W2W – Innovators Ready to Roll

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Global Entrepreneurship Week has rolled around already and Unlimited Potential is once again doing it’s bit to promote technology entrepreneurship as a career option. I’ll be working hard this week on a few last minute details for our Wellington to the World (W2W) event on Thursday.

Wellington is alive with tech talent at present and there has been somewhat of a renaissance as geek-preneurs have got cracking launching some great products onto the world stage. In some cases these are second or third generation ventures where there has been an earlier exit. W2W is a showcase event that brings together technology innovators, entrepreneurs and investors to share ideas and celebrate emerging tech ventures from around the region. 

We have a cool new venue this year, so have included a small demo zone adjacent to the bar area in the programme. There will be plenty of opportunity for hands on experience. Some of the companies in the demo zone will also be presenting during the entrepreneur flash talks. The event begins at 4pm on Thursday 18th November with talks by technology researchers from Victoria University. A number of these projects have commercial potential and will be seeking partnerships and investment in the future. Victoria University commercialisation arm Viclink is an event partner, so please support these speakers. 

The event also encapsulates the Summer of Tech launch for 2010/11. Summer of Tech is a great initiative that matches software and engineering companies with students looking for work experience over the summer holidays. It’s an important plank in a strategy to build up capacity and grow employment in hi-tech around the region. This year we are very pleased to have Xero CTO Craig Walker to speak at the launch. There are a small number of places left at the event, so be quick, registration is essential.

Journalistic Credibility Explodes As Social Media Bites

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“Qantas Jet Explodes Over Indonesia” blared the headline on the New Zealand Herald website yesterday. Once again the media went into panic mode as it scrambled to keep pace with a flurry of reports that were popping up through social media sites. Indonesian sourced Twitter content describing an explosion and aircraft debris raining from the skies were interpreted incorrectly as an aircraft having exploded in the air. Does this sorry episode and the recent media debacle over The Hobbit suggest that traditional forms of media are more frequently substituting sensationalism in the place of research and accuracy, as they struggle desperately to compete with the immediacy of new forms of digital media? The last remaining vestiges of New Zealand journalistic credibility also exploded yesterday.

Traditional media seem ever willing to cater for the public’s demand for reality based entertainment and hunger for death and destruction. What really happened in the sky yesterday was that an uncontained explosion in one of four engines of a Qantas A380 shortly after take-off from Singapore led to the aircraft entering the holding pattern and dumping fuel overhead Batam in preparation for landing. Some engine debris was recovered on the ground but due to the qualities of the Airbus aircraft, there was no loss of structural integrity and the crew followed correct procedures, returning to land safely.  A properly researched headline should have read “Flight Crew Performs Textbook Emergency Landing – 450 Safe”.

Wellington media maven, blogger and Fairfax journalist Greer McDonald will be speaking at Social Media Club on Monday evening about how traditional media treat information received via social media channels. This is sure to be an interesting and lively discussion given recent events and the fact that Greer has a foot firmly in both camps.

Kiss My Ring – Hobbit Debacle Raises Questions

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I was going to begin this article by pointing out that despite the astounding panic from a gullible media and nervous politicians, it was quite obvious from the outset that The Hobbit production was never going to move offshore. I was also going to outline the logical reasons why, including mentioning the fact that a certain movie director prefers working and living in New Zealand and also part owns the local special effects shop that will do the really high value work on the film, regardless of where it is shot.

I may have even mentioned that irrespective of our reputation as producer of incredible feature films, very few New Zealand based actors, set builders and film crews actually make a full-time living in the industry. I might even have been tempted to question why a single film project receives a $90 million plus taxpayer funded handout when our ICT industry that contributes $20 billion to GDP annually (including $2 billion in exports and thousands of real jobs) does not.

I’m not going to dwell on these things at all. That would be most uncharitable. In fact I’m going to give thanks that a large American corporation has pointed out to our government the error of its ways, thus facilitating fast track legislation that will assist said corporation to maximise its profits in the future. I’m so relieved the Hobbit crisis is resolved. It means we can return to focusing on other really important, game-changing economic reform projects like building cycleways and selling beer to rugby tourists.

Is Branding Part of the Value Proposition?

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I’ve recently finished reading a book called “How Brands Grow” by Prof. Byron Sharp. Although it is not specifically technology venture focused, I would highly recommend it for any marketer, especially those marketing web-based B2C services such as we do at iWantMyName. The author questions much of the accepted wisdom on marketing and turns a lot of traditional textbook strategies about marketing on their head.

In a dynamic market, you can compete on price, but this is akin to an arms race and damages everybody. You can also compete by innovating and making your product more feature rich, but this is expensive and takes time. A third approach is to have a brand strategy in place from the outset that puts you in a stronger position when competition arrives. But product developers sometimes overlook branding as part of the overall value proposition.

In his book, Prof. Sharp argues that the quickest way to build a market is to make your brand physically and mentally available to consumers as well as targeting the large pool of dissatisfied customers that change brands each year. He scoffs at differentiation, citing cases like Coke and Pepsi who have attempted to differentiate within the cold drinks category, but whose respective market shares hardly change year after year.

Coke and Pepsi are constantly fighting off cheaper brands and do so quite successfully because customers are prepared to pay a premium for a brand they feel connected to. That connection has been built up through generations of consistent positioning. Everybody recognises the Coke symbol, right? It’s irrelevant whether or not the product itself is substantially better than the cheaper ones. What matters is that customers mentally associate positive attributes with a brand such as trust, some kind of meaningful narrative plus “sticky” graphical images. Customers ascribe value to intangible features and this should not be overlooked.

This post is an extension of a discussion on a value based strategy to competing in new markets started by Libby Russell on the New Zealand Software Alliance LinkedIn page.

Paul Henry Comments Out Of Step

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Paul Henry’s ill advised on air comments suggesting that New Zealand’s Governor General was not fit for office because he neither looked nor sounded like a New Zealander demonstrated how disconnected the “state broadcaster” and its talking heads are from the real world. Worse than that, I found highly offensive the implication that an idiot like Henry speaks for all of us.

Television New Zealand spokesperson Andi Brotherston leapt to Henry’s defence suggesting that he merely reflects what society is “quietly” thinking. Perhaps that is true on some issues, but it certainly was not in this case. The record number of complaints from the public on this matter suggest that Henry grossly misjudged the public appetite for such commentary. The public backlash was as much about disapproving of Henry’s racist tone as it was about defending the good name and dignity of the office of Governor General. Republicanism aside, the GG performs a valuable role as a representative of New Zealand and as an apolitical interlocutor essential to the functioning of a civil society. Henry’s gaffe threatens our nationhood and questions our self perception.

Even more embarrassing was that Prime Minister, John Key was engaged in a conversation with Henry at the time of the incident. However, I’m prepared to give Key the benefit of the doubt. His guard was down during (what he thought was) a moment of light-hearted banter. But one has to question the wisdom of even appearing next to Henry, given his track record. Popular technology commentator Ben Gracewood obviously asked himself that very question, because he resigned from the Breakfast show immediately the comments came to light.

TVNZ mouth-piece Andi Brotherston might be looking back fondly to less controversial days when she shared a provincial radio turntable with DJ turned Cabinet Minister Steven Joyce. Perhaps he could find a parliamentary spokesperson role for her; she might be needing it. Way back then, Joyce established a private radio station to challenge the entrenched state monopoly. Perhaps the accepted moral authority of another state broadcaster needs to be challenged once again.

If you want to lodge a complaint with Television New Zealand about Paul Henry’s racist and denigrating comments, you can do so using the online form at the Broadcasting Standards Authority website.

Innovation Investment For Tech Minnows Drys Up

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Last year the government signalled its intention to invest heavily in “primary sector innovation”. As an efficient producer of food with a huge and growing consumer market emerging on our back doorstep, it absolutely makes sense to invest in this area, but it should not be treated in isolation. It also sends a disturbing message that high carbon, environmentally damaging industries are the priority.

The official announcement of a $144M investment into the Primary Growth Partnership (PGP) springs from a promise made in 2009 to form a public-private partnership to invest into developing more innovative high value added products and services based upon our existing expertise in farming. But this funding was purloined from an almost identical programme that had already been set up just prior to the demise of the previous government. While the Nats rebranded the package, nothing happened for over a year. In the meantime the global economy tanked and the public’s attention was diverted away from the issue.

The recently announced and much lauded additional $189M in funding for high tech industries also sounds good at first glance, but is worthy of closer inspection. It’s spread over four years and is entirely targeted at larger firms. The problem here is that a lot of the most interesting ideas are being generated in smaller companies that are already being hit hard by the recession. Small companies don’t have a lobby group and tend to be way too busy innovating and simply staying afloat to complain anyway.

Starting-up and growing a tech company has always been a crucible of fire and only the best and brightest will succeed. That is why I’m sometimes a little bit ambivalent about publicly funded handouts. On the other hand, larger firms now have better access to government grants than smaller one, which seems a little unfair. New Zealand is way too reliant on commodity exports and certainly needs to add more value through innovation. But let’s not forget emerging software and high tech manufacturing companies that build and export high value products and services with almost no pollution or carbon attached.

There is a real disconnect between innovation at the coal face within small and enterprises and the resources being made available by government to stimulate these enterprises, some of which will grow to be bigger fish eventually. Under the new system, small companies will self assess their needs and receive training to improve “capability”. That is both laudable and necessary, but it doesn’t help get new products developed and to market faster.

Postscript: In response to my friends at TechNZ. My comments above refer to the new funding. There remain avenues for small firms to access co-funding for small projects from the existing funding pool.

Does Shakedown Have Silver Lining?

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Christchurch based politician Jim Anderton will no doubt be regretting his comment last week that it would take a “seismic shift” for incumbent Christchurch mayor Bob Parker not to lose the local body election fight that they are both engaged in. At 4.35am last Saturday morning, New Zealand’s second largest city was struck by an earthquake of similar strength to that which destroyed Haiti. In fact Parker, ever the gentleman showman, has risen to the occasion and must be privately elated that he has a new public platform on which to perform. The timing is also perfect for other politicians who are ever mindful of the lessons from 9/11 and New Orleans.

When old Mr Hubbard went to the cupboard and found it bare recently, the subsequent receivership of poorly managed South Canterbury Finance (SCF) and its labyrinthine and multitudinous related entities also hit the Canterbury region like a shock wave. It was a painful reminder of why we cannot continue to prime our economic machine purely on the basis of milk exports and highly leveraged property assets. Investors in the failed firm received an immediate payment under a government guarantee scheme totalling $1.7 billion. Whilst some of this cash will no doubt be recovered, it’s appalling that SCF went unchecked for so long. Ordinary taxpayers and legitimate businesses have had to shoulder this burden.

Most of the SCF payout will likely disappear into holiday trips to Surfer’s Paradise and safe but low interest earning bank accounts of the grey brigade.Very little will actually be reinvested into the productive part of the New Zealand economy. Consequently, the earthquake is a “god-send” for central government too. Apart from the immediate distraction from existing economic problems, it will validate investing hundreds of millions of dollars on infrastructure repairs. Road builders, plasterers and brick layers from all over the country will be fully engaged for months, possibly years. That may be quite a good thing.

I don’t wish to minimise the effects on Christchurch residents as they were thrown from their beds on Saturday morning. It must have been a terrifying ordeal and the ongoing psychological trauma of aftershocks will continue to play on minds. But I partially agree with some commentators who suggest that New Zealand has a high level of preparedness and that we will come through this. Now that the dust has settled, we might even see some benefits arise from this event. If nothing else, there will be a lot of learnings that can be passed on to those of us that live in other parts of the country with a history of high seismicity.

Finder, Minder, Grinder

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What kind of attributes do you need to make a start-up dream team? When we think about high flying tech companies, a single high profile founder often springs to mind. But the reality is that start-ups with high growth potential need a mix of skills to build something long-lasting.

A lot depends on the type of business that you are thinking about starting. But for a definition of a basic start-up team I quite like the analogy of “finder, minder and grinder”. The Grinder is the person with domain knowledge. In a software start-up it’s obviously a skilled developer, at a micro-brewery it’s the brewer, in a restaurant it’s the chef. The Minder looks after the accounts, makes sure the money gets banked and the bills paid and later on, helps to raise capital. The Finder is your marketing guru who gets out there and makes the all important sales, without which there will be no business.

When we established ideegeo and started developing domain registrar iWantMyName, that was pretty much the roles we each took on. Being a web start-up we also had a designer at the outset, which was important for us. Now I don’t want to be too prescriptive because there are always exceptions to a rule and there is almost always some overlap in these early co-founder roles as well. But “finder, minder, grinder” is a good rule of thumb to get your team started. 

On Thursday 9th September Unlimited Potential will be running the Co-founder Match-making Event in conjunction with the Bright Ideas Challenge and Grow Wellington. This event is specifically aimed at taking people with I.T. related bright ideas and matching them with others who have technology or business skills to take these projects forward. The event is NOT for consultants looking to sell services to companies; it’s for folks who actually want to put their time into a project in return for equity and a bigger potential return downstream.

If you are a developer, designer, web marketing expert or just have a great tech idea you want some help with – come along to this facilitated networking session and find your dream team! We will also be having inspiring Minimonos co-founder and serial tech entrepreneur Melissa Clark-Reynolds join us for the evening.

Please create a short profile on the new Unlimited Potential website and register for the event.

Why Customer Acquisition Is Trumps

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Companies traditionally put a huge amount of resources into carving out and dominating niches within a particular product category. Airline loyalty programmes are one example of the lengths marketers will go to in order to retain customers. But in more dynamic markets such as web-based services, the old rules no longer apply. Customer acquisition trumps retention every time. Do the math.

For argument’s sake, let’s say that there are a total of 100 customers in your target category and that 20% change their loyalty each year. So, ignoring any organic growth, there is a total pool of 20 customers up for grabs in any given year. A start-up entering the field does well and secures 5 of these floating customers in the first year. But they will lose one of these customers at the end of the first year on average. In the second year there are still 20 customers looking to change provider. If the start-up succeeds with customer acquisition at the same rate it will still more than double it’s user base.

Being a small brand in a market with high defection rates is risky. Growing customer numbers as quickly as possible is insurance against future defections. A larger brand can weather the storm. For many product categories in fact, 20% loyalty churn would be extraordinarily high. So a new entrant has its work cut out for it on both fronts because in some industries the number of shifters is fewer.

I’ve over-simplified the figures, but you see my point. Acquiring customers from the pool of dissatisfied users is the primary goal of a start-up. In the case of web-based services, create a better user experience and you immediately tap into that pool. Customer retention will also take care of itself. Because the domain registrar industry is in dire need of innovation and there is a large number of disaffected users, this is the approach we have taken at iWantMyName.

A Very Uncivil Disunion

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Chris Carter’s clumsy and self-serving attempt to foment dissent amongst the ranks of the Labour caucus are remarkable but not without precedent. Carter’s brain explosion was never going to end happily for him. Ironically, his irrational behaviour has given the party a rallying point that might actually strengthen Goff’s position as leader – at least for the time being.

Chris Trotter’s commentary last week indicates that the Left have washed their hands of the rogue MP. Trotter’s analysis is right on the button. In the wake of losing power and with the departure of his ally Helen Clark it seems like Carter was left in the political wilderness. Too much time on his hands led to some outlandish excuses for publicly funded travel which was the beginning of his unravelling. Carter’s puerile attempt at payback after being sidelined by Goff earlier this year will not have won him any friends amongst the electorate faithful.

Carter may well have been right about Goff’s inability to front at the next election but that is a moot point. Goff may have more political nous than he is given credit for. With Shane Jones exposed (so to speak) and Carter shamed, there are very few from within the Labour caucus that would be in contention. In the long term, the leadership will be contested by someone who is not yet even an elected MP but who is being quietly groomed for greater things. In the short term Labour may be willing to sacrifice Goff to an election that might be unwinnable irrespective of the leadership. If the All Blacks win the Rugby World Cup in October 2011 it will be worth 10 points in the polls to the incumbent government.