Nov
16
NOAH: The Value in Sliced Salami
Filed Under B2B, Big Data, Blog, data analytics, Financial services, healthcare, Industry Analysis, internet, online advertising, Publishing, Search, semantic web, social media, Uncategorized, Workflow | Leave a Comment
It has been a strange autumn, from Brexit to Trump, but some continuing strands of human activity give re-assurance that even if the inmates have taken over the asylum, and just about everything else as well, at least some eternal verities remain in place. Arising from a sickbed that had forced me to miss the Charleston librarian’s conference I fumbled my way into the 10th annual NOAH show, anxious to be re-assured on exactly this point. Indeed, I wanted NOAH to rescue me from the Flood!
For those not dutifully attending the Old Billingsgate jamboree during this decade, NOAH, owned and run by the eponymous advisory team, is the premier presentational market for internet start-ups seeking funding or next-stage re-funding. Now joined by a spring offshoot in Berlin, the London show attracts some 2000 financiers who get to hear 10 minute pitches from a different company every 10 minutes for two days from three different stages – and some get to return the favour with pitches for their own funding services. The range is complete – from the impossible to the improbable to tomorrow’s success stories. All you have to do is pick a winner!
Companies are loosely categorised, with presentations in lead generation (still!), marketplaces and classifieds, travel, infrastructure, gaming, The sharing economy, social and dating, travel, logistics, security, finance and insurance, eCommerce, business services, fintech and medtech, to name the more obvious ones. The vast majority of the presentations are around a web services-based world and very many of them reflect the value definitions that we first created in the mid 1990s. These were all about personal productivity and convenience and cost-saving, and whether we could get merchandisers to pay for the value added to the user experience. So, in the context of some of the best presentations that I personally saw, I am perfectly prepared to believe that the German service Casa can help me buy furniture cost-effectively through combining the inventories of over 100 different furniture stores including Ikea, but if I have already made a brand decision then the value becomes a pricing or re-assurance check. Similarly, many will want to use Spottster to ensure that items on their wish lists have not been re-priced and thus brought within range, but the value added requires a determination in the dedicated shopper that only exists in dedicated minorities of populations. We are salami-slicing the value we offer end-users of all types and the result, if we are not careful, will be further marginalisation as markets inevitably consolidate. Increasingly many new service offerings look like add-ons which major players will either hoover up or re-invent in the passage of time. Picking those winners gets that much tougher, which of course raises the importance of NOAH.
And also gives rise to thoughts about where these innovations are going. The commentary online, for example, about AWS as a backward-looking innovation is important. I am not much concerned about whether the plan that Jeff Bezos approved in 2006 was the press release for cloud-based storage, but I am interested in a revival of thinking around value points that leads to the creation of a facilitation that users can then engage with and develop as they will, creating a user drive from an initial value experiment. The user-centricity is the key thing, like the empty chair at every Bezos meeting. So much of the initial web service value was created around this sort of thinking that I wonder why it has not become more important rather than less over time. It is still possible, in certain geographies, to create good service values modelled on things which have succeeded elsewhere – for me, the classic example was the charming food site, Farmy.ch, at NOAH, – but it is really hard to get these things to scale and they tend to be limited by local market conditions.
My prediction therefore would be that shows like NOAH will become much more broadly based in their conception of online innovation. In future years we shall see much more Internet service based development, with blockchain being an immediate focus. Invaluable as the Web may be, adding fresh value gets tougher all the time. Invention should be looking again at the one-to-one and one-to-many possibilities created by global networking; in a future which may well be Web-based but which is not only Web-based, and where the Web may be the service facilitation but not necessarily the service itself. NOAH remains the barometer of these changes, and as I left I could hear the cheerful laughter of investment bankers tinkling into the music of cash registers. How unlike the world outside that day!
Jun
24
On Barriers to Entry
Filed Under B2B, Big Data, Blog, data analytics, Education, eLearning, Financial services, healthcare, Industry Analysis, internet, Publishing, Reed Elsevier, Search, STM, Thomson, Uncategorized, Workflow | Leave a Comment
On the morning after the British electorate performed the largest mass suicide attempt in even our eccentric history, thoughts naturally turn to the future. Will a Europe that envies English as a Lingua Franca and which would like Start-up City Europe to be Berlin or Barcelona instead of London’s Silicon Round-about, find ways, in this messy divorce, to challenge the status quo in European information marketplaces? Like everything else I have heard this morning, it is “too early to tell”, but while thinking about competition and competition rules, it may be worth speculating on something else. Is competition what it used to be, and what has happened to the “barriers to market entry” that seemed so important to us all in pre-digital non-networked marketplaces.
And it may be necessary to remind those under a certain age what those historical barriers to entry were. The greatest of them was Ownership. Primarily the ownership of Intellectual Property. And first and foremost the possession of Copyright in Proprietory Information, Data or Content. For 70 years from the death of the author. This Ownership position was also reflected in Brand, and with luck one could combine the two to create quasi-monopolistic positions. Then add domination of distribution networks, exclusive positions with third party agents in important subsidiary markets. Then look at the Know-how created to run these businesses, and the way it was passed like an inheritance from generation to generation of long-serving staff and one can easily see how intimidating and expensive it was to attempt to compete. As the tyro CEO of the European Law Centre in 1980, I looked at Sweet and Maxwell (late eighteenth century) and Butterworth (late nineteenth century) and wondered, although my online product was a wonderful innovation, how I could possibly compete.
The short answer is that you couldn’t. Thomson bought one and Reed the other, acknowledging that if you wanted market share you had to buy it, or condemn yourself to niche plays in subsidiary markets that these Titans disdained. But now turn your mind to market entry today. Established plays who have put down roots are almost a challenge to disruptive start-ups rather than a threat. I grapple now with the opposite problem of valuation: how do you place value on ex-print – migrating – to digital companies when it is easier for a start-up to enter their markets than it is to rent a garage in London from which to do the disrupting? In an amazingly short time, the Age of Content has collapsed around us in all but entertainment marketplaces. It is not just that content became commoditised. It is also to do with our expectations. As the costs of computing and storage continue to collapse in relative terms, volume is no longer a factor here. I read the suggestion in Ars Technica this week that it will soon be possible to download major data collections like Elsevier’s ScienceDirect and provide them to every user. Which reminded me that you could download major collections (SciHub) a and provide them free in Kazakstan.
While major publishers still own the copyrights, theses ownerships no longer present barriers to entry. As I have so often written here, users want solutions, and preferably ones that slot into workflow. So where do we look now for barriers? In a world where users want a comprehensive view of all of the content/data/information which may be pertinent to solution, we can always simulate the content we do not have even if we cannot acquire it as Open Data or find it on the Open Web. But we can add value to it, both in terms of semantic web treatment, and entity extraction for building taxonomies and ontologies. Our knowledge system is both a differentiator and a barrier if it becomes a market standard. Indeed, much of our software performs barrier roles – even if it is hard to protect and, even if our techniques achieved patent protection, that is a short term gain at best.
But where else can we turn? Well, for some an acquired skills base may be a barrier against raw star-up competition. With many players seriously concerned about price competition from well-funded second stage offerings seeking to buy market share on price, it is also important to inspect the state of the Golden Handcuffs that hold the employed skills base in place. And the same applies to the customer relationships. Since customers are a very likely source of competitive pressure, it becomes important to “value” the customer and his relationship with you – are you so expensive that it will soon be cheaper for him to acquire your technology on the market and do your process internally for himself? What was the cost of acquiring that relationship and how quickly could you build another one? What parts of the relationship are defensible from competitive attack on either price or value?
It now becomes harder to value a company in terms of barriers to entry because many of these elements involve valuing intangibles. In a networked society location is no longer a very important factor, and in a network where brands can be created and built in a remarkably short time there is little sacred about trust and brand authority in the abstract. Yet markets still keep asking about defensible value positions, and none of the old answers work anymore.
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