Every now and again there are movements which gather pace and very quickly form industries. Industries which have inevitability about them. Industries which are suited to the startup realm more than they are to corporate giants. Industries in which it is clear to see that a void will be filled and fortunes will be made. The kind of concepts that are who and when, rather than if and how.
The personal computer industry had this in the late 1970’s and early 1980’s. The the media industry was clearly going to be transformed in the 1990’s witht the dot come boom and right now the web of things is a big opportunity that most industries are failing to see, or at least act on. The thing that they are failing to see is that every product people buy is also going to become a tiny computer. So here’s a question entrepreneurs searching for an idea should ask themselves:
How can I turn product X into a computer?
The companies who already make product X probably know it to, but I seriously doubt they’ll do anything about it. Especially if the company was born before the internet. They’re likely to do what they’ve always done; try to make their product cost cheaper than last year, and maintain their market share. It’s what industrialists do as they return a profit to their shareholders while mitigating risk and changing incrementally – or only once the market demands change. Sure, their are more innovative established firms who’ll see this opportunity and act on it, but they’ll be in the minority. This means that the opportunity is a massive white space for entrepreneurs. A white space where you can turn your hobby into a company – by doing exactly what the question asks. Putting a computer onto a product you love. I intend to do it for surfing. And this isn’t some fanciful development years from now it’s already happening:
LIFX did an amazing job making web enable light globes to change the home.
The Moxie showerhead has a wifi enabled speaker inside it so you can rock out while bathing.
We’ve also seen connectivity on home locks, sports shoes, cars, and clothing, so why not milk cartons or cricket bats?
In fact, have a look around your home and office – look at something and that thing will be connected to the internet at some point in the next 10 years. Whether the connected technology will enhance utility, automation, the smart home, e-commerce or feed into the quantified self, it is going to happen. And the entrepreneurs may not even need to make the thing – it might be attached to the product others make. There’s any manner of ways it can be mashed up. And given that these things that will be connected to the internet already exist, with established markets, the exit potential is clear and simple. So the only question remaining is whether or not you’ll do it or watch while other entrepreneurs fill the void.
I recently saw a prototype for the Google self drive car – It’s picture is below and looks kinda cute / cool / weird.
Anyone who follows the technology world will know that Google have successfully driven their self drive cars without incident for more than million miles. But up until now, the cars have been retro fitted Toyota and Lexus’s – other companies cars they fitted their self drive technology to. This is a bit of a shift in the projects trajectory. The Google car, is quite It’s further proof that information, when distributed freely and easily changes the physical world too. That dramatic changes in information, have dramatic impacts on all things physical. But what it should remind business people is that we simply can’t know who our competitors are any more. In a world where everyone has access to all the major factors of production we end up with a global demarcation dispute. Non linear competition where brands and big businesses get blindsided by category newbies. We’ve already seen it in retail, music and media, and we are about to see it in every form of hardware and manufacturing. The established industries who should, could and would provide the next level of innovation probably wont.
Tesla is already around half the size in market capitalisation of GM and Ford after a few short years in the market. And as we can see by this post the auto industry better get ready for new players from the technology world – Google, and possibly even Apple. The auto industry would do well to remember that cars are about to become mobile lounge rooms, and all the high tech companies are already competing for the ‘lounge room’ in the house. Next they’ll be competing for the lounge room in transit. A preemptive sense of future irony right there. Even small players like Tomcar Australia (which I have an interest in) have proven you don’t need to own a factory to make best in category vehicles and disrupt an established industry base.
I also read yesterday about two absolute powerhouse Australian companies (both in the top 10) Coles and Woolworths better get ready for a new set of competitors. And while they mentioned a siphoning of revenue category by category, I believe they have a much bigger problem coming their way:
What to do with 1000+ stores when no one goes to a grocery store to get their shopping.
And no, this is not like discretionary retail which can be made a social, fun and entertaining experience. Grocery shopping is a chore and technology has a habit of removing chores from the human experience. Not many people run fast or lift heavy things for a living. And mind you, the word computer, was originally a job title, not a machine.
In the food industry there is a term called ‘share of stomach’. What share did the food company get of the stomach. Which is the type of measure which is used to assess the truth about who the competition is, and where the revenue threats lie. I feel as though every industry needs to develop their own ‘Share of Stomach’ metric so they can see the real change in their industry. Maybe all industries related to transport need to measure share of human movement? Self driving cars, aren’t just a competitive play against legacy auto industries, but it’s hard to see city car parks being a valid business when we can ‘send our car home to our driveway’ and get it to pick us up later. It also raises questions about what relatively new businesses like Uber will do when cars don’t need drivers? Chances are they’ll need to become a system which organises and delivers our cars?
Just like life, the real life threatening diseases are from entities our body hasn’t encountered before and built a natural defence against. At times like these, a tectonic shift, business would do well remember lessons from the natural world.
I’ve recently watched a few presentations which really below my mind. Re-shaped my thinking on the next iterations of the technology revolution. Most interestingly, they all focus on independent systems, peer to peer and the end of the middle.
- Jeremy Rivkin – The zero marginal cost society.
- Mike Hearn – The trade net.
- Albert Wenger – World in Transition. (Why GDP decline is inevitable)
- Philip Evans – How data will transform business.
These talks aren’t short, but there aren’t any shortcuts in understanding what our future world might look like. I say, watch these instead of TV – you’ve got the time, it’s really all about how you allocate it.
If you’re reading this and you currently work for a company you don’t have an equity stake in – I reckon there’s a pretty good chance you’re planning your cubicle escape route. Today I wrote a post for Pollenizer on my Top 10 things employees need to know before they jump ship. The thing about entrepreneurship is that it is a change in environment. And like all new environments we enter the biggest challenges we face are never intellectual, but cultural.
You can read it here.
Evolution itself does not have a strategy. It just lets what wins, win. If anything, it is the accumulation of a lot of in market testing. Traits, (or tactics) are tested for advantage, and those that work, keep on happening through natural selection. Nature tries everything. Nature lets things that don’t work die.
We too can help our business evolve. We just need to do what nature does. That is to not pretend to know what will work. Instead we should try everything and find out what does. The good news of course, is that it’s so cheap to try so much in a low cost technology world.
There’s an interesting link between startups, technology and fashion. Any industry which is defined by rapid change and innovation has a fashion element to it. The latest hot stuff which is getting attention, the stuff the market gets excited by, the stuff that gets media attention, the stuff that gets the fanboys and fangirls writing blog posts about it. The startup and technology media is very trend related. So much so that we all know what the hot spaces to be involved in are:
Wearables, 3D printing, Web of things, Drones, Crypto currency, Crowdfunding, and those other ones I’ve left out….
Get a Kickstarter project going with one of these topics in the header and it seems like the funding job is already half done. But if we want to go deeper on this issue as entrepreneurs, then we need to pay some close attention to what happens in the fashion industry itself. Those consuming the fashion and paying attention to it or rarely those who are actually creating it. There isn’t a correlation between being up with the latest trend and ever creating one. In fact, there’s a real danger in being obsessed with what others are doing. It means we’re following, not leading. Fans by definition are always a little bit behind the game – literally. Their focus is on appreciating what has already happened. It means that there might be an inordinate amount of time spent on keeping up.
It’s easy to understand why we might feel compelled to keep up. There’s a lot of social pressure in a sharing economy – the kudos that goes with knowing about the latest thing, using it, or owning the hardware. The ‘have you seen this’ side of the technology revolution.
Will knowing who raised x amount of capital help you raise capital?
Will having the latest apps on your smartphone help you build your app?
Probably not. Probably more of a distraction from the real work we need to do. Sure, be across the market place, but obsessions with the latest trends probably means we’ll never create one ourselves.
Recently I’ve been exploring the hardware space, especially now I’m deeply involvement in Tomcar Australia – a startup which builds cars.
I’ve become more focused on what we can learn in the web / software / mobile space, and apply it to the hardware space – startups which build actual physical things or any non digital kinda startup. Turns out much of it applies, especially given the open access technology and connected society has provided. I’ve recently written a couple of posts for the good people of Pollenizer on this subject.
This post – Beyond the screen – How non software companies can out learn the competition.
and this post – Hero 1 killer feature – How GoPro came from behind the technology curve. The stuff you don’t know about how GoPro got to where it is.
I think they’re both great posts for anyone involved in non screen stuff.
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.
I’m a slow learner. It’s rare that I fully understand things the first time I hear about it. This might even sound ridiculous, but some things I first heard about in primary school and secondary school I’m just starting to comprehend now as a middle age man. Political, social and philosophical lessons I got front teachers, family and friends. I really think that our brains work super hard on everything, all the time, in the back ground while we are busy with the stuff of life.
I had one of these moments yesterday. I was reading this article on bitcoin, which was discussing the genius behind the Blockchain method, referring to the back end complexities and how it might provide a model for a more independent peer to peer based internet. (Well, that’s what I think it was about). The point is that half way through the article, I was like – wow, most of this stuff is way over my head – it must be for smart techie head coding types. But I read it to the end. I’ll probably read it again, and I’ll read the other articles it links to inside of it….. Maybe I’ll understand it in a few years. The point is I’ll leave that to the smart parts of my brain I don’t have personal access to – the secret bits it keeps Steve outside of. I’m sure it’ll come up with something if I leave it alone.
In complex times, this is type of situation is set to become more common. Times when our initial understanding is vague. We shouldn’t let it discourage us. We shouldn’t let it make us give up and stop reading or trying to comprehend it. What we ought do instead, is trust that what we need to know will reveal itself, so long as continue to take in the data and we are patient.