I spent 2 days in the FT Innovate Conference in London. For me that means meeting and listening to a whole lot of intelligent, creative, and mad people. And that is usually accompanied by a meteor-shower of interesting thoughts, a mad dance of the synapses. Here are some thoughts no particular order – let’s hope it triggers some thoughts for you too. 

1.  Sustainability as a design constraint. Nike’s Hanna Jones talked about sustainability and environmental commitments as a design constraint that ensures a consumer can buy a high quality Nike running show with no compromise on quality. It can of course be argued whether Nike’s real motives are a desire to do good, or a more cynically motivated need to tick CSR or PR boxes. It is inarguable, however, that whatever the driver, the approach to design innovation keeping the environmental needs as a constraint is a sound one, as it embeds the thinking all the way back to the drawing board. You might for example argue that privacy or security is similarly at the heart of any thinking about digital products. 

2. Small Bites of Big data. Big Data is all the rage. HBR says that the sexiest job title of tomorrow is “data scientist”. The question for today though, is how much should you be investing in “big data”, whatever it is? I met a number of companies at the event who were struggling with Master Data Management challenges. A major retailer is said to be offering 1% off their bill to consumers in exchange for basic data like email address. That’s 10% of the profits from the purchase. What is clear though is that ironically, big data becomes usable when you can slice it into smaller bits. This can be through the lens of a specific business problem – for example, identifying ways to improve customer experiences or speed of check out, or even uncovering shopping patterns that vary with weather or days of the week. Somebody mentioned that Walmart save about $ 12 million annually if they shave 1 second off the check out time. 

3. Experience is where Products meet services. There was evidence of the eternal struggle between products and services. I’ve always seen products try to add service layers and services try to productise. It’s probably because the ideal customer experience is somewhere in between the two extremes where you have the definition of a product and the human experience of a service. At P&G after seeing Starbucks redefine the experience after spending years trying to improve the product (Folgers), they now have a name for it. The question they ask in P&G is, “how do you Starbucks a category”? As we proceed down this road, we’ll see a lot of companies try to redefine the experience through the right combination of products and services. Two areas you can expect to hear a lot more about in the months to come, are Service Design and Experience Architecture. Stay tuned. 

4. Adding Love to Data: one of the participants pointed out to Philip Clarke, CEO of Tesco that while self service check out had made the Tesco experience highly efficient for her, it had also made it soulless. When you couple this with all the debate about analytics versus privacy or intrusiveness, it seems like we’re halfway through a journey here. We’ve done one part of it, which is made data analysis very muscular. But we need to do the other half, which is to add more human factors to how we use the data. The technologies are possibly there already but we haven’t quite mastered how this needs to work. We need to be able to add love to data and analytics, so that customers can feel truly special, not just well analysed. 

5. Marginal versus big-push innovation. The very eloquent Tim Harford, the “undercover economist” at the FT walked us through the fascinating exploits of Matthew Parker, Head of Marginal Gains with British Cycling (the olympic team). Among his many marginal improvements included better hand washing techniques to help prevent athletes from falling sick, carrying own pillows to events for ensuring good sleep, and the use of “hot pants” to retain muscle heat between warm up and start of race. At the other end of the spectrum is the truly disruptive, big push innovation which typically comes from an absurd idea, such as the creation of a single seater fighter plane, a prototype commissioned in the 1930s by the ministry of defence and criticised, even ridiculed by eminent MP’s including Churchill. History shows that that project created the Spitfire, which is said to have saved the war for Britain. The lessons? For innovation, you need efforts at both ends. Marginal and big push innovations. (not dissimilar to Christiansens argument of sustaining versus disruptive innovations). But the lesson also is that you need to celebrate the disruptive innovators long before they have actually succeeded, i.e. even when they are failing. 

6. Cognitive disruption: A really useful starting point for innovative thinking is cognitive disruption. This is a technique where you introduce a completely different experience to what is expected in a situation. For example, you might expect eye strain after working at a computer screen for a long time. Now imagine that you have a screen which actually soothes eyes, rather than strain them. This is a good way to think about product innovation. Also an excellent way of creating the recall any new product needs, by challenging the users expectation and re-orienting him or her to a new truth. 

There are two worlds within the mobile universe. One is populated by smartphones, tablets, shiny new consumer toys… er… devices. A world dominated by Apple and Samsung, where the revolutionaries are millenials and white collar workers. Then there is the other one – the world of Rugged devices. The very word “rugged” conjures up a picture of muscular men, driving off-road vehicles. It is, infact, the world traditionally occupied by field force engineers, logistics businesses and those working in physically challenging environments. The dominant brand here is not Apple, but Motorola. The dominant OS isn’t iOS or Android, but Windows. And there isn’t a revolution in this market, yet. 

At the Mobility Matters, yesterday, we tried to bring these two worlds together, to ask the question – is there perhaps an argument for field force engineers, or delivery teams to be using consumer devices (smartphones & tablets) instead of the rugged devices they’ve been using for years? 

The lure is obvious – everybody loves iPads or smartphones. They are cheaper than their ruggedized counterparts. They are sweeping across the world and almost everybody has one at home, that is so easy to use, that the average 3 year old learns to swipe before he or she learns to turn a page of a book. What’s more, you can add clever apps on to these ipads, and connect them with your legacy system and off you go! Even better, because it’s an iPad, the user will look after it as a semi-personal device and loss & breakage will be lower. Simple, right? 

The short answer is, no. Certainly not at present. Here’s why. Let’s look at these arguments one by one. 

It turns out that in many organizations, there is a set of people who work in field force or logistics who are not millenials and are not pro-change. There are legions of stories about people resisting change, new technology or indeed technology itself. Without going into the argument of whether or not this is wrong and how it needs to be solved, the point is that plenty of people don’t want to be given an iPad or smart phone. Many are perfectly happy with the device they’ve been using and will resist change. In fact, in many businesses, this involves a renegotiation with a workers’ union. 

And it’s not that consumer devices are cheaper than rugged devices either, the TCO of consumer devices over 5 years is almost $18,000 compared to about $12,000 for ruggedized devices, and even over one year, consumer devices have a TCO of about $3,500 which is $1000 more than that of ruggedized devices. Remember that the consumer device users will expect to be upgraded on average every 18 months, rather than 4-5 years for rugged device users. The support costs of consumer devices is also significantly higher than that of rugged devices. 

Those expecting that the iPad might be better looked after, should also remember that the chances of theft or loss is much higher, that the battery life simply will not allow for a full day of use without a re-charge, that it might not be easy to use in bright sunshine, and will be less resistant to damp.

All the logic and evidence therefore points to the fact that consumer devices are not going to replace rugged devices in a hurry. Yet, scores of companies are going down this very route. Why?  

This is essentially a head vs heart debate. When we asked the question in a previous edition of Mobility Matters, most people came up with reasons for using an iPad at work that were essentially emotional rather than rational responses. Including “it’s the only device I can caress”. Steve Jobs called it “lickability”. Most people don’t know why they want one, but they do. It’s the lure of great design. 

We know of many organizations which have bought iPads by the thousands! Many of these may be used in rugged environments. After all, the list of organizations includes the US army, for example! But we expect that many businesses looking to replace rugged devices with iPads may come back to rugged devices in a few months time. 

Some of the more practical considerations includes breakage, the difficulty of supporting the device and the challenges of sharing a device (multiple users on a single device), etc. Interestingly, security is no longer a consideration apparently, as most managers seem to be comfortable with the level of security offered by most devices. Ultimately though it boils down to a matter of being “fit for purpose”. 

All of this should not be taken to mean that the bricklike devices of old, which lack any kind of aesthetic will continue to be the ugly cousin of the consumer device for ever. One of the key areas of impact of Apple in particular is the resetting of expectations around device aesthetics. As younger workers enter this market, there will certainly be a greater pull of the beautiful devices. We therefore expect to see a morphing of rugged devices to take on some of the aesthetic challenges of consumer devices – across form factor, screen size and accessories. 

Finally, lest we run the risk of allowing the device to define the industry, which would be tantamount to the tail wagging the dog, it boils down, of course, to the applications that actually run on the system. The key trend here is versatility. The future of rugged devices includes applications which do more, connect with multiple back end systems and are generally more versatile, in their coverage of tasks. The arrival of Microsoft Windows 8 might herald a new opportunity to make apps work across consumer and rugged devices, which would allow a much more seamless cross over between the device categories. 

Those among you who have built apps must be waiting to point out the central role of the user and managing the user experience. Yes, this is key, but at present, the device strongly influences the user experience. And it’s not just about what’s on the screen. 

So at present, one could argue that in it’s own category, the rugged device is still ahead of the consumer device. But the future could bring a few surprises. What if it’s not Apple but somebody else that creates the next compelling tablet? What if it able to seamlessly span the challenges for white collar and blue collar workers? These worlds are colliding and the race isn’t over yet. 

There is little doubt that the iPad is probably the most desired gadget on the planet, at this point, but are we letting our lust for the device blind ourselves to its obvious limitations as an enterprise tool?

After all this is a device that you can’t use to print from, that doesn’t integrate very well with most of your office software, that you can’t connect to the LAN, that doesn’t run flash, and that really isn’t built for typing, unless you attach an external keyboard.

And yet, consider the staggering numbers published: 11,000 iPads distributed to staff by United Airlines; 8,000 by Roche; 5,000 by Sears; 4,000 by Verizon; 2,000 by Walt Disney; just to name a few from dozens of examples; and a whopping 32,000 by Korea Telecom. All these companies and many many more are buying iPads by the thousands to distribute to their staff.

According to Forrester, CIOs will spend $10bn on iPads in 2012. A little more than they will actually spend on Macs. And just so you know the figure will actually grow to $ 16 bn by 2013. According to a global survey by IDG Connect, 22% of respondents have deployed tablets in the enterprise and 78% intend to do so by 2013. You do the maths. Also, Apple currently between 60-70% of the tablet market, including the Kindle, and it’s clear that those big numbers for iPad deployment will not be slowing down for a while.

We got some of our clients, partners into a room with some entrepreneurs and experts to pose this question: why? Why are businesses buying what is essentially a consumer device, a toy, in such large numbers? Some of the responses and discussions were illuminating.

“It helps that it’s cool.” – Companies have tried using Laptops before and it hasn’t worked. But giving people iPads and letting them use it personally as well, builds a strong sense of ownership and people look after the device better.

“The business case blindingly obvious for mobile users”. In the sheer amount of information that they no longer have to carry. One of our airline clients mentioned that the fuel savings created by not having to carry manuals with hundreds of pages itself paid for the iPads.

“Cost and Upgrades are key challenges”. The iPad is expensive. And also, Apple does not play by the rulebook when it comes to announcing upgrades, releases, and doesn’t really have an enterprise support environment.

“There is an opportunity for Microsoft” – the good news, or bad news, depending on your religious affiliation when it comes to computing, is Microsoft’s very good showing at the CES. The new Windows 8 interface is seen as a winner and even if they could get a device which has 80% of the iPads power and appeal, the ease of integration of office tools would make it a winner.

“Emotion rules the day” – the amazing thing of course was that every time we asked people about the iPad in the enterprise, people responded first with a personal anecdote. It was their 5 year old son, their 10 month old daughter, their 60 year old father, or themselves, who had been seduced by the iPad. It was a device you could “caress”. If there is a wider lesson here for CIOs, it’s to welcome the arrival of emotion into technology.

Yesterday, on the 25th of August, we held our monthly Convergence Conversation event at Intellect. After 90 minutes of full on and intense discussion, there were far too many interesting insights to capture or even to do justice to all. Here then is my attempt to draw out the key themes of this discussion.

Is there really a revolution?

Anthony Rose’s new company Zeebox wants to re-architect the entire experience of Television. At the heart of this is giving consumers the choice that traditional Broadcasters and EPGs just don’t. Zeebox will be a transformative user experience which will also seek to integrate social behaviours and multi-tasking into the TV experience. Edd Uzzell from Sony suggested that Sony are also looking at redesigning their TVs from the ground up, keeping in mind connectivity, operating system and app environments. Facebook is streaming FA Cup games live. Google have announced a UK launch for their version of TV. It’s fair to say that there is indeed a revolution on.  

But Will it all happen on the TV Screen?

It is indeed true that many experts are envisioning a future where apps drive a significant part of the TV experience, or where the TV show incorporates Twitter feeds and Facebook features (such as “like”). But there is an equally strident voice cautioning against detracting from the “Television” experience. For both sets of people, the second screen is clearly a key component. This could be a smart phone or a tablet. Most of us know this already. And many of us (myself included) no longer like to watch TV without a second screen at hand. For me this is often just a hedge, since the majority of TV programs don’t really engage me 100%. But sometimes, especially during football matches, I might be talking to people in my special-interest football group. This group has people from across the world who mostly know each other, and during the second leg of the recent Spanish Super Copa game between Barcelona and Real Madrid, my friend Bobby and I exchanged over 50 messages via our Facebook group. And I’m sure everyone has seen this twitter timeline from the New York Times.

What is fascinating though is the possible coupling of devices, so that the TV & second screen “know” what’s going on with each other and can react to this. The tablet or laptop could be communicating directly with the TV (rather than over the cloud/ via Sky’s servers) and this direct coupling could be used to drive a lot of interesting user experiences on either screen. Especially interesting to advertising and commercials, many of whom are currently struggling to get their heads around social TV, having wandered in the wilderness for many years in the social networking world. For device makers like Sony, who have TVs, tablets and mobile phones, this opens up a whole new way of thinking.

There was near unanimous agreement that the second screen is a game changer and Fintan, who argued the other way found himself defending the single-screen experience like Horatio on the bridge, but with less spectacular results.  

Richard Kastelein pointed to the 4 C’s (content, community, context & commerce) and context was picked up as probably the most crucial element of social TV. And the second screen might be well placed to deliver context.

But Do We Need To Rethink TV Itself?

What is Television? Is it a device? A broadcast mechanism? A type of content? A schedule? A viewing experience? In fact, TV is a very loaded word which probably implies all of the above. And a number of recent technological changes have led to the questioning of each of these. The TV is in a sense just a shared screen at home. It can as well be a monitor for the gaming system, or a large digital picture frame, or a blu-ray movie screen or a screen for viewing broadcast content. I know that in our home, we’d love to have the family calendar available on the TV screen so we can take a quick look at social commitments, travel dates, and all kinds of other reminders that have to be written down and maintained elsewhere (dates for renewals of parking permits, and doctor’s appointments, for example).

But in the more narrow definition of TV, which is simply a broadcast content screen, there is a sea change. It’s not just about peripheral additions such as adding a “like” button onto a TV program, running a twitter feed at the bottom or allowing people to “check in” to shows. (“Check in is not the answer”). No, it’s much more fundamental – it’s a rethinking of content and storytelling, to incorporate the social networking implications. The game-shows and voting programs seem like killer apps today, but can probably be defined as Social TV 1.0. Many more ways of inserting oneself into the show, and as Mark Grundland put it, “to put the consumer at the centre of the show” – will emerge. And the influence of the social networking phenomena on storytelling itself will be immense. Jed Daly (the LA Guy!) told me about a game show in the US where while one contestant was facing the cameras, the audience were tweeting and communicating with the other contestants, backstage. This takes us to a point where social media is not just playing second fiddle to the main program, it’s a strand of programming in its own right. We are not far from the days when the social network will be the program. This is not a dystopian view of watching people on social networks a la big brother, but some very clever and creative way in which social network is integrated and centre-stage in the program concept. Plenty of examples exist where the cross over between the real and fictional for social media and TV has yielded interesting results.

After all, TV has so far only had the capability to address the one need – that of leaning back and being entertained. Hence to argue that people only want to be entertained passively by TV is somewhat specious and circular. Other basic behaviours such as inquisitiveness, or engagement are equally valid, and might be displayed by some viewers all of the time or all users some of the time. TV now has the ability to address those behaviours as well. And in that, it has changed fundamentally as well.

Is All TV The Same, When It Comes To Social?

The time has come to stop using these broad brush strokes to make generalist comments about “TV Shows” as though the same rules apply across genres and categories of programming. Clearly the pulling power of sport, when it comes to social experiences is more than a documentary on the history channel. Or indeed, the willingness of a viewer to tweet or interact during a show will vary dramatically between watching a revolution unfold in Tahir square, versus watching a rerun of Singing in The Rain.

One of the parameters is the sheer size of audience and interest groups. Arguably, content that draws very large audiences is likely to engender much more social interest. Big news, unfolding major live events, popular sports, the big game shows and participation TV, the biggest soaps, all create interest groups of their own. Some are more tribal than others. Sport naturally creates tribes and very specific patterns of social behaviour, which will replicate itself on any forum it can find, be it a pub, a stadium or on Facebook. Hence the expected social patterns will vary by genre and type of program and experiences must be designed accordingly.

But Hasn’t TV Always Been Social?

This is the question that usually half way through a heated discussion on Social TV. Hasn’t Television always been a social event and so what’s new? Are we simply putting old wine in new bottles? The answer, apparently is yes and no! Yes TV has always been social and continues to be so. And a part of social TV is simply providing people the technological tools to do the same things differently and often faster. So rather than wait for the water cooler moment the next day at work, you can have your “oh my god, did you see that!” discussion just after or even during the show.

But what’s different is the selection and the shape of networks. The old social was limited to the living room, the office and social get togethers, very bounded by place and time. As recounted by many people in the discussion, even when the family gets together to watch the same program, very often some or all the members are also participating in their own social networks – across affinity groups, social groups and interest groups. This doesn’t preclude the family acting as another group, but it adds many dimensions to the “social” in social TV. TV is now differently social.

What Of The Masses?

A room full of broadcast and technology professionals does not social TV make. Ed suggested that there were significant gaps in the average consumers’ understanding of social TV or even many other concepts such as digital switchover. So the danger here is for the industry to rush on ahead and forget the users. Not a new pattern, lest we forget. But on the other hand, if sufficiently interesting, people will find a way to navigate even complex environments. Just look at Facebook or worse, Myspace.

Anthony broke up the classic technology adoption curve into simpler chunks. The creators, the blogosphere and the rest. The trick is to build something that sufficiently engages the blogosphere, so that subsequent following and uptake is assured, but not so advanced that it caters only to the blogosphere and to converts, and becomes a technological toy which the average user can neither navigate, nor enjoy. It remains to be seen how many providers can find that sweet spot.

Where’s The Value?

The money question is always a good way to bring the discussion to a focus. How can businesses make revenues from this?

Irwan Owen from Live Talk Back is trying to just this, by providing to broadcasters a platform which enables the 2^nd screen participation, predominantly on mobile phones (where the IOS significantly outstrips android, according to Irwan and his data). Producers and broadcasters however, need to truly embrace social TV in a way that they probably have not yet done, in order to truly benefit from social TV.

A critical part of the value chain is content discovery of course, and here is where social TV plays a trump card. The EPG has been an anachronism for a while now and suffers from being driven by a number of interests most of which have little to do with improved user experience. The impact of social networks on the EPG will be seismic. The ability to select shows based on friends recommendations, or to see who is viewing what in real time will dramatically change how we select shows to watch. Needless to say this is a part of the Zee Box concept. TV Genius, who have recently been bought by Red Bee Media, have also integrated Facebook into their EPG & recommendations model.

There was also a perspective shared by a number of people, that the player who owns the interaction will corner disproportionate value in the marketplace. This could well be through gamification initiatives, or newer and emerging forms of interaction.

Winners and Losers?

 On the one side you have incumbent broadcasters, platforms and production businesses all trying to get their heads around social media, but effectively just dipping their toes in, for the most part. On the other hand you have major players on the Internet – such as Facebook, Google, Amazon and Twitter, who are all reshaping the content value chain in different ways and arguably have the financial clout to launch a TV proposition. As we’ve heard Facebook has started streaming content in partnership with rights holders, Google has launched a TV framework and Amazon have bought Lovefilm. It would appear therefore that the Internet giants have jumped ahead in the race. However, this is just the start, and TV incumbents have plenty of time to embrace social media.

This is easier said than done, though. The changes can be very deep and difficult. They are not just technology details or adding features to websites. It’s rethinking the very essence of the content and the experience. It’s getting off the “how cool are we!” style of thinking that Jan Gilbert spoke about. It’s making the very brave move of handing choice back to the consumer – the choice of what to watch, how to watch and even whether to watch. It means understanding truly that the “meaning” of the social experience that TV used to represent may have changed. And that people will follow the new meaning, whether or not it involves a TV screen.

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Many thanks to Anthony Rose, Edd Uzzell, Richard Kastelein and Irwan Owen, for leading the discussion, to everybody in the audience for being there and so many cases contributing valuably and to Intellect for hosting the event.

With the Football season now just days away thoughts must turn to first teams, formations and squads. And since we had a great Start Up Conversation 2.0 on the 2^nd of August, let me stay true to both traditions and share with you 11 tips for the first 200 days of your start up.

1.     Know your runway

A wonderful metaphor for any start up: you must know your runway. In other words how long can you sustain yourself before you need the business to take off? This is obviously to do with money, but it’s also important from an emotional and personal point of view. How long can you sustain yourself emotionally? How about your family? How long can they support you? What sacrifices will they be making and for how long? It’s quite critical to know very clearly the answer to this question. Metaphorically speaking, if you’re out of runway and you haven’t taken off yet, the results are obviously going to be painful.

2.     Do Your Homework (research/ resources)

Michael said he spent many months walking around with a notebook and pen, making notes wherever he went. Aniko translated that into “doing your homework”.  No matter how great your idea, you can rarely do too much homework. Most entrepreneurs do far too little. Mostly this includes getting to the heart of your problem domain and really understanding what your customers will pay for, not just what you think they’ll pay for.

3.     Team

We covered this extensively in our note on forming your core team, but of course, one of the first things you need to do is put your team together. The question was asked “how much equity should you offer a CTO” and the instant consensus among the speaking panel was equal stake if you’re doing anything that depends on the technology – i.e. either building a tech product or a tech platform based business (such as an ecommerce or any online business).

4.     100% or part time?

There is certainly a school of thought which says you should do a job, save enough money, and then commit yourself 100% to your start up. Clearly this is the typical thinking in Silicon Valley. There are no half measures there. But of course, it’s also a much more supportive environment – both in terms of your business and managing the rest of your life. The reality for most people is that you probably need to balance your start up work with a job that pays the bills. Just be sure you’re not short changing both and ending up in a situation where neither will give you the rewards you need and seek.

5.     Business Design

Alongside the research and team building, you definitely need to clarify your business design. This is not the same as your business plan, which is largely a set of numbers that reflect your business design financially. But the design of your business includes a lot more than the numbers – it addresses how exactly the business will work, what people will pay for, how they will transact, what moving parts will need to work efficiently  to make your business work seamlessly? Note: there is every chance that your business design will change, dramatically, more than once, as you discover things about your market, product, customers and competition. No matter, make sure the current one is clear.

6.     Product

Along with your customer, your product sits at the heart of your business. Or any business. This is probably the one area most entrepreneurs spend the most time thinking about. And the problem here often tends to be overdoing, rather than under-doing the product. The magic words are “minimum viable product” – what is the most basic set of features that allow your product to exist? If you’re designing an ecommerce site, fulfilment is not an option, but a recommendation engine might be. Can you strip your product back to its minimum feature set so that you can get it out of the door?

Here you might encounter a fork between two philosophies. One says “think big, change the world”, the other says “think realistically, solve a simple problem”.  This is a big argument by itself, but whichever road you take (and may you always take the road less travelled!) you still need to focus on your minimum viable product, else you’ll be in the garage building your product for years and years.

7.     Shortest Path to Revenues

For idealistic entrepreneurs, this is probably worth framing and putting on the wall. Focus on your path to revenues, ideally, your shortest path to revenues. It picks up from the idea of the minimum viable product and helps you define when exactly your business is going to start paying you back. However small and however minimal, when do those revenues start coming in? Another quote from last evening: “A business which doesn’t have a revenue plan is a hobby” – what’s yours? Now it’s possible that you have specifically chosen to defocus on the specific revenue plan because of the nature of your project, but there’s a difference between thinking through this and putting it aside, and ignoring this altogether.

8.     The Ticking Clock

I personally believe that the day you had an idea and decided to do something about it is the day the clock started ticking. Some ideas have long shelf lives. A cure for cancer or for balding, a new transport system, a breakthrough fuel, or even curing the common cold is probably a problem you can dwell upon for much of your working life. But many ideas have a shelf life in months if not weeks. There are loads of smart people out there, being exposed to the same problems, technologies and somebody or the other is putting their mind to the same problem.

I remember telling Karuna, my wife, sometime last year, while visiting a museum, that audio guides could and should be made available as a smart phone app so you can download and customize your guide for any museum (or city) you want to visit. Yesterday I read about Sparkatour, a company that has built the app and a B2B model for selling it to museums.

The shelf life of your idea could depend on the size of the problem or the structure of the industry, external / regulatory constraints, or many other factors. But for that product, there is probably a race on. You might do it in 10 years and beat a competitor who takes 11, to get to market.

9.     Using exceptions as role models

One of the most dangerous things people do, is use exceptions as role models. And some of the biggest names to be wary of are Google, Facebook, Youtube, Twitter and Foursquare. It’s disingenuous to look at them today and suggest therefore that you can build the business and the revenues will take care of themselves, or that you can think about revenues later. To clarify, I don’t think following these examples is wrong, but they are very dangerous. Fundamentally because a) most of them did not explicitly start out to be where they are and b) each of them has found success in markets where dozens of others have failed. Therefore if you’re going to follow Google or Facebook, don’t ape the model, look much, much more closely at why they succeeded where their peers failed.

10.Funding

By now you must be wondering why funding hasn’t found its way into this discussion. Yes, funding is important, but by all accounts, it’s not the first thing you do, unless you want to give away much of your business. Let’s elucidate: you need seed funding for which you should ideally have saved up or organized from “friends and family”. Once you have a product and a demonstrable solution, and ideally a community of users and paying customers, you should be looking for external funding. An angel might fund a prototype but there is a lot of myth around Angel networks and what they’re looking for. The best advice seems to be to aim to build your minimum viable product using as little external funding as possible. And if you’re out looking for funding, here are our nuggets of advice.

11.Buying vs Popularity

I can vouch for this one because I’ve been there. This gem from Aniko is worth repeating. At some point, you have to stop building popularity and start building customers. As entrepreneurs, we’re always looking to share our ideas and seek validation. Few things turn us on as much as somebody telling us “what a great concept!” or “I love the idea!” This is good, up to a point. But this is popularity. It’s not customers. There will come a time when “I love the idea” will not be good enough. What you’ll need is “here’s my money, sign me up”.

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Remember, “the first 200 days” isn’t literal. To go back to the first point, it’s your runway. It could be 2 months or two years. But it perhaps marks the phase 1 of your Start Up, from zero to the point where you probably have a prototype product out.

Many thanks to Dreamstake and to Aniko Zagon(Entelliz.co.uk) and Michael Edge (Flup.com) for sharing their thoughts and experience, and to all the entrepreneurs and professionals in the room who contributed to the discussion.

At this week’s Connected Home Summit, organized by Informa, where I had the privilege of chairing Day 2, one of the panels on the day had Google, HBBTV, BBC and MgMedia. Consequently, 4 distinct perspectives of the connected home emerged, which was quite fascinating. Because whatever you’re doing, it’s probably a good idea to look at all 4 to see if your idea makes sense.

The data perspective, from Google

In the super-engineering world of Google, the problem is broken down into its constituent parts. Data, processor, connection, network and the ability to bring these together to solve specific problems. In fact Kevin Mathers, from Google argued that the “home” was just a construct, and it could apply just as easily to the car or any other context. The problem would still be the same and would be addressed the same way.

The brilliance of this approach comes from the disaggregation – it allows you to look at different groupings of these elements to create the multiple contexts. And mastery over the elements means you can quickly create any context you choose – home, car, retail, etc. However, exclusive focus on the parts can create a danger of missing out on the importance of the ‘whole’ – the context. After all, Google has in the past been accused of being less good at the softer (social, consumer & design) aspects of the business than the engineering side. Here too, the question issue might well be that the understanding of the home as a context is as important as getting the engineering right. Therefore such a strong engineering oriented approach might need coupling with product and usability thinking.

The device perspective – BBC iPlayer

Gideon Summerfield works with the iPlayer and so his big challenge is about getting it to work on a plethora of devices. Unsurprisingly, his view of the connected home is a device centric one. It’s about getting devices to talk to each other, and be able to seamlessly share and play media. The TV is clearly the centrepiece of this view of the connected home. But there is significant growth across connected devices.

Informa suggest that 33% of all video playback devices will be connectable by 2016. The charge will be driven by connected TVs which are set to go through almost a tenfold growth to about 900 m by 2016. Other connectable devices will include blu-ray disc players, media streamers and games consoles.

By all accounts DLNA is still not as seamless as we’d like it to be, but there is near universal agreement that it’s the right way to go. The DLNA/ UPnP approach is being adopted by more and more devices. And an increasing number of services, such as media sharing service Zappo.TV are implementing DLNA. Other major initiatives such as Ultraviolet, from the DECE are going to find their way to market later this year, to provide another fillip to streaming content. The much heralded YouView devices should also help the market along.

The network perspective

David ‘Boris’ Felt from HBBTV took a more network centric view of the connected home. The home network is an area of huge innovation and change. Wired and wireless, new and old wires and any number of technologies ad standards abound. It seems like consumers ideally need a high speed network for content and possibly a low-speed network connecting many more appliances – for control, automation, energy management etc.

This informative piece from the Hidden Wires magazine cites research pointing to how the lower end DIY segment and the high end custom-install segment are both moving towards the more central mass market, through the no-new-wires approach. Key to this are PLC, G.hn, Zigbee, ZWave and the role of KNX.

Boris also pointed out the importance of distinguishing between the physical and virtual network, and also, the internal versus external network, for delivering information/ data / voice/ video solutions. I can set a program to record on my PVR, using my mobile phone, with no direct physical connection between the two. It’s the external network at play here, that is enabling this, and in a sense this is the virtual network of the home.

The content perspective

Jeronimo Macanas from MgMedia felt the connected home should be about content being streamed around the house. A slightly broader definition of content of course would suggest that any kind of packaged information – including healthcare or energy information is also content. While this is slightly limiting because it can exclude automation and control, it is certainly an important driver of connected homes. 

Of course, in the content space, a lot of the excitement is about the impact of connected TVs. The Strategy + Analytics presentation at the recently concluded Connected TV Summit suggested that there will be a significant value shift the gate keepers in the current model (PayTV providers) to the content creators and aggregators, as and when connected TV numbers shift. Of course, this is still under 10% globally, so the change is yet to come. But between connected TV sets, new set top boxes and every increasing broadband speeds, this is a reasonable surety.

Which is right?

The point is, ignoring any of these perspectives would be a mistake. If you’re planning a connected home service – either as a telco, a TV platform or an external service / content provider, you need to evaluate your service from each of these perspectives. Evaluate it from its modular data, processing and context perspective to ensure that it’s extensible and malleable enough. But also, understand very clearly the device, network and content/ data perspectives and ignoring any of these aspects will limit your service capability.

It was a great privilege to listen to the professionals on the panel and I certainly took away this idea of 4 distinct perspectives which are complementary viewpoints of the connected home. I hope this helps you too.

This note comes from the Start Up Conversation 2.0 event on the 5th of July, organized by ThinkPLANK & DreamStake. 

1. Do you really need the money?

This is the first question any start up needs to ask itself. Do you really need the money? Ask it again. Don’t fall into the trap of thinking that you should start your business by going out to raise a big wad of capital. How far can you go without the external investment. Can you get a loan? Against your mortgage?Credit card? Have you explored all the other options first?

2. Why do you want to raise money? 

Do you have a very clear idea about why you need the money? If it is to pay yourself a salary, don’t. Just get a job instead. Explore very clearly your need for funds and be prepared to defend them against revenues and your business plan. 

3. The valley of death

The reality is, you will have to cross the valley of death – the time when entrepreneurial funds will run out and you won’t yet have revenues and possibly even a product. This is when you really need to be creative about funding. External investors will at this stage take an arm and a leg for your business. To address this, create a stripped down version – a minimum viable product which you can use to create interest, and if possible, some paying customers. 

4. Angels

Everybody knows about Angels, but not surprisingly, many entrepreneurs have no idea how to get to one. What you shouldn’t do is pay for this information or pay somebody just to introduce you to angels. There exist entities such as the BBAA (British Business Angels Association) and plenty of others you can reach out to. But perhaps more critically, you can network your way to the right angels. 

There are broadly two types ofAngels (thanks Michael) “financial angels” – high networth individuals who are looking to do something with their cash, and “industry angels” who are trying to create ecosystems within an industry that they understand and possibly have experience in. 

5. What about VCs? 

Obviously, this comes later, but there is plenty of crossovers between Angels and VCs. Keep the VC on your radar, but probably a much later discussion. VCs will give you money when a) you can establish that you don’t need it! and b) when they can clearly see a 5x-10x return in a defined timeframe. 

6. Incubators 

Fortunately, the European incubators are now coming to the party – now there are entities such as Oxygen, Seedcamp and StartUp Bootcamp – who are using the well publicised YCombinator and Techstars models to put entrepreneurs through a 2-3 month intensive session to sharpen the business and even provide some initial seed funding. 

7. Advisors 

Be wary of advisors who promise to get you “investor ready” for a fee. Instead go with those who are willing to work for a share of funds raised, on a no win no fee basis. Although there are some reputed ones run by well known accounting firms, and providers such as Clean Capital. 

8. Grants 

The great things about grants is thaat they are giveaways. Not loans or investments, the money is yours, subject to your meeting specific criteria, of course. The bad news is that they tend to be very arduous processes for getting them and can be a big drain on effort. Often they’re also quite competitive and might have specific requirements which don’t actually fit your business model. For example it was mentioned that some European grants require a university research collaboration and 3 companies from 3 different countries involved! On the other hand the TSB does some tech grants in the UK which are well known. 

9. Racheting 

Some investors will want to offer a racheting structure where the money will be available against specific milestones or a fixed amount of money will convert to more shares for the investor if the business misses its milestones. My basic discomfort with this model, is that it creates a conflict of interest as it is then partly in the investors interest for the business to miss the milestones, so that the investor can get a bigger share of the company. Doesn’t make sense to me. 

10. Convertible loans 

Convertible loans are often preferred by investors to protect their interest in the business and create a vehicle which has a higher security than a pure investment. The investor typically has the option to convert the loan into equity if certain milestones are not met. This also has the problem as above, but this is a good model for funds collected from friends and family. 

11. Crowdsourcing – Crowdcube

This is a brand new model, initiated by Crowdcube, which allows you to raise moneys through a crowdsourced model. Crowdcube have done all the hard work to ensure that it is compliant with FSA regulations (2 years on the drawing board!) to create a model whereby individuals can invest small amounts (from £10 upwards) into a business. This model works for small to medium size of funds – say between fifty to hundred thousand. But also, remember that Crowdcube is just the platform, you still have to do the hard work of working the crowd, your friends and family and driving people to the model. The beauty of this model is of course that it’s similar to doing a public offering. On the downside, it involves bringing a large number of investors on board so investor management can become a challenge very early in the life of the business. 

12. High networth individuals 

A useful tip is to search Linked In and your other networks for recently retired Chairmen or recently redundant senior executives, who typically will be looking for alternative careers and will typically have funds available, as well as a good network. These are people who might want to do something entrepreneurial but may not have a specific idea of their own, could be a great match for somebody with the idea but lacking resources. 

13 Invoice discounting 

An option available for growing companies is the invoice discounting offered by players such as Gener8 Finance. They will pay you against invoices raised, to ease cash flow challenges for growing companies. Generate charge a fixed monthly fee over and above a basic interest, while some others charge on a % of company revenue. The danger with the latter is that you pay a greater price for success. You can also explore factoring, which differs from invoice discounting in that in factoring, the provider participates in the collection process. In either case of course, the entry criteria is that you are generating invoices, which automatically means it applies to certain types of businesses and not others. Not an option for the garage start up looking to build a product. 

14. White labeling 

For some types of technology companies, it may well make sense to find a client at the early stages, give them a great deal and white label the product with them. This will enable you to build the early product using revenues from clients. It also has the benefit of actually registering revenues early in the game. However, the task of convincing somebody to buy/ whitelabel your service very early in the game may well be a tough sell. 

15. Mutual Selection

Whatever you end up doing, be aware that the investor-company relationship is a two way street and there should be selection on both sides. You should select the right investor for your business, depending on their funding strategy, expectation match, track record, exposure and expertise in your business, non financial help and network strength and overall comfort in the relationship, to name a few criteria. Some angel networks set up speed dating services. This might be a good start, but more than a few minutes might be required to establish a match. 

16. The Team

In all the discussion around funding, remember that most investors back the team, more than the idea. Don’t go out there as singleton looking for funds. Make sure you have your core team in place. Here are some thoughts on the core team, based on our previous conversation. 

17. Location/ relocation 

Should you be starting out in London? Or in Silicon Valley? If you’re a high-tech start up, the chances are significant parts of your ecosystem are in the Valley. And it is generally felt that angels and VCs in the Valley understand tech investment, many of them having been entrepreneurs in the past. Consider the ideal location for your start up, it could have a signficant bearin gon your funding. 

18. The business plan

Theres a reason why this is at the end. Nobody funds a business plan, but you have to have it and be prepared to defend it. In short, it’s a necessary but not sufficient aspect of the funding challenge. Most importantly this answers the first to points we spoke about and gives you the discipline and detail required to answer those questions both to yourself as well as your investor. 

Many thanks to Darren Westlake from Crowdcube, Joe Waters from Gener8 Finance and Michael Braga from Motiv Marketing 

Got more tips to share? Let us know! 

PS. The next Conversation 2.0 Event will be on the 2nd of August and we’ll be talking about “The First 200 Days”. See you there! 

It’s not every day that I get to call Google out for making a mistake.

At the end of last week came two rather unexpected announcements. Google announced that they would be shutting down both their Google Health and PowerMeter services.

The primary reason in both cases seems to be the “inability to scale” as mentioned by Google.  This by itself is strange. Consider the Power Meter situation. There are now five million smart meters in the US.  Not even 5% of the number of homes in the US. In the UK, the smart meter rollout hasn’t commenced yet. Most countries in the Far East are focusing more on the smart grid than the smart meters. Deployment is yet to commence in any significant form. So there is no scale possible in the market yet.

It’s possible that even within the 5m smart meters in the US, Google has very low market share. But these are surely just opening moves in the market. The smart meter data management market is predicted to grow from around $ 50 million to $ 500 million over the next 7 years, so there’s still 90% of the market to play for. There isn’t much that Google could have done to accelerate the market given the challenge of bringing together policy, standards, manufacturers, utility companies and creating and executing a significant national roadmap, for each country.

Certainly the early commercial movers in this space in the UK, such as First Utility, have already been using the Google Power Meter. So it’s not as though Google have no traction in the market. First utility, like others, are building their own dashboard now.

A similar argument can be extended to the Healthcare market. Telehealth is nascent at best, wherever in the world you look. The idea that medical records should be held by patients is still a novel idea. The devices which will create a healthcare data stream are not really widespread either. So it’s too early to call really and scale is a long way away. The Google announcement points to the Direct Project initiative, but that is really a standard, and not a repository.

On the face of it, this seems like an opportunity lost, for Google. We believe that across a number of vertical industries including health and energy, there is an emerging and key role for data intermediaries. Increasingly this will become valuable both as a gateway for data use as well as mining for aggregation and insight, into consumer behaviour. Especially, as this space is set to get very exciting with the Internet of Things, M2M communication and a tidal explosion of data which Google are extremely well placed to exploit.

But surely, this is all too obvious for Google. Should we be reading in between the lines here? What kind of hypotheses can we draw about this move?

Well, first, Google might know something we don’t. They may have done enough homework to suggest that collectively this will never be a big enough market for them to go after and they simply have much bigger fish to fry. This is a plausible argument, but it smacks of determinism, and ignores the possibility of explosive growth in this segment.

Or it could be that Google foresee a lot of legislative implications in this space and being embroiled in a number of scuffles already, with respect to consumer data, privacy etc, want to steer clear of an area so fraught with legislative risk.

Or, very likely, that with Google’s recent change of guard, there is a directive to refocus on some key areas – including, as we know, the social networking and intelligent automobile parts of the business. PowerMeter and Google Health are just implementation and marketing challenges. There is no great engineering feat required in the health and energy markets, and may simply not appeal to Google’s founders, or to its ingrained engineering culture. This may just be an Eric Schmidt legacy which was doomed when he stepped aside.

Whatever it is, it’s likely that consumer behaviour will change over the next five to ten years and Google may have missed out on significant revenues and potentially a leading role as a gateway to the home. Microsoft, which owns Hohm and Healthvault, will certainly be pleased about this.

Of course, there remains the likelihood that creating this kind of business from inside Google is much harder given their size and cost base. And Google could simply buy its way back into the market if it gets interesting.

Google’s track record in areas where skills beyond great engineering are required has of course been limited. Their record in social networking with Google Buzz, Google Wave and other initiatives is spotty at best.

In sum, I suspect that Larry Page looked at all the projects when he took over and decided that he didn’t like the Google Health and Power Meter projects, presumably for very valid reasons, including their current lack of scale and decided he wanted the resources focused elsewhere. I do expect though that there is every chance that Google will buy a company in this space in the next 5 years once the market grows and some new innovative service does reach the scale that Google seeks.

It’s not every day that I get to call Google out for making a mistake.

At the end of last week came two rather unexpected announcements. Google announced that they would be shutting down both their Google Health and PowerMeter services.

The primary reason in both cases seems to be the “inability to scale” as mentioned by Google.  This by itself is strange. Consider the Power Meter situation. There are now five million smart meters in the US.  Not even 5% of the number of homes in the US. In the UK, the smart meter rollout hasn’t commenced yet. Most countries in the Far East are focusing more on the smart grid than the smart meters. Deployment is yet to commence in any significant form. So there is no scale possible in the market yet.

It’s possible that even within the 5m smart meters in the US, Google has very low market share. But these are surely just opening moves in the market. The smart meter data management market is predicted to grow from around $ 50 million to $ 500 million over the next 7 years, so there’s still 90% of the market to play for. There isn’t much that Google could have done to accelerate the market given the challenge of bringing together policy, standards, manufacturers, utility companies and creating and executing a significant national roadmap, for each country.

Certainly the early commercial movers in this space in the UK, such as First Utility, have already been using the Google Power Meter. So it’s not as though Google have no traction in the market. First utility, like others, are building their own dashboard now.

A similar argument can be extended to the Healthcare market. Telehealth is nascent at best, wherever in the world you look. The idea that medical records should be held by patients is still a novel idea. The devices which will create a healthcare data stream are not really widespread either. So it’s too early to call really and scale is a long way away. The Google announcement points to the Direct Project initiative, but that is really a standard, and not a repository.

On the face of it, this seems like an opportunity lost, for Google. We believe that across a number of vertical industries including health and energy, there is an emerging and key role for data intermediaries. Increasingly this will become valuable both as a gateway for data use as well as mining for aggregation and insight, into consumer behaviour. Especially, as this space is set to get very exciting with the Internet of Things, M2M communication and a tidal explosion of data which Google are extremely well placed to exploit.

But surely, this is all too obvious for Google. Should we be reading in between the lines here? What kind of hypotheses can we draw about this move?

Well, first, Google might know something we don’t. They may have done enough homework to suggest that collectively this will never be a big enough market for them to go after and they simply have much bigger fish to fry. This is a plausible argument, but it smacks of determinism, and ignores the possibility of explosive growth in this segment.

Or it could be that Google foresee a lot of legislative implications in this space and being embroiled in a number of scuffles already, with respect to consumer data, privacy etc, want to steer clear of an area so fraught with legislative risk.

Or, very likely, that with Google’s recent change of guard, there is a directive to refocus on some key areas – including, as we know, the social networking and intelligent automobile parts of the business. PowerMeter and Google Health are just implementation and marketing challenges. There is no great engineering feat required in the health and energy markets, and may simply not appeal to Google’s founders, or to its ingrained engineering culture. This may just be an Eric Schmidt legacy which was doomed when he stepped aside.

Whatever it is, it’s likely that consumer behaviour will change over the next five to ten years and Google may have missed out on significant revenues and potentially a leading role as a gateway to the home. Microsoft, which owns Hohm and Healthvault, will certainly be pleased about this.

Of course, there remains the likelihood that creating this kind of business from inside Google is much harder given their size and cost base. And Google could simply buy its way back into the market if it gets interesting.

Google’s track record in areas where skills beyond great engineering are required has of course been limited. Their record in social networking with Google Buzz, Google Wave and other initiatives is spotty at best.

In sum, I suspect that Larry Page looked at all the projects when he took over and decided that he didn’t like the Google Health and Power Meter projects, presumably for very valid reasons, including their current lack of scale and decided he wanted the resources focused elsewhere. I do expect though that there is every chance that Google will buy a company in this space in the next 5 years once the market grows and some new innovative service does reach the scale that Google seeks.

The Connected Home concept is starting to snowball. Suddenly it’s all around us. Next week, the Informa Connected Home World Summit promises to be a sumptuous forum for exploring all kinds of directions and ideas. I’ve been asked to chair the day 2 of the conference and I can see I’ll have my hands full trying to discharge my duties whilst taking furious notes from the sessions. One session I’m really looking forward to is a one on one discussion with Sasha Kramar, Chairman of the Board and CEO of Iskon Internet, Croatia.

And if the 2 day bonanza of Connected Home discussions wasn’t enough, the CEDIA Home Technology Show is on as well and I’m delighted to be joining the panel discussion on the 30^th with BSkyB, Wired and Design Logistics. 

There’s even the TEN Networks Digital Home event, on the 27t, but sadly, it’s one event too many for me.

Meanwhile, there have been a few interesting announcements in the past few days. Following on from Google’s launching of the Android @ Home platform, we had Motorola & Honeywell announcing their connected home security solution. Aimed at Telcos, this puts Honeywell home security hardware together with Motorola’s software, which has open APIs for billing/ CRM integration.

There was also an excellent story in the Economist – Saving Britain’s health service, which points to some of the institutional challenges involved in bringing in telehealth and other technological innovations into the NHS, even though they have been widely implemented across the world. Delivering care into the home, across age groups, will become a commonplace idea in a few years time, but some organisations will be carried into that world kicking and screaming, obviously. The problem is, each of these pieces either accelerates or holds back the connected home environment. Multi-room streaming music and television is all very fine, but there will be a significant jump in connected home environments once healthcare services come to the party.

And an interesting development in the US, where some 5 million smart meters have now been deployed. One home owner refused to allow the smart meter to be deployed in his home. This led to a stand off between PG&E and the home owner. But it begs the question – how will the rollout in the UK progress, if somebody here takes the same stance? Will they have to choose between no electricity and a smart meter? Does there need to be much better communication and education about the smart meter program?

Incidentally, the Smart Meter data management market is estimated to be $52 million currently and set to grow almost tenfold, to $ 490 million by 2018. You can well imagine how valuable the sum of connected home data management will be.

Small wonder then that the start up iControl has been funded to the tune of $50m, bringing total investment in the company to $ 100m. IControls platform “OpenHome” allows consumers to connect and control their home devices over a mobile or web connection.

And yet, Telcos across the world are still rushing over the mirage that is content based strategy. Video is the most infrastructure intensive service, in a uber-competitive space, where Telcos are usually fighting well established incumbents. But IPTV is clearly about TV, and this is the problem. My co-conspirator Geof and I have written a 3 part article in response to this myth that “content is king”. The first of the 3 parts is here, on Videonet.

The fun, as they say, is just starting.