In recent weeks, many commentators have pointed out the similarities between the current Silicon Valley scene and the tech boom of the late ‘90s. Meanwhile, recent falls in tech related stocks have led some to fear that another dot-com crash could be around the corner. A first-hand witness of the tech boom of the late ‘90s was author and web pioneer Bill Lessard. In 1999, Lessard and his co-author, Steve Baldwin, wrote a book about the experience of being an ordinary IT worker at a startup during the tech boom, titled Net Slaves: True Tales of Working the Web. It was followed-up by a book chronicling the experience of those same IT staff after the bubble, titled Net Slaves 2.0: Tales of Surviving the Great Tech Gold Rush. The books led to the creation of a pioneering and now defunct online community called Netslaves.com, which bought together many people connected with the tech startup scene. StartupSmart spoke to Lessard about how the current US tech startup scene compares to the ‘90s tech boom. Working the web in the ‘90s According to Lessard, working in a tech company in the US during the late ‘90s was often the opposite of the hype portrayed by many in the media. “For every [Netscape founder and venture capitalist] Marc Andreesen getting rich quick, there were thousands of people getting old fast. The situation was ridiculous. It was akin to saying that everyone who moves to Hollywood becomes Brad Pitt or Angelina Jolie,” Lessard says. “And it wasn't just your mom who was falling for such nonsense, either. Otherwise perfectly reasonable people I'd meet at parties would gush when I told them what I was doing for a living. “After a while, I wanted to punch such people on sight. Working the Web 1.0 was 14-hour days, not cleaning your apartment for six months, having three different jobs in the course of a year.” Many people cite the infamous takeover of media giant Time Warner by tech company AOL as representing the pinnacle of the hype surrounding the early web. Lessard says it was the experience of a round of layoffs at Swiss bank UBS that led him to write the Netslaves books. “I was getting downsized from my seventh job in seven years when I looked up a friend of mine from Time Warner. I was 32 at the time. I was way past my Web 1.0 due-by date. “I wanted to do something different. It was Steve's idea to write about this industry. I added the Studs Terkel aspect of profiling the real people who power tech.” The books led to the creation of Netslaves.com, an online community filled with the tales of disgruntled employees from tech start-ups. However, it wasn’t just IT workers who visited. “It was a sterling example of online community in the pre-Facebook era. There were disgruntled techies, sure. But there were also members of the investor and executive classes. “There were also garden-variety freaks, fruitcakes and lunatics. It's fun to remember the site now, but back then, it was a mess. What started out as an outlet for tech industry workers devolved into a mosh-pit of post-9/11 political extremes.” Lessard explains how, in some ways, the Netslaves website was a forerunner to modern tech startup sites such as TechCrunch, StartupSmart and Valleywag. “We took the bitchiness of Suck.com and brought it to tech. TechCrunch and StartupSmart are definite influences in their willingness to question the sacred cows of the industry. “But Sam Biddle at Valleywag, who criticizes West Coast tech cultist insanity from his Brooklyn perch, seems the closest to what we were doing as New York guys (and gals) with a digital axe to grind.” A particularly notable contributor to the Netslaves website was freelance journalist and pioneering US political blogger Steve Gillard. Gillard, who passed away in 2007, was cited by progressive blogger and Daily Kos founder Markos Moulitsas as a being a key influence on his work. “Steve was a gentleman. He was an educated, honest person in a world where educated, honest people are in too-short supply. Steve appeared out of nowhere. First he was on the mailing list that was the precursor to the bulletin board, then he was sending us reams to stuff to publish, then he was posting even more material directly when we got ourselves a proper CMS. “Steve brought history and a strong sense of social justice to what we were doing. He had no tolerance for the whole rich-kids-messing-around ethos of the industry because he was a moral person and a black dude from Harlem who had witnessed the consequences of such foolishness. “I was so glad to see him taking off as a political blogger. My only regret is that he didn't live longer to enjoy it.” The problems with Web 1.0 Lessard recalls a common complaint from many on the site was that tech startups were often started by young people straight out of college, and the founders lacked basic management skills or training. “It's okay to get some pizza and code all night when you're in college, but if you've got millions in venture and employees with bills to pay and some even with families and mortgages, it's not a good look, particularly if the company is going to be out of business in six months. And your best option seems to be to get another job just like the one previous.” Reclining upmarket office chairs by Aeron came to be a symbol of the tech startups that failed during the ‘90s tech crunch. “In an industry that had rejected suits and ties and other traditional symbols of corporate power, the Aeron was the seat of power in the Web 1.0 ‘game of thrones’. “The closest contemporary equivalent is Mark Zuckerberg's hoodie, where the ultimate expression of authority resides in the rejection of authority. It's all very American. And it's all very rock-n-roll.” Story continues on page 2. Please click below. Key differences to the ‘90s tech crunch Lessard points out there are several crucial differences between now and the tech wreck on the late ‘90s. The most important is the frequency with which companies file for an IPO. “Back in the Web 1.0 Boom, you had dozens of companies going public every week. Every company seemed dumber than the last, but that didn't stop them from going to market and jumping to 90 bucks a share on their first day of trading. “These days, there are offerings, but there are fewer and the companies have stronger fundamentals. Also, another difference is that acquisition is an accepted exit strategy. In the '90s, it was IPO or bust. “If nothing else, it seems like companies are more careful today because they have to be. There's money out there, but not a plethora of dumb money willing to throw cash at anything with a "dotcom" in its name.” Life after startups Since the tech boom of the late ‘90s, Lessard has returned to the public relations industry, with his company counting startups amongst its clients. “I did PR before I got into tech, right after I got out of grad school... I run my own shop, so I get to pick and choose the projects I work on. “I have a great job because I get to advocate for things I believe in. I don't represent crooks and hucksters. I represent people who are trying to make a difference in their own little way. I have worked with videogame charities who distribute used games to kids in hospitals and cancer wards. “I have gotten a street named after a favourite jazz artist. I have partnered with major sports franchises and food startups to get fresh food to people in underserved communities. I choose people as much as they choose me. It's not going to make me rich, but that's okay. My wealth is the satisfaction of being able to live the way I was intended to live.” Four tips for startup founders According to Lessard, there are four key lessons from the tech wreck that startup entrepreneurs should apply to their businesses: 1) Create a company that will make the world a better place. There are already enough apps for simulating fart noises. 2) Failure will teach you the lessons that you need to know the most. 3) Take better care of yourself. Cut out all the pizzas and the all-night coding marathons. That bro stuff is nonsense, and it will kill you. 4) Figure out what kind of person you are: Are you an overdog who needs to run stuff? Are you an underdog who just wants a check and weekends off? Are you a lone wolf who neither wants to run things nor be told what to do? These are important questions. The world is the way it is because it is full of people who are trying to fit themselves into slots they don't belong in.
Augmented reality (AR) is often understood in terms of wearable technology and device-driven capabilities, but an Australian technology company, buildAR, has built technology to enable it in your browser. Often thought of as a futuristic play, the augmented reality and virtual reality (VR) markets are expected to grow 15.18% from 2013 to 2018, reaching $US1.06 Billion in 2018, and that’s excluding mobile based AR and non-immersive VR. It puts some perspective into Facebook’s recent $US2 billion acquisition of Oculus Rift – a VR play in that it creates a virtual world, where AR lets you see the world with more information overlaid on what you’re looking at. According to TechCrunch, Microsoft is also reported to have bought the augmented reality-related intellectual property of wearable tech company Osterhout Design Group for between $US100 and $US150 million. What makes buildAR unique is that they are “augmenting the web” and bringing the experience into your browser. BuildAR founder Alex Young says there was a lot of fragmentation in the app world when it comes to augmented reality, but using it in a browser got around this problem and democratised the technology for everyone. It has recently launched a Kickstarter campaign that makes it possible for anyone to deliver AR using standard Web browsers, but their focus is on utility based applications, particularly in education. The Kickstarter campaign will allow anyone to “create a project and embed it directly in their webpage as easily as you do with a YouTube video.” The campaign highlights some of the uses of the technology: “If you back us as an educator, we'll give you the tools to create experiences such as an AR treasure hunt or historical exploration that'll have your students running around your school or campus having fun while they learn. “If you back us as a curator, we'll give you the tools to enable your visitors to point their phone at items in your exhibition to unlock extra information that extends your collection beyond what's physically on show.” The buildAR platform enables anyone to create digital content into the physical world around you by linking it to images, locations and more. When it comes to education this could mean using the technology to bring learning objectives to life. The technology will work on smartphones and tablets, as well as wearable devices such as Google Glass and Oculus Rift. There are limitations in the use of the technology on Apple devices though, something the buildAR team wants to draw attention to, claiming that “commercial decisions made by Apple have put the [iTunes] App Store ahead of their customers”. As Young points out, Apple have consciously decided not to support the latest open web standards. buildAR have created a demo for their technology to show that how you can run augmented reality within your standard web browser, presenting the "Projects We Love" newsletter as AR images, floating in the real world. If you open this on a modern Android device using the latest version of Chrome, Firefox or Opera you'll see a rich combination of augmented reality and the web, which is called the augmented web. However, if you open the exact same page using an iPhone or iPad, you'll find that it works but that you can only see a very limited user experience. Young says the company has a much higher profile overseas, than locally, but were committed to staying in Australia if it can. They have also launched some local meetups for those interested in Wearable tech, in both Sydney and Canberra.
With a high traffic and low margin business to grow, the team at No Yelling quickly ruled out pay-per-click advertising and decided to invest their limited cash into boosting their SEO ranking. The driving lesson aggregator and lead generator launched in 2010. Founder Jasper Boyschau told StartupSmart investing in quality SEO was the best business decision he’s made so far. “We weren’t anything two years ago really, and all it took was a bit of effort and all of a sudden we’re one of the major providers Brisbane.” SEO rapidly emerged as the only viable option for No Yelling. “Even if it’s only a couple of dollars per click, that’s still 20% of our margin. We couldn’t afford to lose that even though we need to get people through the door,” Boyschau says. No Yelling focused on creating good content sprinkled with their key search terms and getting the pieces published trusted, high profile sites. “That’s pretty much the core of it. The internet is full of trashy content and cheap SEO tricks are 100% dead,” Boyschau says. “We invested a fair bit at the start, and we’ve been number one on the terms ever since.” Sometimes the tactic worked so well it caused other issues for the business. Late last year, one of their pieces appeared on leading US start-up site TechCrunch. When over 200,000 people hit their website within a few hours, the server crashed. No Yelling’s Google growth tactics also included a concerted campaign to drive customers creating Google business reviews. “Word of mouth doesn’t just happen, you can definitely influence it,” Boyschau says. “Offer a good service and then ask for a favour. Most of our customers were happy to do that. Now we’ve got over 180 reviews, more than any competitor.” No Yelling has launched localised expansions in Ipswich and the Gold Coast. They intend to roll out across the country later this year.
The Australian Competition and Consumer Commission has blocked a $1.5 billion takeover of New South Wales government-owned power generator Macquarie Generation by AGL, citing market concentration concerns. “The proposed acquisition would result in the largest source of generation capacity in NSW being owned by one of the three largest retailers in NSW,” ACCC chairman Rod Sims says. “With this acquisition the three largest retailers in NSW would own a combined share of up to 80% of electricity generation capacity. “This is likely to raise barriers to entry and expansion for other electricity retailers in NSW and therefore reduce competition.” Building approvals jump nearly 7% in January Building approvals have jumped by nearly 7% seasonally adjusted during January, a faster rate than many economists had expected, according to new figures from the Australian Bureau of Statistics. Approvals for detached houses were up by 8.3%, while apartments and other dwellings were up 4.6%. In another piece of good news, the ABS figures also show Australia’s current account deficit shrank by 19% to $10.1 billion during the December quarter, with increasing exports and declining imports. Facebook looks to purchase drone aircraft maker Facebook is gearing up for another major takeover, with TechCrunch reporting the company is planning to launch a $60 million takeover of Titan Aerospace. Titan manufactures solar-powered near-orbital drones that can fly for up to five years continuously, with the social media giant reportedly interested in the aircraft in a bid to bring affordable internet access to 5 billion people worldwide who still lack connectivity. The project is set to compete against Google’s Project Loon R&D program, which aims to use hot air balloons to provide connectivity to remote areas. Overnight The Dow Jones Industrial Average is up to 16416.8. The Aussie dollar is up to US89.52 cents.
When two-year-old Envato received a firmly worded legal letter from tech juggernaut Adobe in 2009, the team thought their business was over. “We were terrified. It was just, oh my god our company is about to be demolished. Terrible things are going to happen and our world was rocked,” co-founder and business intelligence director Vahid Ta’eed told StartupSmart. Launched in August 2006 by four co-founders in Sydney, Envato was originally called Flash Den, after their first marketplace that connected buyers and sellers of Flash content. Despite registering a logo including the word “flash den” when they launched, they didn’t attempt to trademark the word until 2009. This is probably what triggered Adobe, which owns the trademark for “Flash”, to send the young company a sternly worded letter. “We got a concerning, and I would even say ugly, letter from Adobe’s lawyers. I still remember reading it, my heart was beating crazily and sweating,” Ta’eed says. According to Ta’eed, the letter informed Flash Den of a series of legal consequences if they didn’t change their company name, website and trademark swiftly. “They were a massive company. It felt like the Borg had come and we were about to be devoured,” he says. (For those who may not watch Star Trek, the Borg are an alien race that forces other races into their collective by turning them into cybernetic organisms.) Flash Den was managing four marketplaces with a team of 15 who had worked hard for two years to build their brand. “We worked through the panic. At first you’ve just got to get past the denial and anger, but then we realised we wanted to switch away from just selling Flash anyway, so maybe a forced branding change wasn’t such a bad thing,” Ta’eed says. They renamed that particular marketplace and their business from Flash Den to Active Den, which enabled them to include emerging technologies such as Microsoft’s Silverlight. They negotiated with Adobe to keep the Flash Den domain for a few months so they could redirect users to their new site. “We’d spent two years and didn’t want to just vanish,” says Ta’eed, adding the Adobe team were actually pretty good about the situation after their first exchange. The team decided to be transparent about the issue and communicated the brand change through a concerted PR effort that included stories in TechCrunch and the Washington Post. “We’d moved beyond just Flash, but we were still that brand, bolted onto that word. To move beyond it was challenging but as a start-up you do what you have to do,” Ta’eed says. The plan had always been to build a portfolio of marketplaces selling online content such as website templates and stock photography. Armed with a deeper understanding of trademarks and a more nimble approach to branding, the Flash Den team went on to explore new company brand names. They originally explored the possibility of rebranding to Eden but abandoned that plan due to the difficulty of trademarking a common word. In 2010, they bought Envato for about $1000 out of a catalogue of brands, complete with the brand, domain and first logo. “I remember when we picked it; I wasn’t convinced we seemed like an Envato. But now it feels like we’ve always been this,” Ta’eed says. Armed with a new brand, they went on to launch four new marketplaces. The team never took any external funding. “Being entirely self-funded is pretty cool. You get to make your own decisions and your own mistakes, which you learn from and live with,” Ta’eed says. Envato now employs over 100 people in Melbourne, with another 100 scattered around the world. In seven years, they have paid out over $140 million in payments to the marketplace “authors” or content creators.
When Daniel Pizzata and Adam Ellison were offered the chance to present their industrial quality robot building blocks start-up ModBot at leading international tech conference the Consumer Electronics Show, they scrambled to incorporate their company and get across to the US in time. They did. Speaking to StartupSmart from Las Vegas, the pair have been overwhelmed with advice and interest from people across the robotics industry after their presentation during TechCrunch’s Hardware Battlefield event. “Everyone keeps telling us that America is tapping the robotic industry as the next trillion dollar industry, especially at the high end of the scale. We’re further down towards consumers, and heaps of people have reached out to us, so it’s been very validating,” Ellison says. The ModBot product is a series of robot building blocks common to most robots. “From humanoid to spider-shaped, any useful robot you want to build will use some of these parts,” Pizzata says. Likening the toolkit to Lego, Pizzata says their primary goal for presenting at the event has been to start developing a community for their testing, upcoming crowdfunding campaign and launch. “Our goal is to raise awareness of the concept and get the tech community excited because this project is going to require a lot of collaboration. We want the maker movement involved as they’re the early adopters who will build the early impressive projects so other people can understand and get excited,” he says. Ellison adds the biggest challenges they anticipate will be marketing ones. “The consumer robotic market is so new, so the first big challenge is explaining the possibilities and triggering other people’s imaginations about how they could use it.” Pizzata and Ellison have both worked in robotics companies prior to launching the start-up this year, and have been developing the idea for three years. They are planning a crowdfunding campaign for around $100,000 and a seed funding round shortly. “We’re going to do both. Our capacity to reach a very large audience is making us very popular over here and there has been investment interest,” Ellison says. “The crowdfunding isn’t so much for capital, it’s about marketing, validation and triggering ideas. This was one of the big reasons we jumped at this opportunity to come to Vegas and present at CES. We need this community to get behind it before we start so the crowdfunding campaign works.”
What does an Australian start-up need to get investment? NICTA new ventures director crunches the numbers12:49AM | Thursday, 19 December
After an article about the similarities between 39 American billion-dollar software start-ups went viral last month, Andrew Stead, the director of new ventures at NICTA, decided to research the most successful investment-backed Australian start-ups. ‘Welcome to the Unicorn Club’, the TechCrunch article by seed-stage fund Cowboy Ventures founder Aileen Lee, detailed the key factors start-ups that received investment and became worth more than a billion dollars had in common. The findings were companies that became worth more than a billion dollars had two or more founders who were over 30 years old with university degrees and who had worked together before and launched companies previously. Stead analysed 71 investments in Australian start-ups in 2012. This included 44 deals totalling around $30 million from angel investors and smaller venture capital firms, 20 deals worth $24 million from early stage venture capital investors and seven deals worth $17 million from venture capital. “There is certainly not a formula and plenty of exceptions to every rule,” Stead says. “Building successful businesses takes time, experience, a team that knows each other and the ability to convince an investor that you are the team to exploit a big opportunity. With this in mind and the preferences of Australian venture investors, start-ups can go into a pitch forewarned and forearmed.” He found early stage venture capital and venture capital firm investments demonstrated a preference towards enterprise-oriented start-ups (80%), with two or three founders (67%), aged between 35-45 (71%), who have previously founded a business (68%). A key difference was Australian investors appear to be more open to backing single founder companies (41% of the companies were single founder led) than the findings of the American research, compared to only four of the American companies. “Determining whether the founders knew each other before was more difficult, with only 14% with obvious connections, compared to 90% in the US,” Stead says. “Australian founders had a solid track record of building businesses before with over 65% having done so and around 6% had sold a business.” The majority of the Australian founders were university educated with 95% of the founding teams had at least one person with a university degree. Of the founders who were also chief executives, 83% had university degrees. “In the US there is a focus towards the top schools but here that is less relevant, with a good spread across states and universities,” Stead says. The peak age for founding a business in Australia was similar to US, with 35-45 the most common bracket and just over half (62%) older than 35. Only 5% of Australian founders were under 25.
With new figures from Sensis revealing 67% of businesses expect to see an increase in sales in 2014, 99designs chief executive Patrick Llewellyn saysrefreshing your business’s image could be the key to boosting sales. Just as you need streamlined back-end technology in business, a company’s image is also fundamental to its success and longevity. Llewellyn told SmartCompany if a business is underperforming, or if it wants to address a new market, it needs to consider changing its image. “If things are going great, I wouldn’t be changing up your look for the sake of it. You need to have a purpose for why you’re doing something and have a clear reason,” he says. “But if your brand feels and visually looks dated, you should clean up and use flattering design principles. It’s an element of taking stock and having a good look at all of your materials and asking yourself hard questions about how your design represents your brand and reflects you.” For businesses in need of a facelift, Llewellyn has the following advice: 1. How does your design translate? Llewellyn says businesses need to consider how their design works on the different mediums. “Think about how it looks on social media, on mobile devices, on websites and whether or not your site needs to be more responsive. All of these things need to be considered,” he says. Llewellyn says when thinking about redesigning, businesses should find out what customers think of the brand. “Think about it as though you’re taking stock of yourself. Survey your customers and ask them what they think of the brand, how they perceive it and what values it represents to them. This process can give you a springboard,” he says. 2. Start with a clear vision Businesses need to start with a good understanding of what they want to achieve through the redesign process. “Spend some time trying to articulate this and engage others in this process,” Llewellyn says. “When coming up with a vision about making these changes, engage with your staff and try and involve as many stakeholders as possible.” Llewellyn says businesses can have fun with the process and use it as a way to bring everyone in the business together. 3. Think about the future When redesigning, businesses need to think about what they want their brand to present going forward. “Think about the future and your audience going forward and combine the best of the old and the new elements of the brand,” Llewellyn says. “Any new brand needs to be able to work on mobiles and also consider how the brand will interplay with the importance of content marketing. We will continue to see the rise of this in 2014 and any new branding effort needs to take this into account.” From here, businesses need to construct a design brief. “Talk about what the industry is, who the customers are, your mission and vision, and what visual styles you’re looking to represent,” Llewellyn says. “Look at brands you inspire to be like and where you want to go and really articulate this.” 4. Refresh all brand interaction points Llewellyn says brands now need to consider how they’re presented on every medium. “You also need to refresh your social and visual representation – so things like Facebook covers, blogs, emails and different interactions points with the brand could benefit from a redesign, rather than just your logo,” he says, “With content marketing a key trend, also think about repurposing existing content and turning it into something else, like an infographic or video.” Llewellyn says the notion of needing to stay relevant and be present on a “myriad of devices” is only just starting to take hold. “The trend is starting to permeate down to smaller and smaller businesses. The old paradigm of small businesses just caring about how their advertising looked in the Yellow Pages is changing. Small businesses now also care about SEO and SEM,” he says. “Every time there is a new device, your design needs to be rethought and redone. We’ll continue to see an evolution of these trends going forward as lots of small businesses still need to go online.” 5. Aspirational businesses Llewellyn says businesses big and small are reinventing in positive ways. “Looking at the big players, Google has done a really great job of enhancing its individual style. There’s been a noticeable change and it’s brought its products together in a more unified way with a good aesthetic and responsive design,” he says. “In terms of smaller sites, The Next Web and TechCrunch are trying to reinvent pretty often. They’ve done an okay job with their latest reiterations and their visual design styles continue to evolve.” This story first appeared on SmartCompany.
Gamified polling app Play2Lead received a warm international reception after being used by over 100 investors at international conference TechCrunch Disrupt last week. Co-founder and chief executive Theresa Lim says the three minute pitching opportunity was amazing, but she was more thrilled about the fact her app was used for the audience choice award at the AngelHack Global Demo day just prior to the conference. “I think I was the only product that was used by everyone in the room. The organisers told me that the judges really loved my product, but I’m really clear that even though I can’t ignore the US market because it’s so big, my focus is on the Asia-Pacific region first, especially China, and I want to stay put here,” Lim says. Just before departing for the US, Lim had signed up as a provider with events company InfoSalons. “They do 500 major events a year, and that gives me access to Australia, China and the Middle East. So I’m lucky enough to be one of the very few start-ups that has distribution ready to go, before coming out of beta,” Lim says. The app, which is due to exit beta in late October, was pitched at the global start-up day along with 300 other apps. Lim pitched shortly after two Australian developers, Jethro Clayton and David Boulton, who have since come under fire for pitching a sexist app called ‘Titstare’. Lim and her co-founder Evgeny Dudin were part of the TechCrunch pre-pitch training program, after coming second to Boulton and Clayton during an Angel Hackathon in May. Straddling the gamification, engagement and data trends, Lim says she’s developing a range of apps for events and in the next few months she’ll focus on partnering with a high-profile event to launch the app. Lim says she had a series of very positive conversations with representatives of Fortune 500 companies at the conference, who were keen to use the app for their events. “I already have some possible customers and I’m looking for a big event launch partner,” Lim says. The app operates on a monthly subscription model, funded by the event coordinating company so it’s free for users to download. Lim adds they are also about to start seeking seed capital to ensure they can get the app out to big events and markets quickly.
Last week I experienced my first taste of controversy in this arena. I contrasted Posse to Foursquare in an interview with Fast Company, who ran it as a feature with the headline 'What Foursquare would look like if it had been founded by a woman'. The article sparked a barrage of comments and tweets arguing why Foursquare is or isn't a good product for women and how Posse shapes up. It's the first time we've been so publicly compared to a competitor; the experience was both flattering and scary – a tiny Australian start-up set against a US industry heavyweight. Posse is not a revolutionary idea; many competitors are trying to solve the same problem as we are. And being first in line to seek a solution to a problem isn't always best. I found this recent Techcrunch article interesting: it points out that almost all of the nine tech companies that have exited for more than $1 billion in the past four years haven't created a new product category. Rather, they have developed in areas where the existing solution isn't up to snuff. Facebook provided a better experience than MySpace or Friendster, and Zappos just sold shoes in a better way with better service. We designed Posse because we felt the existing solutions weren't working for us. Now that we've officially launched in the US, it's natural that we'll be compared to competitors. In my blog today, I wanted to reflect on the process we used to design our product and how we took inspiration and ideas from others, like Foursquare and Yelp. 1. Define the problem and the audience We started with a hunch that some people preferred recommendations from friends to reviews from strangers on Yelp or TripAdvisor. We also thought that the process of asking for recommendations from friends through email, SMS or Facebook was cumbersome and inefficient. We set up an initial 10 focus groups to test our theory and asked questions like, 'Describe the last time you were in a new place looking for a restaurant or hairdresser. What did you do first?' The most common answers followed a pattern of, 'tried to contact a friend who knows the area,' then, 'couldn't get hold of them so ran a Google search or checked Yelp'. We also asked group participants to recommend places to each other on the spot, so we could understand exactly why they enjoyed sharing recommendations. Not everyone had a problem with this. Some were happy to use Google or Yelp to find places. The people who were dissatisfied tended to be like us: slightly fussier urban types who wanted to visit the best bars, restaurants, fitness centres, hairdressers and so on. They needed recommendations from friends and almost panicked at the thought of going somewhere cold. We continued the interview cycle until we identified four audience definers: gender, age, behaviors, and 'preferences'. By this I mean, what they sought in recommendations from friends and why they enjoyed giving recommendations to friends. Three of the four audience segments turned out to be female, so while we didn't design Posse just for females, we expected that the majority of users would be women. This may appear cold and calculating: breaking down users into audience segments, then designing features and artwork to appeal to those users. It certainly helped us understand who would want to use our product and why they'd use it instead of the competition. 2. Who has previously tried to solve the problem? Why did they succeed or fail? For this exercise, we mapped out every platform, past or present that had tried to solve social search. Yelp and Trip Advisor obtained lots of reviews and great data but failed to get a high enough proportion of their users writing reviews to show what your friends think of places. Both sites seemed littered with irate customers writing negative reviews. These upset the merchants, and many users we interviewed were skeptical about who was writing the reviews. Apps like Stamped and Fondu emerged to solve the social recommendation problem, but appeared to fail because not enough people were making recommendations to sustain long-term engagement. The only platform we could find that had managed to crack the problem of persuading lots of socially connected people to give it content was Foursquare. To understand how, we interviewed 100 Foursquare users. We invited friends who used the platform and put up posters around our office building offering to pay anyone who used Foursquare $50 for an interview. I wanted to know what was so compelling about checking in on Foursquare. We found that the overwhelming number of people who responded to our ads were male (+80%) and I was amazed when they described how they used the product. One guy told us about how he drove out of his way home every day to check-in at a supermarket where he was the Mayor. Others said they would check-in to places that they didn't even visit as they walked past. They were addicted and didn't understand why. As I struggled to make sense of check-in addiction, I couldn't help but notice the parallel between what these guys described and the behaviour of my small male chihuahua 'Steve' who dragged me to random posts, marking that he'd been there more than other dogs. Many women using Foursquare wanted to secure recommendations from friends for the best bars and cafes but found it frustrating that the most popular places around them were subway stations, people's offices or alleyways. They also didn't like 'checking in', broadcasting where they were, and were irked by random guys asking to be friends with them. I'm not saying that Foursquare, Yelp, Trip Advisor and many other local discovery platforms aren't great products that are loved by lots of users. Foursquare in particular was revolutionary in the way they use game mechanics and design to make participation in their platform fun: Posse and many others since have taken inspiration from these ideas to develop other products. I'm just saying, this is a process we went through: analysing the competition to design what will hopefully be a better product for a certain part of the market that doesn't seem to be well served by the existing players. Story continues on page 2. Please click below. Above: Steve the dog. 3. Designing the principles behind our solution Once we'd defined our problem, our audience, and analysed the competition, we created a list of principles. These principles underpinned the product for which the platform we designed would work. They included statements like: >Our audience make recommendations to signal social status. >Our audience like to collect and display their favorite things (Pinterest/Wanelo). >Our product category is so competitive that our product must be delightful and fun so people want to share it with friends. >Our audience doesn't want to earn currency for making recommendations but love recognition with authentic unexpected gifts from their favorite retailers. There were many others. 4. Designing the product With these principles in place, we set about designing the actual product. It all came together surprisingly quickly. The whole team took part in daily product design and we brought in lots of outside help for fresh perspectives on ideas. This whole process of defining the problem and audience, analysing the competition, designing our product principles and then the product took around four months and involved more than 200 outside interviews before the first line of code was written. It's something I didn't do the first time around when I built a site for selling music tickets. While we're constantly evolving and coming up with new feature ideas and design improvements, the fundamental strategy behind the product is solid and hasn't changed. Execution is the next big challenge and we're getting better at that too. We're still a tiny team with an early product that doesn't really stack up against the competition yet. Who knows if we'll make it? We're giving it our best shot. I know most people who read this blog are in the process of starting a company. I think that an in-depth analysis of the competition is vital, without fearing to enter a product category because of the big incumbents there already. We've found it helpful to take inspiration and learn from the successful trailblazers in our field, and if others do the same then we'll all end up with better products as a result.
It's been a while since the tech industry has seen a massive takeover deal, but this weekend delivered: cloud-storage group Dropbox agreed to acquire the popular new email app Mailbox for a price rumoured to be as high as $US100 million. The price is a huge premium for the app, which has only been available for a few weeks. But it also shows businesses in Silicon Valley are still willing to shell out massive amounts of money for very early, or even premature, ideas. Mailbox has become popular for its mail system, which allows users to delay receiving messages until certain times to help clear inboxes as quickly as possible. Mick Liubinskas, the co-founder of Australian start-up incubator Pollenizer, says email has become "one of the biggest areas of opportunity". "There are a lot of people attacking this in many different ways and it's a very good one to crack as well," he says. "But it's also a problem, because how do you disrupt something that's so embedded?" Reports, first from The Wall Street Journal, started emerging over the weekend that Dropbox had acquired Mailbox, where the company confirmed Mailbox would remain a separate app. Dropbox chief Drew Houston said he believed the acquisition would help the app grow "much faster". Houston also said he believed the deal would help Mailbox add new features quickly, such as handling attachments. In a blog post, he said the app's simplicity caught the company's attention. "Dropbox doesn't replace your folders or your hard drive: it makes them better. The same is true with Mailbox. It doesn't replace your email: it makes it better. Whether it's your Dropbox or your Mailbox, we want to find ways to simplify your life." With both Dropbox and Mailbox working so closely with cloud-based services, an acquisition makes sense. Mailbox is created by Orchestra, which was founded by Gentry Underwood. The app caused a splash during its release by creating a digital queue, with users having to wait days or even weeks to access the app – the company wanted to avoid any downtime caused by a rush of users. It was a smart move, bringing attention to the app's main feature – the ability to not only archive email quickly, but also tell email messages when they should be sent. For instance, users can decide to read an email later that day, or even in a few days. The Mailbox servers handle the message in the meantime, and then send the message back as per the user's instructions. Orchestra had already raised $5 million in funding from Charles River Ventures, SV Angel, Kapor Capital and Crunch Fund. The app already has 1.3 million users. The amazing part of the deal is the price, with TechCrunch claiming the deal was done for "well over" $50 million, to as high as $100 million, although All Things Digital says the structure of the deal makes an actual valuation difficult. The deal is in many ways a throwback to the past few years when small, relatively unproven businesses won millions in funding, such as the $1 billion Facebook-Instagram deal. More recently, however, those deals have become rarer. Telsyte analyst Rodney Gedda says the acquisition is a smart one, as email has been ripe for innovation – it's essentially the same product as it was 20 years ago. "It was designed for simple messages that weren't time-critical. It was never designed for collaboration and sorting in the sense that a structured data application would be." Some have tried to advance the email process, such as Google with Google Wave, although the tech giant eventually shut that project down due to poor usage. The biggest change, Gedda says, is the move to cloud-based services. "The challenge now is to build upon that base line of email to make it more functional, collaborative and user-friendly, and then extend it to any device." This story first appeared on SmartCompany.
The average age of companies that the owners sell at more than $1 billion is seven years, according to US venture capitalist Jacob Mullins, who has revealed the common characteristics of $1 billion consumer tech companies.
Local online retailer Shoes of Prey has taken a step towards the bricks-and-mortar world, teaming up with department store giant David Jones as the two companies explore new ways to boost sales.
A former winner of Startup Weekend is among the 10 ventures selected to take part in the second ANZ Innovyz START program, which is once again dominated by Adelaide-based start-ups.
US-based incubator AngelPad is accepting applications from around the world for its next round, after revealing the 62 start-ups it backed in 2012 raised a total of $56 million.
Anthony Goldbloom, founder and CEO of Kaggle, tells TechCrunch how the Eurovision Song Contest and a stint in journalism helped him devise one of Australia’s leading tech start-ups.
Venture capital firms in the United States raised $20.6 billion from 182 funds in 2012, new figures show, with Australian start-ups among those that benefited from the surge in investment cash.
A new Facebook feature dubbed Publishing Garage will see the social media giant work with businesses to improve how they use the social media platform to market themselves.
US-based platform AngelList is reportedly in the process of raising a major round of financing at a valuation that could top $150 million, with Google Ventures among the rumoured investors.
I'm writing today from the plane travelling between San Francisco and New York.