The tech sector has always been hyper-competitive, and never has this been truer than in 2013. For the likes of Twitter, Samsung and Google, the harvest of 2013 was bountiful. However, from the perspective of Nokia, Microsoft, BlackBerry or the PC industry, it was a year to forget. Here’s a look back at 10 of the big events and trends that shaped the tech sector in 2013. 1. One billion smartphones sold this year – and counting The most important tech story of 2013 didn’t take place with a major product announcement or a Steve Jobs-style keynote speech. Instead, it took place without fanfare at an ordinary mobile phone retailer somewhere deep in suburbia. It was there that a consumer decided to purchase the one billionth smartphone to be sold during 2013. To put that number in perspective, it is projected that 227.3 million tablets shipped worldwide during 2013, 158 million television sets, 180.9 million portable PCs and 134.4 million desktop PCs. Meanwhile, figures from market analysts IDC show smartphones also outsold featurephones worldwide for the first time in history during the first quarter of 2013. What this means is that while smartphones now account for more than half of the 418.6 million mobile phones shipped worldwide each quarter, there are still millions of old-fashioned featurephones being sold each year. Especially in the low-end of the market and in emerging economies, that means there’s plenty of extra room for growth in the future – especially at the low-end of the market. Make no mistake about it. The smartphone industry is big – far bigger than the PC or TV business. And it’s only going to get bigger in 2014. 2. Google Android and Samsung: The juggernaut rolls on The biggest winners from the spectacular, ongoing growth of the smartphone market have been Samsung and Google. Last year, smartphones running Google Android outsold Apple. In 2013, that trend morphed into total industry domination. For example, of the 261.1 million smartphones shipped worldwide during the third quarter of 2013, 211.6 million or over 80% ran Google’s Android operating system. That compares to just 33.8 million iPhones, representing around 12.9% of the market, and a measly 3.6% for Windows Phone. Samsung managed to ship 72.4 million smartphones during the second quarter of 2013 alone, representing around 30.4% of the market – more than double Apple’s sales during the same period. Those device sales also mean increased component orders flowing through the various divisions of the South Korean tech conglomerate, which manufactures everything from semiconductors to batteries and smartphone displays. The growing strength of the South Korean electronics behemoth is demonstrated by its advertising and marketing budget, which has been estimated at around $US14 billion worldwide. To put that figure into perspective, as of 2011, North Korea’s entire national economy was estimated to stand at $US12.385 billion. 3. The PC industry bloodbath While Google and Samsung have had a stellar year in 2013, the same certainly can’t be said for the PC industry. The September quarter was the sixth consecutive quarter of falls, according to Gartner, with shipments falling to 80.2 million units for the quarter from 87.8 million a year earlier. Figures released by IDC forecast PC shipments for the full year to fall 9.7% in 2013. More alarmingly, it appears the emerging middle class in China, India and Brazil aren’t keen on buying computers, with total PC shipments in emerging markets expected to drop from 205.2 million to 185 million this year. Australia and New Zealand led the trend, with a massive 21% year-on-year fall in shipments for first quarter in Australia, along with a more astounding 27% fall in New Zealand. The implosion of the PC market was disastrous for a number of PC makers, including Dell, HP and Acer. In August, HP announced a major shake-up of its senior management team after announcing a large 15% year-on-year drop in net earnings and a 22% drop in revenue from consumer devices during its quarterly results. That same month, Dell reported a massive 72% year-on-year collapse in quarterly earnings, while a consortium including founder Michael Dell, Silver Lake Capital and Microsoft successfully fought off high-profile investor Carl Icahn’s bid for control of the company. And at Acer, founder Stan Shih made a surprise return as interim chairman and president, following the resignation of former chief executive JT Wang and president Jim Wong after the company recorded a record third-quarter loss. The resignations came after Acer announced its consolidated revenues for the third-quarter of 2013 fell 11.8% year-on-year to $US3.11 billion, resulting in an operating loss of $US86.6 million. 4. Surface falls flat On top of falling PC sales and 3.6% Windows Phone market share, the news was dire for Microsoft on another front in 2013. Late last year, Microsoft launched its Surface series of tablets as a first step towards making devices, with the company believed to have manufactured around six million units. The release of the Surface instantly made Microsoft a direct competitor to many of its already struggling PC partners, straining relations in the process. Fast forward to July of this year when Microsoft announced a massive $US900 million writedown on its inventory of unsold tablets. The writedown came less than a week after Microsoft announced a large price cut of $US150 for the struggling product line. Adding insult to injury, Microsoft also revealed it has spent $US898 million advertising the tablets, while only generating $US853 million in sales. According to many leading analysts, the company was believed to have sold just 1.7 million of the six million tablets it had built. To put those numbers in perspective, Apple sells around 14.6 million iPads each quarter, while Samsung sells around 8.8 million. 5. Steve Ballmer resigns During the 1990s, Microsoft was undeniably the 800-pound gorilla of the tech industry. Then, in January 2000, founder Bill Gates stood aside as chief executive, in favour of Steve Ballmer, in order to focus on his philanthropic efforts. Since then, the company has lost much of its former dynamism, and has failed to become the dominant player in a range of new technologies that have emerged since then, including search, tablets, smartphones or social media. In August last year, Vanity Fair magazine journalist Kurt Eichenwald ran a feature exploring why Microsoft fell behind its rivals. A management technique called stack ranking was almost universally blamed. “If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review,” a former software developer told Eichenwald. “It leads to employees focusing on competing with each other rather than competing with other companies.” Add the low market share for Windows Phone, poor sales of the Surface and the PC industry bloodbath, and it became clear something had to give at Microsoft. In July, the company announced a major management restructure, with the company’s strategy shifting to focus on “devices and services”. Then, just one month later, Ballmer resigned as chief executive, with stack ranking dumped as a management technique soon after. The Redmond, Washington-based tech giant is currently searching for his replacement. Story continues on page 2. Please click below. 6. Nokia sold for a song Soon after Ballmer’s resignation, the news was overshadowed by an even bigger story. In September, Microsoft announced it was buying Nokia’s smartphone and devices businesses for $US7.2 billion, with the Finnish telecommunications company retaining its Nokia-Siemens services network equipment business and the Nokia brand name. The deal came after Nokia announced its smartphone sales had slumped 27% year-on-year during the second quarter of 2013, with an overall loss of €115 million ($A190 million) for the quarter. The sales plunge was led by the company’s Windows Phone-based Lumia smartphone unit, where shipments fell 27% from 10.2 million units during the second quarter of 2012 to just 7.4 million for the same quarter in 2013. To put that number into perspective, it was a little over one-tenth the number of smartphones sold by Samsung during the same quarter. It was an inglorious end to a company that absolutely dominated the mobile industry through the 1990s and 2000s. As recently as 2010, when Apple sold 47 million smartphones, Nokia managed to sell 104 million. According to prominent industry analysts, such as former Nokia executive Tomi Ahonen, the fateful moment came in February 2011, when then chief executive Stephen Elop made the decision to switch its smartphones to the Windows Phone operating system. Soon after, a leaked internal letter from Elop known as the “burning platform” memo likened the company’s situation in the mobile phone market to a person standing on a burning oil platform. After the takeover was announced, Elop was named as one of the top contenders for the position of Microsoft chief executive. 7. BlackBerry’s failed comeback and takeover attempt It wasn’t just Nokia that had a tough time in the smartphone market at the hands of Samsung and Google. In January, BlackBerry launched its new, all-touch BlackBerry 10 smartphone operating system. The platform, originally scheduled for late 2011, had been delayed by a year, preventing the company launching a flagship phone in 2012. The Australian launch for the first smartphone to run the new platform, the Z10, came in March at a gala event in Sydney hosted by Adam Spencer. A second device using a traditional BlackBerry keyboard, called the Q10, came soon after. While the reviews were generally positive, the new devices failed to be the big comeback success the company’s then-chief executive, Thorsten Heins, had hoped for. By August, the company formed a special five-member panel to examine takeover options after director and Canadian investment guru Prem Watsa quit the board. In its September quarter results, the full carnage was laid bare. The Canadian smartphone maker reported just $US1.6 billion in revenues for the quarter, down 45% year-on-year and 49% quarter-on-quarter. The company also revealed it sold just 3.7 million smartphones for the quarter – and less than half of those ran BlackBerry 10. Total losses came in at $US965 million, including a massive $US934 million inventory writedown against unsold stock of the company’s Z10 smartphone. The company announced more than 4500 staff layoffs, representing nearly 40% of its global workforce, while Heins bought a new private jet. Meanwhile, the company’s rollout of its Messenger app for Android and iOS was frozen due to technical issues with its release. In early November, with banks uncertain of the company’s long-term future, Watsa failed to raise the requisite $4.7 billion for a buyout, instead lending the company $US1 billion. As part of the deal, Heins stood aside as chief executive, replaced by former Sybase chief executive John Chen, with Watsa rejoining the board. Heins received a $US22 million golden parachute for his efforts, significantly less than the $US55.6 million he would have received had the sale gone through. 8. The Twitter IPO Last year, Facebook’s disastrous IPO ended in tears – followed by lawsuits. Thankfully, the outcome was not repeated when its social media rival, Twitter, listed on the New York Stock Exchange in November. After opening at $US26 per share, the company’s share price surged 72.69% in its first trading session. It closed at $US44.90 per share, before dropping slightly to $US44.44 in after-hours trading. Making the result even more amazing was the state of its balance sheet. While the tech giant has revenues of $US534.46 million and around 230 million users worldwide, it has never posted a profit. Despite this, the company now has a market capitalisation north of $US20 billion, with chief executive Dick Costolo claiming the company’s long-term investment strategy has prevented it from chasing profits in the short term. 9. iOS7, iPhones and iPads For Apple, 2013 was a solid if somewhat unspectacular year. In June, the company released a redesigned version of its smartphone and mobile operating system, iOS7, alongside a new version of its Mac OS X desktop operating system, known as Mavericks. It was the year that Apple finally unveiled a low-cost version of its iPhone, known as the iPhone 5c, alongside a new 64-bit flagship smartphone called the iPhone 5s, complete with a 64-bit processor and a fingerprint sensor. Then, in October, the company unveiled a lighter version of its iPad, known as the iPad Air. None of the products had the industry-shaking impact of the unveiling of the Macintosh, iPod, iPhone or iPad. That said, with billions in profits each quarter, a solid second place in the smartphone market and the world’s biggest selling tablet, solid and unspectacular for Apple is better than most companies could dream of. 10. Xbox One and PlayStation 4 launch Last, but certainly not least for gamers, 2013 marked the introduction of next generation games consoles from both Sony and Microsoft. Coming a year after Nintendo launched its Wii U system, Sony announced one million first-day sales of its PlayStation 4 system, but the launch was marred by a number of angry consumers taking to social media to complain about non-functional systems. Sony’s first-day sales were soon matched by the first-day sales of Microsoft’s new Xbox One system. So how will the two new devices perform over the long term? We’ll have to wait until next year to find out! This story first appeared on SmartCompany.
Liquorun, a start-up that delivers alcohol to metropolitan Melbourne homes within two hours, has emerged victorious from their beta testing phase and just passed their first weekend of trading. Launched in July by Melbourne Football Club players Joel Macdonald, James Strauss and Rohan Bail, the Blue Chilli-backed company will be focusing on growing their customer network and online community in Melbourne with a view to launch in Sydney and Brisbane in early 2014. Macdonald told StartupSmart their fundamental partnerships are functioning well and they’re learning a lot. “We got probably more orders than we expected. The bottle shops are really happy, and that partnership is crucial to our growth as they’re pumping our brand in store and we’re leveraging each other’s databases, so the long term prospects are looking good,” Macdonald says. He adds the most challenging part of their launch so far has been making sure the agreements with the bottle shops were up to scratch. “Most challenging has been making sure that the agreement is tight with the bottle shop and our own licensing documents, because they’re putting huge faith in us,” Macdonald says. The first weekend involved 300 customers and three drivers. The Liquorun team are focusing on tightening the processes and systems they rely on. “The learning has been great, and we’re trying to implement everything we hear that makes sense straight away,” Macdonald says. “Now we’re in the validation through growth phase. We need to tighten up the model and boost our distribution and delivery reach.” They’ll be focusing on customer acquisition and developing their online communities in the coming months with Facebook advertising, Google AdWords campaigns and editorials in hyper-local news sites. Macdonald adds one of the best bits of the business so far is how delighted people are when the delivery team turns up. “We’re working on protocols for our drivers as we grow, because everyone wants you to come in and have a beer with them when you rock up,” Macdonald says. “But we’re going to keep it really professional and hopefully soon the drivers will have too many orders to hang around at any spot.”
Despite being kicked out of a Founder Institute entrepreneur training program in its early weeks, Pixc founder Holly Cardew wasn’t discouraged. “He didn’t like my pitch,” she tells StartupSmart of the reaction of a Founder Institute mentor to her idea for a business. But she refused to be discouraged by the feedback on Pixc, a web-based service that Photoshops the background out of pictures of products online retailers want to display on their websites within 24 hours. “I knew this was a big problem for shop owners,” she says. Cardew, 26, discovered a need for a service such as Pixc’s while running her Country & Co. marketplace website and finding retailers in country areas needed help with their sites, especially pictures. She launched Pixc in May and soon had an order asking for 800 images to be edited and, after relaunching around September/October, is now processing hundreds of images a week, with a goal to process thousands next year. Last month, Cardew pitched Pixc as part of the Telstra Digital Summit and won a scholarship to visit San Francisco and the SXSW festival in Austin next year. She says she’ll be visiting payments giant PayPal, as well as marketplace eBay and Google. Pixc charges $US2 for each image it edits, with designers around the world accessing them from the cloud to work on them and then return the image when it’s finished for the customer to access. Cardew says a product displayed on a contrasting background can increase sales online by 39%. She says she’s been selling products on the internet since she was 13, but this year feels like she’s solved a problem faced by retailers. “I’m really passionate about helping people sell online and get a thrill out of seeing sales increase.” Cardew has experienced the ups and downs of starting up in the online world. When she was 18, she tried to develop an online travel website and spent all her savings on a digital agency that couldn’t build what she wanted. As a result, she says she taught herself Wordpress to build her own sites. Cardew says her ambition for Pixc is for it to process thousands of images a day, create thousands of jobs in developing countries, and to one day be acquired by a larger online retailer.
Workplace health and safety start-up SafetyCulture has this week closed a $3 million fundraising round. The round is made up of $1.79 million from Commercialisation Australia, $1 million from Blackbird Ventures and $210,000 from angel investors. Launched in 2011, over six million workplace health and safety inspections have been logged through the app created by Safety Culture. The app has been downloaded over 200,000 times and has over 25,000 active daily users. Co-founder and chief executive Luke Anear told StartupSmart the funding will go towards doubling its team of 38 by mid-next year. “We’re recruiting 40 new team members, about half of which will be in software engineering. We’ve had to get pretty innovative about how we attract these guys because we’re competing with Google and Microsoft,” Anear says. The SafetyCulture team is offering to relocate people from anywhere in the world, support them rent-free while they get settled and if it doesn’t work out, they will fly them home after 12 months. Anear says it’s working, as they’ve got applications rolling in from all over the world, including start-up hot spots such as the United States and Israel. Anear says he thinks the company is attractive to investors as it has built up significant traction, with very little energy invested in the product. It’s a disruptive product for a global market that’s got a lot of traction that’s been self-propelling,” he says. “We just built an app, put it in the app store and launched a website. That’s it for marketing so far.” The SafetyCulture team was surprised to discover the adoption of its enterprise software solution was being worker-driven. “We didn’t anticipate the worker-driven model. Usually enterprise software comes from the top and pushed down. But we found workers are our quickest adopters because they want to be safer at work and they’re convincing their management to embrace it,” Anear says. It’s working on a suite of complementary apps to release in the next six to 12 months. Anear adds the successful uptake of the app is opening up new opportunities. “This has now become a big data project, which we never anticipated. There is so much data in the back-end that we’re beginning to explore the uses for.”
In this column, a dirty word will be used. A word seldom used in polite conversation. The kind of word people fear to use around children or in the company of the elderly. That’s right, this is an article about outsourcing. Now while your humble correspondent is not a mind reader, I can already tell what you’re thinking. The poorly trained call centre staff in some far off land who robotically read scripts. Don’t worry – Old Taskmaster is more than familiar with the call centre shuffle. Of course, all outsourcing means is contracting out a business task to another company, rather than doing it in house. That’s all. Contracting a job out to someone else doesn’t have to mean “offshoring”, or sending jobs offshore. You can outsource a job to a company in Australia if you so wish. Likewise, it doesn’t even have to be about minimising your costs – although that is one common benefit of the practice. The reason for doing it is to focus your resources on what your business is truly good at – your core competencies – and then hiring someone else to do the rest. For example, if you’re launching a tech start-up, there are probably some things relating to smartphones and computers that you are exceptional at. Perhaps it’s database management, server-side scripting, or coding apps for Android or iOS. Of course, as soon as you start, you will inevitably need to do a whole range of tasks you’re not so good at. You might know how to write PHP code with a blindfold on, but you might not know the first thing about accounting, payroll management, graphic design or business law. If you try to build your own accounting team in-house, you’re left attempting to manage a team of people whose industry you know nothing about. Your staff will suspect you’re a clueless boss who doesn’t know the first thing about accounting – and they’ll be right. Meanwhile, as long as there’s a tax office and a government, there will be long and pointless forms you need to fill out. Why should you waste your time with data entry work or bookkeeping? Why not spend your time getting your apps onto Google Play, something that will earn you money? As your business grows and revenue comes in, do you invest more resources into the things your business is good at – such as computer programming – or the stuff you’re not good at – like accounting? Well, it’s time to take a moment to think about exactly what it is that you or your business can do exceptionally well. What are the core areas where you can add value for your customers and turn a profit? What are core competencies you need in-house to deliver your products to your customers? As your business grows, this is what you should invest your capital in. This is the area you should hire new staff in. This is what you should be focusing your time and energy on as a manager. For everything else? It’s time to hit Google, the Yellow Pages, Freelancer.com and 99 Designs to get it outsourced! Get it outsourced – today!
Before Seek was a household name, the go-to platform for job seeking and one of Australia’s biggest start-up success stories, it was a couple of guys around a table scheming about how to make it happen. Co-founder Matt Rockman told StartupSmart there were some tough moments he didn’t think it was going to work, but the scariest period was in the first few years as they clambered their way towards profitability. “The scariest bit for every start-up is that couple of weeks, months or years of wondering if the revenues come. I definitely had days where I thought maybe we wouldn’t get there,” Rockman says. “You spend a long period of time biting your nails waiting for the market to pay you for the value of your service, and that was years not months.” As a marketplace model business, the Seek team had focused on building up users and customers on both sides of the offering. But leveraging their user base into viable revenue streams was proving to be challenging. Rockman says they were focusing on converting free trial ads from recruiters and corporates into paid ones to create the habit and the relationship between their two user groups. “We were a total afterthought for our first clients, a completely marginal business. They had such a long habit and strong relationship with newspaper advertising. They didn’t get us, weren’t sure it was going to work. You’d go knocking on doors saying ‘Hi I’m Matt Rockman from Seek’ and they’d say ‘yeah cool, what’s a Seek?’.” He adds it was especially stressful as locking in consistent revenue streams is how founders know they have a business, and they were grappling with huge competitors. “Our biggest risk was taking on News Limited and Fairfax. They could’ve and should’ve squashed us. But you can’t really be in two places at once, and they were still print rather than digital,” Rockman says. “And credit where credit is due, we were obsessed.” According to Rockman, keeping your paranoia about competitors in check is a skill founders need to learn fast and never forget. He adds Seek now is probably as paranoid about LinkedIn and Google as the original team was about the major news media groups who used to dominate classifieds. “You don’t want to be looking backwards not forwards because you’ll run into walls. But you don’t want to be so full of confidence or arrogance that you feel like the challenge is over when it’s not. Always play as number two in the game, because if you play as number one for too long, guess what?” Rockman says. The other fundamental skill start-ups need to make it through the early terrifying days is the ability to maintain their confidence, tempered with a strong sense of reality. “You’ve got to careful, there is a lot of confidence and blind enthusiasm that is good, but there is a level of confidence, arrogance and hubris that is not good. You’ve got to get the balance right,” Rockman says. While the newspaper groups’ monopoly on classifieds was one of the early casualties of the internet, Rockman says there are still plenty of industries ready for a shake up by tech-enabled start-ups who are up for the hard work. “This internet thing was a very powerful disrupting force then, as it is in many other market segments today,” Rockman says. “Was making Seek work a smooth-sailing, risk free, easy ride? No way. Were the tough parts worth it? Absolutely.” This is the fifth instalment in our week-long Start-ups are Scary series, which included the toughest and most terrifying moments of younger, successful companies 99designs, Canva, Thank You Water and Vinomofo. We will be continuing the Start-ups are Scary stories as a weekly series. If your start-up has survived a difficult period, please get in touch so we can celebrate and share your story with the wider start-up community: rpowell at startupsmart dot com dot au
Kat McArthur, winner of this weekend’s Startup Weekend, arrived at the weekend-long hackathon armed with an idea for a walking tour app and plans to recruit team members to make it happen. “Startup Weekends are intense so I pitched a fun idea. It was helping a local schoolies girl find the best route to get cider and burritos,” McArthur told StartupSmart. “The app is about instant satisfaction for the time poor and technologically enabled.” A team of six quickly formed around the app idea. Developer David Baker started building their minimum viable product version of the app, which is now available online and called Ambleabout.co. The app scrapes freely available information and connects it with Google Maps to create short walking tours defined by interests. During the build, marketers Bogdan Borungel, Ricky Baharwal, Chris Wambora and William Chen joined McArthur to start exploring who and how to promote it too. “The great thing about developing apps at hackathons is over the 64 hours of the Startup Weekend, we’ve smashed out eight or ten revenue stream options. The implementation of these will depend on the feedback we get about the app from our beta users, and if we can access investment,” McArthur says. Ambleabout.co has won a range of prizes including $3,000 in legal consulting and a meeting with investors. “As soon as the team has got a bit of sleep, we’re going to meet up and work out who’s in this for the long haul and wants to make it happen,” McArthur says, adding they’ll start seeking investment for the full build next week. The team plans to keep sourcing freely available information to fatten the offering and create better customisation functionality. McArthur says the plan was always to create a global app, and she’s looking forward to working towards that. “I’ve had the idea for six months, but until now I’ve been a one-man band. My biggest drive this weekend was to find people with expertise in building apps, and marketing and communications, and now we’re full steam ahead,” McArthur says.
It’s near impossible to cover everything that’s happening for Australian start-ups, but we’re giving it our best shot. While we’re busy capturing and sharing the Australian start-up community’s news, it’s nothing compared to the long days and sleepless nights that goes into running a start-up. Because you’re busy, we thought we’d start publishing a weekly summary of our daily newsletters so you can see all the news at a glance. Here’s what happened this week. Hot topics: Dynamic equity splits, free apps and crowdfunding We received a lot of emails on our exploration of why Australian start-up founders are exploring dynamic equity splits, and this article on why free apps may be damaging the commercial potential of the $53 billion industry. Crowd funding continues to be a hot topic, with one of our mentors exploring crowd funding firsthand; this start-up founder shares why they turned to Kickstarter rather than searching for an angel investor; and we reveal the top five tips of an ambitious new crowd funding campaign happening right now. We also heard from mentor Greg Ferrett about why the sales spiel is dead, and engagement is the sales strategy that actually works. Three companies announced successful investment rounds Design marketplace DesignCrowd raised $3 million and spoke to us about how their international expansion plans; budgeting app Pocketbook closed a $500,000 seed round and shared who and how they’re planning to hire their first employee; and Loke Digital, a tech company targeting the hospitality industry closed their second seed round, bringing their investment total to $1.1 million. Rapidly growing and now Silicon Valley-based start-up BugCrowd shared their steepest learning curve: getting over their Australian bashfulness and learning how to “speak American” to investors. We also heard from five experts about why Australian investment will continue to grow as Australia learns how to value tech companies better and explored new data that suggests investors are over games and are looking for a different kind of app these days. Founders and leadership So many start-ups fail, but we got advice from a business accelerator about why sheer determination and the ability to think on your feet could save yours; what business owners can do to support their employees with depression and reduce the stigma; and how retailers can ensure their supply chains are ethical. Posse founder Rebekah Campbell shared her tips for creating a start-up culture strong enough to rival Google’s; a project manager at a South Australian University was named Entrepreneurial Educator of the Year and Nina Hendy shared the five experts every sole trader needs to have on speed dial. And, we announced our top 20 entrepreneurs under 25 in our 2013 Future Makers list; found out why this entrepreneur decided to launch her first start-up in her 60s; and discovered why this founder wants more competition. New opportunities, competitions and grants Three major Australian cities will take part in the Global Startup Battle this weekend and Ford Motors has reached out to the Melbourne start-up community to be part of an upcoming hackathon. The chief executive of Bakers Delight shared their top tips for sourcing retail locations; a new franchise is coming to Australia and preparing for our feisty entrepreneurial culture; and new research reveals that only 19% of deals are now done in person. Two governments launched new start-up targeted initiatives with Parramatta City Council is seeking start-ups to re-awaken its CBD by offering $10,000 grants; and the NSW Government has appointed an advisor for creative start-ups. Topics to watch Wikileaks this week revealed Australian copyright may be in trouble, with the Federal Government possibly planning to adopt several problematic parts of the United State’s legislation, and Vanessa Emilio explains what you need to know about the incoming changes to privacy laws. If you’ve passed a major milestone and have news you want to share, please get in touch directly: rpowell at startupsmart dot com dot au You can sign up for our free weekly newsletter here.
Woolworths’ decision to sell Dick Smith Electronics for $20 million to Anchorage Capital Partners has been described as one of the worst in recent history, as the private equity firm files for a $345 million float before Christmas. “The electronics industry is coming out of several years of deflation and coming into some positive tailwinds,” Dick Smith chief Nick Abboud says. “And so if you look at it there is some inflation coming back into the category, you have got the launch of PlayStation 4 in December, the digital changeover for TVs for Victoria and New South Wales, that's happening over the next few months. “We have a very strong housing market, low interest rates, which is good for retail, the Reserve Bank have left open the door for a potential further interest rate cut and actually, from a timing point of view, there are some good things happening in retail.” Google wins landmark book-scanning lawsuit Google has won a major lawsuit in the US upholding its right to scan millions of books, with Circuit Judge Denny Chin in Manhattan upholding its argument the practice constitutes a “fair use” under copyright law. Advocacy group the Authors Guild first sued the tech giant in 2005, claiming that scanning books under copyright constituted a gross violation of the intellectual property rights of authors and publishers. It demanded $US3 billion in damages, or $US750 per book, from the tech giant. "This is a big win for Google, and it blesses other search results that Google displays, such as news or images," says James Grimmelmann, a University of Maryland intellectual property law professor who has followed the case. Bega raises its offer for Warrnambool Bega Cheese has increased its offer for Victorian dairy company Warrnambool Cheese and Butter, with its new offer coming just a day after an increased bid from rival Murray Goulburn. Bega increased its offer from 1.2 to 1.5 of its shares plus $2 for every share of WCB, which works out to be $8.87 at current market prices. The offer is significantly above Canadian food giant Saputo’s $8 per share bid for the company, but still less than the $9 bid from Murray Goulburn. Overnight The Dow Jones Industrial Average is up 0.36% to 15878.72. The Aussie dollar is down to US93.23 cents.
As crowdfunding continues to develop, so too does the information about how to run a successful campaign. With another platform, Indiegogo, launching in Australia this week, StartupSmart spoke to its Australian community consultant, Tony Been, who shared his top four tips for getting support beyond your immediate network. “The most important thing is to be smart about what you’re raising for. Don’t try to fund the whole project, break it into tangible pieces so you can hit the goal, and then keep re-engaging the same audience for each later goal,” Been says. Over 150,000 campaigns have been run on the platform since it launched in 2008. The site currently receives over nine million unique browsers a month. Been says the majority of projects take home cash, as people increasingly opt for more flexible campaigns compared to the traditional, all-or-nothing style crowdfunding range. He adds 70% of money donated in a campaign is “stranger money” from people outside the entrepreneur’s network, but it’s never the first 30%, so fundraisers need to plan campaigns carefully. Being proactive and updating regularly will boost your chances by over 200% Been says those embarking on a crowdfunding campaign need to give it their all, and not be too shy about encouraging momentum. “You need to be really proactive. Tell people about it constantly. We know people who update their campaign one to five times a week will raise 218% more than people who just let the campaign tick over. It’s about constantly engaging with the audience.” Being proactive can also catapult your campaign from your own networks to the Indiegogo home page, blog or social media channel. “We have an internal algorithm that kind of works like Google page rank. It’s about how active the campaign is, so every tweet, share, link in or out counts towards your chance to leap onto our front page,” Been says. Focus on the three levers to attract new donors People who get involved in campaigns run by people they don’t know do so for three reasons: perks, passion and participation. Been says campaigns that combine the three effectively are more likely to go viral. “If you can pair a perk or bonus to one of the more interesting elements of the project, you’re set,” Been says. “The key is to have a strong pitch, and the strongest is your own personal story and passion.” According to Been, the key to writing a compelling pitch is passion, but also about tapping the visionary potential within. “We often talk about engaging the ‘artist within’ with the people you’re trying to raise from. It’s about remembering how when we were all younger, we had huge unstoppable dreams. If you position your passion as part of that, you’ll wake up that part of your reader, and that’s really powerful,” Been says.
A debate about the role and size of the early stage venture capital community was sparked last week by David Gonski’s comments that Australian entrepreneurs are being driven overseas due to a lack of available funds. Speaking at an Australia-Israel Chamber of Commerce event, the Australian Future Fund and Coca-Cola Amatil chairman declared the diaspora of Australian entrepreneurs heading overseas to find investment a “tragedy”. “We need an industry that is involved in early-stage investment and I don’t think we can get that when the major pools of money are being judged on 30, 60, 90 or 180 days because these things take much longer,” Gonski said. However, Venture Advisory executive director, Sydney Angels member, and investor Adrian Bunter told StartupSmart Gonski was incorrect in his assumption there is no adequate pool of funds. “In some respects he said there were no early stage funds and the only option was to leave Australia in the early stage. But the reality is start-ups don’t need to leave to raise funds and there is a lot of investment activity going on here,” Bunter says. According to a PwC and Google report on the start-up ecosystem released earlier this year, there are over 500 angel investors, 10 angel groups and one sidecar fund, and almost $600 million in management by 20 venture capital groups. “But there is always more money that can go into the system and he is right that a lot more needs to be done, especially from an institutional investor perspective. Most super funds don’t look at early stage start-ups and are more guided by those shorter couple of month return windows.” Bunter says encouraging super funds to back start-ups will not be an easy task. “It is very difficult for institutional groups to invest in start-ups because they’re so large. They’d need to allocate a significant proportion funds to see the returns their shareholders expect. “Venture capital here really started to grow during the dot.com phase, and towards the peak of it, so venture capital doesn’t have a great track record over the last ten years or so. Therefore the super funds aren’t allocating much money to venture yet.” Bunter adds the amount of early stage investing in Australia is probably considerably higher than the Google statistics imply, as much of the early stage investment comes from personal networks of family and friends rather than through networks and funds. “There is a huge amount of investors who are comfortable with that level of risk, so concerns about high-risk investments are not exactly the problem,” Bunter says. Concerns around the lack of funding at the series A-round level have largely been met, according to Kar-Mei Tang, head of research at national venture capital industry association AVCAL who addressed an event for venture capital investors in Sydney late last month. “The start-up sector has been an emerging force over the last three years and we’re starting to see more founder investors and super angel activity which will filter through to venture capital,” Tang said. Alan Jones is an investor and advisor for a range of start-ups including BugHerd, ScriptRock and through the Startmate accelerator program and Blackbird Venture Capital portfolio. He told StartupSmart investing in start-ups would become increasingly popular as people seek investment options not shackled to commodity prices but instead driven by smart people tapping into new trends. “People who are considering investing in start-ups often say it’s risky. But for those of us who are already doing it, we know we’re investing in people, technology and innovation. To me, that seems like a much safer investment than some of the other sectors where Australians invest such as mining, agriculture and aquaculture,” Jones says. Jones says the tendency of Australian investors to pour money into industries vulnerable to fluctuating commodity prices needs to evolve. “As no one in Australia has any influence on the future of commodity prices, it’s all speculation,” Jones says. “Sure, we have different challenges about gaining capital and getting permission to shoot for the moon, but usually when you start-up here, you’re servicing a global market and there are lots of options.” While there is significant risk involved in investing in early stage companies, Jones says the early stage start-up investment community in Australia is growing as investors gravitate towards more personal connections with their investee companies. “I’d rather back someone with a great technological idea, because the risks there are much more about picking the sentiment of customers correctly. The biggest thing about the tech start-up industry is there is no such as thing as a unique idea, so you need to find and back the team that will be the best at executing on their plans,” Jones says.
After noticing how hard it was for friends and acquaintances to find the right lawyer to handle their legal issues, corporate lawyer Jeremy Tompkins created a platform to fill the gap. Tompkins has launched Brief It, a website that lets people post the legal work they need done, or “brief”, that lawyers in the network can pitch to work on. The client then chooses which lawyer they want to work for them based on their response on how to tackle the problem. “It’s about matching the problem with the expertise of the lawyer,” Tompkins told StartupSmart. He says the approach is similar to how large corporates deal with their legal issues by sending the problem out to a panel of lawyers who pitch for the work. Tompkins says he was partly inspired to create the site after being approached by friends for help with issues involving family, employment or property law. But because the issues were outside his field he couldn’t offer the advice they needed and while he might be able to refer them to other lawyers he knew in those fields, they may not be the right fit from an experience and cost perspective. He says Google searches for lawyers could also provide a large amount of information that was difficult to “cut through”. He told how he recently met a nurse who needed a property lawyer but could not find one who met her needs through internet searches. Tompkins says the site also carries feedback from past clients on a lawyer’s work, as well as indicators of expertise, value for money, reliability and an overall rating for the quality of service. “This is giving choice to the consumer,” he says. “The site is really aimed at the large number of people who want to research and make an informed decision. It’s providing the information that those consumers are demanding.” And from the lawyers’ perspective, they get to find work they’re interested in, Tompkins says. For people seeking a lawyer it’s free for them to post a brief on the site and free for lawyers to join. Lawyers pay a fee if they’re awarded a brief.
Why the tech revolution could soon be televised: If you develop mobile apps, you must tune in to this10:49AM | Friday, 25 October
Earlier today, your humble correspondent read a really rather interesting news piece. If you’re in the mobile app business or even a software developer in general, this is one article you must read. But first, a little background. If you’re a loyal reader, you might recall back in July your dear Uncle Taskmaster wrote a little article looking at the growing tensions simmering between Google and Samsung. (If you’re a new reader, click here to read it.) To refresh you memory, the two companies have made a small fortune selling Samsung Galaxy smartphones running Google’s Android operating system and apps. However, now Google (through its wholly owned Motorola Mobility subsidiary) builds its own smartphones. Meanwhile, Samsung has started working on its own smartphone platform in competition to Android, known as Tizen. At the time, you’ll recall Old Taskmaster wrote the following: “If you’re already coding mobile apps, and you find yourself with some spare time on your hands, it could be worth playing around with the Tizen development kit. If it flops, you’ll be the coder with the best chess app in a sparsely filled app store. “Meanwhile, if these two giants of the smartphone world file for divorce, you’ll be well positioned to cash in.” Then, at the start of August, Old Taskmaster wrote a column about why YouTube video clips matter for small business. Again, click here if you missed it. Now, dear reader and start-up entrepreneur, here’s where it all starts to get interesting. According to an article your humble correspondent read earlier today, it appears that smart television will be one of the key focuses of the next version of Google’s Android smartphone platform (Android 4.4 KitKat). If this proves to be true, it could make “how my app looks on TV” as big a consideration as “how well it works on a smartphone” or “how well it works on a tablet”. But, loyal reader, here’s something even more interesting: “Google is set to collide with Samsung over the future of smart TV, with the Korean electronics giant set to use its own operating system – Tizen – to power its future smart TV products from next year.” That’s right, the likes of Sony and LG will ship TVs next year running Android, while Samsung will ship them with its own Tizen platform installed instead. Now, my dear app developer, I don’t know about you, but that sounds like a golden opportunity right there. If I were in your shoes right now, here’s what I would do. First, download the Tizen development kit and have a play with it if you haven’t already. Secondly, keep an ear to the ground about any more news that comes out about Android 4.4 KitKat. Someone could potentially make a lot of money selling apps for smart TVs. As a start-up, you need to be nimble and ready enough to grab that first mover advantage. Get it done – on TV!
Australian start-up Tiger Pistol, a social media marketing platform for small and medium businesses, has raised $1 million from Australian venture capital fund Rampersand and existing shareholders to establish an office in Silicon Valley and promote its services. Co-founder and chief executive Steve Hibberd told StartupSmart the business tapped a desire by small and medium businesses to market themselves online through social media channels such as Facebook. “There are about 75 million small businesses in available markets globally for what we’re doing,” he says. Hibberd says attracting investment comes down to the quality of the business’s vision and the quality of its plan and people. Founders should “be very honest with themselves” and ask whether they’ve done enough work to validate their idea, whether their plan stacks up and do they have the right people around them, Hibberd says. “All of these things come out in the fundraising process,” he says. Tiger Pistol provides a pre-scheduled social marketing plan for individual businesses using big data to achieve the best outcomes. The company is currently focused on marketing plans using social network giant Facebook but aims to add other channels, such as Google AdWords, in the future. “We remove a headache and provide confidence to small business operators, helping them to be successful in just a few minutes a day,” Hibberd says in a statement. “Most small businesses know they need to be on social, but have neither the time nor the head space to take advantage of it.” Tiger Pistol’s first platform was launched in May last year, providing custom Facebook pages and promotions for several thousand small businesses in more than 100 countries. Revenue has doubled each quarter. The company raised $1.15 million in funding last year. Rampersand co-founder and managing partner Paul Naphtali says social media marketing has “come of age”. “It’s time small businesses had a tool as powerful as those built for enterprises, but with clear simplicity,” he says in a statement. “Tiger Pistol has not only built a great product, they have created a new category in marketing platforms and we look forward to supporting company through its rapid growth.”
A strong and growing start-up sector and the international rise of crowd-sourced equity are set to shake up the Australian venture capital ecosystem for the better in coming years. Over 60 venture capital and private equity investors gathered in Sydney today to explore the future of the Australian venture capital at the first of three national events coordinated by accounting and research group PricewaterhouseCoopers. Kar-Mei Tang, head of research at national venture capital industry association AVCAL, told the room the sector was set for signficant changes in the coming years as the start-up ecosystem developed. “The start-up sector has been an emerging force over the last three years and we’re starting to see more founder investors and super angel activity which will filter through to venture capital,” Tang said. According to a PwC and Google report on the start-up ecosystem released earlier this year, there are over 500 angel investors, 10 angel groups and one sidecar fund, and almost $600 million in management by 20 venture capital groups. According to Tang, the emergence of new funds has mostly alleviated AVCAL’s concerns about a Series A funding crunch, but the concern is now for the later rounds. “It’s very important not to leave this gap unplugged,” Tang said. “It matters because we know venture capital works to drive innovation, and we know it works in Australia with venture capital backed companies having far higher job creation rates than standard companies.” She added 10 new smaller funds have launched in the last few years, and the sector was on track to see a 20% increase in venture capital activity. The venture capital funds are gathered around the eastern seaboard, and different cities have different strengths. “Sydney is still the place to be for start-ups in the technology space,” Tang said. “Victoria is leading in life science and environmental investment, probably due to supportive strategies and policies of the state government there.” Tang added AVCAL would continue to encourage the federal government to create a workable employee share schemes system, to be supportive of innovation and continue policies such as the Innovation Investment Fund and to increase wider awareness about the critical role of venture capital in moving Australia forward by enabling innovation. Director of legal services at PwC, Steve Maarbani, said the future was bright for start-ups and local venture capital investors, but they needed to increasingly focus on Asia, specifically Indonesia as vast new markets to tap into for fundraising. “It’s fair to say the federal government policies around start-ups and venture capital are strong,” Maarbani says, citing the early stage venture capital limited partnership tax treatments, research and development grants, innovation grants, national broadband network as effective policies. Maarbani said the concerns around the future of the Innovation Investment Fund, sparked by GBS Investments returning their funding this year, had been resolved. “There was concern that it would be reconsidered, and it was. But they’ve come out with the largest commitment of funds ever, with $350 million on the table next year,” Maarbani says. The Innovation Investment Fund allocates several million to venture capital firms, who then raise funds to match the amount. Maarbani added the growth of the tech start-up ecosystem has caused a significant change in the investment landscape. “We’re looking at a significantly different venture capital ecosystem compared to even 12 months ago. I use the term ‘groundswell’ very intentionally,” Maarbani said. “Early stage financing deals are being done much earlier now, with angel deals are becoming more important. This means start-ups can prove they have traction before a venture capital investor even sees them.” Angel investment has grown significantly in the last few years. In 2011, $4 million worth of deals were made. This increased to $8 million in 2012 and $21 million in 2013 so far. Describing the environment for investors and entrepreneurs as very positive, Maarbani noted the challenges of working with risk-shy institutional investors, but said fund managers needed to look to Asia to raise their funds. “Instead of endlessly lamenting capital markets moving their cheese, you can work on a better value proposition, or find new cheese,” Maarbani said. According to PwC research, over 50% of the world’s financial assets will be based in Asia by 2050. “As the balance of global financial power shifts to Asia, and it is, as the Asian universities start outperforming the rest of the world, and they will, it’s becoming absolutely imperative for fund managers to have an Asian strategy,” Maarbani says.
Internet retail sales conducted by smartphones, tablets and other mobile devices have increased by as much as 400% and it’s critical that merchants refocus their efforts accordingly. Australia's online retail spending totalled $14.2 billion for the 12 months ending August 2013. This level is equivalent to around 6.3% of Australia's traditional bricks-and-mortar retail sector. What’s more, because of the increased use of social media on smartphones and social media’s involvement in retail sales, “social selling” has become red hot. Anyone hoping to improve their online sales success must take advantage of emerging trends like data-driven selling, personalised marketing efforts and specific product recommendations based on a buyer’s past shopping history. Here are seven quick tips for Internet sales success: 1. Make sure your store is ready for the mobile revolution Mobile usage accounts for more than 50% of your visitors. A recent report by marketing website optimisation company Monetate found the average order value purchased via iPhone was $97.49 and the average order via Android was $97.16. Your store has to be prepared for that type of mobile transactional traffic, so creating a mobile-friendly version of your site is a no-brainer. 2. Optimise your mobile site for SEO It’s now just as important to optimise your mobile store for SEO as it is your normal online store as half of your traffic is coming from mobile devices. Be sure to add unique titles, tags and descriptions. 3. Offer local pick-up Research by CBRE shows when given the option, 41% of Aussie shoppers would prefer to pick up their products locally. What’s more, 27% of in-store pickup shoppers make additional purchases. If you don’t have a physical storefront, offer pick-up at farmers’ markets, craft fairs and other similar locations. 4. Enable “geo-focused” SEO Another way to cash in on consumers’ need for instant gratification and their desire to shop locally is by adding terms and tags to show up in geo-based search results. You should also get listed in location-based price comparison apps like Milo, RedLaser, Shopkick and others. 5. Add real-time product reviews Customer reviews translate to an 18% increase in sales. It’s important, though, to tell both sides of the story. Shoppers who read bad reviews convert 67% more than those who use sites with only positive reviews. Start proactively gathering reviews and set up an email campaign asking buyers to review products. 6. Add product videos By some reports, a video makes a front-page Google result 53 times more likely. Consumers are 64-85% more likely to make a purchase after watching a video. Use pre-produced videos or make your own and add them right to your product pages. 7. Improve your checkout process You can attract more customers and close more sales by simplifying checkout and adding payment. Offering a single-page checkout can boost conversion by up to 21% according to ABtests.com. Provide as many payment options as you can and gateways for credit cards like Google Checkout and PayPal. Finally, increase your average cart value by showing complementary or similar products as an add-on option at checkout. Take a snapshot of your store’s basic analytics today: sales, traffic, etc. Implement the changes I’ve suggested, then compare your snapshot to your numbers three months from now to measure your improvement to determine which suggestions really work for your business and which you may have to tweak for better results. Eddie Machaalani is the co-founder and co-CEO of Bigcommerce, the world's fastest-growing software as a service e-commerce platform that helps power over 30,000 small businesses to sell online.
Finn Peacock didn’t realise his straightforward approach to brand creation would get him into legal hassles, but he’s learned a lot since defending his solar industry quote comparison brand against local and international copycats. Launched in 2009, Solar Quotes, a quote comparison website for the solar industry, seemed like a great brand to Peacock. “My philosophy when naming a business is to call it was it is. I’m not one for made up, fancy names, and didn’t want some wacky title that’s not in the dictionary. So our name is what we do,” Peacock says. “But the problem with that is it’s a descriptive name, and as I now know, these are very hard to trademark.” Peacock was able to trademark solarquotes.com.au, but says he should have been prepared for the influx of competitors and a couple of copycats given the industry he was operating in. “Quotes are important in the solar industry as it has a history of very generous rebates, so it attracts a lot of fly-by-night companies that consumers want to avoid. So our brand, and therefore copycat brands, really matter,” Peacock says. Peacock recommends start-ups invest the couple of thousand dollars required to hire a good trademark lawyer to protect whatever they can. “Quite rightly, IP Australia has a very high bar to show you’re worthy of owning the trademark. We got the domain name because we had spent a lot on advertising, and get a lot of visits to the website so we could prove traction,” Peacock says. He adds he probably should have bought all possible domains, but as a cash-strapped start-up he decided not to at the time. “Spend the $60 or so it takes to register every version as soon as you get going. Five years ago when I was starting out that 60 bucks seemed like a lot of money, but man I wish I spent it then,” Peacock says. In 2010, a previous client of Peacock’s launched a very similar website with a slightly different domain suffix. Peacock says the founder copied large amounts of his website, and even occasionally sent out correspondence with solarquotes.com.au as part of the signature. “That was a bit awkward, but made it really obvious he was cutting and pasting from my work,” Peacock says. “The real issue is about branding. I got so many furious emails from people about bad experience with solar quotes, which they found via Google AdWords. No one really checks the dot whatever after the brand.” Peacock finally got the competitor to stop using the similar website address after taking the issue to the Au Domain Administration and the World Intellectual Property Organisation. “These were an alternative to going to court, which I was trying to avoid because it was so expensive,” Peacock says, adding he had to gather testimonies from clients who had been confused, of copied sections of his site and correspondence where his writing was used. He’s now grappling with a group based in Hong Kong which has added a number to the domain name he has trademarked, also via the World Intellectual Property Organisation (WIPO). “A lot of start-ups don’t even register a business name, but you need to do that. It’s not the first thing you should do, but once you’re not under the radar anymore it’s worth doing,” Peacock says. “It’s interesting when the company is offshore. There is next to nothing you can do get hold of them, so it’s worth knowing about groups like WIPO.”
Yesterday, your humble correspondent looked at four key trends in the smartphone industry that every mobile app developer should be aware of. While the figures can be dry, the information is critical, whether you’re planning your start-up or looking for big numbers when you are strategising your future direction. Likewise, coming up with a few hard numbers can be useful if you’re pitching for capital. So, without further ado, here are four more essential trends emerging from the mobile sector: 1. Android dominates over Apple in most other major markets – except Japan Okay, so Android is strong in the US and Australia, but what about the rest of the world? In terms of market share the most competitive major market against Android is Japan. In Japan, Apple claims 47.4% of the market, compared to Android only a notch higher at 48.6%. Across Europe, the story is very different, with Apple claiming 27.5% market share in the UK, compared to Android’s 56.3%. The situation is worse elsewhere in Europe, with Apple trailing 17.5% to 63.3% in France, 14.4% to 71.6% in Italy, 9.5% to 78.7% in Germany and claiming just 2.2% to 90.8% in Spain. As for China, Android’s market share is now at 72.4%, compared to a respectable 20.8% for Apple. And there are a few very good reasons why you should pay attention to China when it comes to mobiles. 2. The world’s biggest smartphone market is China – and it’s huge! Australia’s population stands somewhere around 23 million. The total population of the US is around 310 million. This year, IDC anticipates China’s smartphone market will hit 360 million people. And that’s not including all the people still using older feature phones. Next year, it is projected to hit around 450 million, including around 120 million users on 4G. Now here’s an astounding statistic. The worldwide smartphone market reached 216.2 million units during the first quarter of 2013 according to IDC figures, while China’s shipments stood at 75.28 million. That means China accounted for around one-third (34.8%) of the worldwide market for smartphones. And there’s still a lot more room for growth. The largest carrier in China – China Mobile – is estimated to have around 700 million mobile phone subscribers, including both smartphones and older phones. Kinda makes Australia and New Zealand’s 2.6 million mobile phones per quarter look pathetic in comparison, doesn’t it? 3. Mobile apps are now a multi-billion dollar industry – and growing If you thought China’s mobile market had some big numbers, take a look at the size of the worldwide app industry. According to Gartner, last year there were 63 billion apps downloaded worldwide, including 57.3 billion free apps and 6.6 billion paid apps. Total revenue from apps hit a massive $US18 billion. If you keep in mind that the total population of the Earth is estimated as being somewhere between 6 billion and 7 billion, a number like 6.6 billion paid app downloads starts sounding quite astounding – let alone 63 billion total downloads. This year is on track to be even bigger. Worldwide, we’re on track for a total of 102 billion app downloads, with 92.8 billion free apps downloaded and 9.9 billion paid apps. Gartner predicts those numbers are only going to get bigger. In the year 2017, they anticipate a total of 268 billion apps will be downloaded. That’s right, two hundred and sixty-eight billion apps. Of those, 253 billion will be free and 14 billion will be paid. 4. Most Android users now use a recent version One of the issues when it comes to developing for Android is how much you support legacy versions. Well, the answer is increasingly clear: Don’t bother! According to Google, 48.6% of all devices running Android are now powered by JellyBean (that’s Android 4.1/4.2/4.3). A further 20.6% run the previous version, 4.0 Ice Cream Sandwich, with 69.2% in total running a recent version of Android. Meanwhile 0.1% of the Android user base is hanging on to 1.6 Donut, 2.1 Eclair or 3.0 Honeycomb. The only old versions to have significant user bases anymore are 2.2 Froyo with 2.2%, and 2.3 Gingerbread on 28.5%. So sure, as far as Android fragmentation exists, much of it is over obsolete versions no-one uses anymore. Time to cash in! The global appetite for apps is huge – and growing. And contrary to popular myth, most of it isn’t in countries where English is the first language. Now, are you going to let this opportunity pass you by? Or are you going to cash in? Get it done – on mobile! Click here to read part one.
Omny, an app allowing users to combine news clips, emails, social media updates and articles via voice-to-text software, launches today after over 20 months in development. Created by 121Cast, the app allows people to create their own customised audio channel. The app also includes a recommendation algorithm to suggest content. 121Cast co-founder and chief operations officer Ed Hooper told StartupSmart they were excited to see it finally launch. “Seeing how it can change people and their behaviour is really exciting, as is the opportunity make that commute period really productive all over the world,” Hooper says. “We’ve all been doing this for so long and everyone knows about it, so how this goes is tied to our personal brands, what we stand for, and our credibility.” Co-founders Long Zheng and Hooper began exploring the idea for the app in 2011. They had previously worked on an international award winning start-up involving farm irrigation automation software. “But it was the GFC and we were still students, so for a whole lot of factors it didn’t work out but it was an amazing journey,” Hooper says, who gave up studying at Stanford to return to Australia to work in the Groupon team just as coupon sales were taking off. He was working at Groupon when Zheng got in touch to talk about how to turn the issue of commute productivity into a business opportunity. “I was constantly looking for a good opportunity, but I didn’t want to jump on something unless it was awesome, because you want to put everything into it. When Long called me up and we started talking about an audio solution that read you your emails and updates, I realised this was it. I literally could not stop thinking about it,” Hooper says. Omny sources content from over 30 providers, from music apps such as Spotify, to news groups such as the ABC and BBC, to Facebook, Google and Microsoft. Hooper says all the early conversations were focused on the difficulties of developing such an app, rather than building a business around it. “Whenever we’ve spoken to potential partners or investors, the assumption is always if we can make the app work, the money stuff will be fine,” Hooper says. “The feedback we got was the idea was there and it could definitely be a business, but also that it was going to be really hard to build and we’d need significant expertise.” They brought on third co-founder and chief technology officer Andrew Armstrong in February 2012. They’ve gone on to hire a front-end developer and a data scientist as well. To guide the development, the 121Cast team launched a test app, SoundGecko, in mid-2012. “We realised we didn’t have a clear idea of what we were creating and needed some real data. We tried surveys and interviews, but it didn’t really get us there. So we took a small fraction of this app, and bundled it as a standalone,” Hooper says. SoundGecko, an app which read websites and PDF documents for users, has almost 50,000 active monthly users. It allowed 121Cast the opportunity to test the reception of voice-to-text, and also the data requirements for sending audio to thousands of users across the world. Over 210,000 people have downloaded SoundGecko on iOS, Android and Microsoft phones. “We found that managing all three platforms was quite hard. As soon as we’d launch a version, we’d see things we needed to change and there were always things we should have done on the first one,” Hooper says. “For the resources we have, it just isn’t feasible to be updating the app on all three platforms. So we’re fine tuning the iOS one while we do the core Android development.” Omny is currently a free app. 121Cast will introduce ads and affiliate marketing in the coming months, and are exploring a premium subscription for launch later next year. “SoundGecko definitely validated that people would pay for the premium features, such as more voices, and the Omny premium subscription will probably not include ads,” Hooper says. Hooper adds financial opportunities will emerge from the user data over time. In order to fund the development, the 121Cast team used their own capital and raised a series of seed investments. “We burnt our own savings and lived off them for quite a while. We decided we were going to do this regardless, and between us we could go for about a year without raising funds. Let’s just build this because we have to do it,” Hooper says. They went on to raise $250,000 from Adventure Capital and the SingTel Optus Innov8 program in November 2012; $20,000 from the University of Melbourne Accelerator program in late 2012, and just over $250,000 from Commercialisation Australia in July 2013. “With the investment, if we knew we need to do something in the future, we started building the relationship as early as possible and find out what’s important to our potential partners and match them on multiple data points,” Hooper says. Hooper says they’re focused on Australia at this stage, but will be looking to expand to the US, United Kingdom and other English speaking markets in the next few years.
Designed to turn Australian technical founders into successful global entrepreneurs, one of Australia’s first start-up accelerators Startmate is now open for applications. The program will run next year from January to May. Companies will spend three months in Sydney and two in San Francisco. Startmate is seeking around eight companies, which will receive $50,000 in seed capital, in exchange for 7.5% equity. Startmate co-founder Niki Scevak told StartupSmart they’re seeking founders with big dreams and plans. “Beyond the very product centric technical team, we’re looking for people with large ambitions, the crazier the idea the better. We really want to work with teams who want to make a big difference in the world, so the scale of the ambition is what we’ll be selecting,” Scevak says. He says they’re committed to approaching each pitched idea with an open mind, adding that being the hundredth start-up to tackle an idea didn’t hurt Google, Facebook or Atlassian. “Anyone doing anything in an incredibly crowded area will be taken as seriously as brand new ideas. The ideas may sound incremental, but it really does matter why the founders have chosen to pursue this idea, and if they have a unique insight into it,” Scevak says. “It’s about why they care about their customers and if they have an authentic connection to the market. We look for what in their lives have driven them to this idea.” The program includes an impressive line-up of mentors including Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar; Tjoos co-founder Bart Jellema; and Spreets co-founder Dean McEvoy, as well as several partners from Square Peg Capital and Blackbird Ventures. This will be the fourth intake for the program. Previous participants include BugCrowd and NinjaBlocks. Start-ups can apply via Angel List.