Start Up Blog

Random Soundbites

Posted in entrepreneurship by Steve Sammartino on March 25, 2014

In the past few weeks I’ve been in the audience a few times when some smart people have taken to the stage. The presentations were largely retail focused. As usual I took notes and thought I’d share some random soundbites from what they had to share. I haven’t got the sources for each quote, because I couldn’t write those down quick enough without losing the information. But the thing that really matters isn’t the exact figures, but the patterns they are part of:

  • 10 years ago car buyers used to visit the dealership an average of 6 times before buying a new car. Now the average 1.5 times. When surveyed about the cars they bought more than 90% of buyers knew the specs in more detail than the car salesman.
  • Retail Delivery Gap: Australian retailers believe their customer shopping satisfaction rates are 80%. When surveyed the actual satisfaction rates from shopper was 8%.
  • There are a significant amount of retailers who are now treating the customers as employees: Airline check in – Supermarket check out. This is all fine so long as it reduces friction and increases joy. It shouldn’t be the default approach, but a considered one.
  • Retailer measurement used to be all about foot traffic and transactions, now they can measure everything in between, before and after. But smart retailers will need to ensure they have permission and share the prize with those providing the data.
  • Big data is a bit like teenage sex: “Everyone talks about it. No one knows how to do it, and everyone thinks everyone else is doing it, but not many actually are.”  Not my quote – but made me laugh.
  • Advertisers need to get ready for revised TV. A television that knows who is watching it, what they’ve bought, where they’ve been and what they car about.  One that can serve up specific, permission based  and relevant content for a single person. 1 to 1 television creative executions – the TV’s can already do it – but it seems no marketers can?
  • The delineation between physical and digital is over – pointless and and us versus them zero sum game. The intersection is now mandatory, or even tables stages – it’s now phygital.
  • People like buying stuff, but not so much paying – but the money isn’t the pain point, it is the process and the friction they hate. Sellers need to get out of the way.
  • Network Survival: A network stays alive so long as it provides trust and reduces friction. What’s interesting is that friction is often reduced by routing the long way round.
  • The top 12 Australian retailers have $700 billion worth of currency convertible loyalty points on hand – a giant liability, or is it an asset?
  • The phone is now becoming the personal life controller. It is the new location for commerce – literally where the phone is: simple example is Uber.
  • We are entering the wallet wars era. The digital wallet as spruced about by Bill Gates way back in 1995 – every tech player, bank, payment system and hardware developer is in the battle.
  • Mobile payments growing at an astounding rate in e-commerce. In the past 2 years payments via mobile phone grew 57 fold in Australia alone.
  • Mobile provides a leap frog opportunity. Many players who missed the first web iteration, can now disrupt the disrupters by doing an amazing job on mobile - this game is still open.

What does this tell us. Just that there is so much happening, and no matter what business we think we are in, we are all in the startup business now.

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If vs When & Who

Posted in entrepreneurship by Steve Sammartino on September 13, 2013

There are some things which we as humans intuitively know will occur. Almost every industry has a future state which we can see occurring at some point. While the timing might be hard to predict, the inevitability is predictable.

We can take a quick look at certain industries to provide exemplars of this contention:

  • In the future cars will not run on gas / petrolium.
  • In the future smart phones will be usurped by wearable computing.
  • Physical retailers who compete on price with omni available goods will cease to exist.
  • Leisure space travel will be within reach for the masses.
  • Many (half?) companies will close offices and move to remote / choice based location working structures.
  • Global virtual and crypto currencies will replace fiat currency.
  • 3D printers & scanners will be as common as computers in homes & work spaces.
  • Sharing economies in all industries will create resource leverage & new financial liquidity.
  • Self organised banking and lending systems will emerge.
  • Connected everything – chips and sensors in everything from milk cartons to t-shirts.

The list is endless. These are the ‘When & Who’ startups. Those with a high level of probability, even though it may not be us, and may not be now or next year.

Yet, many startups focus on things which may occur, based on a needed shift in human behaviour which – if it does happen will be insanely profitable. The ideas that no one has thought of (white space), where the entire prize can be theirs alone. I call it the ‘IF’ startup. Sure they are possible, yet they are improbable due to their occurrence being so rare.

So we have a choice on which kind of startup to go for. The possible or the probable. The ‘if’ or the ‘when and who’. I feel like it is a better choice to go for the inevitable, rather than the possible. It’s true that some things arrive which we didn’t see coming that change lives, the reality is that most technological curve jumps are foreseeable. As a bonus it’s usually easier to inspire our supply chain, customers and investors on highly probably events of the future. And while we all make our own market entry choices, it’s nice to go in with our eyes wide open.

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The 200 year shift

Posted in entrepreneurship by Steve Sammartino on August 22, 2013

I was recently in Perth for and presented at the Agile Perth MeetUp. The presentation I gave was entitled the 200 year shift. It’s a ‘living’ presentation which I’ve been working on for around 7 years – and it explores the end of the industrial era and the transition into a digital age. An age where most every industry is up for grabs as the rules are reinvented and barriers to entry are entirely evaporating.

I was totally thrilled when local UX legend Gary Barber did a live sketch of the concepts I was sharing. As is by séance Gary managed to visualise all my words into exactly what was in my head. He then shared the results on Flickr and posted in his twitter stream. What is amazing is that he did it all live, and some the the pieces I spoke about for a mere minute, and yet he managed to capture the essence. I later found out that he has a habit of creating such cool visuals. A picture of it is below. But before you have a look at it, here is a simple idea:

Next time you are running an event or conference with thought leading ideas: Get Gary on board to draw up some live info graphs for everyone to take home and remember what they learned, to pin on their offices walls, and just appreciate the power of thought and poignant art work.

Nice job Gary – and thanks!

200 Year Shift Sketch

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The story of ice

Posted in entrepreneurship by Steve Sammartino on July 8, 2013

Most everyday products we use and take for granted have a deep story of innovation underneath them. Once such product is that of simple household ice. What’s interesting about ice is that it went through a number of disruptions. New methods and players arrived to usurp yesterdays heroes. Much like the industries did in this post.

The original startup thinker and bootstrapper Guy Kawasaki tells the story of ice and how it pertains to curve jumping. I’ll do my best to remember how the story is told.

If you truly want to be an entrepreneur or an uber innovative intrapreneur, you have to jump curves. You can’t do things 10% better, you must do things 10 times better.  Originally ice was sold through an ice harvesting business. In the ice harvesting business in the early 1900’s, this meant that Bubba and Junior would go to a frozen lake or a frozen pond during the winter time and physically cut out large blocks of ice. And in 1900 over 900 million pounds of ice was harvested in the USA. Then 33 years later was the beginning of the first curve jump in the ice industry. This was the start of the ice factory era. Operating on the ice factory curve then meant that ice harvesting didn’t have to happen in the winter and it also meant that you didn’t have to be in a cold climate. You could freeze water centrally any time of year and any place you decided to set up an ice factory. (In fact, ice factories for obvious reasons did a better trade in warmer climates – a counter intuitive shift) And then once the water was frozen in the factory, the ice man would deliver ice to your house or business. So imagine the advantage of going from ice harvester: a cold city in a cold time of year, labour intensive – to moving to an ice factory, any city, any time of year, with dramatically lower labour costs.

Fast forward another 30 years and we move into the second curve jump. The refrigerator ice curve. This becomes ice 3.0 where an ice factory becomes a legacy cost infrastructure. People started to have refrigerators in their own home that could create ice on demand in a matter of hours, with no wastage, at the cost of a small amount of electricity. No need for factories or deliveries to your home when you have a personalised ice factory.

So if we look at this closely, the great value that was achieved was because the new method jumped across to the next curve. Incremental innovation was entirely usurped. It didn’t matter if you improved your efficiency dramatically on the previous curve because the entire market moved. And very few (if any) producers went from ice harvester, to ice factory, to refrigerator manufacturer. As you can imagine most ice harvesters didn’t see the disruption coming. So too with the ice factories and their owners. And in all probability refrigerator companies are not looking at bio tech or what is likely to come next in freezing water or ‘things’.

So the lesson for entrepreneurs (and more so for business owners & industry stalwarts) is that we simply cannot and will not change the world on the business curve that we are on. We have to jump it, and if we don’t someone else will. Incremental improvement is just not enough. Sometimes we must jump curves to merely survive. Makes me think that car companies are playing a very incremental game with their hybrids… What I really want is a self driving electric car or personal transport drone!

Worth Noting: In many ways all industries move from the macro to the micro. We’ve seen it with computers, music, many forms of manufacturing. We can only assume that the future will be continue the current trajectory to ‘personal’. Most curve jumps involve taking the macro to the micro.

Startup blog says: Get out there and curve jump!

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Who is your competition?

Posted in entrepreneurship by Steve Sammartino on June 17, 2013

If we ask any well know brand who their major competitors are the answers are reasonably predictable. It’s those brands who have that other part of the market share pie. This is what we all got taught during marketing class, and it made sense in the AC Nielsen TV ratings market share industrial era. The problem is that it makes a lot less sense as we transition to the digital age. An age where incumbents are constantly being exposed on the flanks, rather than by direct competitors. If we went back and asked a number of industrial world businesses who their main competitors were, the story becomes much clearer:

Kodak: At first it was Fuji & Agfa, closely followed by Cannon and Nikon…. but really in the end their nemesis came from a different planet. The planet of Apple, Google, Instagram and Facebook. What is Facebook really other than a Kodak moment 2.0?

Encyclopedia Britannica: Clearly World Book and later Encarta, the CD ROM based delivery by Microsoft. But in the end it was you and me who provided more accurate data on the subject of ‘everything’ as we populated both Google and Wikipedia. We turned out to be more accurate, more timely and we came at everyone’s favourite price – free!

Free to Air Television: First became very worried about movie rental stores (VHS, DVD) followed by cable TV. While now their real worry is the other screens in the home as Netflix, Youtube and Pirate Bay eat their lunch.

There are of course an unlimited number of examples with the same story.

But the lessons in a period of technological transition are two fold.

Incumbents: If your company or brand is in a battle defending revenue and market share from industry players, you’re focusing on the wrong area.

Entrepreneurs: If you’re aiming to disrupt an industry that has intense and focused market share battles, you’re focusing on the right area.

Startup Blog says: In times of transition, it pays to look to the sides instead of straight ahead.

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Houses and technology

Posted in entrepreneurship by Steve Sammartino on December 5, 2012

I was discussing with a colleague the inevitability of supermarket retailers being disrupted the same way department stores have been . I contended that in a few short years the technology will arrive that allows a supermarket shopping experience on line that is cheaper and better in every way than entering a store – not even considering the time saved. Their retort I found to be an interesting one….

They claimed it was too difficult logistically. That the shift would even need to involve some kind of one way cupboard and or refrigerator being installed at the door of every house to take delivery of the goods. They even made reference to the fact that the goods would need to be segmented into different delivery boxes based on their temperature storage requirements. Besides the fact that this person had terrific ‘solutions’ within their proposed issues scope – it made me think about how the places we live in have already changed significantly based on technology, social and commercial innovations. Innovations which have been pushed into homes based on an entrepreneurial imperative.

The simplest example is the driveway. Something that no home in the history of man had before the nineteenth century. A simple yet expensive convenience all new homes were built with after WW2.  Based the desire of home owners to have the convenience of a private transport device, adjacent industries responded with solutions. In fact, a large part of the Henry Ford strategy was to convince government to pave the roads of America and accommodate his burgeoning industry. So it isn’t silly to believe that the impending upheaval in the supermarket industry will involve a great deal coalescing from the ‘new supply chain’ and home designers and builders. Through history this has happened in both large and small ways. But to jog your memory, here’s a few more examples of technology placed into homes to assist homeowners and new industries:

  • the letter box
  • the kitchen
  • the inside bathroom
  • the inside toilet
  • telephone cables
  • internal plumbing & gas fitting
  • internal electricity
  • heating & cooling systems
  • wifi systems
  • garages

In fact we could probably add everything under the roof that doesn’t involve the primary idea of housing – providing shelter.

The insight for startups is two fold: Firstly, we can inspire and believe that the infrastructure will arrive to support an innovation which makes life better for people. And secondly, we can be the provider of that infrastructure to make the next growth industry possible.

New startup idea for free – One way in home front door fridges!

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Why failure is scary

Posted in entrepreneurship by Steve Sammartino on January 17, 2012

While technology and lifestyles has shifted radically in the past few hundred years, the human DNA hasn’t evolved very much at all in the past few thousand. It’s one of the reasons why we are becoming obese. Our bodies are just not designed to have some much access to food, and so much automation and leisure time. Another interesting quirk of our DNA is the fear instinct. An instinct which is totally vital for survival, until a a few hundred years ago. In a pre-civilised world, failure could mean being killed while gathering food.

The problem with the fear instinct is that it gets in the way of us doing our best work in a modern world. It can stop us from proposing amazing ideas, and disrupting old outdated methods. The fear we have is not of death, but these days usually only of embarrassment or financial loss, neither of which will kill us.

This fear robs us of our best chance to make a difference, and generate the momentum we need. The best way to overcome this fear to remind ourselves that the fear we are facing is emotional and not physical. And almost every circumstance, what we are afraid of will not stop us from having a second chance.

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Singing for their supper

Posted in entrepreneurship by Steve Sammartino on November 21, 2011

You may have noticed that there are a lot of ‘Older’ Rockstars coming out to perform in your country. Bands we thought we’d only hear on Golden Oldies radio stations and never see live again. Well they are all back playing live again….

…I’m guessing it’s not buy choice. The fact that it’s pretty hard to find a record store these days is a good indication that the royalty streams old rockstars lived on have dried up for good. It’s much harder for older music to be promoted on iTunes than it was in a store that could only carry 2000 albums – from the artists who always got played on the radio. Their industry has been disrupted to the point where they now have to sing for their supper. Actively earn a living, versus passively receiving cash for deeds of yesteryear. Hence the deluge of 1980′s rockstars now touring again.

At some point disruptive technology effects us all. As startup entrepreneurs we are often the the creators of the disruption. As successful business people in years to come, our revenue streams will ultimately be disrupted by the next iteration. What we must do is create a war chest of revenue streams once we make bank. And the best advice I’ve ever been given that is future proof is this:

Build businesses, then buy real estate.

Sure it might sound boring, but one thing for certain is that it’s hard to see technology disrupting the value of good real estate. At least in our life times.

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Bigger than the internet – 3D Printing

Posted in entrepreneurship by Steve Sammartino on October 30, 2011

3D printing is really starting to blow my mind. As far as I can tell it is taking the information we are currently living through and making it physical. It’s the missing link. The start of being able to create everything from nothing – ephemeralization. Converting the first 20 elements into stuff, by organizing information, ones and zeros. About 20 years from now, you’ll remember talk about 3D printing, the same way we remember hearing stuff about a connected world through computers in the mid 1980′s. I think it will be more disruptive and bigger than the internet.

In order to just make sure you are across what is happening here’s the most famous Youtube Clip about 3D printing which is from the Discovery channel. In the coming weeks I’ll be posting a large article about all the implications on the world. And before you watch the clip below here is a list of some things that have already been printed by such machines:

Bicycles, cars, tools with moving parts, furniture, drone aircraft and even balls bearings.

It’s coming and it is going to change everything.

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Bees can’t fly

Posted in entrepreneurship by Steve Sammartino on June 1, 2011

A popular story in science folklore is that the aerodynamics of bees suggest that they should not be able to fly. It was hotly debated in at a time when human flight via aircraft was being mastered (around the 1930′s). Because physicists and aerodynamic specialists had started to develop theory of ‘predictable flight’ with machinery, they believed their knowledge applied to all forms of flight.

(Hand drawn by Sarah Cameron)

Of course bees do fly. A bee is very small. And, at that size, air acts as a much more viscous fluid than it does for airplanes and helicopters. So the laws of aerodynamics are quite different for bees and other insects. But it took some time before this was understood and that new theoretical models were developed relative to the size of the thing of flight.

The point for entrepreneurs is important, especially at a time when technology is challenging existing business models. So the next time someone tries to put the kybosh on your new idea or startup remember that based on yesterdays knowledge, bees can’t fly.

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