Start Up Blog

The truth about crowd funding

Posted in entrepreneurship by Steve Sammartino on October 29, 2012

Most web tools that are re-shaping commerce are doing one thing, handing over control to the users from the producers. They are democratizing the factors of production so that anyone with access and ideas can now play. They do this through cutting out two things that existed and thrived in the industrial era: middle men and gate keepers. The power of collaboration has been touted as a revolution consistently since the the word web 2.0 exited the mouth of Tim O’Reilly. I think it is entirely justified. This is particularly the case with the latest disruptor to emerge – crowd funding. The reason that funding our projects from the crowd changes everything, is because it doesn’t really change anything.

All things have always been funded by the crowd, we just didn’t know it before.

To bring this idea to life let’s consider a couple of examples:

Debt funding via banks is a form of crowd funding: They take our deposits, assess and carry the risk of ‘sub-letting’ our deposits on margin. Essentially banks make money from crowd funding projects and managing the organisation of it.

Capital raising via VC firms is a form of crowd funding: They take large portions of their venture money from Superannuation or 401K funds which has been allocated to ‘high risk’ investments. This is typically between 1-5% of the total asset allocation. Again, our money is being allocated in our behalf from which transaction profit margin is made.

The point is that pretty much every type of investment that involved aggregated money, has always been the money of the ‘audience’ hidden within a structured system. A system which we are now re-structuring with deomcratised tools so that we can organise our capital amongst ourselves. So that we can access each others funds without permission from financiers. So that we can decide what is worth funding. So that we can make the margin available on float capital. And this is just the start of the inevitable changes to the financial system.

The very truth about crowd funding is that before it arrived in its current ‘web organised’ form – we got locked out of the system that our money funded. And it feels like crowd funding of micro projects is just the begging of something much bigger and more important. The question for aspiring entrepreneurs is how can we disrupt the finance industry further with newly connected commercial eco systems?

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The open API secret

Posted in entrepreneurship by Steve Sammartino on January 18, 2012

The biggest flip the technology age has done on the industrial era is the open API. For the uninitiated, an open API (Application Program Interface) is a word used to describe sets of technologies that enable websites to interact with each other. It is also a system where web companies ‘open up’ their platform for external non affiliated software developers to create applications on. Facebook most famously did this with their ‘Facebook Platform‘.

While this sounds like some kind of nerd nirvana, it is actually a counter intuitive move that forms a large part of the marketing genius of social web 2.0 applications. And that is outsourcing the R&D to total strangers. That is, entrepreneurs who have new and interesting ways to mash up their content. It is quite revolutionary in fact. Corporations from the pre-web industrial era would rarely let people use their logo, let alone open up part of the factory for hackers to come in and try and build something interesting. But this is exactly what is happening, the most amazing stuff is usually coming from external organisations and the entire ecosystem is the beneficiary.

  • Existing web companies get their new product development for free
  • Entrepreneurs get a shot at being acquired by the firms whose API they focus on

The open API idea has to be one of the major reasons why technology companies are eating the world. The only question remaining is why don’t old world industrial companies open up their doors to some new, fresh and external innovation?

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Why e-Commerce is different

Posted in entrepreneurship by Steve Sammartino on January 10, 2012

At first we got confused about how to make money out of the internet. We thought we should be able to demand payment. Silly us, we forgot about the first lesson in economics – that pesky demand and supply. Supply doesn’t automatically equal demand – especially financial demand. On the internet things work in reverse. First value must be created, then it is extracted. It’s the opposite to the previous industrial world of buying and selling.

Now it’s proving, then earning.

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The new usability experts

Posted in entrepreneurship by Steve Sammartino on December 19, 2011

Are not who we expect them to be. It’s not Jakob Nielsen or even Steve Krug. In fact it is Joe Citizen.

Without even realising it, the average web surfer or smart phone addict has become an expert in usability. This doesn’t mean we could ask them what a sight should look like, how it should work or to advice us of any design imperatives. it’s a little different than that. But have no doubt, they are the experts. And their expertise is different. it is more like this – they know what sucks. They will not tolerate a site that sucks for more than a few seconds.

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We have entered an age of mass usability expertise – and this has been driven by social media. As entrepreneurs and aspiring startup geeks we have to remember the training our users are getting. They are being trained on what is ‘best practice’ by the worlds best – brands like Facebook, Twitter, Instagram, Youtube, Google, Foursquare. Brands with the greatest UI’s ever seen are training the everyday person on what good looks like. Even if it is occurring at a subconscious level. It is happening.

The impact of this is significant. For me it puts flow first, and features second. The flow of the site and intuitive nature must be put above all other technology and feature desires we have. If we fail with our usability, there wont be a second chance to win back the experts who’ve already decided we don’t cut it.

The Interest Graph

Posted in entrepreneurship by Steve Sammartino on October 31, 2011

Mark Zuckerberg has promoted the idea of the Social Graph for sometime. And it is true that Social Networking has changed the way we use the web. The only problem for me is that sometimes the people in my social life are there not by choice:

Family members

people I work with

Neighbours in my my street

People who drink coffee where I do

People I went to school with

Friends of friends

You get the picture. These people are in my life by geographic default. Whether or not we are interested in the same things is another question. In fact our values and interests may be entirely juxtaposed. This is starting to make me think much more about finding people who are interested in the same things as me. The social space is such a deluge of opinions and data, it is hard to sift through the noise to find what I care about.  I am not necessarily interested in people just because they are in my close geographic space. It needs to be much more. We must share an an interest as well –  we must intersect on the ‘Interests Graph‘, not just the social or geographic one.

In fact, my circle of acquaintances has never changed as quickly in my entire life as it has in the past 3 years. People are coming and going at a rapid pace. Sure, close friends and family are bonded by forces much deeper than digital technology, but we need another layer added to the social graph to make more meaningful connections.

It’s already happened on a business and career level already – coders, entrepreneurs, advertisers, bloggers, lawyers, artists, photographers etc all have connection potential in existing digital forums. But what about the marathon runners, surfers, cyclists, and basket weavers? (Insert personal passion here) They need to be able to find each other too.

I really feel like this is a massive opportunity space for startup entrepreneurs. Connecting interests, socially and geographically to using temporal mobile devices to create deeper meaning. The question for all of us, is how can we do it in the things we are involved in which don’t yet have a commercial context?

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Trust and my dad

Posted in entrepreneurship by Steve Sammartino on October 3, 2011

My dad has an interesting viewpoint on the idea of trust. He says that it doesn’t need to be earned with him rather, he gives it out freely and automatically with anyone that he meets. He says that it is implicit in the human make up. He says that trust should be an automatic ‘gift’ in the human operating system.

Occasionally his trust gets abused – that’s the price he is willing to pay for it does happen. The upside of all the trust given far outweighs the few exceptions.

In startups and business, we’ve tried to de-humanize trust and replace it with forms and legal agreements. I really believe that we should trust ourselves and our gut just a little more. But I’m excited that new technology is making us more human again. The fact that digital footprints are largely permanent may even circumvent the need for mistrust and formal agreements. We can instead go back to trusting peoples word and enjoy the speed that organic development gives us versus making lawyers wealthy.

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Moving to ‘open’

Posted in entrepreneurship by Steve Sammartino on August 1, 2011

The world is quickly moving to ‘open’ whether we like it or not. Companies that lean this way will invariably do better than those that lean to ‘secret’. It is also important to know that our philosophy can’t be segmented. It is a cultural decision.

Which way is your organization leaning?

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Falling in love with infrastructure

Posted in entrepreneurship by Steve Sammartino on July 4, 2011

Here’s a list of companies who should’ve done something, yet instead, let someone else do it for them. And in being asleep at the wheel, they will never be as powerful (read relevant) again.

Yellow Pages should have become… Google
Encyclopaedia Britannica should have become… Wikipedia
RCA / Sony / BMG / EMI / Warner should have become… iTunes
Newspaper classifieds should have become… Craigs List
Trading Post should have become… eBay
Barns & Noble should have become… Amazon
Industry X could well become… Your startup

The key point is this. The future doesn’t care about your legacy, or how things were done in the past, it only cares about what people actually want. And people don’t care about your existing infrastructure, they only care about themselves.

There’s a million more of these examples out there, and many more to come. The question is which industry will you disrupt because they are too in love with their existing infrastructure?

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60 seconds on the web

Posted in entrepreneurship by Steve Sammartino on June 16, 2011

The world moves fast. When we we’re unconnected the speed of change went unnoticed. Now that we all have digital footprints, we can track all that happens. This amazing and statistically rich infographic is solid reminder of the world we live in. It’s also very cool that most of these business are startups that aren’t even teenagers yet. I’ve pulled out the numbers and got the pic below.

60 seconds on the web:

  • 12,000+ new ads posted on Craigslist
  • 370,000+ minutes of voice calls on Skype
  • 98,000+ tweets
  • 320+ new twitter accounts
  • 100+ new Linkedin accounts
  • 6,600+ photos uploaded to Flickr
  • 50+ wordpress CMS downloads & 125+ plugins
  • 695,000 facebook status updates, 80,000 wall posts and 510,040 comments
  • 1,700 firefox downloads
  • 694,445 google searches
  • 168 million emails sent (of which 92% is spam)
  • 60+ new blogs & 1500+ new blog posts
  • 70+ new domains are registered
  • 600+ new Youtube videos are uploaded. 25+ hours in duration
  • 150+ questions are asked in Question forums
  • 13,000+ iPhone apps are downloaded
  • 20,000 new posts on Tumblr.
  • I new definition added to Urban Dictionary 
  • 1,600+ reads on Scribd.

And here is what it looks like:

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Loyalty Schemes Vs Gamification

Posted in entrepreneurship by Steve Sammartino on June 1, 2011

In many ways Gamification is an evolution of the long lived Loyalty Scheme. But so much better, and the evidence exists even at the simplest level – the words themselves.

Loyalty Scheme: Firstly the word loyalty seems very one way. It was / is as if the company expects us to be loyal to them. And although one might argue that loyalty is a two way street, the second word of the phrase is the giveaway – ‘Scheme’. Yep, sounds like some kind of a trick to me. A scheme to make us believe we are getting a good deal, when in truth we are just a number on some kind of cost / benefit analysis spreadsheet. Intuitively, schemes feel like there is a winner and a loser.

Gamificiation: Games are fun. We spend most of our childhood playing them and find as many excuses as possible to play them as adults. ‘Who wants to come to the football this Friday night?’ A game needs at least two willing parties or organisations to play. Sometimes we can collaborate and form teams and clubs and divisions and theme songs and have awards nights and weekend getaways. We can celebrate wins together and lament the losses, either way we like to return to the game and try and win, or even better our own score, although it’s collaborative, it’s also personal. The game is the ‘thing’, not the result of it. Games contrive all of the important human emotions that make our hearts beat.

Play is human. Great games even turn into industries.

Yep, it feels to me that gamification facilitated via Moore’s law is here to stay.

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