the day when everyone would figure out that I’m not that extraordinary.   “But you’re taking a massive risk! That’s so brave!” they’d say. I never thought so. The biggest risk in my eyes was going to university, getting a stable job, and sliding into a comfortable life. There’s nothing wrong with that, but I knew it wasn’t me.   Plus, the worst that could happen if I failed was that I’d end up living with my parents. I think the really brave founders are the ones who will be out on the street if they fuck it up, and still do it anyway. Its easy to take risks if you have nothing to lose.   My mother said “Nikki, are you sure that you really want to do this? It is so much pressure for a 19 year old to take on. No one will think less of you if you decide this isn’t what you want”. My parents are my number one supporters but my mum hated seeing me in so much pain, even if it was character building.   But despite the horrible sinking feeling in my stomach, and the fact that I had no money left, and the fact that I had no stable team, and massive product problems, and was feeling burnt out, and had no idea how to overcome any of the aforementioned obstacles, and felt completely alone in it all, I persevered.   I didn’t fail then. I couldn’t fail. This was my baby, and if it was going to fail it would be over my dead body.   I became numb to the pain, and despite waking up for weeks on end with no glimmer of hope and no desire to get out of bed, I still made myself sit at my desk and work.   Eventually, things took a turn for the better.   When you’re at your lowest, the only way forward is up   I applied for a university team business planning competition with a $10k prize, paid a friend $500 of the prize money to be on my ‘team’ so I could qualify to enter, wrote a winning business plan and took out first place. That was enough money to buy me a plane ticket and some accommodation to the US.   I met my friend and advisor, Matt, who took me under his wing and helped me more than I could ever have hoped. My developer was admitted to hospital with a very serious illness and dropped out of the company, but I replaced him with 2 co-founders. I got into Y Combinator and headed to Silicon Valley — startup Mecca for a starry eyed young founder like I was — for 5 months. We rebuilt the 99dresses product and launched it in the US. We were getting traction. I signed a $1.2 million seed round with a group of investors on a valuation cap that I honestly thought was ridiculously high.   99dresses was back, baby!   And then, all of a sudden, we weren’t.   Another trip down the emotional rollercoaster   I had to fly back to Australia to get a working visa as soon as the funding paperwork was signed, and the next day my two “co-founders” decided to tell me they were leaving the company without even a hint of warning.   The $1.2 million hadn’t hit our account yet, but even if it had I would have felt uncomfortable accepting it with no team in place to execute my vision. I would have looked like a fraud and an idiot anyway — what kind of founder announces to her investors that she suddenly has no team the day after she takes their money? And furthermore, how could I not have seen this coming? I was completely blindsided.   I went over to Matt’s office, and he proceeded to pour vodka down my throat whilst telling me I was much better off without them. Like most of Matt’s lessons it was hard to see that then, but he was right.   The next day I rang up our lead investor who decided to pull out of the round. Then another investor fell off. Everything I worked so hard for was crumbling to pieces. If only I’d closed everyone individually, instead of agreeing to round up at least $1mil to get the lead on board. But then I realized that these “co-founders” would have left anyway, leaving me in this same position.   I was stuck back in Australia still with a big vision, but as a single, non-tech founder with no team, no product (I needed these co-founders to keep the product running), no US visa and just some money that I’d gotten from being a YC company.   I remember my sister taking me for a walk after it all happened. She sat me down in a park overlooking Sydney harbor at night time and made me listen to ‘Shake it out’ by Florence and the Machine. She told me I’d bounce back, that I’d overcome this like I always did. I wasn’t sure I believed her, but I knew I’d survived worse. This ended up becoming my motivational song that I would listen to when times were tough, because it reminded me that I could surmount huge obstacles if I wanted to.   I didn’t fail then. I just started again.   Starting over   There were 5 investors who invested in me, despite all of this. They believed in me when I was having trouble believing in myself, but I couldn’t show them that — that’s the cardinal sin of any entrepreneur. Always be confident. Always be smiling. Always stay positive. Sell, sell, sell!   I remember one investor sending me an email saying “Shit happens. Take the money and go sort it out.” Another told me to go make him some crack for women.   My cap got sliced in half, but at least I wasn’t broke again.   So I closed $595k and started looking for a new co-founder. Problem was, I didn’t trust anyone. Not after what my previous co-founders had just put me through.   But then I met Marcin, who quit his corporate IT job and joined me in an office we referred to as ‘The Cave’ because it was cheap and nasty and had no natural light. I remember he came in on his first day, and midway through a conversation my chair completely collapsed. The next day he bought in his own chair. I was very jealous.   We rebuilt 99dresses again and launched it in the US which was proving to be ridiculously hard when we weren’t physically in the US and having to handle some stock and seed a community from another continent. We were having trouble getting traction. The market had moved on, competitors had flooded the space and the product we had built just didn’t provide enough value in comparison.   Add to that the fact that we were building a 2 sided marketplace, and you might get a sense for how tough things were. The US market is huge, hyper-competitive and way harder to crack than the Australian one. We were frustrated by our lack of progress, and the product I’d promised our investors just wasn’t working.   I didn’t fail then. We pivoted.   Our big pivot   I caught a plane to the US and talked to as many women in our target market as I could. We interviewed more customers. We discovered a very clear set of problems that explained why our product just wasn’t working in the US market.   I rang up the team in Australia, and told them, quite bluntly, that we needed to chuck everything out and approach the problem from a different perspective. I presented a new idea for a product that seemed to resonate with the girls I was talking to. The team did not take it well, and I definitely communicated the change very poorly. I almost got on an early flight home because I felt a mutiny brewing — we were throwing out many months of hard work. This wasn’t my finest moment as a leader.   Despite this, the team rallied together. We threw out our website and concentrated entirely on mobile. We had a mobile website prototype in front of users within a week and iterated based on that before building out the native version.   We hustled to get anyone we could to try out our beta app. We must have emailed thousands of bloggers, and some ended up giving it a go. Items were being traded, and girls were paying us money. This new thing was working! We couldn’t wait to launch it in the US, but we needed to physically move there first in order to do things properly.   Visa issues   Problem was, we didn’t have any visas. You see, its very easy to get into the US as an Australian if you have a degree in a specialized field, which I did not. Marcin had to wait it out to first become an Australian citizen with his wife, then get his E3 visa. However, right before joining 99dresses his wife had fallen pregnant with their first child, which they needed to give birth to in Australia. Marcin was then tasked with moving his wife and baby halfway across the world to chase our startup dreams. Needless to say, he’s a very brave man.   I, on the other hand, was faced with my next big challenge: proving that I was ‘an alien of extraordinary ability’ that was worthy of living and working in the US without a degree (after all, I gave up my scholarship and dropped out of university when I got into Y Combinator). After about 7 months of working on my petition, I was ecstatic and incredibly grateful when I got approved for an O1 visa.   I practically skipped over to the US consulate in Sydney for my appointment, where I was to pick up the visa. Instead, I was interviewed by a lady who took an obvious immediate disliking to me. She told me she was putting me through extra processing, so I wouldn’t be getting my visa that day. She told me it was random. She told me it would take 2 weeks.   I later found out this processing was not random — it was reserved for potential terrorists, and could take up to several years.   As an entrepreneur I HATE feeling helpless. I’m used to taking action on something and producing some kind of result. I like being in control. In this instance I felt completely helpless, and my startup was at the mercy of a government worker on a power trip.   We were already running behind on launching this app in the US, and the consulate had my passport. I couldn’t get out of Australia. The consulate made me jump through hoop after hoop, and a few months later I still didn’t have my visa. It got to the point where I had to call the consulate hotline every single day and split test different types of crying (machine-gun bursts of sobs vs. long sad silences vs. loud ugly cries) on the operators (males were much more receptive to helping out), and occasionally I’d get lucky and have one of them put in a report for me. I hated doing it, but it was the only way to push things forward.   I finally got my visa, and took the next flight I could get out of Australia with four suitcases — 2 full of clothes, 1 full of shoes and another with all my electronics and miscellaneous items. The contents of these suitcases just about summed up my life.   I’d achieved my dream of moving to NYC, and I was living in a shoebox. It was all I could afford on my startup salary.   Soon after, my 25 year old sister and 19 year old brother both bought gorgeous apartments in Sydney. Whilst I was absolutely thrilled for them, I also couldn’t help feeling a little jealous as I sat in my tiny convertible bedroom with no windows. If this all didn’t work out I’d be financially left with nothing, whilst my siblings were off investing in their financial future. That didn’t really scare me — I’ve realized that money isn’t a huge motivator for me — but it did flare my competitive side. We probably all compare ourselves to others way more than we should…   Re-launch time!   After hiring a few people and finding an office in NYC we were ready to launch. We solved the chicken-and-egg problem using techniques that we promised never to speak of again because they squarely sat on the grey/black spectrum of naughtiness. If there was a line, we definitely crossed it. We had to. These hacks were harmless to others, so I figured it was only a problem if we got caught.   Our plan worked better and faster than I’d budgeted. Within three months we were doing over 1000 trades a week, and bringing in revenue on every trade. We continued to grow.   Our app store reviews were overwhelmingly positive. Obsession did not begin to describe how some girls treated 99dresses. Within a few short months several power users had spent over $1000 each and traded hundreds of individual items. We steadily grew our stock turnover rate from 17% to 50% — that was 2-3x better than our competitors. Everyday I’d be wearing a new outfit that I’d received off the app. Our retention rates were really exciting. If my investors had wanted crack for women, then that is what we had created.   Based on the way we were growing, we thought we could get cash-flow positive before our funding ran out.   I had 99 problems and our runway was one…   But then growth started to slow down. The average value of items listed steadily declined and our fees were based on this value, so although we were growing transaction volume our revenue wasn’t budging. We started to see some holes in the business model. Whilst our retention was great, we worried about our activation rate.   In an attempt to save ourselves we made one more pivot; this would turn out to be our last one. The pivot made complete logical sense based on all of our research, but introducing it to our community was a nightmare. There was mutiny within the app. While our top line metrics shot up in a massive way, our one metric that mattered — transactions — plummeted.   Meanwhile, I had approached our existing investors about getting a bridge. I knew we had something really special with amazing potential, if we just had enough runway to give it an extra push. I also knew we weren’t perfectly poised to raise a bridge round, unless our existing investors were going to pony up the cash. We’d been in the market a while, and although we had to overcome a number of setbacks to get out here, that didn’t seem to matter too much to external investors. Bridge rounds just aren’t that sexy.   We only had one institutional investor in our previous funding round, and I was so relieved when they told me they wanted to lead this bridge. Boom! It looked like we were going to live to see another day.   I sent through the due diligence documents and worked with them to answer all their questions.   They were taking longer than anticipated to get back to me so we could get the deal done and move on. Then one Wednesday I got a call from them, and the line was kind of crackly. However, it sounded like they not only wanted to lead, but they actually wanted to fill up the entire round! Relief flooded through my body. I was so nervous.   Then I heard a ‘but…’   And the rest of the conversation explained why they would not be doing that. My stomach dropped. I knew they were our best shot of getting the money, and some of the angels who had previously invested were interested in coming in but only if I could get a VC to lead it, probably for some oversight. We now had very little cash left, and very little time to find someone else.   Turns out, under closer scrutiny some of the other partners in the firm didn’t like how competitive the market was. 99dresses was squarely focused on trading cheaper fast fashion (fast fashion is really hard to re-sell for cash), but all the competition were mainly focussed on buying & selling designer fashion. Despite our differentiation, the space is crowded and the competitors are well funded to the tune of tens of millions of dollars each.   I felt my voice crack whilst I was talking back on the phone. I was trying so hard to hold it together and be professional, but I could barely speak without it being obvious I was crying. Damn emotions! I was embarrassed.   Our last attempt   It was night time and I walked over to Marcin’s home in tears, fully expecting him to take the safe and responsible route of deciding to get another job. He had a family to support, and I felt an extraordinary amount of guilt for putting him in that position.   Instead, Marcin surprised me. He wasn’t willing to give up that easily. None of the team were. I was taking on this massive burden and internalizing everything, when in actual fact my team was prepared to fight to the end alongside me. We made a plan for cutting our costs to extend our runway whilst we tried to get some more cash in the door.   The next day I gave notice on our office, and let someone go. We were already a very lean operation, but now the work of 2 was being done by 1 person on operations, and we shifted our focus to only the most essential tasks to buy us more time.   I didn’t tell many people about what was happening. You’re not supposed to talk about this shit. If someone asks how your startup is doing, you fire off some kind of positive phrase like a reflex. My friend gave me a hug and told me to go read ‘The Hard Thing About Hard Things’ by Ben Horowitz. I bought the book and sat in a coffee shop that Saturday afternoon reading it through. I identified so much with the struggle — I’d been through it many times before whilst aboard this emotional rollercoaster.   I realized something: I was fucking tired — physically and emotionally. I wasn’t sleeping properly. I hadn’t been on a proper holiday since our ‘schoolies’ beach celebration straight after I finished high school in 2009. The holidays I had tried to go on just ended up being long strategy sessions in my head to figure out my next move whilst lying beside a pool. All I could think about was this damn startup and it was completely consuming me.   I had no bandwidth for anything else. When someone asked what hobbies I had outside of work, I’d laugh. I’d recently started having mini panic attacks whilst I was doing ordinary things, like taking a shower or doing my hair. I felt like a shitty friend. I couldn’t even contemplate having a relationship (I tried that before, but yet again this startup won out over him). I wasn’t sure how much longer I could do this.   My mother told me to trust my gut. If my gut told me that I didn’t have faith in the business, then there is no shame in winding down the company and moving onto something more productive instead of raising more money. I’d learned an awful lot in the past few years.   I told my mum I didn’t trust my gut when it came to this. My gut was telling me to quit. Problem was, my gut had told me that before in my darkest hours and I still pulled through. If I had trusted my gut then I would have quit years ago.   I knew the only way this was going to die was if we were killed. I am not a quitter. I owed it to myself, my team, my investors and the 99dresses community to see this through.   I continued approaching investors without luck. I’d be invited to cocktail parties full of VCs where I’d don my painful sky-high heels because I’d split tested heels vs. flats, and for some reason a 5'11 woman in 7 inch heels commands more talking time and attention from investors than one in the comfy flat booties I wear to work. Apparently height gives you presence. Once or twice I’d have an investor asking if I knew what an angel was, or if I also modelled because of my height, or some other unintentionally patronizing comment that I doubt any guy would be subjected to. I learned to take it all in my high-heeled stride.   I kept hearing the same thing from these investors. “That’s a very interesting business, but we’ll either put in the first money or a series A. We don’t do in between. I’d love to keep in touch though, and see you progress to a series A where we might be able to help. Oh, and why aren’t you getting this bridge from your current investors?”   I remember one day Marcin joked that I was a control freak, and I was really surprised. I’d never perceived myself that way — I just liked things done a certain way and to a certain standard that matched the vision in my head. When it came to non-99dresses related stuff, I thought I was pretty chill.   Over the past few weeks leading up to this event I did start to get a sense for what he was talking about, though. I wasn’t a control freak in that I was obsessed with controlling outcomes — I was a control freak who just needed to be in control of the inputs.   This became more obvious as everything started looking more and more hopeless at work. I started eating much healthier, strictly cutting out wheat, sugar and anything processed. To take a mental break I would read about bio-hacking, which is incidentally all about understanding and controlling how inputs effect your body. I told myself this would give me more energy to hustle, but really I think I just had to feel like I had control over something — anything — when my startup’s fate felt so out of my control.   Closing down   With a few weeks of cash left, Marcin and I agreed to use our remaining time to shut down the app gracefully for the sake of ourselves and the community. I came into the office that day prepared to have a hard conversation with him, but we both looked at each other and knew it was over. There were some tears, and I was grateful to have a curtain of long dark hair to hide my bloodshot eyes behind as I walked through our co-working space. I felt physically sick all day, and my stomach wouldn’t let me keep any food down. I lost my appetite for the rest of the week.   My first instinct was to apologize — to Marcin, to my team, to my investors, to the loyal community we’d built. I felt shame, guilt, embarrassment — like a shepherd who’d led her sheep off a cliff when it was my responsibility to keep them safe. I logically knew that I shouldn’t feel these things, but emotions aren’t always logical.   In fact, I didn’t really know what I should be feeling. I’d been working on this company ever since I finished high school, so 99dresses was all I’d ever known. It was a huge part of my identity — I was “that 99dresses girl”. Who was I without this startup? I had no idea. Just an ordinary girl, I guess.   My friends invited me out to drink away my sorrows and get my mind off things, but I just didn’t feel like it. I was scared I’d meet someone new and they’d ask me what I do, and I wouldn’t know how to answer. I was also embarrassed because I couldn’t afford to pay for anything superfluous anymore — I still don’t know how I’m going to pay rent at the end of the month. As a woman going out in NYC my nights were normally cheap because cute guys would buy me drinks, but I am not the kind of woman who expects that. I’m independent. If I couldn’t pay for myself then I wasn’t going out at all.   I wasn’t depressed so much as disappointed. I tried so fucking hard, and I still couldn’t make it work. There are many things I would have done differently were I to do this all again, but Marcin and I agreed not to get sucked into the ‘shoulda woulda coulda’ trap. “No regrets”, he said. We both learned some hard lessons from our mistakes, but it also made me realize how much luck and timing are often huge factors in success and failure.   The next day a report came out by a startup with a very similar model to us, but in a different vertical. We’d traded 3x more items than them in our first 8 months of the US app being live, had 2.5x more members and had a business model in place — all with a team half their size. They’d gone on to raise a sizable series A; we’d failed. Our investors said we did a lot with the money we had.   It’s easier to accept defeat if you try and try and try but don’t get anywhere. You call it a failed experiment. The failure is easy to justify.   It’s incredibly frustrating to try and try and try, and when you finally start to get some good traction you fall off a cliff. Our business still had problems, sure, but so does every other startup.   Moving on   So this is where the story comes to a close. My friends all ask me if I’m fine, and I honestly think that I am. It’s been a wild ride, but its time to move on.   A cruel consequence of my failure is losing the US visa I worked so hard to obtain. Once I stop being the CEO of 99dresses I technically have 10 days to sell all my possessions, pack my bags, say goodbye to my amazing team, my friends and the life I’ve been building here, and leave.   That being said, I’m excited to start a new chapter. As much as I love startups, its somewhat liberating to have no responsibilities to anyone but myself — no team, no investors, no customers to look after. Maybe now I can be a normal 22 year old for a while: indulge my wanderlust, make some bad decisions, try something new.   I’ll be taking some time out to recharge whilst living with my parents in a country town of 2,000 people where the internet is slow and there is no Seamless. I hope I survive. Honestly, I’ll probably get bored within a week and start working on a new idea. I already have a few.   When I started 99dresses I was going to go big or go home. It’s been a great adventure, but now I’m going home.   The end   So that’s it. That’s my story of what failure feels like. I hope reading it was as helpful to you as writing it was cathartic to me.   Most startups fail, and yet this industry doesn’t talk about failure nearly enough. I’d encourage anyone who has failed to write about how it felt, as I can’t tell you how much that would have helped me in those final months & weeks. I just wanted someone to relate to. Instead, I was left feeling isolated and ashamed.   In fact, I thought it might be therapeutic to curate a collection of stories from founders who have failed and put them together in a book. It might be a little project for me whilst I take some time off, and I’m sure it would be helpful to someone in my current position.   If you want to get involved or contribute your story then shoot me an email. My email address is nikki @ 99dresses dot com (yep, I’m going to need a new email too — still haven’t sorted that out yet).   Thank You   I thought I’d end this post by publicly thanking everyone who has been a part of the 99dresses journey.   To my co-founder, Marcin — there is no one I would have rather had by my side through this experience. The sacrifices you made to make this all happen are nothing short of inspiring. If Zoe was old enough to say anything other than “this!”, I’m sure she’d tell you how proud she is of her dad. I’m going to miss your terrible jokes.   To the team, past and present — thank you so much for all of your hard work, perseverance and loyalty. Chandra and Oguz, you guys are amazing. I loved coming in to work every day because you always made it fun. I’m going to miss you all immensely. When I do another startup I’ll be coming after you guys again :p   To the wives, Natalie & Semiha — I’m sure its not easy having your husband involved in a startup. You were both so supportive of the long hours, sacrifices and emotional ups and downs, so thank you.   To my family — you guys have always been my #1 supporters. A special thanks to my mum for putting up with me, even when I was a stressed out and horrible daughter. You’re the strongest woman I know, and I hope one day to be as bad-ass as you.   To my friends — I couldn’t have done this without your support. You celebrated my highs and comforted me in my lows, and for that I’ll always be grateful.   To Matt — You’re the reason I got this far in the first place. If it weren’t for you I probably would have failed in 2011.   To my investors — thank you for believing in my vision and trusting me to fulfill it, even through the rough patches. I really do appreciate it.   To our community — without you, we’d be nothing. Thank you for loving 99dresses, and spreading the word. Many of you I now consider friends, and I’m so grateful for your support and loyalty.   Ok, that’s it. It’s over. Now its time for a nice long sleep.   Nikki Durkin is the  Founder & CEO of 99dresses. This post originally appeared on Medium. 

Five-star idea to make reviews more social wins university golden gong

6:03PM | Monday, 23 June

Revuudle wants to turn often mundane social media updates into meaningful reviews.   Founder of the Adelaide-based startup Luke Larsen says Revuudle’s core premise centres around turning people’s opinions expressed on social media, into quantifiable data by letting them share reviews with a five-star rating system.   “What would normally be meaningless sharing of experience becomes a data topic for review,” Larsen says.   “Using the power of social networks you can scale that to people in your area, people with similar tastes to you.   “It will allow you to review things that have never been possible before. You could review not just the movie, but the cinema, the restaurant you went to before the movie, literally the specific dish you ate at the restaurant.”   Last week the startup won the Gold eNVIe at the Flinders University New Venture Institute’s Venture Dorm awards and Innovation Showcase.   Larsen is developing an application programming interface (API) and apps for Revuudle across all platforms.   “I call it the social reviewing network,” he says.   “In the current ecosystem of user reviews there are many, many places for people to leave their reviews, but there’s not much incentive to do so.”   Larsen says there’s the potential to integrate the review platform with commercial websites, and it will be linked with the Facebook and Twitter accounts of users.   The silver eNVIe went to Kick it, an app to help smokers track their habit and quit smoking when they’re ready, while Floragram a service which delivers the best flowers from local markets, was the people’s choice winner.   The judging panel included Vinomofo co-founder and chief executive officer Andre Eikmeier, Adelaide Football Club general manager commercial and community projects Darrin Johnson and Commonwealth Bank private banker Sarah Sullivan.   “I was actually impressed with the quality of the pitches, given how early stage this program is,” Eikmeier says.   “Four or five real standouts for me, and I shall be following their progress keenly.   “The pitches themselves were polished, and most punched through even for the people or ideas I wasn’t as keen on.   “They have honed in on the problem/solution succinctly, which sets a business off on the right path.   “I’m also very impressed with Matt Salier, who is taking a very inclusive feeder approach with NVI, and I’ve got some confidence it will be a valuable contributor to this growing Adelaide startup ecosystem.”

Local Measure opens Singapore office with eyes on Asia-Pacific

6:02AM | Monday, 23 June

Location-based social B2B platform Local Measure, spun-off from now defunct consumer-focused Roamz, today announced the opening of an office in Singapore to support the company’s growth in the Asia-Pacific region.   According to a statement on the announcement, the Asian market has a big appetite for social media where social content is shared at a higher rate than any other market.   “There are many opportunities for Local Measure in Asia to help businesses in the region extract valuable insights from various social media platforms including Facebook, Twitter, Instagram and Foursquare,” says Jonathan Barouch, founder and CEO of Local Measure.   “Expanding into APAC is an exciting next step in our growth plan.   “Businesses nowadays appreciate the value of real-time local insight and Local Measure provides the tools to capture what customers are saying publicly about their brand on social media, while they’re on the business’ premises.   We’ve developed a location-based customer intelligence tool that works for businesses of all sizes and across different languages.”   With existing clients who use Local Measure in Singapore like Spizza, SingTel, Gelatissimo and Qantas, the business has already established a presence in Singapore, long before the opening of the Singaporean office, but the move acknowledges the importance of having feet on the ground to service the specific requirements of the local market.   The Singapore office will be headed up by Gary Spero, vice president Asia at Local Measure.   Spero has been with the company for the past three years. His responsibilities will include growing Local Measure’s market share in Singapore and driving the Singaporean team to service the specific needs of the local market.

WhatsApp? Yo!

6:22AM | Thursday, 19 June

Yo.   It’s an app that could highlight the genius of simplicity or the stupidity of a generation. Yo is a smartphone app that allows you to contact friends with one word – yo.   The app launched on April 1 (no yoke) but has become something of an (we’re going to say it) internet sensation, even featuring in the Financial Times.   It gets worse/better with news that Yo has received some $1 million in funding from high profile investors.   Of course it’s run by a CEYO who has described it as “Twitter without tweets, Poke without the Facebook, Snapchat without the sexting risk.”   just setting up my Yo— Or Arbel (@orarbel) June 13, 2014   But, what does it all mean?   About psychology…   Success of the #yo #app confirms Scott Adam's hypothesis that entrepreneurship is often about behavioural psychology— Rushabh Mehta (@rushabh_mehta) June 19, 2014   About life…   Yelling into a noisy, crowded abyss—grasping for meaning. Yearning for a feeling, anything. #Yo— Aaron Edwards (@aaronmedwards) June 18, 2014   About love…   I used to have trouble talking to girls, but with #Yo app, that's not a problem. I know how to say all the right things.— Bohnna Chhim (@Bohnna) June 19, 2014  

Amazon’s Fire Phone launch offers a warm platform for growth

6:36AM | Thursday, 19 June

Amazon, the e-commerce internet giant, is launching its first smartphone. Media attention is focusing on whether the phone’s features, such as its rumoured 3D interface, are really as cool as portrayed in its trailer video which aims to wow early users. But by entering into the fray of an already hyper-competitive mobile phone industry, Amazon is doing a lot more than adding another gee-whizz feature to a smartphone.   This launch tells us a great deal about CEO Jeff Bezos' strategy for his company – and what it might mean for the future of competition and innovation in our increasingly digital world.   First, let’s ask the obvious questions. Why is Amazon, known for internet retailing and related software development, entering a hardware market where leading incumbents like Nokia have already failed? After all, what does Amazon know about the telecoms business? Can it succeed where Google has failed?   We have seen Google, which has virtually limitless financial resources, enter the mobile phone handset industry by purchasing Motorola Mobile in 2012, only to take a heavy loss after selling it on less than two years later. Even incumbent firms who had a very strong set of phone-making capabilities have taken tough hits in this turbulent market – witness Nokia’s dramatic plunge, which led to a sale of its mobile phone business to Microsoft.   Platform Number 1   You cannot understand Amazon’s move without situating it in the broader context of platform competition. Platforms, these fundamental technologies such as Google search, Facebook and the Apple iPhone, are the building blocks of our digital economy. They act as a foundation on top of which thousands of innovators worldwide develop complementary products and services and facilitate transactions between increasingly larger networks of users, buyers and sellers. Platform competition is the name of the game in hi-tech industries today.   The top-valued digital companies in the world (Amazon, Apple, Google, Facebook) are all aggressively pursuing platform strategies. App developers and other producers of complementary services or products provide the armies that sustain the vibrancy and competitiveness of these platforms by adding their products to them. The more users a platform has, the more these innovators will be attracted to developing for them. The more complements available, the more valuable the platform becomes to users. It is these virtuous cycles – positive feedback loops, or “network effects” – that fuel the growth of platforms and transform them into formidable engines of growth for the companies and developers associated with them.   The smartphone is a crucial digital platform. Achieving platform leader status in this space is a competitive position all the hi-tech giants are fighting for. Google has its ubiquitous Android operating system, Apple has shaped the whole market with the iPhone, Microsoft has purchased Nokia’s phone business, and Facebook has invested $19 billion in WhatsApp among other acquisitions for its growing platform.   In fact, I suppose I should have rephrased my question a little earlier – why hasn’t Amazon already staked its claim to lead this digital space after having launched its Kindle Fire tablet and Fire TV set-top box?   Opening the door   Simply put, the smartphone is the main gateway to the internet today, and, in the hand of billions of users throughout the world, is the physical embodiment of a conduit that links those users to each other and to the whole content of the internet. There are almost 7 billion mobile phones in the world (and only 1 billion bank accounts). And the trend is staggering. Mobile payment transaction value surpassed $235 billion worldwide in 2013, and is growing at 40% a year, with the share of mobile transactions already reaching 20% of all worldwide transactions.   So, while risky, Amazon’s entry into the smartphone business is a classic play: a platform leader entering an adjacent platform market that is also complementary to its primary business. All platform leaders aim to stimulate complementary innovation (think how video game console makers aim to stimulate the provision of videogames), and they often attempt not to compete too much with their complementors in order to preserve innovation incentives. But at some point all platform leaders start to enter these complementary markets themselves. Google has done it through Android, Apple has done it with iTunes, Facebook has done it with Facebook Home.   It happens when platform leaders feel threatened by competition in their core market, or when they want to steer demand, competition and innovation in a particular direction. The idea is to use their own user base as well as their own content and technologies to create an unassailable bundle, one that is difficult for external competitors to break into. Think of it as creating barriers to entry, while expanding the core market.   The reasoning behind entering a complementary market is well known, and related to the benefits of bundling. In the case of hi-tech platforms, the benefits are even stronger. By optimising and controlling the interface between a platform and complements, a company can have a structuring impact on the evolution of the platform ecosystem – and that means on all the innovators around the world that invest and make efforts to develop complementary products and services.   In your hands   So, these are the reasons why Amazon is entering the mobile phone market, despite the difficulties inherent in taking on an über-competitive market. This strategic choice makes a lot of sense.   As to whether Amazon has a fighting chance of succeeding, there are reasons to be optimistic. Beyond its deep financial resources, Amazon has learned something of what it takes in the development and successful commercialisation of various versions of the Kindle. That has given it expertise in hardware, on top of its software background, and should prove a useful training ground to allow it to launch other consumer products such as the smartphone.   But the ultimate judge will be you, gentle readers. Will you be willing to swap your favourite mobile phone for a yet another new kid on the block, even if it does let you browse Amazon’s ever-growing catalogue in splendid 3D?   Annabelle Gawer is Associate Professor in Strategy and Innovation at Imperial College Business School.   This story was originally published at The Conversation. Read the

Show me the money! Four Australian disruptive financial services startups to watch

6:59AM | Wednesday, 18 June

According to SEEK co-founder and Square Peg chief executive Paul Bassat, payments are the “holy grail of innovation”. He made the comment at The Australian Financial Review and Macquarie Future Forum on Tuesday, where some of Australia’s leading entrepreneurs declared the industry ripe for disruption.   Despite banks in Australia being protected by complicated regulations, entrepreneurs are placing the industry under increasing pressure. Adding to banking woes are the likes of Google, Amazon, Apple and Facebook eyeing entry to the payments market.   Here are the top four Australian disruptive financial services startups to watch:   1. Society One Society One is Australia's leading peer-to-peer lending platform, with a $5 million investment from Westpac’s Reinventure Group, a $50 million fund set up to back early stage startups. It’s rumored to be on the investment radar of both James Packer and Lachlan Murdoch.   Borrowers list loan requirements and investors decide which loans they choose, how much to invest in each loan, and the rate at which you want to earn their interest.   Its personal loan rate for a prime borrower is 9.80% pa, 5% lower than the average rate from the major banks.   2. Tyro Payments Tyro provides credit, debit and EFTPOS card acquiring services and does not take money on deposit.   It was founded in 2003 by ex-Cisco employees Peter Haig, Andrew Rothwell and Paul Wood as MoneySwitch Ltd.   Eleven-year-old Tyro is in its second year of profitable business operations. Disrupting the Australian banking industry was never going to be easy, and it took the team over $30 million in capital and a founder break-up to get there.   At launch it was the first new entrant into the eftpos space in 15 years.   3. Pin Payments Pin Payments is an Australian-based startup operating from Melbourne and Perth that offers onsite payments and a developer API without the need for a merchant account.   It received a grant from Commercialisation Australia and partnered with some of the Australian banks to make its offering possible. Both overseas-based Braintree and Stripe operate in the same space, but Pin has a solid local focus.   Getting access to a payment system has previously been a juggle for companies, especially early stage ones. Pin Payments is aimed at developers who can easily integrate its service through their API.   4. CoinJar CoinJar, a Melbourne-based bitcoin exchange and payment system, which has raised $500,000 in seed funding from a range of individual investors and the Blackbird Ventures seed fund.     Launched in February by Asher Tan and Ryan Zhou, CoinJar has over 10,000 active users in Australia. The company charges a low single-digit percentage fee for each transaction.     CoinJar was the first company to get its Bitcoin app re-listed in the iPhone App Store, after Apple revised its app guidelines to include virtual currency apps that it previously excluded.

Google’s plans for internet access from the sky

6:18AM | Tuesday, 17 June

News that Google representatives are in talks with Richard Branson’s Virgin Galactic are seen as further evidence the web company is looking to set up a series of low-orbit satellites to help connect more people to the internet.   Reports earlier this month said Google was planning to spend more than US$1 billion on a network of 180 satellites to provide internet access from space.   Then Google revealed last week that it paid US$500 million for the satellite imaging company Skybox. It says the deal will give it access to better imaging technology for Google Maps, but it could also see it launch a new satellite network for delivering internet access.   Google is already experimenting with new ways to provide internet access in remote locations through its Project Loon, which began in New Zealand last year and uses antenna held aloft in balloons.   Access to digital networks and information are playing an increasingly important role as we move towards a more networked society.   The global population today is approximately 7.1 billion, yet only 2.4 billion people are connected to the internet. Over the next six years this is expected to double, reaching 5 billion in 2020.   It’s not just about the web   Significantly, internet users will not be the key source of growth. There is increasing demand coming from a range of devices, systems and infrastructure being connected to the internet – home security systems, personal health monitors, cars, trams, trains, smart meters for power, gas and water, traffic lights and offices, as well as public spaces and buildings.   As the internet is further industrialised the big technology companies are tapping into the growth in networked devices – usually referred to as the Internet of Things.   Currently, 16 billion devices such as smart phones, tablets, security systems and smart meters have a network connection. This will grow exponentially towards 50 billion in 2020.   There is a change in the focus of connectivity too - from individual people to houses, towns and cities.   Large information and communication technology (ICT) companies such as Google are driving this increase in global connectivity, as their biggest market growth opportunity lies in the areas of population that do not have internet access.   The World Economic Forum – which monitors the digital divide through its annual Networked Readiness Index – also sees the urgency in making the internet accessible to remote communities from the developing world. They are the people likely to benefit from substantial improvements in the quality of life through access to ICT.   Other players trying to connect the world   Google is not alone in this race. Facebook’s founder Mark Zuckerberg has also announced similar satellite plans to connect the unconnected, through the internet.org project.   There have been past attempts to increase internet connectivity via satellites, such as the Iridium Project by Motorolla, now Iridium Communications. Iridium provides satellite phone connectivity across the globe via a constellation of 66 satellites.   The service is limited by very low data rates - approximately 10kpbs - with costs of around A$1 to A$2 per minute of access.   Well ahead of its time, the Iridium project faced significant challenges with a range of technological issues as well as failing to effectively monetise the idea.   There were serious issues with the inter-satellite links needed to maintain the network, its handsets were bulky and its internet access plans were expensive. It remains largely an emergency communication tool and for infrequent access such as asset tracking in maritime/defence applications.   Iridium plans to launch a new satellite service, Iridium NEXT, delivering peak download rates of 1.5Mbs by 2017. We will have to wait to see if the second incarnation of Iridium can increase its subscriber base.   There have also been several other commercially yet-to-be-proven proposals that looked at high altitude long operation platforms making use of aircrafts and balloons to deliver similar broadband services.   These platforms use the millimetre-wave (30-300 gigahertz range) frequency bands (currently targeting around 28-33 gigahertz range) to deliver broadband wireless services to locations theoretically wherever access is required. But none have yet to offer a product to market.   Current satellite constellations are small (such as the 66 in Iridium) with each satellite often covering an area in excess of 1000km2. With limited bandwidth (often less than 100 megahertz available) to share between thousands of subscribers, individual subscribers get very low internet speeds.   Looking for growth   Yet new services are emerging. The Federal Communications Commission in the United States has approved Globalstar’s request to use a frequency band adjacent to the WiFi frequency window to offer satellite based WiFi coverage.   Additionally, operators such as Intelsat and Inmarsat provide satellite internet connectivity across the globe.   The growth in connected people and things presents an expanding market opportunity. Google’s business relies on its users delivering information upon which it can target advertising. It appears to be pre-emptively meeting the projected demand in order to increase its services. Satellite technology has matured and is now able to provide increased access and throughput to users and devices.   Google’s approach is similar to that deployed by mobile phone operators. By increasing the number of satellites, individual beams can cover smaller areas, approximately 100-200km2 thus sharing scarce frequency spectrum with fewer customers, increasing internet access rates.   Competition for Australia’s NBN   In Australia, NBN Co offers broadband plans using existing satellites to about 3% of Australian population scattered around the massive landmass in areas with lower population density.   The company has been designing its own satellites, which will be launched soon to increase access to broadband in remote Australia.   But the project is facing major obstacles in terms of securing the highly regulated satellite launch rights. It is reported that NBN is in negotiation to secure a launch orbit spot.   Google is not confining its vision to satellites or balloons. Google Fiber also plans to offer fibre connections with greatly improved speeds (compared to that offered by NBN) in selected USA cities directly competing with traditional telcos such as AT&T.   This is driving innovation in the sector, with these new technologies providing possible options for the NBN to deliver broadband to cheaper and faster to remote Australian regions where wireline access to broadband may be difficult.   Google’s satellite play highlights its serious intention to move into the new converging world of computing and communications, driving further competition and changes in the communications sector in the near future.   Thas Ampalavanapillai Nirmalathas is currently the Director of Melbourne Accelerator Programs (MAP) which supports entrepreneurial activities of the University Community through business acceleration models. He is also an Associate Director for the Institute for the Broadband-Enabled Society.   This story was originally published at The Conversation. Read the original article.

Here’s an app that wants you to put down your phone

6:10AM | Monday, 16 June

While many apps want users to spend all their time on their phone, social app Bridge is encouraging people to put down their phones and meet new people.   Based in Sydney and co-founded by brothers Paul and Michael Lutkajtis, Bridge aims to bring like-minded people together in real life.   Using an app available for both iOS and Android, users link their Facebook accounts to Bridge and then are able to connect with people by creating their own ‘bridge’ which can then be found on the apps map.   Say you’re looking for someone to go for a hike with, the app lets you create a ‘bridge’, then other users looking for a partner can connect and you can organise a hike together.   Co-founder Paul Lutkajtis says he and Michael came up with the idea because they were both looking to meet people, because many of Michael’s friends were doing shift work, and Paul had just moved back to Australia after living in the United States for a few years.   “I was looking to rebuild my social circle,” Paul Lutkajtis says.   “It wasn’t just people who shared similar interest, but also had a similar schedule.”   Since launching in April, Bridge has around 8000 users in Australia and the United States and has created close to 5000 ‘bridges’.   “We’ve seen quite a few revolving around fitness,” Lutkajtis says.   “Tennis partners, workout partners, running buddies, but there’s the business side of things as well.   “People that want to meet people who work in a similar industry and talk shop over a drink or two.   “It’s very broad, which is great as well, because it allows people to see that wide spectrum of things out there.   “We think it’s the missing link in the sea of dating and social apps.”   Development began on Bridge 18 months ago, and so far it’s been self-funded, in about four weeks’ time Lutkajtis says they’ll be running a kick-starter to fund “the next stage of growth” and build awareness.   He says the company will likely look at developing corporate partners in order to monetize the app, but for the time being they’re focused on gaining traction.   “Grow, grow, grow,” he says of the startup’s plans moving forward.   “It’s all about building the user base.”

Melbourne startup aims to take on eBay for local sales

6:13AM | Thursday, 12 June

Most startups don’t often admit to going after the big guns, but not Melbourne-based online marketplace startup Locl, which is looking to offer an alternative to eBay and Gumtree for local sales.   The Locl app which is available on iPhone, and will eventually be available on Android, launched four weeks ago and enables users to quickly list items for sale by taking a picture, setting a price and uploading a listing with a smartphone.   Buyers can then browse listings in the app based on their proximity or a number of categories and set alerts for specific types of new listings.   A diverse range of items are listed for sale on the app at the moment, from smaller items like games, clothes and shoes to larger items like cars, motorbikes and even a Sydney apartment.   There are no seller fees, no auction time limits and buyers and sellers can chat anonymously in the app and buyers can review sellers they’ve brought from.   The app is also integrated with Facebook and Pinterest, allowing users to share listings.   Locl co-founder Arie Spivak, who is an eBay PowerSeller, says the success of Locl doesn’t necessarily hinge on the demise of Gumtree or eBay, rather the app is servicing what he believes is a gap in the market.   “I’ve been very aware of eBay fees, which have become astronomical,” he says.   “Auctions were too slow. There’s a long wait for shipping from overseas. That whole model was becoming a little bit stale.   “Gumtree has always been a bit of a wild west, you don’t know who you’re dealing with, there’s no reviews or ratings for buyers and sellers and no context with history.   “We saw a huge opportunity there and got together about a year ago, and set out to create a mobile app that would be nothing short of the easiest way to buy and sell at a hyper local level.”   Since launch, Spivak says Locl has had “thousands of downloads” each week, 70% of which are in Australia and 30% from the rest of the world.   Spivak and fellow co-founder Nir Davidson funded the development of the app themselves around a year ago, but since they’ve taken seed funding based on a $1 million valuation of the company.   Spivak says that’s all the information about investors he’s able to provide.   No plans have been made to monetise the service yet, but he says there’s plenty of potential.   “We’re really committed to achieving a critical mass, so as soon as we feel the time is right there’s a lot of opportunity in terms of advertising, in terms of chain stores,” he says.

Pearcey Award winner Guy King warns Singapore’s “kicking our arse” in the race to become Asia’s tech hub

6:27AM | Thursday, 5 June

Hefty tax concessions are the only way to keep world-beating startups leaving Australian shores, according to RetailMeNot co-founder turned angel investor Guy King.   He adds that Singapore is “kicking our arse” in the battle to become Asia’s tech hub and to secure the initial public offerings that would come with it.   Last night, King and fellow Retailmenot co-founder Bevan Clark were named the 2014 Victorian Pearcey Entrepreneur Award winners at the Victorian iAwards.   The award is aimed at encouraging and rewarding innovative talent within ICT and is given to people “who during their career have taken a risk, made a difference and are an inspiration”.   In 2010 King and Clark sold their coupon trading website RetailMeNot for $90 million, they’re co-the founders of LIFX and mentors for Melbourne-based accelerator Angelcube.   “If the next Facebook is started by Australians, it will end up floating in the US and none of those jobs or taxes will flow back into the country,’’ he says.   “Increasing the amount of venture capital available in the country would go a long way to helping that, and the only practical way I can think of doing that is to provide hefty tax concessions.   “I’d love to see a concession for early stage investing, but I doubt we’ll ever see that in this country because it’s a political issue about giving rich people tax breaks and stuff like that.   “Which is a real shame because it is risky to invest in startups.”   That said, King noted that pool of venture capital could be about to expand naturally.   “I almost feel like there’s a bit of a quiet period before we start to see some new runs on the board come through relatively soon and those entrepreneurs will then feed back into the system,” he says.   “For example, Atlassian are probably on the cusp of an IPO and it’s going to create a whole new generation of entrepreneurs out there.”   King lamented the government’s general ambivalence when it came to nurturing the startup scene.   “It’s hard to criticise the government’s approach, it’s been fairly non-committal either way, which is a problem I think in and of itself.   “Even things like the ESOPs (employee share options scheme), they’re a nightmare as well – that’s really the engine for startups in the Valley.   “That’s how you attract the best people and motivate those people.”   King and Clark founded RetailMeNot in 2006, and while they believe the government can do more, they say the Australian startup system is generally much healthier than it was then.   “A lot has changed in the last six or seven years, since RetailMeNot; I don’t think the community existed then,’’ Clark says.   King agrees.   “It didn’t feel like we had mentors we could turn to or a community,’’ he says.   “It probably was there but a lot smaller and fragmented that what exists now.   “I think generally there’s a much greater awareness of the whole entrepreneurial thing.”   Clark says the changes aren’t all good, noting how the recently scrapped Commercialisation Australia helped them in their early days.   “It’s a huge thing and it’s going to have an impact, but I think entrepreneurs in this country will push on through that,’’ he says.

HealthKit founder gets a rude shock as Apple uses its name for iOS 8 platform

6:07AM | Thursday, 5 June

The co-founder of Melbourne-based startup HealthKit, Alison Hardacre, was surprised and confused to learn Apple is using its name for one of iOS 8’s features.   Even the capital K.   In the early hours of Tuesday morning, Hardacre woke to the startling news. . @HealthKit was around a long time before iOS 8... #justsaying — Healthy Startups (@healthystartups) June 3, 2014   “I just happened to wake up at 4.15am and couldn’t get back to sleep, so like any good tech entrepreneur I decided I’d check my emails on my iPhone,’’ Hardacre says.   “I found an email from a friend asking, ‘Has Apple just trampled on your name?’”   Surprised, she jumped out of bed and checked for herself and found numerous reports about HealthKit, Apple’s new native health tracking platform.   Apple’s HealthKit is designed to help users keep track of all their health and fitness data, effectively collating health data from the many health apps available by allowing them to share data.   The Melbourne-based HealthKit is a global health administration platform which enables patients to find practitioners online and enables users to track, manage and share their health records.   “Every startup worries that Google, Apple or Facebook will enter their market, but nobody thinks they’ll take their name when they do it,’’ Hardacre says.   @healthystartups @HealthKit The new cyber squatting. The big don't have to care! #notfairapple — Tim Offor (@timoffor) June 3, 2014 Following the announcement her company’s name was the fifth most popular trending term on Twitter yesterday and traffic on its website www.healthkit.com, which it has owned since 2012, was 10 times more than usual, according to Google Analytics.   “We’ve been growing at a rate of 7% a week, which is really a fantastic rate of growth, it’s what the founders of Airbnb say you should be aiming for,’’ Hardacre says.   “We’ve been over in San Francisco at health tech conferences; we’re not like some company hidden in some backwater. We’ve grown and we’ve followed a particular strategy, we’ve looked at moving the company to Silicon Valley.   “Part of me thinks it’s the cut and thrust of the business, but it’s actually not.   “It made me realise that this could happen to every startup.   “I kind of felt a little bit let down – didn’t they spend five seconds to visit HealthKit.com?”   Hardacre says HealthKit had already filed a trademark for HealthKit in Australia.   StartupSmart contacted Apple for comment, but has yet to receive a response.   @tim_cook @HealthKit I know you're new to this whole Ruthless-Like-Steve-Jobs game, but my good man, you need to learn subtlety! — Daniel Cohen (@CodaAzzurra) June 3, 2014 Executive director of Premier IP Ventures and intellectual property expert Brian Goldberg says the incident serves as a warning to startups to ensure they register their brand name as a trademark.   Goldberg says it’s not conclusive at this stage that the brand HealthKit is entirely owned by the Australian startup, nor whether or not Apple will use it as a standalone brand name or in conjunction with its core Apple brand.   “So at this stage the Australian startup may have some brand rights in Australia but it’s not definitive as to the extent,’’ he says.   “It is important to file your brand as a trademark. This provides certainty and clear rights for the brand owner. Importantly the rights can then be enforced as well as negotiated."   Note: this story has been updated for clarification. 

Turning your great idea into a shipping product

6:07AM | Tuesday, 3 June

Hardware is hot. It feels as though nearly everyone in the startup community has a secret desire to be a maker, nursing a product that will ‘make a dent in the world’.   Although well-trodden, the path from great idea to great product contains more than its fair share of switchbacks, cul-de-sacs and dead ends. Goals that appear to be easily achievable get swamped by a morass of details. Schedules slip, mistakes get made, smooth processes jam up. Everyone who’s made the journey from idea to product agrees: hardware is hard.   Drawing on our experience bringing Holiday by MooresCloud to market, this series covers our whole journey, from concept to design, preparation for mass production, compliance testing, manufacturing, and what to do when things break down – because they will break down.   With luck, aspiring hardware entrepreneurs can avoid some of our mistakes. Part One: Concept to design   Begin with a good idea, then prototype.   MooresCloud grew with a from straightforward (if geeky) idea: An inexpensive Linux-based computer driving a string of LEDs, connected via WiFi to the Internet.   The first prototype - soldered together across a weekend in August 2012 - looked a lot like a pipe bomb. But it worked well enough to pique the interest of two key talents and soon-to-be co-founders of MooresCloud: hardware genius Kean Maizels, and industrial designer Robert Tiller.   Tiller Design - Robert’s firm - presented us with concept drawings for what this ‘Light’ might look like. Kean considered the suitability of the proposals from an electronics perspective, while I weighed the sizzle and usability of their designs.     Light by MooresCloud had a clear, sensible design, which obscured a large problem.   Always design from a use case. Ask yourself ‘Why?’   We’re creatures of habit. Experience informs our expectations. When you name your product ‘Light’ - and it looks like an arty lamp - quite naturally people expect it turns on and off. Full stop.   When we explained how Light was very different from any other lamp, that a smartphone could be used to adjust its colour and pattern, or that Light could tie into Facebook or Twitter, we lost them. Light lay too far outside their expectations.   If you need to explain your product design, you’ve made a serious mistake.   MooresCloud raised over a quarter million dollars on Kickstarter, but despite that kind of success, we could never articulate what made Light so fantastic to someone who wasn’t already a deep geek. Our design failed to reveal Light’s potential.   Had we researched several different form factors, we could have saved ourselves months of frustration. As soon as we redesigned Light, ‘unwrapping’ it into the string of lights we named ‘Holiday’, people responded.   We have seen fairy lights all of our lives. We have a deep emotional relationship to them. Holiday brought to life the qualities people already projected onto fairy lights, leveraging an existing expectation.   We created a new product out of a widely-held belief. Now to take that design – still on paper – and bring it to life.   Design experiences – not products.   To be successful, Holiday needed to delight a wide range of users, from the technologically sophisticated to the absolute technophobe. We wanted customers to have a lovely experience without ever reaching for a smartphone. This meant Holiday needed ‘off’ switch. (You’d be astounded at the number of connected products which lack a physical off switch.)   Our design resolved into a small ‘controller’ with three buttons – ‘mode’, ‘up’ and ‘down’ – and a seven-metre string of fifty oval, opalescent light globes.     Once we had a basic design in place, we tweaked it to fit the use case, adding a metre of string before the first globe, because Holiday is frequently strung up the centre of a Christmas tree, and shaping the controller so it can be operated with one hand - even strung as an bauble. The buttons give a reassuring audible click. A few small changes to the physical design of Holiday made it much more fun to use.   A great designer like Robert Tiller can make a product beautiful, but MooresCloud learned that design is always the handmaiden to utility. Every great product has a great experience within it. Let the design amplify that experience.   Next week: moving from design to manufacture.   Mark Pesce is a co-founder of MooresCloud. His website is at www.markpesce.com. Images copyright Mark Pesce.

When foreign companies attack your target market

5:32AM | Friday, 30 May

Many startups think about building and testing their product, their marketing and their sales strategies in Australia and then taking their product into the much larger markets in Asia, Europe and the United States.   But what happens when your export plans are interrupted by a large, well-funded competitor entering the Australian market?   That is exactly what happened to Marketing4Restaurants.com, a company with a team of seven (and growing) that provides restaurants with online tools to find new customers and turn them into repeat customers. One of our products is an online booking feature which has been growing at around 8% per month and on a good day does 6% of all online bookings in Australia.   In December we discovered that leading European online booking company Restalo had raised $10 million for the express purpose of entering the Australian market – that is a significant war chest. (Although we have seen others spend more trying to build market share in Australia and still not get cash flow positive.)   They were probably focused on the largest online booking company in the world, Open Table, and seeing that they weren’t in Australia, they may have seen an opportunity. We sat down and came up with a plan to address their entry into our market.   We came up with the following action plan:   Focus on what we do well. We focused on our competitive advantages – our bookings product is offered free and we never share a restaurant’s customers’ details. This is very different to our competitors and we ensured our marketing clearly got that message across. Educate our team. We made sure that everyone in the team knew about Restalo, what they offered and why we thought we were a better choice for our customers. This meant that every time it came up in a conversation with a customer, our team had all of the answers. Educate our market. Facebook and blog articles generated a lot of very targeted traffic, and provided us a very cost-effective way to get the message out to our prospects. Fight for information. We spoke to their customers, we searched to see who they were hiring and we talked to other companies in the industry, so we had a clear idea about what they were doing and what their strategy was. We learnt that they had 130 employees and we viewed that as positive for us. We are nimble and we are often a little cheeky in our marketing and being a small company makes that a lot easier. Home field advantage. Entering a new market means understanding their culture and language and Restalo had some issues with website and text. This highlighted to us the difficulty of entering non-English-speaking countries. Don’t panic! We knew our market and the largest player has less than 25% of the market (and decreasing), so it is quite fragmented and in reality another player with a decent share of the market wouldn’t be a particularly bad thing, because it meant that no one would have a dominant position.   We made sure that everyone was kept up to date with developments. Luckily, we didn’t lose any customers to Restalo and were able to continue growing fast enough that it was placing pressure on our provisioning system, which I guess is a great problem to have. In mid-May, we discovered that Restalo had pulled out of Australia.   They realised quickly that they were going to struggle to make their targets, tried a few adjustments to the plan and when they didn’t work, they moved on. They have gone back to Spain with a large part of the money they raised intact, and live to fight another day. We have seen others in this industry spend well over $10 million and still not be able to make it work.   For fast growing startups, it is a lot more fun playing offense, but at times we need to devote some time to playing defence and by spending a little time planning out the response. The competition is a great thing for us because it has reinforced our faith in our product, made us think about strategy and what our customers think of us and it has definitely forced us to make our marketing more focused.   James Eling is managing director at Marketing 4 Restaurants.

Pinterest turns to Aussie startup Bugcrowd for protection as cybersecurity fears grow

5:47AM | Wednesday, 28 May

Australian startup Bugcrowd has added social media giant Pinterest to the growing list of companies using its platform.   Bugcrowd is a marketplace for security testing websites where companies offer bounties to its network of security researchers for capturing vulnerabilities in their code.   The startup’s CTO, Chris Raethke, says they’re thrilled to have Pinterest on board.   “It’s amazing, it’s nice to see companies that are consumer focused joining us, the security among tech companies are often reserved to people who are in the developer kind of space,’’ he says.   “People are getting to the point now where they reach a certain stage where they’d like to do more security wise, but not a lot of companies are in a position like Facebook to go it alone.”   In a statement introducing its bug bounty program, Pinterest security engineer Paul Moreno says the company hopes tapping into Bugcrowd’s network of over 9000 security researchers will allow it to learn more from the security community and respond faster to white hats.   “We anticipate a much more efficient disclosure process as a result, and an even stronger and bug-free environment for Pinners,’’ he says.   The general public might be more aware of the importance of software security than ever before after the Heartbleed bug and it’s well documented consequences earlier this year.   Raethke says while the majority of consumers still don’t understand the full impact of something like Heartbleed, they are more aware of the need for security and as a consequence companies are too.   “Big companies are really trying, and that’s what happens when there is such an awareness around security, people are stepping up their game,’’ he says.   “But it does take time to get up to that next level.”   Bugcrowd raised $1.6 million in seed funding last year and its pool of researchers has steadily grown since beginning in 2012.   The company is now based in San Francisco but Raethke says it will always have a presence in Australia both because of patriotism and the need to service the market in this region of the world.   “We have some amazingly talented developers and security people in Australia,’’ he says.   “It won’t ever be that we never have a presence here, but we’re focusing on the US moment.”

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