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Lean thinking – how you’re doing it wrong!

9:32AM | Thursday, 25 September

Businesses with digital projects have accepted that lean thinking and agile methodologies provide the best approach for their projects and ventures.   Start-ups use them as a matter of necessity. Commonwealth Bank, Suncorp, Telstra, Fairfax and even the Australian government have realised the value in this new method.   Lean thinking and an agile approach work by taking an iterative, evolving approach to developing an idea rather than the more traditional, stages of plan, develop and deliver as a whole. Lean and agile can shorten product development cycles, reduce the risk of misunderstanding user needs, increase the likelihood you create something that sticks and, if it doesn’t work, decrease the cost of the failed project.   Lean isn’t for everyone and here are six watch outs to think about before embarking on your own lean project:   1. Lean is not the ‘no plan’ plan   Far too often people say ‘we’re running agile, so we don’t write plans or requirements any more’ and the speed and low-cost benefits are used as an excuse not to invest time and money into thinking things through, opening up a project for failure.   Going lean doesn’t mean doing away with planning.   In one instance, we were brought onto a project with developers that had been coding away for months. No one had a list of completed or outstanding tasks. No one had documents, diagrams or mock-ups describing what needed to be done. Management was wondering why there were so many bugs and why things kept being delayed. Things turned around when we put some basic planning processes in place and some unimposing levels of documentation. Simple, but successful.   You don’t need to spend months planning but you still need to plan, do requirements and think ahead to keep stakeholders on the same page. You may even choose to evolve your planning and requirements iteratively.   2. You and your stakeholders must accept things will go wrong   Lean means that you would prefer to try, fail, learn, improve and repeat in small incremental and manageable investments. Failing is part of the process of understanding where things are going wrong.   Demanding that things go smoothly is therefore false economy. Sure, there are mistakes that are avoidable but more often than not, if you have good team and you’re following the process correctly, the errors will be important. Errors mark a need to change approach, re-evaluate or, in extreme cases, kill the project – a much more favourable, low-risk outcome compared to an investment in something that isn’t going to work.   But you need board, senior management, customers and suppliers to buy in. Google does this really well. They brand their products or features as “beta” or “labs” signalling that they’re trialling something and it may go wrong. People accept that these features may have errors because they know it’s part of the process of producing a better outcome for them.   This might sound obvious, but when you’re innovating and outside your comfort zone the temptation to return to the comfortable can be strong, especially when the board or senior management is breathing down your neck demanding to know why things aren’t going smoothly. But if you succumb, you face a much greater risk: a project with the expectations of “lean” but none of the flexibility to experiment and learn.   3. Lean isn’t an excuse not to commit to things With the emphasis on trying, failing, learning and improving it is easy for teams to start avoiding any commitment but you can’t let lean or agile be a scapegoat. At the end of the day, your team is still operating in a commercial environment and results need to be delivered.   4. Accumulating technical debt   Projects that use lean as an excuse to go as quickly as possible without much forethought tend to pile up what engineers call ‘technical debt’ that is an amount of future effort required to fix technical tasks that were done the quick way instead of the right way.   We’ve seen entire systems are thrown away and written again because the quick and dirty approach has been used.   5. Lean doesn’t mean you can always change your mind and expect immediate results   Lean can help move things along faster and can be better at dealing with change when compared to more traditional approaches. This is often how it is sold to management and stakeholders. However, lean and agile don’t mean you can repeatedly change your mind and expect immediate results.   Software engineers make decisions and create logical structures based on the current requirements and future vision of the project. Some changes can easily slide inline with prior decisions and the existing logical structures but other changes may require a significant restructure which in turn results in a significant effort to make changes.   6. Knowing when to move away from lean   The landscape may have changed; you may have thousands of users, new regulation to deal with or greater certainty that the project will succeed. Ignoring more “traditional” planning or risk mitigation strategies may result in missed opportunities or worse, in a damaged brand or fines.   The lean methodology has already brought great rewards and better business practice to many firms, but like any other process, misunderstand it and it can go wrong.   Knowing the things to look out for is half the battle. I hope these tips help in keeping your lean project on track.   Scott Middleton is the CEO and founder of Terem Technologies, an Australian company that specialises in developing custom software and technology solutions for corporate innovations and high-tech ventures.

Apple iPhone 6 release: Australian app developers and startups react

9:54AM | Monday, 22 September

Apple has now released its iPhone 6 and 6 Plus smartphones in Australia, and the near inevitable crowds are – once again – lining up around the block.   So what does the news mean for Australian software studios and app developers?   Is this likely to be an “insanely great” development that will boost revenues and sales for local startups? Perhaps it will mean more headaches for developers? Or will this mean less than some would anticipate?   We asked a number of developers and entrepreneurs to find out:   Clipp co-founder and chairman Greg Taylor   It looks like a bigger iPhone 5s – but with some amazingly beautiful and innovative new rounded edges!   The best part for Clipp is Apple Pay. Apple Pay will provides our customers with another payment option to credit card and PayPal, the major benefit being customers not having to enter their credit card, overcoming any concerns of credit card security.   Apple Pay will be a huge driver to mobile payment adoption, which is great for Clipp.   Anytime Apple releases a new iOS, I get very nervous, particularly a major release like iOS 8. There is a strong history of many apps not working on each major release. I have already received an email from a widely used app this morning warning customers not to upgrade to iOS 8. Apple don't give developers much time at all from releasing the final version until consumers can download it. If something does not work, there is not enough time to fix it, test it and put it through the App store approval process (approximately two weeks) prior to it hitting the market.   Tapit co-founder Jamie Conyngham   The fact that NFC is in the iPhone 6 is a huge reversal for Apple, and we are super excited by it. As recent as 12 months ago TechCrunch reported that Apple was never going to take NFC up so we're really glad to see it's there.   The fact that they have put it in for payments is amazing for the industry and we are already feeling the shock waves. People now understand that everything is going to be NFC payments in a short amount of time. We have been waiting for the banks, credit card companies and retailers to begin educating the mass market about NFC for payments for a while, as it was always going to be a big driver for the technology so it will be a great opportunity. Organisations are finally realising that NFC services are coming and they are all going to start planning for it.   Unfortunately, it won't be available for other great NFC applications like tag reading/pairing and apps for about 12 months. In the meantime, Tapit will continue working with open NFC partners like Samsung to improve and innovate on new ways to use NFC, as well as executing bigger information and advertising projects. Tapit will also continue using beacons and QR for Apple users in the meantime as well.   Outware Mobile director Danny Gorog   “iPhone 6 and iOS 8 are an incredible opportunity for Outware. Many of our clients including ANZ, Telstra, AFL and Coles are excited about the new larger displays and the added flexibility that iOS 8 provides. We’re already well underway to ensure our clients apps are fully iOS 8 and iPhone 6 compliant.   As specialists in large scale finance and insurance apps, we believe the new NFC capabilities in iPhone 6 will change the mobile payment landscape and the way Australians want to pay and shop. Australia has one of the highest penetration rates of tap and go terminals in the world so we are a perfect fit for this technology.”   Squixa chief executive Stewart McGrath   Devices like the iPhone 6 are a response to the consumer demand for easier access to more content. In the last four years, the average webpage size has nearly tripled while average connection "speeds" have only doubled. This is putting great pressure on website owners to utilise better ways of delivering increased content to these devices but still maintain a quality user experience.   The challenge to keep pace and make use of the attributes of these devices is now being pushed back onto website owners. Higher resolution screens mean images need to be sharper and improved processing capacity means laggy web content delivery is more noticeable for a user.   We expect the consumer demand for content to grow at an exponential rate and platforms like the "six" are the hardware manufacturers' answer. The pressure is on website owners now for sure. The ones who are responding are setting themselves apart from their competition.   Will Heine, Wicked WItch Software   Again the new iPhone launch has been very successful, so there will be more iPhones in the marketplace and new consumers that can enjoy our games like Catapult King. As well as more users, the new devices are again more powerful, which allows more advanced features of our game engine technology to run on mobile and tablet devices, resulting in improved graphical and gameplay quality in all of our upcoming titles.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

The Australian startup scene is booming, but we still face a crippling problem and it’s not funding

9:08AM | Monday, 1 September

The Australian startup scene is booming with large numbers of startups being launched every day, but we still lack experienced founders and teams, according to a number of Australian investors.   Application numbers are more than adequate across a number of Australian startup accelerator and incubator programs. The Telstra-backed Muru-D program received 200 applications for its initial batch of startups while AngelCube received around 100 applications for this year’s intake, meanwhile BlueChilli receives 200 online applications a month.   AngelCube founder Adrian Stone says the incubator tried to the address the problem by tightening its requirements this year, which resulted in around 50 fewer applications when compared to last and an increase in quality, but it was still difficult to find seven or eight startups to fill the program.   The Sydney Seed Fund, which aims to invest in 20 startups over three years, had over 200 applications in its first year, but only offered investment to five.   Sydney Seed Fund partner Benjamin Chong says it isn’t so much a lack of quality ideas that’s a problem, but a lack of quality teams.   “From what we’ve experienced the quality is very variable,” Chong says.   “We’ve had a bunch of people applying for money and all they have is an idea, others have a team, but maybe they haven’t had revenue, but they do have something to show for it.   “We’re very interested in backing teams of people that are demonstrating a capability to get things done. They might have done something before, but also if they have a strong co-founding team with complementary skills.”   The Sydney Seed Fund received a broad range of applications, many of which weren’t even tech startups, one team wanted to build a skyscraper in Pakistan.   “For some founders there’s a bit of a spray-and-pray type approach,” Chong says.   “Just go up and hit a lot of people in the hope that it will bear fruit.”   Chong wasn’t able to say for sure if the three startups Sydney Seed Fund invested in, and the two more it’s negotiating with, were the only startups they gave an offer sheet.   Stone agrees it’s a lack of quality teams, and more specifically technical co-founders that is hurting the standard of Australian startups, in addition to a general lack of experience that comes from the ecosystem having a relatively small amount of successful startups.   “Maybe we haven’t got enough people that have had a go, if you haven’t started and failed you’re probably not as good a founder as you can be,” Stone says.   “And we’ve got a weakness when it comes to tech co-founders.

Tasmania takes promising steps to building its startup ecosystem

8:57AM | Monday, 25 August

Tasmania’s startup ecosystem is starting to attract the attention of mainland accelerator programs.   In the past month the island state has been visited by the Telstra-backed Muru-D accelerator program, and BlueChilli founder and chief executive officer Sebastien Eckersley-Maslin.   Muru-D held two events, one in Launceston and one in Hobart, as part of its search for its next batch of startups, while Eckersley-Maslin was in Hobart speaking at the Tasmanian ICT Conference.   While it might not seem like much to those in Melbourne or Sydney, it’s an important step for a state that wants to become competitive with other regional startup hubs, as Startup Tasmania’s James Riggall explains.   “Tasmania itself is still getting started for sure, there’s not much of an established startup ecosystem here,” he says.   “Instead there are a number of groups working towards trying to make Tasmania competitive as a regional startup ecosystem. It’s really exciting for us to have BlueChilli’s Seb Eckersley-Maslin and Muru-D in the state within two weeks of each other. It’s a really important step to help build awareness.   “The vision is to make Tasmania a place where accelerators are interested in recruiting, and in the long term to have our own home-grown accelerator programs.”   Both of Muru-D’s events in the state where well attended, Riggall says, with roughly 50 entrepreneurs taking part.   They provided a glimpse of the sort of startups that could call Tasmania home.   “There’s a small number of startups around and we’re already starting to see some niches developing,” he says.   “Looking at the people coming along to the Muru-D event and pitching on the night, there were some startups in the agricultural sector and there’s also a little bit of boutique electronics manufacturing.”   Muru-D co-founder Annie Parker, who was in Tasmania representing Muru-D, says there’s a real opportunity for Tasmanian startups to be taking on the agricultural and creative arts spaces.   “That’s something that Tassie specialises in really well, and will give them a fighting chance to stay in Tasmania to build it,” she says.   “If you’re a B2B (business-to-business) or a straight to consumer product it’s going to be difficult to build that critical mass, that wealth of customers or small-to-medium businesses.   “If I was in the agricultural tech space, or creative arts, I would find Tassie a fantastic space, with relatively low cost access to potential customers.”   The Tasmanian state government has pledged funding for a “go-to-market incubator” to support Tasmanian startups to commercialise their technology. However, what exactly that incubator might entail is still unknown.   “The government is doing what it can for startups, but there really needs to be the community groundswell, the energy needs to come from the community,” Riggall says.

The case for a fibre to the premises NBN

8:00AM | Thursday, 21 August

In his independent audit of the public policy process behind the national broadband network, former Telstra director Bill Scales suggests there was never an internal debate about different technology options for the NBN.   He also argues the panel of experts (of which I was a member) assisting the Rudd government did not properly test advice from the Australian Competition and Consumer Commission (ACCC) about the upgradeability of a Fibre-to-the-Node (FTTN) network to a Fibre-to-the-Premises (FTTP) network, and that the panel inappropriately relied heavily on this advice in making recommendations to the government about the development of the NBN.   In my view, all of these assertions are incorrect, and this taints the credibility of the audit.   In reality, the panel spent many hours discussing and analysing the technology options and the upgrade paths, including those set out in the various proposals submitted by companies in response to the government’s Request for Proposals (RFP). The panel also independently evaluated other models for upgrades.   The panel, which included telecommunications experts from both industry and academia, carefully scrutinised all advice it received, and drew heavily on its combined experience. Some advice was very helpful and some was considered to be of little value.   When the ACCC tabled its advice regarding the costs of upgrading FTTN to FTTP, it came as no surprise to the expert panel that the ACCC had a view that was similar to what the panel had already concluded. Simply put the panel did not rely heavily on the ACCC advice.   A fundamental flaw with the audit process was that Scales, by his own admission, did not have access to key information, with limited access to documents associated with the panel of experts’ activities.   Members of the panel, constrained by strict confidentiality rules, were also unable to share any further information with Scales about the details of panel discussions and deliberations. Without divulging any details, I was able to explain the situation regarding the ACCC to Bill Scales when he interviewed me for his report, but it seems he did not put much weight on my comments.   Scales seems to have missed the point that upgradeability was an important issue from the outset of the RFP process. The RFP for NBN Mark I included many requests for information from proponents about how they proposed to future-poof their networks by providing upgrade paths from FTTN to FTTP. It even suggested a 2020 time frame for this upgrade. The consideration of upgradeability and its costs was one of a number of factors that fed into the “value for money” criterion for evaluating the proposals.   In one part of his report, Scales suggests the ACCC ignored a key report by Analysys Mason, which shows that the cost of FTTP is around five times the cost of FTTN. But a little bit of information can be dangerous.   What Scales seems to have missed here is that the Analysys Mason report was based on the British broadband landscape, and assumed that the copper network required for a FTTN rollout was already owned by the operator rolling out the network. When parts of the copper network and/or the associated ducts might need to be purchased or leased, as required for Australia’s NBN, the calculus changes completely.   Story continues on page 2. Please click below. The Coalition’s NBN is proving expensive   Under the previous Labor government, NBN Co negotiated a deal with Telstra to provide access to Telstra’s ducts and pits, enabling fibre to be laid with fewer trenches needing to be dug. The cost to NBN Co of this access was A$11 billion, and added a hefty overhead to the total cost of the NBN.   Even if we make the optimistic assumption that NBN Co will not have to pay any more than this $11 billion to access and maintain Telstra’s copper wires inside those ducts, the Coalition’s (predominantly FTTN) NBN will suffer the same $11 billion overhead. Consequently, the factor of five difference between the cost of FTTP and FTTN given in the Analysys Mason report drops to something around two or three. By world standards, the Coalition’s NBN is turning out to be very expensive.   What has Australia lost in the transition from Labor’s FTTP NBN to the Coalition’s multi-technology mix, with a large proportion of FTTP? In my view, a big danger is that future upgrades from FTTN to FTTP will be slow and that Australia will continue to lag behind the rest of the developed world in terms of broadband access.   With such a huge investment sunk in the Coalition’s multi-technology mix NBN, there is going to be very little appetite in government to fund future expensive upgrades to FTTP. If the government sells the NBN to a commercial monopoly operator, there could be even less incentive for upgrades to FTTP. There is a real danger that Australia will remain trapped in a broadband backwater.   Rod Tucker receives funding from the ARC and has received funding and in-kind support from a number of telecommunications companies. He served on the Rudd Governent's Panel of Experts that assisted with the development of the NBN.   This article was originally published on The Conversation. Read the original article.

Upcoming event encourages the next generation of female tech leaders

8:00PM | Sunday, 10 August

Go Girl Go for IT, a free upcoming event for high school girls from years 8 to 11 organised by the Victorian ICT for Women Network, aims to encourage girls to consider a career in the tech industry.   This year’s event, to be held at Deakin University’s Burwood campus, is set to attract 1500 girls from 54 schools across the state, including some from as far away as the regional city of Wodonga.   Go Girl Go for IT communications team lead Sara Ogston told StartupSmart the 2014 theme is about changing perceptions about a career in IT.   “The big theme for the event is ‘IT is it’, it’s about talking through the opportunities in the sector,” Ogston says.   “It’s about getting away from the stigma around IT and making sure girls understand IT is no longer just about sitting at a computer all day or plugging in cables in a server room – it can be a really creative career.   “IT and ICT can be intimidating. The big thing is we want to open up these girls’ eyes to how there’s also a lot of opportunities in it.”   Go Girl Go for IT co-director and the head of cloud practice service optimisation at Telstra, Irene Evgeniadis, told StartupSmart the event is about showcasing the variety and diverse opportunities available to women who want to study or work in IT.   “We do this by having industry speakers and sponsors (corporate, educational and government) who give the girls with a glimpse into the excitement, opportunities and career satisfaction that IT can provide,” Evgeniadis says.   “Our past surveys have clearly shown us a rise in the number of girls wanting to consider a career in IT, after attending our Go Girl, Go for IT event.”   The event begins at 9.30am with a keynote speech by 2014 patron and Twitter Australia managing director Karen Stocks.   The students will then break up into five streams, where they will hear from a range of leading women from the tech industry. Speakers include NAB senior digital strategist Tammy Barlow, York Butter Factory’s Richenda Vermeulen, Telstra’s Anne Libel, ANZ’s Krish Beresford, and Krishna Nair from Deloitte, among many others.   Following the group sessions, a trade fair will allow the students to ask questions. Meanwhile, a Facebook page has also been created allowing the conversations to continue online.   Gender inequality has long been an issue for the tech sector, with the number of young women choosing to study tech-related subjects at a tertiary level declining over recent years.   It is an issue that has come under increasing scrutiny in recent months, with a string of tech giants including Google and LinkedIn admitting they have serious problems in terms of gender equality. In the case of Google, just 30% of its workforce are women. 

OPINION: How Google Drive for business fits with a home security business

6:39AM | Thursday, 26 June

Google’s main developer conference for the year – Google I/O – has kicked off in California.   For weeks ahead of time, speculation about Android Wear smartwatches, new Google Nexus devices and a possible update to its Android or Chrome OS operating systems.   So Google raised a few eyebrows when, ahead of the conference, it announced it’s shilling out $US555 million (approximately A$591 million) for a company called Dropcam. The newly acquired business is being combined with Nest, the smart smoke detector and thermostat company Google purchased in January for $US3.2 billion.   The company makes small security cameras with built-in microphones and speakers that connect to the internet over Wi-Fi and stream encrypted video and video to the cloud.   Once the camera is set up, the user can use the company’s iOS, Android or web app to stream video and video from their camera, or speak through the camera’s built-in speaker, allowing for two-way communications.   The company also offers the option of recording up 30 days of continuous security video and share favourite clips with family and friends.   The deal sparked a lot of discussion and speculation. Was Google interested in monitoring people’s houses, shops and businesses to glean even more data for its search rankings?   No sooner had the ink dried on the contract when, in Australia, Telstra announced a security deal of its own.   Through a joint venture with firm SNP Security, called TelstraSNP Monitoring, the telecommunications giant will offer will offer monitored security for business and residential customers. While SNP will continue offering guard and petrol services, its video surveillance and security alarm arm will be swallowed by the new venture.   A secure solution   Now, certainly both Google and Telstra have long been interested in security. But it’s mostly been of the cybersecurity and network security variety. So why the sudden interest in catching real-life crooks?   The reason comes down to two topics I’ve discussed a fair bit in recent weeks: Cloud computing and the internet of things.   While people still often think about the “internet of things” as connecting fridges to the internet. However, a real-world example of a situation where there are practical benefits in hooking up a device to the internet is with security cameras.   As I’ve discussed previously, IoT is an evolutionary trend, rather than a revolutionary one. In this case, connecting security cameras and alarms to the cloud allows for easy off-site storage of footage (with a cloud provider), as well as the ability to monitor footage in real time from almost any device anywhere in the world.   In many cases, internet-connected cameras will allow for more flexibility than if all the cameras were physically wired back to a control room or stored at the original location on video tape. (That being said, you can still do both of those things if you stream the footage over the internet).   For reasons I’ve previously discussed, the cost of cloud-based services has fallen through the floor in recent times. Today's announcement of Google Drive for business, with unlimited cloud-based storage for $10 per user per month, is a perfect example.   The cloud adding value   With the cost of providing the underlying cloud computing and storage services falling, the real business opportunity for cloud providers such as Google and Telstra is in providing value added services over the top.   Centralised video camera monitoring and security footage storage over the cloud is one example of where cloud service providers like Google and Telstra can add value for customers.   And if you combine security camera vision in a cloud-based with real-time information from other devices, you begin to build a powerful platform that can be used to remotely monitor facilities and equipment, without physically needing to have staff on the ground.   What it means for you   So what does all this mean for your business?   Well, in many sectors – such as retail or property management – security cameras have long been a fact of business life. A cloud-based, IoT solution could be a far more effective yet cost-effective alternative to existing video surveillance systems.   And if loss prevention is part of your business, that’s certainly worth looking into.   This article first appeared on Smart Company.

NBN Co and Telstra agree on broader FTTN deployment

6:55AM | Thursday, 26 June

NBN Co and Telstra have reached agreement on an expanded program to plan, design and construct fibre-to-the-node (FTTN) high-speed broadband to about 200,000 homes and businesses.   The agreement marks a major step forward in the Government’s ongoing reform of the National Broadband Network. The reforms currently underway at NBN Co will ensure the network is delivered sooner, at less cost to taxpayers, and more affordably for consumers.   The number of premises to be covered by the project is roughly equivalent to the 206,000 homes and businesses passed by the NBN fibre-to-the-premises (FTTP) rollout in established neighbourhoods over the entire period the previous Labor government was in power.   NBN Co will continue to deploy its FTTP, fixed wireless and permanent satellite networks during the period of the FTTN trial deployment.   NBN Co’s contract with Telstra will ensure initial rollout of FTTN focuses on areas categorised as ‘underserved’ in the Government’s MyBroadband broadband quality study.   NBN Co estimates areas underserved with broadband account for around 28 per cent of the premises in the rollout regions.   ‘This announcement demonstrates how FTTN can help to bring broadband more quickly to many regional areas than would have occurred under Labor’s plan—and that is good news because upgraded broadband can help regional communities capture improved economic, educational and social opportunities,’ said Paul Fletcher, Parliamentary Secretary to the Minister for Communications.   Rollout regions included in the trial project include:   Belmont, New South Wales Bribie Island, Queensland Boolaroo, New South Wales Gorokan, New South Wales Morisset, New South Wales Hamilton, New South Wales Bundaberg, Queensland Caboolture, Queensland Gympie, Queensland Warner, Queensland   In addition, the NBN will expand its current FTTN pilot in Umina on the New South Wales Central Coast.   The agreement for a thousand-node FTTN trial represents an interim step while NBN Co, Telstra and the Government finalise changes to the existing Definitive Agreements covering Telstra’s participation in the NBN. It is anticipated that these changes will include arrangements for the NBN Co to gain access to Telstra’s existing local access network.   In parallel NBN Co will work closely with telecommunications retail service providers to finalise the design of its FTTN products and provide services to end-users.   Early line tests using Very-high-bitrate Digital Subscriber Line technology (VDSL) indicate that download data rates of up to 100 megabits per second and upload data rates of up to 40 megabits per second are achievable over copper lengths of a hundred metres.   The top available downloads speeds are approximately 17 times faster than current average fixed line broadband connections to Australian households. These speeds allow ten high definition television shows to be streamed to a single household or business concurrently. A three minute YouTube video will be able to be uploaded in as little as 42 seconds, compared to up to 20 minutes on today’s average ADSL connections.   Since the September 2013 election the number of households and businesses with active service over the FTTP network has tripled from 48,000 to 146,000.   In the same period the number of premises passed by the FTTP network has almost doubled to 482,000.   Telstra, the NBN Co and the Government are well advanced in negotiating changes to the Definitive Agreements. These negotiations have not yet concluded but are progressing well.   The limited deployment of FTTN is an important step in allowing NBN Co to determine how a multi-technology mix rollout will change its construction and service provisioning operations.

Internode rolls out free Wi-Fi hotspots in Adelaide CBD

6:58PM | Wednesday, 25 June

South Australians will no longer have to search for a hot spot or a café with Wi-Fi in the Adelaide CBD, as the city today switches on free wireless network access throughout central Adelaide.   While Telstra is rolling out its Wi-Fi hotspots across Australia, national broadband provider Internode, a subsidiary of iiNet, has got a jump on the South Australian Wi-Fi game with the creation of its AdelaideFree wireless network.   Launched today in partnership with the South Australian government and Adelaide City Council, Internode says AdelaideFree’s 300 wireless access points across the city will saturate almost the entire CBD, offering free Wi-Fi to more than 30,000 people.   Internode says the network will provide blanket coverage between North Terrace and Wakefield Street/Grote Street and broad access areas in the south city, North Adelaide and the most heavily frequented parts of the Adelaide parklands.   “Already people in Adelaide are embracing this new Wi-Fi capacity. Internode has recorded about 50 per cent increase in use of the Wi-Fi network since announcing AdelaideFree’s deployment last year,” said Internode chief business officer Greg Bader.   AdelaideFree is installed at external locations throughout the CBD including the Festival Centre, the SA Museum, the State Library, the National Wine Centre and the corporate function centre located in the historic Adelaide Stock Exchange building.   The telco says the network is one of the largest CBD-wide outdoor wireless networks in the world and was well tested during Adelaide’s “Mad March” festival season.

‘Google Schmoogle’ – how Yellow Pages got it so wrong

6:12PM | Sunday, 22 June

Yellow Pages directories have been appearing on doorsteps across Australia in recent weeks. As often as not, they go straight into the recycling bin. In the world of the internet and e-commerce, the very notion of a book the size of two bricks being the source of valuable purchasing information seems plain silly.   Once directories like the Yellow Pages served a valuable need in most developed economies. They provided basic and inexpensive local advertising, especially for small businesses.   As the internet emerged as the preferred means of accessing such information, the potential for directory owners like Telstra to translate directory information into a valuable online business opportunity seemed promising. As is often the case in the unpredictable world of the internet, it was not quite so simple.   In January 2014, Telstra sold a 70% share of Sensis, its directories subsidiary, to a US hedge fund for A$454 million, only 2.4 times projected 2014 earnings. This is quite a turnaround from the A$12 billion value suggested to Telstra’s Board in 2005. At the time, Telstra’s chief executive Sol Trujillo declined to spin-off the business, suggesting Sensis (Telstra’s directory business) would be “bigger than Google”.   Google Schmoogle?   Indeed, with characteristic ebullience, Trujillo commented in November 2005, “Google Schmoogle”. Contrary to that prediction of sorts, since 2005 Google’s market capitalisation has increased tenfold, to more than half a trillion dollars. Among Trujillo’s many strategic mistakes, his misunderstanding of the relative potential values of Google and Sensis probably takes the cake.   It’s fair to say, however, that Trujillo was not alone in misunderstanding the radical changes in the economics of information over the last decade. These changes have completely upturned the value of directories businesses globally. The investors who bought Telecom New Zealand’s directories business in 2007 for $2.1 billion (at an earnings multiple of 13.6 times) at the height of the private equity bubble have done most of their dough.   Knowledge is Power (and Money)   The 2.4 earnings multiple on the recent Telstra sale suggests two things - that the business is still profitable, but that profits are expected to rapidly erode. How can we explain this sudden, anticipated and precipitous decline in the value of information available through directories like the Yellow Pages?   The economics of information is changing rapidly. Economists George Akerlof, Michael Spence and Joseph Stiglitz won the 2001 Nobel Prize for economics for their seminal work on the economics of information, especially information assymetries between buyers and sellers.   Most famously among the suite of work done by these economists was Akerlof’s 1970 paper “The Market for Lemons”. Like all great academic work, its beauty lay in its simplicity. In essence, buyers and sellers have “asymmetric” information. In the example in his paper, the seller of a used car knows if it is a “lemon”, though the buyer rarely does.   A consequence of Akerlof’s Lemons paper for sellers is that it made sense for them to signal to the market aspects of the quality of their products – by suggesting that they are selling “cherries” (great used cars) and not “lemons” (cars on their last legs). One simple way to do this was through advertising. This was especially useful where the buyer’s knowledge of the seller was limited, as would often be the case for the buyers from small businesses who advertise in directories like the Yellow Pages.   Better information, less asymmetry   The steep decline in the generic, supplier-provided data that is the essence of Yellow Pages has been driven by a set of related phenomena.   First, sites like TripAdvisor have emerged to provide detailed and generally reliable information on services including hotels, tourist attractions, restaurants and the like. Importantly for Yellow Pages, sites such as these are becoming the first place for buyers to visit. As the quantity of collected reviews increase, the value of such sites increases greatly, as they provide a level of information on sellers that static directories cannot match.   Second, the costs of “searching” for information is in steep and terminal decline. Once, buying a set of golf clubs for the best price, for example, required a multitude of phone calls or, worse still, visits to stores with pushy salespeople. Now, finding the best price in the market is a few keystrokes away through Google.   Too late for Sensis?   This begs the question – can the Yellow Pages reinvent itself to be a new portal for information on sellers that will be valuable for buyers, and thus continue to attract advertisers? The answer is probably not. As a late mover into such information provision, it will have an almost insurmountable challenge to build an equivalent body of information in comparison to its competitors. More so, it will be a generalist in an industry full of specialists, the last site visited by buyers and thus the least valuable site for sellers to direct their advertising dollars to.   This makes the 2.4 times 2014 earnings paid in January for Sensis seem about right. Such a multiple suggests that this year’s Yellow Pages might be the last one to lob onto Australia’s front porches. If this is bad news for Sensis, it is good news for the millions of trees that will be saved!     By John Rice and Nigel Martin.    Rice is an Associate Professor in Strategic Management at Griffith University. Martin is a lecturer at the College of Business and Economics at Australian National University. Rice is a member of the National Tertiary Education Union and the Australian Labor Party. Martin does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. This article was originally published on The Conversation. Read the original article.

Telstra asks small businesses to hand over their Wi-Fi for hot spots

5:25AM | Tuesday, 27 May

Small businesses will be able to use Telstra’s $100 million national public Wi-Fi network to provide free internet to their customers.   Telstra is asking its small business customers if they will turn their service into a Telstra Wi-Fi hotspot and to be promoted by Telstra as a destination to connect.   Alan Crouch, director of connected home at Telstra, told SmartCompany it was a great offer to small businesses such as cafes, shops and doctors surgeries.   “The whole idea is to be able to provide a place for people to connect,” says Crouch.   “When they’re out and about getting a coffee or when they’re at the doctor, they’ll see the Telstra Wi-Fi there and it gives them a chance to have multiple choices on how they connect.”   Telstra broadband customers will be able to install new gateways allowing them to share a portion of their usage quota each month in exchange for free access to the network.   Crouch says the details of commercial negotiations and costs for business haven’t yet been decided.   “It’s really a ‘better together’ scenario, there’s mutual benefits,” says Crouch.   “We’re providing a service to people that’s going to make them want to come visit shops.”   He says the telco has had considerable interest in the Wi-Fi hotspots in the past 24 hours since it announced its new network.   “We’re asking all of Telstra’s small business customers to start this conversation with us.”   Small business owner and Telstra customer Salvatore Malatesta, the man behind Melbourne’s popular St Ali cafes, says he would welcome the Wi-Fi hotspot in his cafes.   But he says the business already spends a considerable amount on corporate phone plans and would not want to pay any extra fees for the service.   “If they want ambassadorial clients to embrace their technology and give them lots of love on social media platforms and that sort of thing, then it should be free,” says Malatesta.   Interested business can register their interest here.   This article first appeared on SmartCompany.

Wireless world: Telcos invest as we become more mobile

5:44AM | Tuesday, 20 May

News that Telstra plans to build a national wi-fi network, as reported by The Australian and Fairfax mastheads, shouldn’t come as a shock. Given the volatility of anything and everything to do with mobile internet use, nothing should surprise us any more. But it should scare you.   Telstra’s plan, which is being announced right on Crikey’s deadline, will — according to tweets from ZDNet’s Josh Taylor — reportedly see $100 million spent showering the country with new modems for broadband customers who choose to act as wi-fi hotspots using Fon sharing technology. It’ll be free to use by the telco’s fixed broadband customers, although any data used will count towards their quota, and a “small daily fee” for others.   Arranging free wi-fi for fixed broadband customers is not uncommon in Asian and North American cities, although the Fon sharing is a less common twist, and it’s a logical move for Telstra for the same reasons. It makes the telco’s fixed broadband packages more attractive, it reduces the load on 3G/4G mobile broadband services in high-traffic areas, and — not talked about so much — it provides more opportunities to track customer behaviour for all those data mining and monetisation strategies that make modern telcos into something much more like a media company.   For all the hype around the “mobility revolution”, and while consumers are increasingly using their mobile devices away from the home or office, the growth in Australia’s mobile broadband market was just 3% in the 12 months to December 2013, according to research released yesterday by analyst firm Telsyte.   The proliferation of public wi-fi hotspots, which Telsyte analyst Alvin Lee says are “sprouting like mushrooms and are now widely supported by local councils, shopping centres, local businesses and increasingly our transport networks”, means that there’s less need for a dedicated mobile broadband device — particularly as most smartphones can now operate as a wi-fi hotspot, and people are becoming more comfortable pressing that button.   “The opportunity for dedicated mobile broadband is diminishing even as mobile traffic continues to grow,” Lee said. As a result, Telsyte believes telcos will only be able to monetise 20% of the consumer media tablet market.   Indeed, why would anyone want to load yet another device into their pocket, perhaps with yet another charger, and certainly with another monthly bill?   Whether this will play out well commercially for Telstra remains to be seen. As Fairfax’s David Ramli points out:   “Other Australian companies have attempted to use Wi-Fi hotspots to give customers more internet services on the go with very low success rates.”   iiNet sees its wi-fi offering more as a marketing tool.   My weekend in San Francisco showed how this might play out. AT&T has wi-fi hotspots across the city, and you see their branding every time you look for a connection. It left an impression. But at the same time, most bars, cafes and shopping malls have “free” wi-fi too — along with power outlets and somewhere to sit.   “Free” is in scare quotes there because the use of wi-fi for tracking consumers is becoming ever more sophisticated. Toronto-based Turnstyle is just one of the companies pushing the boundaries in this regard. By rolling out a unified wi-fi network throughout the shopping district, they can track people as they go about their business. As The Wall Street Journal reported in January:   “Turnstyle’s weekly reports to clients use aggregate numbers and don’t include people’s names. But the company does collect the names, ages, genders, and social media profiles of some people who log in with Facebook to a free wi-fi service that Turnstyle runs at local restaurants and coffee shops… It uses that information, along with the wider foot traffic data, to come up dozens lifestyle categories, including yoga-goers, people who like theater, and hipsters.”   If Telstra is planning something similar — and given that this is increasingly the way things are done, I suspect it’s likely — then this could be the start of one of the most comprehensive consumer tracking databases in the country.   This article first appeared on Crikey.

What now for the NBN as taxpayer investment is capped?

5:34AM | Friday, 16 May

The Abbott Government’s first federal budget has allocated funds for capital investment into the National Broadband Network (NBN) to continue up to 2017-18 but with a cap of A$29.5 billion.   This falls well short of NBN Co’s original forecast of A$44.1 billion not withstanding various estimates of cost blowouts and new NBN Co leadership’s revised forecast of A$72.6 billion.   The Coalition under Tony Abbott’s leadership in opposition and in government has long maintained that NBN could cost less and be rolled out quicker.   That commitment was confirmed this week by Communications Minister Malcolm Turnbull following the budget announcement on spending.   In a statement, he said the budget provides A$20.9 billion in equity funding to NBN Co to cover up to 2017–18. This is on top of A$8.6 billion already committed bringing the total to the capped A$29.5 billion.   New sources of funding needed   NBN Co CEO Bill Morrow now faces some difficult decisions in deciding how best to allocate resources to meet the objective of providing high-speed broadband across Australia.   Since the Coalition’s election in September last year the NBN has been subject to a number of reviews and a wholesale clean out of management.   With many reviews, such as the cost-benefit analysis, yet to report, the strategic direction for NBN Co is uncertain making it difficult to comment on future developments with accuracy.   What can be said with certainty is the capping of the government’s investment gives a clear indication that Coalition’s NBN will be vastly different from that proposed under Labor.   But some issues will need to be addressed so they do not provide a thorn in the side to NBN Co or hinder the rollout of broadband across the community.   The funding cap amplifies the need for private investment. Only A$57 million has so far been earned in revenue related cashflow against the A$7.3 billion invested to date.   NBN Co will therefore be required to increase revenue and raise funds through private equity or debt financing to ensure it can fund both operational expenses and future capital investments. But it will need to show an attractive rate of return potential to lure Australian institutional investors, superfunds and other international investors.   Alternatively NBN Co will be forced to secure loans to bridge the gap. But whether the Abbott government would offer debt guarantees to the company remains an open question.   NBN Co may seek to reprioritise the rollout of the planned network by cherry picking more profitable connections in metropolitan regions. But this may detract from the rollout of services in areas with a higher capital cost, such as regional towns and outer suburban areas, which are often those areas that have the most to gain from the provision of broadband.   Deals with telcos   The A$11 billion deal with Telstra to lease part of its existing network is currently under renegotiation. This might extend to accessing existing fibre-to-the-cabinet, hybrid fibre-coax and dark fibre in addition to copper infrastructure to speed up “new” NBN rollout.   A changing technology mix means that some existing copper will not be decommissioned, entering operation as part of the NBN.   The outcomes of the renegotiation and the terms of any new agreement will impact the rollout and the future technology mix. Fibre-to-the-node in some form and maximising the use of existing copper infrastructure appears to be a dominant base for such mix and existing carrier infrastructure may offer opportunities in a funding constrained environment.   By further reviewing its construction and installation methods NBN Co may be able to achieve some cost savings and curtail cost blowouts.   Network competition   The NBN Co is operating in an uncertain regulatory environment. The current rules were set up with the NBN Co being a monopoly wholesale infrastructure provider.   But internet service provider TPG’s plan to rollout its own fibre-to-the-basement network is changing the telecommunications landscape requiring a regulatory response. Failure to clarify this would force NBN to lose opportunities in rolling out to rapidly expanding apartments sector with a customer base often opting for higher tier services.   Australia would then see its history repeated once more with parallel network rollout similar to the hybrid fibre-coax rollout by Telstra and Optus.   Maintaining the wholesale monopoly for NBN Co could have possible competitive consequences. Currently there appears to be a confusion in the way wholesale services are defined with potential restrictions on emerging market opportunities. NBN review panel’s terms of reference is seeking input on clarification of this.   Relieving NBN Co of its wholesale-only constraints, or at least redefining its limitations, would allow it to provide network connectivity directly to business end-users such as mobile base-stations, large businesses, governments and national infrastructure such as power grids which offer high growth potential.   This approach would be good for NBN Co as it would open new revenue streams that would support the government’s desire for the company to increase private investment.   Thas Ampalavanapillai Nirmalathas is a Professor of Electrical and Electronic Engineering. He is currently an Associate Director with the Institute for Broadband-Enabled Society which has received funding from a range of sources including the University of Melbourne and Victorian Government. He is also the Director of Melbourne Accelerator Program which helps to promote entrepreneurship culture through acceleration of start-ups. Views expressed in this article is entirely that of the author and do not reflect the views of his employer - University of Melbourne. He receives funding from the Australian Research Council.   This article was originally published on The Conversation. Read the original article.

Microsoft improves its Azure hybrid cloud offering

5:57AM | Tuesday, 13 May

Optus’ parent company SingTel has signed on as a major partner for Microsoft’s newly announced Azure ExpressRoute hybrid cloud service.   Announced today at Microsoft’s TechEd North America conference, ExpressRoute allows businesses to directly connect their on-premises servers or data centres with Microsoft’s Azure cloud hosting service.   The service uses direct fibre optic links through phone providers and virtual private networks, such as SingTel’s Multi-Protocol Label Switching (MPLS) service, to allow businesses to connect directly to Azure without using the public internet.   SingTel joins a number of other major international telcos including AT&T, BT, Equinix, Telecity and Verizon in offering the service, which appears set to compete head-to-head against the network applications and services (NAS) offerings recently announced by Telstra and Cisco.   Microsoft’s Cloud & Enterprise Division corporate vice president Brad Anderson told the conference the new service is the product of the increasing data volumes many organisations exchange with their cloud services.   “One of the most common requests we have from organisations that are really embracing the cloud in a big ways is they want dedicated links that are high speed because they’re moving so much information back and forth between their clouds.”   The new service will allow businesses to use Azure as an extension of their existing on-premises server and datacentre capabilities. It will also allow hybrid apps where, for example, a corporate intranet app hosted through Azure can be authenticated with an on-premises Active Directory.   Aside from extending datacentres, a service set to roll out next month, called Microsoft Azure Site Recovery, will allow businesses to replicate and recover their servers to Azure in the event of an outage at their primary datacentre.   Alongside the new ExpressRoute service, the tech giant has also announced a number of cloud-based cybersecurity initiatives. These include an anti-malware service for Azure, new Data Loss Prevention capabilities SharePoint Online and OneDrive for Business, and the deployment of new file encryption technology in Microsoft Office 365 from July.   This article first appeared on SmartCompany.

Amazon’s ‘silly’ patent only strengthens Aussie startup’s position

5:55AM | Tuesday, 13 May

Amazon’s move to patent the process of taking a picture of an object against a white background makes Australian startup Pixc stronger, according to founder Holly Cardew.   Pixc is a web-based service aimed at online retailers that photoshops the background out of pictures and replaces it with a white background, within 24 hours for a small fee.   Amazon recently made waves when it applied for and received the patent, which details a process using a camera and lighting and a particular studio arrangement in order to take a picture of an object against a white background.   The patent includes a work flow chart that describes the process as follows: start, activate rear light source, activate front light source, position subject on elevated platform, initiate capture, end.   “It shows how serious Amazon take their white backgrounds,’’ Cardew says.   “This shows both to our customers and investors that white backgrounds are the key to selling a product online.”   The decision to grant Amazon the patent had been widely mocked and some have gone so far as to call it the silliest patent ever awarded.   “I think if you have the money and the right lawyers anything is possible, unfortunately,’’ Cardew says.   “I am curious how they are going to enforce this as photographers have been using this technique for years.   “The photographers are the ones who should be concerned as they will have to do more post photo editing, which means that companies like Pixc are even more relevant.”   Cardew says Pixc doesn’t own a patent on the process it uses to produce its images of objects on a white background and she points out the structural advantages that behemoth’s like Amazon enjoy.   “I wouldn’t get a patent unless I knew I had the funds or lawyers to fight it,’’ she says.   “It can cost a lot to get a patent but unless you can enforce it, it is worthless.”   Pixc is part of the Telstra backed muru-D accelerator program and Cardew is in the United States on a visit organised by the program where they are hoping to gain exposure to the US market.

Google Glass: Eyes and ears for sight and hearing impaired

5:52AM | Thursday, 8 May

Imagine a device that provides subtitled conversations for the hearing impaired in real life.   Thanks to Google Glass, Telstra and Australian app developer b2cloud, such a device is a reality.   For the past six months, Telstra and b2cloud have been working to create apps on Google Glass for the vision and hearing impaired.   One app uses Google Glass’ microphone and heads-up display to transcribe speech for the hearing impaired, presenting real-time subtitles of a conversation.   It will enable users to be more active participants in conversations or meetings with multiple people in a room, rather than having to rely on a laptop or computer.   Another enables those who are vision impaired to receive audio descriptions of objects in front of them.   B2cloud managing director Josh Guest gives the example of a vision impaired person holding two cans of the same size, one of spaghetti, the other of baked beans, the only way to tell the difference is the label, and Google Glass is able relay that information back to the user by giving them an audio description.   For the vision impaired, it’s a feature that can make common tasks like shopping at the supermarket, an awful lot easier.   “It all works, these are real apps, they’ve been trialled amongst users, people who are hearing and vision impaired,” Guest says.   “The point is not to look at it like a product, but what it is an experiment, and it just shows what the potential is, in a brilliant connected future, what does that actually look like.”   Guest says when the device was tested by a group of Telstra employees with vision and hearing impairment and their reactions were “jaw dropping”.   “It’s super rewarding,’’ he says.   “If it’s just about building stuff, then it gets forgotten, but if you are able to markedly change someone’s life, it’s remembered, it changes society.”   B2cloud is one of a select group of developers given access to Google Glass and is projecting revenue from wearables to grow from 10 per cent to 30 per cent of its business within 12 months.   “One of the points for us is we’re a mobile developer and we’ve started to realise mobile isn’t all about the phone,’’ he says.   “It’s your watch, it’s your fitness band, mobile is changing and as a business we’re changing.   “To think it took five years from when app started to get to this point.   “Wearables are only going to take a year. It’s really important for businesses to understand now what they’re customers are going to be using in six months or 12 months’ time.’’

Tasmanian startups and small businesses describe NBN services “transformative” as rollout slows

4:31PM | Tuesday, 29 April

Tasmanian startups say the rollout of “transformative” NBN services is vital for businesses, as IT lobby group TASICT warns the rollout of the NBN has slowed to a crawl across the island state.   In its submission to the National Broadband Network inquiry, TASICT says that it remains supportive of the full fibre-to-the-premises network being rolled out to all 190,000 premises originally earmarked for connection.   However, it warns that the project has been used “as a political tool” by all major state and federal parties, while key issues are ignored.   The report also notes increasing frustration from retail ISPs about the technology that will eventually be used on the project, with an estimated 50% of appointments missed by contractors due to delays in rolling out the network.   “Prior to the 2013 Federal Election, TASICT lobbied for the completion of the existing fibre to the premises (FTTP) NBN rollout,” the submission states.   “Soon after it become clear the rollout was facing significant issues in Tasmania. By June 2013 the project was plagued by disputes between NBNco, Visionstream and its subcontractors as well as concerns over asbestos risks during remediation work.   “These issues were never dealt with by the Government of the day. In fact, they were completely ignored and the rollout had almost stopped by September 2013.”   The submission claims less than 4000 new premises have been passed by the rollout since Visionstream announced plans to accelerate the rollout in December of last year.   “It was hoped these issues would be addressed by a new government and the rollout could get back on track. To date, that has not happened,” the submission states.   Tasmanian startups who have been able to gain access to the National Broadband Network have described it as being transformative.   Paris Buttfield-Addison, co-founder of independent Hobart-based computer game and app development studio Secret Lab, told StartupSmart before the NBN, the fastest upload speed he could get on ADSL2 was just 0.9 Mbps.   “The connection of the NBN via FTTP to our business has enabled us to be significantly more efficient, work faster with international and interstate clients, and offer better service to our existing clients. We’re able to accomplish in a matter of minutes what used to take overnight – or much longer: Uploading large files!” Addison says.   “Prior to having the FTTP we used to have to use expensive Telstra 4G connections or resort to using the post to mail hard drives or USB sticks to clients to transfer data around. The upload component of NBN has been the most transformative for us.   “We think it’s a bit sad that the rollout has slowed significantly, and we hope that the FTTP rollout moves faster in Tasmania soon. It would be nice if FTTP ended up being widespread here.”   The sentiment is echoed by Biteable.com cofounder James MacGregor, who told StartupSmart the NBN rollout is essential for the growth of Tasmanian startups.   “The snail paced rollout has been disappointing. If any state needs a boost in business productivity it's Tassie. The NBN holds a lot of promise for the new wave of tech businesses emerging in the state,” MacGregor says.   “Our video animation startup Biteable.com is heavily dependent on bandwidth speeds as we're constantly moving large video files. Our servers are based in Hobart currently but we'll most likely move them overseas as an NBN connection seems like a pipe dream at this stage.”   An NBN Co spokesperson told StartupSmart it remains committed to the Tasmanian rollout.   “NBN Co and its construction partner in Tasmania have commitments to deliver fibre to as many premises this year as were passed in the previous five years of the project,” the spokesperson says.   “We are also improving our construction standards so homes are connected at the same time the fibre is being rolled out down the street.   “This change in approach, coupled with the incorporation into the network of existing infrastructure, such as Telstra's copper, will enable more families to receive fast broadband sooner.   “Everyone in Tasmania will receive the NBN. But the rollout will be achieved by working together with construction crews, communities and the telecommunications industry, not by continuing to set heroic targets.”   The spokesperson also points out the latest weekly rollout metrics can be found on the official NBN Co. website.

Free to fail: Why corporates are learning to love venture capital

4:20AM | Wednesday, 23 April

Opening a venture capital branch seems to be the new “thing” in the corporate world. While Telstra and Westpac are the new big national players, Google is clearly ahead of the curve, with two distinct venture capital firms: the newly launched Google Capital and the five-year-old Google Ventures.   But why are so many companies, across a range of sectors, now running to open their own venture capital funds? And why does a company like Google, which has already delivered tremendous innovations in the past, now need to innovate “on the outside” with not one, but two, venture capital branches?   How it works   Venture capital has evolved as a tool to provide financing to firms in situations of extreme asymmetric information: young companies with no history, no assets and no track record, the proverbial “two kids in a garage”.   In this situation bank debt is not viable because the bank has no way to control how the money is spent and no collateral to fall back on. Direct access to the stock market is also out of the question because investors would not be able to judge quality and risk of the project.   The venture capitalist, on the other side, has industry specific know-how and can structure the financing in a way that allows them some control over the firm: in exchange for a capital injection the venture capitalist receives a portion of the equity and, usually, a seat on the board.   Moreover, as a common practice, the investment is usually staggered into multiple tranches, with subsequent infusions conditional on the achievement of predetermined “milestones”, such as the completion of a prototype.   Incentives for innovators   While venture capital is a powerful tool, there is another way for companies like Google to innovate: internal development. If the “two kids in the garage” were to work as Google employees, the company would be able to allocate capital with the best possible knowledge of the project.   So why use venture capital and not just develop internally? While this question hasn’t yet been directly addressed by academic research, pulling together different strands of literature can provide some useful insight.   A first problem is the incentive structure for the “innovator”. Disruptive innovation is highly reliant on the talent and ideas of a small number of individuals. In a startup, innovators can reap the entire value of their idea when they sell their shares. For instance, the founders of WhatsApp, Brian Acton and Jan Koum, are now worth a combined US$9.8 billion after it was acquired by Facebook.   When the innovation is promoted within a larger company the key actors will, at best, receive stock options with a value based on the performance of the entire company, only marginally reflecting the potential value of the innovation.   Consider Paul Buchheit, the Google employee who developed the first Gmail prototype. While the details of his compensation are unknown, it is unlikely that it contained the full value of the world’s largest email service. Buchheit later left Google to join a startup incubator.   This situation can get even more extreme: the CIA finances the development of strategic technologies via its own venture capital fund – In-Q-Tel. The entrepreneurs the fund financed would know that beyond the government getting the “first bite” of their products, they’d be able to benefit from the commercial applications. This would be impossible for public employees developing the same ideas in a basement at Langley.   Taking a punt   Another important factor: investing in disruptive innovation means accepting a high failure rate. While precise estimates are impossible, high levels of risk for venture capital investments have long been documented. Large public companies may be unwilling to accept this risk, not because of financial constraints, but because of pressure to maintain quarterly profitability.   A recent survey has shown the majority of CFOs are willing to abandon valuable projects in order to meet quarterly profit expectations. Google was forced to close its in-house development playground Google Labs after it was criticised for a lack of focus.   Other research has shown that firms whose financial statements are analysed by a large number of financial analysts tend to produce less innovation: they generate fewer patents and patents with lower impact.   The authors of that study concluded that “analysts exert too much pressure on managers to meet short-term goals, impeding firms' investment in long-term innovative projects".   Startups and venture capitalists do not suffer the same pressure: they are intrinsically less transparent and thus “protected” from the scrutiny of financial analysts and activist investors.   They are free to experiment, free to take big risks, free to fail miserably, and eventually free to come up with an idea that will shake the market.   Marco Navone is senior lecturer in the Finance Discipline Group of UTS Business School - University of Technology, Sydney and research fellow at CAREFIN, the Center for Applied Research in Finance at Bocconi University (Milan, Italy). This article was originally published at The Conversation. Read the original article

Controversial tech entrepreneur to political leader: The new startup career path

4:45PM | Tuesday, 22 April

Controversial tech entrepreneur Kim Dotcom has announced the formation of a new political party, known as the Internet Party, ahead of New Zealand’s next general elections in September.   German-born Dotcom is best known as the founder of the controversial file sharing website Megaupload, for which he was indicted in the US on charges relating to piracy.   Since then, he’s gone on to launch a new venture, a highly encrypted cloud storage service called Mega.   His new party’s positions include delivering cheaper high-speed internet, better oversight of spy agencies, opposition to the Trans-Pacific Partnership Agreement, copyright reform, the introduction of a digital currency and the introduction of a digital bill of rights.   However, Dotcom is far from the first tech figure to turn to politics – with some having more success than others.   StartupSmart looks at five other high-profile tech figures from the tech world who have gone on to their hand at politics – often with mixed results.   1. Julian Assange, Wikileaks Party   Should Dotcom’s party get off the ground, his political career will inevitably be compared with that of Julian Assange.   Assange is best known as the founder of whistleblower website Wikileaks, along with a long-running series of court cases relating to rape allegations in Sweden. Since August 2012, facing the threat of arrest, Assange has been granted asylum in the Ecuadorian embassy in London.   After being granted asylum, Assange announced plans to form a Wikileaks political party. The Wikileaks Party contested the 2013 federal election, but only received 0.66% of the vote.   Along the way, several high-profile candidates, including prominent academic and former Wikileaks lead Senate candidate Leslie Cannold, abandoned the party.   2. Ross Perot, Reform Party   A far more successful minor party campaign was run in the US by Texan tech entrepreneur Ross Perot.   Perot got his start in the tech industry all the way back in 1962, when he launched an information technology equipment company called Electronic Data Systems. Perot eventually sold the company to General Motors in 1984, which in turn sold the company to HP in 2008.   It was around the time of the sale to General Motors that Perot met another young tech executive named Steve Jobs. After being ousted from Apple, Jobs had launched a new tech startup called NeXT, and Perot decided to make an investment.   The products Jobs’ company developed included an operating system called NeXTStep, which would eventually form the basis of Mac OS-X and iOS after Jobs returned to Apple. Perot also sold another venture – Perot Systems – to Dell in 2009 for $US3.9 billion.   Of course, these days, Perot is best known for standing as an independent third candidate in the 1992 US presidential election against incumbent George Bush Snr. and Democratic Party candidate Bill Clinton.   The Texan stood on a platform combining a mix of policies mixing positions traditionally advocated with the left and the right of US politics. For example, Perot advocated a balanced budget, a tough stance on drug policy and opposition to gun control. However, he also advocated in favour of abortion rights, protectionism, an end to outsourcing and a strong Environmental Protection Agency.   Perot ended up winning 18.91% of the vote, an incredible result for an independent presidential candidate in the US. He stood a second time in 1996, picking up 8% of the vote against President Bill Clinton and Republican candidate Bob Dole.   Story continues on page 2. Please click below. 3. Rickard Falkvinge, Pirate Party   Of course, when it comes to Kim Dotcom, perhaps the best political role model to follow might be Rickard Falkvinge.   Falkvinge grew up in the Swedish city of Gothenburg, next door to the home ground of football club Västra Frölunda.   Falkvinge’s biography reads like a list of tech entrepreneur clichés. He got his first computer, a Commodore VIC-20, when he was just eight-years-old. By the age of 16, he had launched his first tech startup, a company called Infoteknik. At the age of 18, Falkvinge hired his first employee.   More than making profits, Falkvinge was motivated by the free exchange of ideas that came with the early home computer market. He grew increasingly concerned that harsher copyright laws being lobbied for by the motion picture and record industries could stifle online innovation.   His concerns about patents, copyright law and file sharing restrictions led Falkvinge to form a new political party. On January 1, 2006, he launched the website of his newest venture – dubbed the Pirate Party.   While the new party managed just 0.63% of the vote in its first Swedish elections, it grew to 7.13% for the 2009 European elections. The pirate party model was mirrored internationally, including in Australia. On January 1, 2011 – five years after its launch – Falkvinge stood down as party leader, handing control to his deputy, Anna Troberg.   4. Malcolm Turnbull, Liberal Party   In Australia, the most prominent example of a (far less controversial) tech executive turned entrepreneur is communications minister, Malcolm Turnbull. Before entering into federal politics, Turnbull has served in many roles, including as the general counsel to Kerry Packer’s Consolidated Media Holdings, the cofounder of law firm Turnbull McWilliam, the chair of the Australian Republican Movement, a journalist and a partner at Goldman Sachs.   Turnbull became the chair of pioneering Australian internet service provider OzEmail in 1994, also becoming an investor in the company. In 1999, at the peak of the ‘90s tech boom, Turnbull sold the company to US telco MCI WorldCom.   In 2004, Turnbull won the by-election for the federal seat of Wentworth, being elected as the local Liberal Party MP at the general election later that year. Since then, he has served as the environment minister in the Howard government, as well as the leader of the opposition.   5. Paul Fletcher, Liberal Party   These days, Paul Fletcher is best known as the Liberal MP for the federal seat of Bradfield, as well as a parliamentary secretary to the minister for communications. It’s a position he’s held since December 2009, when he won the seat at a by-election after former opposition leader Brendan Nelson retired from politics.   However, before entering into politics, Fletcher served as a senior executive in one of Australia’s largest telecommunications companies Optus, between 2000 and 2008.   After stepping down from the role, Fletcher authored a book titled Wired Brown Land? Telstra's Battle for Broadband, which dissected the case for Telstra being allowed to build the national broadband network.   He has also run a strategic consulting business focusing on the communications industry, and also served as the chief of staff to former communications minister Richard Alston.

We’re off to Texas! Why this Central Coast startup chose Austin over Silicon Valley

4:55PM | Wednesday, 16 April

Entrepreneur Helen Mitchell is getting ready for the “world’s biggest commute”, splitting her time evenly between her startup’s office in the Central Coast and its new one in Texas.   Mitchell’s startup Busivid, a corporate video management system, has set up a subsidiary in Austin and hired their first two US employees.   This is the second time Mitchell has set up a startup in the US. She moved to Dallas, Texas in the late 1980s to raise funds for engine management system startup Haltech.   Mitchell told StartupSmart they almost picked San Francisco.   “I’d sworn never again about Texas. It was quite an adjustment to go from a beautiful high nature environment to a huge city in the desert,” she says. “We were almost committed, boots and all to San Francisco. It’s easier to fly back and forth to Australia, and the culture is more similar.”   But after chatting to a startup at a Cleveland trade show that was moving from Silicon Valley to Austin, they decided to check out the city.   They were swayed by the creative culture of Austin coupled with the can-do attitude, as well as the better tax arrangements for local employees.   According to an infographic published by Austin Business Journal, the city is ranked fifth in the US based on number of tech startups per capita with over 2500 tech companies.   Australian startups such as BigCommerce have also opted for Austin over Silicon Valley, employing over 200 people there, and have only recently opened an office in San Francisco.   Mitchell says they’re following the 99designs model of having their tech and product teams in Sydney with their sales and marketing team based in the US.   “There level of customer service expectations from the day Americans born inspires us. They expect a bit more and just don’t tolerate anything less. We want lift our game to that level.”   They also intend to raise funds from US investors.   Launched in 2011, the 11-person team has built a business they believe is ready to start really scaling.   They’ve recently signed a cobranding agreement with Telstra and deliver their app to over 30,000 corporate phones.   Busivid has thrived so far on angel investments and bootstrapping, but will be doing a small series A round in Australia as “top-up” before they begin pitching to US funds for millions.   “We don’t want to come from a position of hunger so we can pursue a partnership centric approach to funding,” Mitchell says. “We’ve attended so many summits in the US, and learned the hard way that you need to be very, very prepared to pitch over there.”

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