Startups are the new MTV – and 15 other thoughts for 2015

startup MTV

As we are now in 2015, midway through the second decade of the new millennium, I thought I’d reflect on shifts I am seeing in culture, commerce and technology. Many are counter intuitive to what we might read in Business Insider or Buzzfeed. It’ll take you about 12 minutes to read and it will be worth the effort. The first thought is pretty obvious. Startups are the new MTV. They’ve become a pop culture phenomenon. They are not only a cool thing to be involved in, but as like pop stardom in the 1980s, the promise of potential riches and global fame are part of the attraction. We’ve now exchanged the American Billboard Top 40 for Listicles and ProductHunt. Telling people you’re in a startup is a bit like what being in a band was a couple of decades ago. And so everyone has exchanged their Fender Stratocaster and ripped jeans for a macbook air and a desk at a co-working space. Don’t get me wrong, I think it is cool. I also think it is a reflection of an entire generation waking up to the fact that they can create something themselves, and it is no longer about following a path set by our parents, the government or the declining industrial powers that be. Bring it on.

And here some of the other social and tech changes I found myself thinking about over the holiday period:

  1. Anonymous Web – It seems that more than ever the internet replicates life, because it is part of where we live. And just like when we are away from the keyboard, there are certain situations in life when we’d rather remain anonymous. While I’m walking down the street I don’t wear a t shirt with my actual name on it. Yes, I am participating in society, buying, selling and just being, but it doesn’t mean I want every shopkeeper and stranger on the street to know who I am. Not all of my social interactions are branded as Steve Sammartino. And so, the web is starting to realise that sometimes we want to be known, and at other times we don’t. Apps like Secret, Cyberdust and even Bitcoin, is proving that anonymity is a valued asset in much the same way that a personal brand can be. If we consider the success of Tinder, it is largely because it pays homage how we actually behave without the web. Look at someone and decide immediately if we are attracted to them. We make judgments about people before we know who they are, assess if we like what we see, and only then do we uncover actual identity. I feel like we are now starting to find a balance between the early days of secrecy on the web – remember the emails we used to have like We didn’t want to be fully exposed. And then Facebook arrived and everything you’d be able to know everything about me via a few clicks. But now, it’s about balance. People want to be able to choose what is public and what is private. The opportunity for startups right now is around anonymity.
  2. Just Big Corporations - I can remember at the dawn of the web 2.0 era when we believed that companies with digital DNA would be different. And they are to some extent. It is fair to say that every revolution makes commerce a little more human. But I feel as though this year we all realised that the corporate hero of today with their playful primary coloured logos and desire to change the world, are well, just the next batch of large corporations. Google, Facebook, Twitter, Netflix, insert your favourite company from the post web era, and you’ll see their objective is the same as those that came before them: increase shareholder wealth. The most poignant realisation of this for me has been the general awareness that few of them pay their fair share of taxes in localised operations. People forget that General Electric, Shell and Ford were once as loved as Twitter. They too made life better for their customers and took humanity a few steps forward. Another thing our wonderful tech saviours have in common with their industrial counterparts is they have the same birth line as their forefathers, one which favours profit maximisation over all things. Just consider this for a moment: 29 of America’s 100 top-paid CEOs collected more in compensation than their corporations paid in income taxes. Don’t be evil?  To your shareholders at least!
  3. Privacy – a Private Industry – While I think there has always been a trade off between privacy and access to public infrastructures (we all need passports & drivers licenses to travel independently), it became clear this year that in order to protect certain privacies, privacy will need to become a private industry. (Gee that was a mouthful.) All governments in democratic countries have made it clear that they would rather protect against statistically insignificant threats and maintain data control than grant their citizens rights to freedom. Australia might possibly be one of the worst offenders. Expect to see an uprising of startups providing software layers to protect end users and aggregate public data on them so they have awareness of what their digital footprints look like.
  4. Little Data – Big data has been a buzz word in business for a few years. I’m now seeing the emergence of little data as consumers are starting to realise the value of information about themselves and will start to use it as their own commercial platform. Read here, ‘make it available to the corporate market to buy’. Just like a strong social media voice became an asset, expect personal data trails to have as much or more value in the coming years. The challenge for entrepreneurs will be to create places to teach non-techies of its value, show them how to wrestle control of it and provide platforms to commercialise it.
  5. A.I. Fears – Artificial Intelligence has become a hot topic of the day, with technology luminaries including Elon Musk and Stephen Hawking even likening it to the nuclear threat. That is a type of technology which could become a species threat before we realise what we’ve created. Whether this is true or not I’m in no position to comment, but what I will say is this. It is among the hottest spaces for deep research and Venture Capital investment, and like all technologies before it, humans will roll the dice if there is a big dollar to be made, regardless of the potential externalities they might create. It seems the financial paradigm is still the key driving force even as we enter a collaborative age.
  6. Digital – still a flawed strategy – Every day I work with startups and large corporations trying to uncover the secret sauce of the startups. I’m the guy who plays on both sides. If there was one thing I could tell the Fortune 500 on their immediate future it would be this: there is no digital, there is only life. Consumers don’t delineate their digital and analogue existence. And so neither should companies. Having a digital strategy is flawed by definition. It reflects the viewpoint that digital is that bit 0f the business over there (pun intended). Today having a digital strategy is akin to having an electricity strategy. Pointless. Strategy is all encompassing, which means there shouldn’t be a digital director or division. It’s everyone’s job to know this stuff, and fully understand the new tools of business. The people who don’t get it by now need to be replaced.
  7. Maker Movement Momentum – Internet of Things – While both of these topics are hot, it seems price alone is not enough for both the enter the mass market. Both 3D printers and Internet of Things infrastructure are cheap. A decent 3D printer costs around $1000 and companies could turn consumer products, cases and pallets (shoes, shampoo, toothbrushes) into ‘computers‘ for cents on the dollar through technology such as RFID. Like all emerging technology the capability is not the problem – it’s the education of the possibilities. It’s the unleashing of imagination, and the handing over of the tools to the public and mash up their development process. It’s the creation of open source platforms that enable anyone who can type to make something. These are the missing links and prize is big.
  8. New Age Conglomerate - In business we went from diversification being in favour in the 1970s and the 1980s, towards expertise through focus in the past 20 years. This year it seems, the age of the conglomerate is on the comeback trail. As the lines of who we compete against are increasingly being blurred – Digital Demarcation – companies are beginning to compete horizontally. We are also seeing lots of backwards and forwards vertical integration. Google becoming an Auto Industry player. Amazon becoming a movie studio. Netflix a TV studio. Distribution and data is where the power lies, it’s no longer in making things. But on the acquisition side, it’s far more likely in the modern age that the company chooses to keep the newly acquired company separate from the new owner. To be run with separate management, in a separate building, and keep their cultures away from each other. Facebook claim to have done this with Oculus. With the switching costs lower than they’ve ever been through consumer history, it’s important that separation is maintained so that new business maintains its value as a defensive play. We’ve now entered an era of the technology conglomerate. Just as Nestlé wants to sell you food regardless of your tastes, so too Facebook and Google want to collect and connect your data, regardless of device, app or interface. It seems that Zuckerberg has been wise enough to realise not everyone likes Facebook, and so is doing a nice job of keeping the brands as separate strategic business units. In any case, all shareholders care about is the aggregate profit and ROI. Just like Nestle is inevitably in your shopping basket, the Google and Facebook are inevitably in your pocket – regardless of the name of the service.
  9. Bitcoin is Good, Blockchain is Great – This people realised that the best thing about bitcoin isn’t really the currency. It’s the Blockchain. For the uninitiated, the Blockchain is a public ledger of all bitcoin transactions that have ever happened. In addition to this, it is stored in a decentralised way – that is, everyone has access to the entire history as it is tired and updated on all the nodes participating in the network. It is not controlled or owned by anyone – unlike other currencies. More importantly it is a system which can be replicated in other industries and technologies. Venture Capital Fred Wilson has gone as far as calling this era of investment the ‘Blockchain Cycle’. In many ways it can be compared to other open source advancements like HTTP, The Browser, Search, Social, Mobile, and now Blockchains.
  10. Self Drive Reality – This is moving well beyond fantasy. While I think we can all agree it is inevitable, launches of self drive cars for sale to the general public are now touted as being as soon as 3 years away. This chart does a great job of showing what’s coming. For me, the self driving car is not nearly as interesting as its consequences. Consider these thoughts for example: car parks will be a thing of the past as we send our cars home to rest. Rich kids getting cars for their 13th birthday to drive them around. Traffic jams evaporating as cars talk to each other. Cars becoming mobile rolling lounge rooms where screen time becomes a major revenue source for auto makers. Sleeper cars…? the opportunities are endless. The question is which industries will benefit from moving fast.
  11. Long Form Content – After years of reduced attention spans and short form content the long web is making a massive comeback. Long Reads and the growth of the Medium blogging format (which both advise the expected reading time) are examples that humans need intellectual nutrition, not just snacking. Add to this the tremendous growth of podcasting.  Apple expects over 7 billion podcasts to be listened to on their iOS alone. So what happened? It’s another case of the infrastructure and bandwidth catching up to desire. What we often forget is that the economics need to make sense before we embrace something fully. With smart phones coming with ever increasing data we now have infinite topic mobile radio at zero cost. But in addition to this I think we are realising that ears are the killer human app as they are the only sense we seem to be able to multi task against.
  12. Screen Equalisation – The reality of all screens are equal now. They all have the same capability, and the humans at the end of it don’t care about legacy revenue, or traditional media supply chains. People don’t care how media companies built their business or report their revenue by media. They expect all content to be available globally on any screen on the day of release. This includes new movies. It seems that finally some Australian content providers are starting to pay attention. In the next month there will be a myriad of launches for new content streaming services; Presto, Stan, Netflix Australia, HBO Go, Hulu +. If there is one overriding thought with media, it is this: the direct connection to paying customers is what counts, not the device.  The fact that Sony generated $15 million in revenue for ‘The Interview’ by selling direct on line is a bit of a clue, yet most are betting they won’t even embrace their own example. There is no such thing as TV or Cinema, only screens and content.
  13. Assets Are Optional – The Alibaba float made many step up and pay attention. At the time of writing it is valued at $256 billion. The thing it made many people realise is that manufacturing is no longer a closed shop. Anyone can play and that access really is greater than ownership. The financial heroes of today are no longer building factors of production, but connecting people to them. Now anyone can get anything made in over 4 million factories listed on Alibaba. This is quite a shift, and it is one of the big things which is causing disruption. The financial advantage startups now have is to be unburdened by the cost of infrastructure. Uber owns exactly zero cars. Apple owns exactly zero factories and Airbnb has more than 800,000 hotels rooms of which they own exactly zero. It turns out that old world assets are now optional. And the new asset is in fact data.
  14. Corporatisation of Social Spaces – A fact we should remember is this: if there are lots of people, eventually the corporations will arrive. I’m certain you’ve noticed that social spaces aren’t really looking so social anymore. They’ve been converted from Town Squares into Hypermalls. My Twitter feed is now ensconced with advertising, as we all should’ve expected. If we have a conversation at someone else’s house, we generally have to follow their rules which can be changed at any time without notice. What this means in a data driven economy is that we’ll generally have our attention sold on our behalf, or we’ll need to purchase our own privacy back. Two juxtaposed examples of this dichotomy are: Google’s decision to offer ad free subscription based web surfing (a very clever move in my view) compared with McDonald’s Australia who placed advertisements inside Instagram to which the negative comments as close to inevitable as anything ever gets. Just check their feed. I can imagine the brief: ‘Please target those who hashtag #Food or #Foodie in their posts’ – a massive fail in the age of context. While the corporates are here to stay, the key ingredient for successful participation (from both people and companies) will be about participants understand the sub-culture of the domain in question.
  15. Virtual Reality gets Real – It seems as though we might actually find some short term usages for virtual reality hardware such as Oculus Rift (Virtual) and HoloLens (Augmented). Which both now live in the stable of tech giants Facebook and Microsoft respectively. But I can’t help but feel both might suffer / benefit from Amara’s Law. It will be hard to predict when these technologies will go from cool to useful, but when they do they’ll both be world changing in ways we never could’ve imagined. Much like the super computer which lives in our pockets.

If you liked this post, you’ll probably love my new book – The Great Fragmentation – I’d appreciate it if you checked it out, or give it a review on Amazon if you’ve already read it.

Have a great 2015, Steve.

How to build financial wealth in 1 sentence.


The way in which all financial wealth is built, time immemorial is this:

Find a way to make money when you are not in the room.

This formula has never actually changed. All the traditional investments fit this definition. Property, Rents, Dividends, Interest, Equity and even creating a startup which becomes bigger than us. Essentially, we need to invent more than 24 hours in a day through the labour of others. We need revenue which is controlled rather than earned. We can build it, or buy it, either way can work. Some ways are faster than others. But if you want to generate money, then you need to bethink this maxim. It tells all about the financial future.

New book – The Great Fragmentation – out now!

A christmas story about how technology does not change us

Solstice Christmas

Yesterday I went shopping to buy all our favourite foods for Christmas. I paid a visit to the supermarket, the bakery, the deli, the fruit & veggie store and accumulated many guilty pleasures. As well as all of those foods we rarely let our kids eat. Most times we go shopping our kids love to come to the door and inspect the bounty of what we have brought home. They inspect the bags while we are trying to carry them into the kitchen tripping under our feet, hoping to see we have bought them a treat. But this week was especially bountiful. The bags were filled with DNA enticing high sugar obesity causing treats. The kids were thrilled.

It got me thinking about when I was a kid. I remember the exact same excitement when my mother would bring home Christmas cakes and candy for us to munch on. My brother and I also tried to take the treats out of the bag before mum would notice. She always did, and would grab them back and tell us we have to wait until Christmas, although that week we would always get more than usual.

This has been going on for millennia. No doubt the hunters would return from the field with their success from the hunt. Excited children would gather and see what would be cooked on the campfire that evening. At those times of the season when the natural environment was plentiful, traditions would evolve and turn into reasons to celebrate. But the behaviour hasn’t change all that much, just where we hunt and what our campfires look like. Today we have cars and credit cards. They had spears and hunting wolves.

It turns out that most of what we do and appreciate is the same, our methods change, but our motives don’t. It’s something worth remembering with new technology, the best forms of which helps us achieve more efficiently what we already care about.

Merry Christmas and have a safe holiday.

New book – The Great Fragmentation – out now!

So what really happened to newspapers – in data?

The Age Printing press in Tullamarine

We know that newspapers are in decline. We know that we are shifting where we get our news, both in channel and in provider. Gone are the days when we have a few local TV stations, radio and newspapers to get our news from. News is more fragmented than any industry I can think of. But the truth is that we’ve never read more and watched more news per person than we do today. We just do it in different places and more of them. But how far have the printed version of newspapers really declined? Will they even exist in a few years or will they join the record stores and CD’s?

Let’s have a look at some numbers from the Australian market. (source IBIS World)

Screen Shot 2014-12-21 at 12.56.28 pm

It is fair to say that a major disruption has occurred. In 10 years the best part of half of their business has gone. And these numbers do not include the fact that both the Sydney Morning Herald and The Age have moved to a tabloid format which has one third less space. And while some of the readers have gone to the same provider but online, the revenue streams have not. The online version of a newspaper can no longer pretend X number of readers saw the advertisement, no less than they can pretend that Y number of people clicked on it. The problem with such dramatic declines is that it is rare that being half the size can provide half the profit. When critical mass is lost, the business model itself starts to crumble. It would for example be hard to believe that The Age can deliver hard edged investigative journalism with half the reporting staff. It does seem that our BuzzFeed encroached world now rewards speed, rather than depth.

The biggest reminder for me as to how fast things can change is every time I drive to Melbourne airport. I go past the image at the top of this blog entry. It is a new printing facility built by Fairfax to print The Age newspapers. It was built in 2004 at a cost of $220 million. A few short years before the smart phone arrived, which fundamentally changed how we get our news. Today they are now trying to sell it for a little over $30 million – a $190 million loss.

We want doesn’t really change that much, but how we get it sometimes does. And while it’s clear this is a revolution, that thing that is changing is not so much human desires, and more so the infrastructure which delivers them.

New book – The Great Fragmentation – out now!

Little Data – Insurance, finance and digital footprints


General Thesis:

Cheap technology is changing everything. There’s a deluge of data being created by all economic participants. But, this time buyers, sellers and employers all participate and have access. It’s no longer just top down business infrastructure, but quickly becoming horizontal. Access is now greater than ownership. This means that in a data driven economy, areas that previously did not affect insurance and finance industries are starting to. Their biggest competitors in 5 years is more likely to come from outside their industry, as is of course any new revenue opportunities. The world in 20/20 will be one which is open source, built by crowd dynamics, collaborative, and all about the leverage of new data points created by businesses and their customers.

Specifically these changes are framed by (but not limited to) the following technologies:

Internet of Things: A world filled with traceable devices, which are added to all products and services experiences, because the technology costs are so low, they are cheaper than the packaging they come in (a few cents). By 20/20 18 billion consumer goods will be connected to the internet of things which dwarfs the internets current 3 billion human connections. This will allow insurers and consumers to de-risk and reduce cost of helping each other in a quantifiable world.

Quantified Self Movement & Gamification: Consumer are starting to use smart devices to track their human behaviour and gamify their lives to a more healthy and abundant lifestyle. Brands who participate and facilitate this movement will become indispensable partners in improved living standards in our post consumption, experiential economy.

Data Driven Insurance: Real Data versus Actuarial Estimations will change the approach to costing all forms of finance and insurance. Traditional actuarial models will be disrupted as real data replaces traditional demographic profiling of risk.

Big data & Little Data: People are starting to realise the power and economic value of their personal ‘little data’.  Entrepreneurial innovators will assist the ‘everyman’ to take control of the digital footprint and help them leverage it as an economic currency, just like we do today with our social media followings. Little data will become our personal asset and the panacea the our current privacy concerns.

Crowd Powered Finance: How powered low cost technology is empowering entrepreneurs and consumers to innovate outside of the traditional finance system. We are quickly entering Sans Nation State financial services era – that is, monetary systems without a global or national control. Innovations like Crytpo Currencies, Peer to Peer lending, the Crowd Funding will be in full force by 20/20 with disruptive potential for the traditional financial systems. A fast forward repeat of what we have seen in the media industry as the move towards a decentralised economy continues.

All these innovations are yet to be dominated by an single player, in one sense, it is the start of the start as we move beyond the social era of the internet economy, to the connection era where technology envelopes itself in every industry, not just industries whose output lives on a screen. The game is open, and future is bright for those who embrace the change. And as always, it’s not about being a technologist, but understanding how the tech can be used. And then organising and collaborating with others to make it happen.

How to price yourself as a freelancer

kids writing

As the friction of employment is being removed, many people are taking the opportunity to freelance out their skills. The independent digital craftspeople are arriving thick and fast, but one of the trickiest parts of doing such work is knowing how to price it. Getting it wrong seems scary, as it can be the difference between getting paid this month or not. So the inclination is to take a conservative approach, price low and ensure we get the business. But all is not as it seems. So here are some hacks to remember in order to get your freelance pricing right.

General rule of thumb:

Charge yourself out at least double the rate you would earn in full time employment doing the same work. 

So if you would earn $50 an hour, then charge yourself at a minimum of $100 an hour. If you’d earn $100k a year, then your rate should be based on $200K per annum. Divide $200K by 52 weeks and that’s the rate to charge out for a days work. And if you think you were getting under paid in previous gigs as an employee, then you should double the rate you think you should have been getting paid.

We need to remember that being independent has a lot of added costs, and we need to take them into account in our price. Even in a digital world we still have real costs like office materials, electricity and equipment. And there is no one providing us with paid leave, health care or a superannuation / 401k.

But there is also more to it than that. What we must do is put ourselves in the shoes of those who need the skills we can provide. We need to remember the costs of the alternatives and the mindset of the end customer. When we do this, the ‘double the price’ concept won’t seem nearly as aggressive.

Here’s a few things things to remember:

– It usually costs around 50% more than a persons wage to employ them. Office costs, management, administration, payroll taxes, annual leave payments, public holidays and the like really add up. This is inside the calculation of those who need people. They always consider the substitutes and make their own calculations on full time employees, so the premium on your rate is not nearly as high as it seems.

– We also need to remember that it is quite likely they only need your skills temporarily. Short term resources always come at a premium – just think of the price of renting a hotel room, versus leasing an equivalent place for a year – we pay a premium.

– Chances are the ‘buyer’ can’t afford you all year, and while your cost per day might be much more than it would be per day for an employee, you are most likely still a much cheaper option overall. You will be saving them money.

– It must also be said that smart employers know that much of an employees time is eaten by ‘the office paradigm’. Freelancers much less so. In this way, freelancers are usually far more effective in output per hour.

– Price is a perception game – in all products. The natural and automatic perception of all products is that higher priced goods are of better quality. Pricing sends a signal to potential buyers more than anything else in purchasing decisions. And counter to what we might believe, pricing ourselves too low has as much potential to lose work as pricing too high does.

– It’s easier to find people who will pay the correct rate than it is to make a living working for half of what you’re actually worth. It’s better to hunt a little harder to find a premium customer. They also tend to appreciate your work more than cheapskates, and take they advice they are buying seriously.

Finally, we need to embrace the idea that price is an experiment. It is the easiest thing to change in our offer. And we can do it without notice. Over the years of catalogues, discounts and sales, people are groomed to expect prices of all things to vary. Why should a freelancer be any different? So you can play with your prices. In the end it is about finding the right balance of demand with the personal supply of hours you have available.

The Uber attitude & surge pricing

Travis from Uber

Today the ride share service Uber, did more again of what it seems to be good at – acting like jerks. During the Sydney Siege they conducted a price surge and put prices up to reflect the demand for transport at a time of serious civil disturbance. But the most disturbing thing, isn’t the price, it’s really the attitude.

This is one time when industry disrupters can take an important lesson from their industrial era counterparts. Let’s take legacy airlines. Our national carrier Qantas has on many occasions diverted flights at no cost to pull people out of countries which present an immediate danger to Australian travellers.

While Uber later countered their original decision with a ‘Oh, and we’ll pay the fares’ tweet – below – it was clearly an afterthought when the rightfully astounded community reacted.

Screen Shot 2014-12-15 at 4.09.50 pm

It turns out our natural intentions are revealed by how we behave before we get feedback.

New book – The Great Fragmentation – out now!