Klook Lands $1.2M To Help Travelers Find Activities Across Asia

Klook, a service that helps tourists find interesting activities to do when they travel overseas in Asia, is in the money today, after closing a $1.5 million seed investment round.

The financing is led by Xiaoguang Wu, a senior executive vice president with Chinese internet giant Tencent — he is CEO of the company’s e-commerce division. Another notable investor is Shuren Hu, formerly Vice-Chairman of Strategy and Planning at the China National Tourism Administration, who joined the company as an advisor.

Hong Kong-based Klook was founded in September 2014 with the aim of providing English-speaking and Chinese travel enthusiasts with a platform to discover interesting activities — from diving in Bali, to Disneyland Tokyo, and race track driving in Singapore — which it offers up with up with discounts of up to 50 percent.

Klook doesn’t cover hotel or flight bookings because there’s already a myriad of companies in that space, instead it covers how you spend your time in 21 destinations across Southeast Asia, Hong Kong, Japan, Korea, Taiwan, Nepal and Mauritius. Many of these countries are travel hotspots for Chinese tourists right now, which is no coincidence since Klook is looking to capitalize on the growth of Chinese tourism.

For example, if you want to visit Bangkok — it’s a great place, trust me on that — then you can pull up the city on the Klook platform and get a range of activity ideas: from popular picks, to unique activities, and deals.

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  3. Screenshot 2015-06-01 12.52.53

Klook — which recently released dedicated mobile apps for iOS and Android — claims to have over 1,000 “carefully handpicked experiences”. It uses a combination of deal selecting and local teams to bring together discounted tickets and more unique local experiences.

klook hong kong

Now that it has mobile apps, Klook said that its customers can browse activities and make bookings after they arrive at their departure. Klook’s mobile app can handle mobile ticketing and entry to destinations, so there’s no need to worry about paper tickets and queues.

“Mobile will be a game changer for this sector,” Klook co-founder Eric Gnock Fah said in a statement. “Although, according to recent data, over 80 percent of travelers research their trip online pre-departure, we believe a significant share of the bookings happen at the destination.”

Curated travel activities is not something new, and it tends to be a tough niche to play in because so many big brands dominate the travel space. It’s a large pie, though, since Asia-based tourists are tipped to become the world’s most prolific (and lucrative) travelers by 2030, with China estimated to become the world’s largest contributor.

Wu, the Tencent executive who also sits on the board eLong — the Chinese travel firm Expedia recently divested from — believes Klook is “well positioned to capture this huge market opportunity.”

Klook, which has a staff of 20, claimed it has clocked over 200,000 bookings since its September 2014 launch.



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Will Silicon Valley Or Hollywood Solve Wall Street’s Churn Problem?

In this year’s annual letter to shareholders, JP Morgan’s CEO Jamie Dimon warned that “Silicon Valley is coming.” From investing to payments and lending, the rise of fintech has left many of the big banks and brokerages worried. In a March research report, Goldman Sachs estimated that 7 percent of annual bank profits ($11 billion-plus) may be at risk to non-banking entities over the next five years.

While Silicon Valley startups may be causing some unease on Wall Street, it appears that a growing number of companies in the financial services industry are turning to the Valley, and even Hollywood, for help removing the latest thorn in their side: churn.

Wall Street’s Growing Churn Problem

The growing ease in which traders can change brokerages online, combined with large welcome bonuses offered to new customers, has resulted in a number of traders switching brokers with the same casualness as switching outfits.

The magnitude of this problem is illustrated by the fact that almost half of the talks on the first day of the upcoming IFXExpo, a major annual conference for the B2B finance industry, are on the topic of retaining traders.

In response, brokers have been forced to think outside of the box in terms of how they retain their users. As it happens, this thinking has led many of the large banks and brokerages directly to the doorsteps of Silicon Valley startups and Hollywood directors who are offering solutions to help these companies keep traders engaged.

Retention on Auto-Pilot

One of the most popular solutions for improving retention rates that’s being adopted by companies in the financial industry is marketing automation software, which allows companies to detect signs of inactivity in advance of a customer deciding to close their account.

This provides a valuable window of opportunity, where automated messages are triggered to re-engage the customers and incentivize them to stay.

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Over the past five years the marketing automation software industry has grown from a value of $225 million to $1.65 billion. According to a study by Mintigo, the financial services industry are among one of the top industries to have adopted automation software.

Social Stickiness

Social trading is a relatively new concept that combines aspects of social networking websites with traditional online trading features. Most social trading platforms work by enabling users to follow and copy the trades of other users whose track records are made public on the site.

While social trading provides many benefits to traders, it has also become an attractive way for brokers to increase their customer retention rates.

In the same way that Facebook makes it difficult to leave your account, brokers are adopting social trading in the hopes that the social networking aspects will make their services ‘stickier’ and therefore harder to leave.

Will Hollywood Save the Day?

One company has decided to look beyond the Valley towards the Hollywood Hills to improve trader retention. Social trading platform TradeSocio has recently announced plans to launch a reality show featuring a group of amateur traders competing against each other for a grand prize.

The company is creating this show to try to differentiate its service from the competition while providing traders with an opportunity they can’t find elsewhere.

“The reality is that this industry is about to get upended. If brokers want to develop loyalty among their traders, they need to offer them something that they can’t get elsewhere,” TradeSocio founder Rohan Hall said. “That may be the opportunity to be in a Hollywood TV show, a better trading experience, or something else. At the end of the day, the tactics that used to work are becoming increasingly ineffective, and if brokers don’t adapt, they’ll find themselves without a sustainable customer base.”

Regardless of whether the industry gets upended or not, examples like this make it clear that brokers are taking the threat of customer indifference seriously and are willing to experiment with creative solutions from the least likely of places.

It’s Time for Brokers to Place Their Bets

The brokerages and banks of Wall Street have had a good run of being in control. The widespread adoption of the Internet and the recent surge of innovation in fintech is beginning to shift some of that control back to the users.

With less control, the established financial services companies are being forced to place their bets on different ways to regain their customer’s loyalty. From implementing marketing automation software and social networking features to hiring Hollywood TV companies, it’s unclear at this stage which bets will pay off.

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Uber Hires Its First India President To Lead Its Business In The Country

India’s is Uber’s second largest market worldwide behind the U.S., and today the company showed its commitment to the South Asian market by appointing its first ‘President’ to head up its business there.

Uber has hired Amit Jain, an IIT Delhi and Stanford graduate who was most recently President of U.S.-based Rent.com, the once eBay-owned real estate listings site. Jain, who lists TPG Capital and McKinsey as former employers, is charged with leading “all business strategy, operations, and growth in a market of global strategic importance for Uber,” the company said.

The move is an interestingly symbolic one, since Uber doesn’t tend to appoint figure heads to lead it in a country. It prefers smaller teams that run its business on a city-by-city basis, but obviously felt India is enough of a priority to warrant an overall lead.

“I’m thrilled to have Amit on board to lead our business in India,” Uber CEO Travis Kalanick said in a statement. “Success in India is a global priority for us, and I know Amit’s leadership and passion for Uber’s mission will be transformational as we redefine urban mobility for hundreds of millions of Indians.”

Jain himself lauded Uber’s role “helping [to] create tens of thousands of new jobs [in India], empowering drivers with higher earnings potential and flexible work hours, and providing millions of consumers with a safe, reliable and convenient mode of transport.”

India is a huge opportunity for any internet firm, given its 1.2 billion population and the increasing rate of smartphone adoption, and Uber is one company that is heavily investing in the country.

Uber arrived in India less than two years, but quickly scaled and currently covers 11 cities. That is significantly less than market leader Ola, which is present in over 100 and targeting 200 by the end of the year, but Uber has gone deep in India’s top-tier cities. It has expanded beyond its standard limousine (Uber Black) service and introduced a range of experiments as it aims to grab a chunk of the market and position itself as more Indians come online and identify the need to hail taxis from their phone.

Across India, Uber offers India-specific auto rickshaws and chauffeured hatchbacks rides, while it introduced new safety measures to India first and is currently piloting cash payments in Hyderabad.

The U.S. company has, of course, also experienced controversy. The alleged rape of a passenger in New Delhi caused its service to be suspended — now available again, Uber is currently operating a “no profit” model in the city, where it began working with a safety data service to provide more information to passengers.

Uber’s hiring of Jain is also another example of an Indian technology executive returning home from the U.S. for a job. E-commerce players Flipkart and Snapdeal are among the companies to have lured talent from Silicon Valley — the former landed former Google and Motorola exec Punit Soni — and it is a trend that is set to continue.

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Meet Musio, A Robot That Talks Back

Natural language and machine learning company AKA says it’s taking the next step toward the creation of a robot that you can really, truly talk to, with a new project called Musio.

Members of the AKA team demonstrated an Android-based prototype for me last week. As you can see in the video, Musio should be able to carry on a normal conversation, complete with bad jokes and (thanks to Bluetooth connections to smart devices) magic tricks. Why would you want that? Well, besides the novelty and fun of having a talking robot, it could be useful for practicing English and other learning activities, and for controlling smart home devices.

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To be clear, this version of Musio is very much a prototype. Its conversation followed an established script (and I wasn’t allowed to butt in). But linguist Jacob Bradsher promised that when the product launches next year, it will be fully interactive.

AKA is crowdfunding Musio on Indiegogo. (The campaign page also offers a little more detail about the underlying technology.) The company aims to raise at least $50,000, with pricing starting at $99 for a “simple brain” version of the robot.



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Incremental Design Won’t Save You

The First Battle In The Mobile Payments War Is Over

While the war to control mobile payments has been broadly covered over the last several years, it seems that the tactical warfare that has been at play is less understood by most observers.

It’s been a tale of conflict, closed door bargaining, and one with a David vs Goliath subplot and huge fortunes at stake. Many watched and waited as PayPal and Google battled the oligopoly of the Networks (Visa, Mastercard, Amex), only to be surprised by a twist ending.

PayPal’s Attempts To Move Offline

For PayPal, the smartphone revolution presented the entry point into offline sales that it had been waiting for. The PayPal wallet, previously limited to use via a web browser, could potentially be in every consumer’s pocket (a la the mobile phone).  In 2010, PayPal seized on the opportunity and began a series of strategic moves to extend their online payment network into the $3 trillion offline payment world.

They signed some early, big offline merchants (i.e. Home Depot) and began work with several point of sale vendors to integrate into their embedded merchant card terminals. And, most important of all, they began negotiations with the major payment processors (players like First Data, who do the heavy lifting in managing payment processes for the Networks) to enable PayPal as a form of payment on the more than 10 million merchant card terminals installed across the U.S.

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The ambitious strategy, however, was met with many expected challenges and the rollout has been painfully slow. Payment processors proved to be challenging to work with. They sought economics out of the relationship that were untenable for PayPal and their allegiance with the Networks was being tested.

If that weren’t enough, alternative paths to get integrated into merchants’ points of sale proved equally difficult. It’s been an uphill battle for a relatively new entrant, once again trying to rely on established tracks laid by the Networks.

In the online world, PayPal’s ascent was equally complex, but the stars were aligned around their value proposition and the objectives of the Networks. In the late 1990’s, there were hundreds of millions of dollars of e-commerce occurring on eBay (on its way to billions) and those transactions were being settled with checks and money orders.

PayPal provided the means to cheaply and easily onboard those eBay Sellers on to the card Networks, in the process shifting potentially billions of dollars of payment volume to the Networks.  PayPal was good for the Networks and they cooperated.  PayPal was also good for eBay, as they accelerated the velocity of transactions by speeding up the payment cycle, so eBay acquired PayPal.

Google Wanted A Shot at Owning Mobile Transactions Too

Google in 2010, like the Networks and PayPal, recognized the value of offline payments and the potential for a new entrant to play a major role with the explosion of smartphones.  Google wanted a shot at being a major player here, but for different reasons. For Google, it was all about the data.

By sitting in the middle of a consumer’s offline payment spend, they would have a window into where a consumer is spending and how that spending is influenced by advertising. For the first time, Google would be able to “close the loop” from advertisement exposure to consumer spending, like they were already able to do on the web, and thereby address much more of the advertising market. In particular, they could sell more advertising to the CPG brands, a huge and previously unpenetrated advertising market for Google

In 2011, Google pioneered the vision for NFC payments and secure tokenization (more on these technologies in a bit). It was a beautiful concept, but like PayPal, they too ran into execution challenges. They needed to partner with the big mobile operators who had their own visions of owning offline payments. And, they were early; ahead of the terminal upgrades upon which the whole solution depended.  Google Wallet, while the right vision, was stalled.

The Networks’ Effort to Own Mobile Payments

In the mean time, the Networks were busy at work figuring out how to make sure the mobile phone was an expansion opportunity for them and not a threat. The strategy they executed was simple in concept, but complex in execution. The plan was to do what they do best: define standards and rules by which their existing network could be extended to operate in a world where the mobile phone replaced the physical bank card.  Two key standards they placed bets on:

  1. NFC (Near Field Communications) was the protocol by which data would be wirelessly transmitted from the phone to the merchant card terminal. NFC was a standard the Networks had rallied around about ten years ago, but had failed to get traction for lack of merchant support and consumer value proposition. Tapping a card was not much simpler than swiping a card.  Now was the time for NFC’s second act.

  2. Tokenization via a “secure element” was the means by which a card number could be stored on a mobile phone and transmitted by NFC to the merchant card terminal.  In simpler terms, it was a means to (i) store a bank card number on a secure chip in a mobile phone and (ii) dole out tokens that were proxies for that card number, resulting in a more secure system than plastic bank cards and that could be manufactured and distributed by third party mobile phone manufacturers.

The Networks’ strategy ensued as they put all their weight (and chances) behind these two protocols. Their first step was to figure out how to get merchant card terminals to support NFC and the means to do this was, once again, to define and legislate standards.

In 2006, Europe mandated the use of “chip & pin” security cards (aka EMV). These cards, based on EMV standards developed as far back as 1994, provided additional layers of security. They were becoming widely adopted across the world and were proving to drive down fraud costs. In the U.S., efforts to drive EMV adoption had stalled.

Card fraud was not viewed as big a problem as in the rest of the world (this was before Home Depot and Target security breaches), and moving to “chip & pin” would require upgrades of all merchant card terminals across the US, estimated to cost over $6B.

And then, Main Street was hit with the 2008 recession, and there was even less interest in forcing expensive upgrades. The Networks, however, had another reason to move to EMV. Coincidentally, or maybe not, it was pretty certain that when merchants upgraded their terminals to support EMV, they would also gain NFC capability.

Starting in 2013, the Networks again collaboratively defined and later published standards by which tokenization would work. Many insiders tell me this was the fastest any such standard that required cooperation among the Networks had ever gone from concept to final published standard.

The Networks made their move. In 2011 and 2012 the Networks cooperatively announced the mandated upgrade of US payments networks to EMV.  All merchants would be required to upgrade their payments terminals to support EMV, or take on liability for fraudulent transactions. Conveniently, support for NFC would be a byproduct of this upgrade.

The next step to enable secure mobile payments, was to garner support for tokenization. Starting in 2013, the Networks again collaboratively defined and later published standards by which tokenization would work. Many insiders tell me this was the fastest any such standard that required cooperation among the Networks had ever gone from concept to final published standard.

With the key standards and technology in place, and banks and merchants on board, the Networks now needed a major mobile phone deal to bring consumers along and make it all work. Enter Apple–the perfect distribution partner–a master at bringing disparate parties together and creating consumer demand out of nowhere.

The Victory Goes to The Networks

In the Fall of 2014, ApplePay was launched, and as they say, the rest was history. Mobile payments won’t take off overnight, and Google Wallet, with Apple paving the way, is now poised to capture Android offline payments. But, after a 5 year set of skirmishes, it’s clear that the first victory in mobile payments goes to the Networks, leaving PayPal to fight another day.

Basic CMYK

The Next Battle for Google and PayPal

For Google, the next several years will be about fast-follow execution.  They need to draft off of the technology and deal structures that were put in place by the Networks and Apple.  They are unlikely to get the economic shares that Apple was able to extract, but that is ok if they can leverage the data for advertising.

For PayPal, the story is more complicated.  In Fall of 2015, PayPal becomes an independent, publicly traded company and, in many respects, it will have more to lose if it doesn’t make the right set of strategic moves in a world where the mobile OS is poised to become the wallet of choice for consumers.  For online payments (PayPal’s entire business), PayPal will need to develop a value proposition for consumers that is greater than (1) Privacy: shopping without sharing your card number and (2) Convenience: all your cards are digitally stored and you don’t need to pull out your physical wallet.  Apple and Google are now better than parity for these propositions. These innovations will likely orient around meta commerce services like merchant loyalty / incentives, spend management and consumer to consumer.  In any event, the pace of innovation will need to be accelerated to defend the empire that has been built.

The other interesting question is whether or not PayPal remains an independent company for much longer, or does the spin-out by PayPal set it up for takeover in the next couple of years.  It would be easy to argue that is a spectacularly valuable asset for one of the major Networks, with a digital first global footprint, a more flexible technology stack than any of the incumbents have, direct relationships with millions of consumers and merchants, and an enormous direct debit network.

It will be an interesting second battle in the ongoing war.

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The Senate Advances NSA Surveillance Reform Legislation As Deadline Approaches

The Senate voted 77-to-17 to take up the USA Freedom Act, a bill already passed in the House that would reform National Security Agency (NSA), in a rare Sunday session.

The procedural vote came just hours before key provisions of the Patriot Act are set to expire at midnight. It will likely take until the middle of the week for the Senate to pass the House bill, meaning several programs under the bill will temporarily lapse.

Among the expiring provisions is Section 215 of the Patriot Act, which has been applied to allow the controversial bulk collection of Americans’ phone records. It was one of the first programs reported by The Guardian after former government contractor Edward Snowden leaked secret documents about American surveillance processes.

Although privacy advocates and many in tech supported allowing Section 215 to expire, the surveillance reform bill did receive the support of many tech companies. President Barack Obama has also committed to signing the bill into law.

Passage of the bill would mark the first time lawmakers have reined in the surveillance powers of the intelligence community in the two years since Snowden first revealed the controversial intelligence gathering programs.

Over the weeks leading up to the deadline, lawmakers have grappled with protecting Americans’ civil liberties while upholding the nation’s counterterrorism programs. Senate Majority Leader Mitch McConnell led a push to extend the programs but the Senate blocked his attempt.

After leading opposition against the Freedom Act in 2014 and again last week, McConnell voted on Sunday evening to advance discussion of the bill. He encouraged other members of his party to support the bill so that the surveillance programs would not expire.

McConnell also attempted to temporarily extend two lesser known Patriot Act provisions expiring tomorrow that involve roving wiretaps and tracking “lone wolf” terrorist suspects. Paul objected to that vote.

Under the Freedom Act, the phone companies, not government agencies, would hold American phone records. The NSA could only access these records after receiving permission from a Foreign Intelligence Surveillance Act court.

The Freedom Act does not go far enough in curtailing American surveillance practices. It only addresses the bulk collection of American phone records and does nothing to rein in many of the gross oversteps we have seen from the Snowden revelations. The American Civil Liberties Union does not formally support or oppose the bill, but when it passed the House, it said significant changes should be made to strengthen privacy rights.

“The Senate should not make the same mistake and instead remedy the bill’s many deficiencies, which have been criticized on both sides of the aisle,” said Michael Macleod-Ball, acting director of the ACLU Washington Legislative Office, at the time.

The bill does not address the surveillance of non-Americans or the communications of U.S. citizens with people outside the country under FISA Section 702 or Executive Order 12333. But today’s vote remains a victory for the advocates that have been fighting for two years to limit the scope of the NSA’s surveillance.

A recent Pew survey found majority of Americans do not believe there are adequate limits on what telephone and Internet data the government can collect. Today was a step in the right direction, but the fight isn’t over.

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Formula 1 Technology Is Being Used To Make Better Surgeons

There was plenty of drama at the Monaco Grand Prix last Sunday with driver Nico Rosberg of Mercedes taking first place from teammate Lewis Hamilton late in the race. But there’s always plenty of action off the track too as race engineers analyze and transmit data to teams before and during any race.

McLaren, based in Woking, UK, is one of the biggest names in F1 but is now using their know-how in real-time data to help surgeons. Dr. Caroline Hargrove came to McLaren 18 years ago and is now Technical Director of McLaren Applied Technologies (or MAT), a subsidiary of the McLaren Technology Group.

Hargrove explains that 100s of sensors go into F1 race cars and stream torrents of live data to engineers far away in Woking, helping them make real-time decisions to optimize race strategy. But MAT is now applying this expertise to surgery – a profession where seconds also matter.

McLaren announced just last month an agreement with the University of Oxford to enhance key medical services by jointly developing analysis and decision support tools. The partnership draws on McLaren’s expertise in simulation technology, data management and predictive analytics. They’re starting with 50 surgeons, mostly ones in training but also more experienced surgeons. 

How F1 technology is working in the operating room

 A sensor is placed on a surgeon’s elbow while they operate. The data is sent via Bluetooth technology to computers. Hargrove explains that sensors can produce a stream of data that can be analyzed in real time for immediate feedback on a surgeon. She says, “We know there are certain traits that distinguish a great surgeon, such as speed and dexterity – how jerky or smooth is their movement when they cut. There’s always a subjective element in teaching any surgeon. This adds objectivity to it …in addition to another surgeon’s feedback.”

By comparing the results for different surgeons at all stages of their training – from beginners to highly experienced ones – it’s possible to predict their progression and gauge whether they’re hitting their development targets. She says this kind of analysis will not only save time on an operating table but in training a new surgeon. “Has the surgeon improved the last two to three times they did this procedure? Are they better at one thing more than another? Or, they don’t need to practice something 10 times more because they’re already doing it really well.”

“We know there are certain traits that distinguish a great surgeon, such as speed and dexterity – how jerky or smooth is their movement when they cut. There’s always a subjective element in teaching any surgeon. This adds objectivity to it …in addition to another surgeon’s feedback.”
— Dr. Caroline Hargrove

Hargrove also says by providing more feedback early on in a doctor’s career, the surgeons themselves know if indeed surgery is the best fit for their chosen specialty (or if radiology is because of a really keen eye).  “Surgery is perceived as the rock star of the medical field but it costs a lot of money to train surgeons.”

Hargrove says this partnered effort with Oxford is in beta testing for now, but eventually; McLaren may want to commercialize it. She points out the value of a potential database of quantitative (not qualitative) assessments from surgeries on 1,000s of patients.

A surgeon’s point of view

Dr. Freddie Hamdy is Head of Surgical Sciences at the University of Oxford and Director of Oncology and Surgery at Oxford University Hospitals NHS Trust. “Part of my job is to select the right people to become surgeons and to make sure they’re getting the right training.”

When asked why he chose to work with MAT, Dr. Hamdy said, “They have a lot of experience in expert simulation. In surgery, there’s a need to reproduce that, and a need to see what progress a surgeon is making so we can evaluate them, as well as an opportunity to validate an experienced one.”

How F1 technology helps patients:

In an F1 race, data is immediately analyzed to find the best strategy for the team, and used to run 1,000s of simulations per minute. For example, ‘If I pit now, what will happen?’ Or ‘If Ferrari drivers pit now, how does this affect me?’

As part of the McLaren/Oxford partnership, prescriptive data is also gathered, but from sensors placed on patients …during pre-op and post-op. Hargrove says data can be monitored from a patient at home days before a surgery to see how fit a person is for a procedure, or if they need more time to get into better physical condition.

“With data, we can spot a trend – why has this person’s weight gone up when their diet hasn’t changed. Or, we can monitor a person’s gait (how they walk). When a person’s gait changes, it’s usually due to a medical condition. But you don’t notice this visually.”
— Geoff McGrath

Hargrove points out that no sensor goes on the patient during surgery “as that aspect is already superbly done”. Anesthesiologists take in tons of data already by doing traditional patient monitoring of things like blood oxygenation and blood pressure.

Prescriptive Health Data

Chief Innovation Officer of MAT Geoff McGrath says sometimes the biggest challenge for data in healthcare is “people using prescriptive action based on algorithms across a population”. He adds, “Knowing that you have taken 10,000 steps a day isn’t really meaningful. Will it make a significant impact on your health? It doesn’t’ really tell you how hard you’re working, or what you need to do differently. People can start losing faith in the data.”

McGrath says like in F1 racing, a combination of mathematical data, simulation and modeling can spot a small anomaly in someone’s behavior …whether they’re a patient or a race car driver. “With data, we can spot a trend – why has this person’s weight gone up when their diet hasn’t changed. Or, we can monitor a person’s gait (how they walk). When a person’s gait changes, it’s usually due to a medical condition. But you don’t notice this visually,” McGrath says.

He points out an irony. “In intensive care of any hospital in the world, loads of alarms are going off all the time with loads of complexity there. But go into an F1 racing monitoring room, it’s very calm. But we’re processing way more data there …and presenting precise, detailed information that can then be acted upon out on the track.”

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I/O Spotlights Google’s Machine Learning Smarts

Few will argue that this year’s I/O keynote was Google’s flashiest yet. If you were expecting people to jump out of blimps to bring you a new version of Google Glass, the event surely left you disappointed. Instead, Google used its relatively low-key keynote to announce an evolutionary update to its mobile operating system, a new effort to bring Android to the Internet of Things and a number of new tools for developers to better monetize, advertise and analyze their apps.

The three new products that stuck out for me on the consumer side of Google’s announcement, though, were Google Photos, Now On Tap in Android M, and — though it wasn’t announced in the keynote — the latest update to Inbox for Gmail. To some degree, all of them draw on the natural language understanding, deep machine learnings expertise, and immense Knowledge Graph database Google has focused on so much in recent years.

Google Photos, for example, features what is undoubtedly the best photo search engine currently available. Just do a search for ‘trees,’ ‘flowers,’ or ‘mountains’ and see what it finds in your photo collections. Photos, of course, is the stand-alone version of the photo feature of Google+, which was already able to do much of this, but the company has improved search in this version.

Google Now on Tap can understand what’s happening in an app and then give you additional contextual information and answer your questions about it. In Google’s demo, which drew quite a bit of applause from the audience, the presenter brought up a Skrillex song in Spotify (and oddly enough, not Google Music), launched Now on Tap and then asked “what’s his real name?” To do this, Google has to understand what’s playing in the app, understand who the ‘his’ refers to, and then go deep into its knowledge base to give you the answer.

tomorrowland-final

Inbox, which somehow got left out of the keynote , now relies on some of this knowledge and natural language understanding to automatically generate reminders for you when it notices somebody is asking you to do something. It can also recognize emails about upcoming trips and bundle them together into a single group.

Microsoft is starting to do a bit of this with Cortana now and I’m sure Apple is thinking about similar tools, but at the end of the day, Google’s products feel like they are quite a bit ahead of the curve. Nobody else, after all, can draw on a project like Knowledge Graph with data about more than a billion of entities. And for better or worse, nobody knows as much about you and your online (and maybe even offline) habits than Google, so it can put all of this info into context for you.

Google I/O’s keynote may have lacked any real surprises (though the ATAP keynote the day after made more than up for that), but these three features alone show that Google is far ahead of its competitors when it comes to understanding its users.



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An Interview With Nathaniel Popper, Author Of Digital Gold

If you’ve been reading the site lately you’ll notice we’ve gone Digital Gold-crazy. First we started with an amazing excerpt outlining the story of 21.com. Then we posted a review and a podcast and now we present an short interview with the author in our studio in New York.

Popper and I go through his theories behind the mysterious Satoshi Nakamoto, why the couldn’t price the book in bitcoin, and how many bitcoins he’s holding. I’d also highly recommend the book if you’re interested in cryptocurrencies. It’s a very human story about a very unique technology and well worth a read.



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Labs And Incubators Fuel Enterprise Innovation

Change doesn’t come easily to large organizations. Over time they have established a firm set of core business processes to give  them the structure to manage massive workforces, which makes sense, but it also means they lack the agility of smaller companies.

They have created systems to provide safe and effective ways of doing business, which protects companies from chaotic decision making and running willy nilly toward every market whim.

This inability to pivot can be a weakness in the current economic environment which requires independent and creative thinking and the ability to react quickly to changing markets.

Big companies by their nature simply aren’t prepared for that kind of approach.

Now, smart executives are seeing the limitations of this strategy and are looking for ways to turn the battleship to find new ways of engaging with customers and doing business.

One method companies have begun employing has been through building internal incubators and labs as innovation engines. Typically these projects have a goal beyond pure experimentation, and at their best they develop new products and ways of working that get absorbed into the organization at large.

Developing New Ways Of Thinking

The lab or incubator provides a way to institutionalize this approach and carve out a pocket of innovation that’s separate for the most part from internal processes. That doesn’t mean necessarily that there is no process, but it’s a process defined with the purpose of building a new generation of tools and to instill new ways of thinking and creating that eventually reach across the entire organization.

“What every company needs today is scale or agility. The Coca-Cola company is one of most scaled companies on the planet. We need to learn more about agility,” David Butler VP of innovation at Coca-Cola told me in February. On the flip side, startups know about agility, but don’t have any understanding of how to scale. Butler believes by incubating startups in-house, Coke can bring these two requirements together and both parties can learn from one another.

You have to have that center of the business that makes it run, but you need something that sits further away from the center so it doesn’t get sucked into the organizational vortex, explained Vanessa Colella, managing director and global head of venture investing at Citi Ventures.

“In a large organization, there is a center of gravity to the business. When you are close in you are necessarily pulled by the gravitational force. There is more focus on how do we do things that are near in,” she explained in a conversation last Fall.

“We found at Citigroup that if we sit further away, we can bring outside innovation in.” She makes it clear though that you still have to bring that innovation inside eventually where it can benefit the whole organization. “Those things can’t be in a different solar system. They have to come together,” she explained.

It’s great thing when you have to get into this mode because you’re [constantly] iterating and delving deeper into what customers want and need
— Vanessa Colella

She said, the challenge is that there is constant change now. From a digital perspective, that means you can’t just make one change and think you’re done. She’s sees this constant push from market forces as positive because it forces you to continually look for new ways to engage your customers.

“It’s great thing when you have to get into this mode because you’re [constantly] iterating and delving deeper into what customers want and need,” Colella said.

All In Service Of The Customer

Group of people working in Fidelity Labs. Ultimately all of this innovation is about one thing: servicing the customer, says Sean Belka  svp and director of Fidelity Labs. “Our goal is how do we identify ideas that solve important customer problems — and how do we apply design thinking + agile + lean startup methods to make that happen.”

Fidelity has been running Fidelity Labs for many years as a place to experiment with different ways of doing business inside the larger company. Today one of its main focuses is offering an entirely new way of approaching customer problems through experimentation and iteration. Its ultimate goal remains developing products that are useful to their core audience of investors.

Fred Leichter, SVP and head of the Design Thinking program at Fidelity Labs is a Stanford Fellow, who attended its d. School. This had a huge influence on his approach.

“The most important job is figuring out what is the customer problem we’re solving for,” Leichter said. This could involve experimenting with a dozen low fidelity prototypes, all with the goal of figuring out if they are solving a real problem in a meaningful and creative way. They understand they could start with a clear premise and proposed solution and find out they were way off base. That’s part of the learning process.

The Labs working under this design process has projects in various stages of development from very early experimentation to one that is fully developed and ready to incorporate into the main product family. The former is called FidSafe, a digital safe deposit box for all your important documents. What’s great about it, is that it solves a big problem for customers, but it also acts as a catalyst for many of the other solutions that are in progress inside the Labs. What’s most important though is that all of the projects are completely focused on the customer and eventually the hope is graduating from the Lab and into the company.

Jerry Wolfe, who runs a company called Vivanda, which started as a small experimental project inside of the spice giant, McCormick says starting small inside a lab or incubator lets the company see the advantages of innovating and opening new digital channels to customers. That’s why these labs and incubators are so popular. They allow a safe way to introduce this kind of thinking inside an organization.

“Don’t start with ‘we need a digital transformation initiative.’ That has a high rate of failure,” he explained. He says look for that small bit of success. In his case it was Vivanda’s FlavorPrint app. For Fidelity Labs, it’s FidSafe. Whatever it is, if you start small, you can build from there and begin to build the type of innovative thinking your company needs to survive moving forward.

Featured Image: Fidelity Labs

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All Screens Are Not Created Equal

Recently, Taiwanese lawmakers approved the “Child and Youth Welfare and Protection Act,” making it illegal for children under the age of 18 to use electronic devices for excessive periods of time.

In the United States, we don’t have legislation restricting screen time, but organizations like the Campaign for a Commercial-Free Childhood have addressed the issue of screen time by creating Screen-Free Week, an annual initiative that encourages families to unplug from technology for a week.

But these actions ignore a fundamental principle: All screens are not created equal. A tablet, TV and computer are all different in terms of function, the way people interact with them and the type of content consumed. All things considered, why don’t we delve into what matters, which is the activity being done, rather than the channel or device?

The basic misconception stems from the notion that the screen itself is more important than the action being performed. Well-meaning organizations have made blanket recommendations calling for an end to screen time for kids, but these recommendations are based on obsolete studies, conducted prior to the iPad and other interactive devices.

In May 2014, Dr. Dimitri A. Christakis, co-author of the 2011 American Academy of Pediatrics Guidelines on Infants and Media, spoke out about the guidelines, arguing the “judicious use of interactive media is acceptable for children younger than the age of 2 years.”

Screens have evolved from the days of TV, when most viewing was passive and lacked interaction. Today, tablets can be used for language learning, playing games, watching Khan Academy videos or video chatting with family. The possibilities are endless, and while it’s all done on the same screen, each activity is different, tapping into different emotions, skills and parts of the brain. Knowing this, why would we treat all screen activities the same?

According to a 2014 Zero to Three study, “research shows that when parents and other trusted adults make screen use an interactive, shared experience, it can become a tool for learning, and the potential negative effects can be reduced.” The study advised parents to be selective with content and to “choose programs and apps with interactive components that engage your child’s participation, that use strong story lines, and that model positive interactions between characters.”

As with most things, a balance between kids’ activities is generally best. Too much of anything is not healthy. Reading books is great, but if your nose is stuck in a book and you never step outside, there’s an imbalance there. The same concept applies to sports. Being active and playing basketball is a fantastic way to get exercise and build teamwork skills, but if that means that you never pick up an instrument or draw a picture, then you are missing out on valuable experiences.

This concept is obvious for most parents, and the same simple approach applies to screen time  — keep a balance. If screens can provide value and be useful, use them! If not, put them away. Technology isn’t a one-size-fits-all solution and shouldn’t be treated as such, but it also shouldn’t be deemed categorically bad, either.

Instead, think of tablets as a tool — one that can be used for education, entertainment or communication, depending on your preference. It’s a versatile tool that contains the world’s collected information, all in one single place.

Does your child want to learn how to play the piano? There are videos online that can teach your little Mozart. Do you have a bookworm who is longing to read a new story? Snag a free e-book download. Does your little one miss Grandma and Grandpa? They’re just a video call away.

When you start thinking about technology as a tool, it becomes clear that the point is not to replace anything — it’s just to add value where it can. It shouldn’t take the place of face-to-face interaction. On the contrary, your phone helps you stay in touch with more people than you might otherwise. The two aren’t mutually exclusive. Having friends on Facebook doesn’t mean that you can’t have dinner without a phone on the table.

Use technology where it is useful. Teach your kids to think of it in the same way. It’s the same common sense you’re already teaching them.

We know that technology is going to play a major role in kids’ lives. It’s not a matter of “if” children should be using technology, but “how.”

Featured Image: Syda Productions/Shutterstock

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How Should We Learn?

Ignorance has been a fait accompli throughout the history of human society. There was never enough information about the world and how it functions, and even when we had it, few people had access. Whole branches of knowledge could be lost or simply stagnate, like much of science and mathematics in the European Dark Ages.

The internet changed all that. Data is everywhere, and knowledge is accessible on almost any subject imaginable with just a few clicks. Suddenly, we went from people ignorant of our own ignorance to content consumers struggling to keep up with the information all around us.

We will never stop being the deer in the headlights of knowledge. We shouldn’t celebrate ignorance, but neither can we cure it. Instead, students – hopefully aided someday by a new generation of education startups – need to learn how to navigate in a world where the frontier of knowledge is rapidly expanding and dynamic. We need to inculcate purpose-driven learning and move away from a model of slurping up all the data in the world.

Cancel The Deluge

When pundits describe data in the 21st century, they often resort to the flood metaphor, describing how we are “inundated” or “awash” with data. It is true that the internet has given us almost unlimited and practically free access to the sum of all human knowledge in a way never before seen in history.

The flood metaphor breaks down pretty quickly though upon deeper inspection. Data doesn’t just rush flow by us as we struggle to stay anchored above the deluge. Rather, we have built sophisticated tools to filter through that data and find the pieces that we are most interested in.

Yet, we still feel so overwhelmed by all of this. We are so concerned about our next email or text message that we have to buy special devices for our wrists just to make sure we aren’t falling behind. It’s no better at work, where a majority of executives feel completely powerless to handle the roaring current of data flowing in (I’m metaphorically guilty now).

The challenge is that most of us aren’t actually that good at learning. Sure, we can seek out facts, read news articles and tweets, and analyze tough problems. The software industry in particular is filled with autodidacts who can learn both the higher-level architecture of a massive computer system and the extremely nuanced implementation details required to run it. Data is abundant, and we can consume all of it given enough time.

Data is not knowledge however, and knowledge is not wisdom.

I am reminded of one of my “friends”* who years ago used to constantly click on the random article button on Wikipedia and ingest the articles as quickly as possible. He was considered smart by many people, even brilliant by some who marveled at the level of his know-how. In the end, that data was superficial, enough to keep a conversation going with a specialist but without the ability to fully engage on a topic.

We can consume all the facts in the world and still not comprehend what is really going on. The rise of explanatory journalism – pushed aggressively by Vox and several other internet publications – is a partial antidote to this problem. However, we are only moving from data to knowledge, and we still haven’t found wisdom.

The Ignorance Gap

One of my professors once described education as a fraction. The numerator is the knowledge we know about the world, and the denominator is our understanding about all of the knowledge that exists in the world. He argued that grade school equally expanded the numerator and denominator, and that college expanded the numerator at a slightly faster clip, giving everyone confidence.

The punch line was that getting a doctorate degree would only expand the denominator, which is why after five or more additional years at a university, people feel dumber than when they first started.

One reason we feel overwhelmed by all of this data is that we suddenly know how much we don’t know about the world. Our collective denominators have expanded rapidly in the last twenty years, without a concomitant increase in our own base of knowledge. We are constantly being confronted with stories we know nothing about, in countries we weren’t even truly aware existed.

We have to accept our present condition: we will always be more ignorant than knowledgeable about the world. Our societies are too complicated and the human lifespan is too short to ever hope to try to bridge that gulf.

Instead, we need to accept ignorance and handle it graciously. That doesn’t mean we should revel in our ignorance, but we shouldn’t be bothered when we don’t know the latest trend or some news story, nor should we judge others as “stupid” if they don’t know some factoid. There is a fear that we will enter a conversation not being completely up-to-date, but what is the point of a conversation if all we are exchanging are the facts we already know?

Wisdom comes when we increase both our numerators and our denominators. We need to both know what we know and as much as possible about what we don’t.

How Should We Learn?

We have had an explosion of learning products published online, whether sites like Wikipedia that offer a huge library of content for consumption or MOOCs like Udacity and Coursera that have more interactivity built in. We can learn about almost any subject imaginable today, and of course, get the details and data that the internet always offers.

Yet, these companies have barely started to build platforms for purpose-driven learning. In fact, the rhetoric around online education has focused so much on skills, credentials, and mechanisms of accountability that we have mostly neglected building up the more fundamental skill of simply learning what information is invaluable, merely valuable, and useless in a field.

We need to develop thinkers, not information processors. That’s incredibly hard in a world where students want instantly useful skills that are going to be worth a premium in industry. Just look at all of the coding education startups – there is far more coverage of CSS gradients than algorithms in many of these curriculums. Yet that deeper material is precisely what will differentiate students as thoughtful developers.

We do students a disservice when we only focus on that numerator of knowledge they know rather than that denominator of knowledge they are aware of exists. Yes, we want students to know how to process an HTML form, or to run a regression. But we also want them to become independent learners, adults who know when they need help, and how they might seek out the answers they are looking for.

Two weeks ago, I asked why the university is still here. The answer really comes down to its ability to teach students both knowledge and wisdom. There is no reason this can’t be done online or through books, but so far it hasn’t. It remains one of the largest opportunities in the edtech learning space available to entrepreneurs today.

People can be incredibly smart, even brilliant sometimes, and yet still be bad at deep learning. The internet has given us this omniscience that we have never had before, and we suddenly have this ability to see all of the details that we don’t know about. We need to inculcate the skills to navigate that world, handle ambiguity and ignorance, and become more purpose-driven learners.

*Note: May actually be me.

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Hard-Core Career Advice For A 13-Year-Old

I’m ashamed because I felt the need to brag to my 13-year-old. But she asked for it. My daughter Mollie had a homework assignment for her guidance class that had her ask me what I do for a living. This put me in a weird position. I do a lot of things. I didn’t know how to tell her.

But it also shows that school is too focused on “education leads to a job.” This is not true anymore.

The reality is the average person has 14 different careers in their lives and the average multi-millionaire has seven different sources of income. So anything that is “one-job focused” will create a generation of kids that will learn the hard way that life doesn’t work like that.

The world changes fast. The jobs I do now didn’t exist when I was 13. And the jobs she will do don’t exist now. So learning how to learn is more important than memorizing facts.

Here’s how the assignment went:

What is the name of your occupation? What are the educational requirements to work in your career?

I don’t have a single occupation. And you can drop out of school right now and do what I do. In fact, Mollie, I hope you drop out of school right now. Please?

I’m a firm believer that people feel more well-being in their life when they are around people they love, they are good at what they do, and they have some autonomy (freedom) in how they make decisions.

You have to give yourself permission to totally humiliate yourself repeatedly.

You get more freedom in your life by doing many different things. Some of which make money, some don’t, but all increase your competence, relationships and freedom: the three musketeers of well-being.

So I am a writer (I write books and articles). I’m a podcaster (I’ve had 10 million downloads of my podcast). I speak occasionally. And I advise or invest in over 30 different companies.

And I screw up a lot. If you do a lot of things, you screw up a lot of things. You have to give yourself permission to totally humiliate yourself repeatedly. If you can do that, then happiness results.

With companies I advise I try to stick to one criteria: can this company help over a billion people [I think I exaggerated here. Pathetically bragging to a 13-year-old. Maybe a million people is more accurate. Or, heck, a hundred people.]

And remember, there are zero formal education requirements for what I do.

What do you like in your work? What do you dislike?

I am really happy with the friends I’ve made in the past five years. Also, I learn a lot. Probably a day has not gone by where I haven’t learned a huge amount.

The thing I dislike is that sometimes I don’t say “no” enough (even though I wrote the book “The Power of No.”) Here is the secret: If something is not a “hell yes!” then you should say “no.”

If something is not a “hell yes!” then you should say “no.”

But even though this is a good technique, it is sometimes hard to follow and you end up saying “yes” because you want people to like you and you end up having less time to do the things that make you creative and give you life and energy.

I don’t know how to solve that. Practice.

How is your day typically spent? What are your work hours?

I have no work hours. Neither will you. You have school hours now but those are fake work hours.

BUT.

Daily routine is very important. We are at different levels of energy and productivity throughout the day. For instance, at an extreme example, late at night we tend to be tired (that is why we sleep). So if you try to do important work at night, it might not come out good.

We are at our peak productivity in our brain from two to four hours after we are awake.

Daily routine is very important. We are at different levels of energy and productivity throughout the day.

So if you wake up at 5 a.m., from 7 a.m. to 9 a.m. your brain is about 100 times more active than it is at night. So I wake up at 5 a.m. I read for two hours. Then I write for two hours because this is the activity that is most important to me.

Then I walk or exercise and then start to do things that require less and less brain power. Like advising businesses (I will do that first) and then do things like running errands or things that don’t require as much energy.

Our brain is only 2 percent of our body mass but burns 25 percent of our calories every day. So how you make use of this magnificent tool that you have is very important for how well your day turns out.

How did you chose your occupation?

I don’t have an occupation.

But then I got desperate and scared. I started building businesses when I was in my 20s because I needed to make some money.

When your sister was born it was like this new U.S. citizen moved into my house and she was one foot tall, didn’t speak English, couldn’t walk, shat all over the floor, and cried all the time, and I had to take care of her. So I felt I needed to make money to do that.

Sometimes I was good at it and sometimes I was incredibly stressed out and bad at it. Sometimes I wanted to run away. But I’m glad I didn’t. Because now both that little one-foot-tall person and you are now in my life.

I’ve built over 20 businesses and maybe 17 of them have failed and three have done well. But I’ve also loved writing and creating since I was a little kid. I’ve written every single day for almost the past 25 years.

Because I know a lot of people and write about a lot of people, I’ve also started doing a “radio show” (podcast) where I interview people. I’ve interviewed entrepreneurs (Mark Cuban, Arianna Huffington), entertainers (Coolio, Amanda Palmer), many authors, many athletes, and all people who have tried to make their lives better.

I interview them because I want to learn from them and share their stories with my listeners. I try to be a good interviewer but it’s hard. I try to practice.

For every 10 people who like you, at least one or two people hate you and they are the ones who reach out and contact you. So the better you do, the more you hear from people who hate you. So you have to give yourself permission to do things that a lot of people hate.

And I like helping businesses because often we are solving problems very important to many people.

When you have impact on people, money is a byproduct.

I chose to do these things because I love them and I also love the impact they have on people. It was very hard for me to figure out all the things I want to do and it often changes. When you have impact on people, money is a byproduct. You get better and better at how to make that byproduct when you mine for value.

Every six months I end up doing different things. I have no idea what I will be doing for a living six months from now. Nobody does. Nothing in life is predictable. You can say, “I will do X” but then in a year you will end up doing Y and that’s fine.

Being unpredictable is more normal than being predictable. Humans were made to be nomads, to be in different environments, to roam the world, and we evolved to adapt quickly to new experiences.

So what new experiences we all adapt to six months from now is unknown. But I hope and think I will still love what I do and still help people and still be creative in everything I do.

What advice would you suggest to young people regarding career choices?

Whenever you are curious, ask questions.

If you feel a question is stupid then definitely ask that question. If you are shy about asking a question, then ask two questions.

Your mom has a good trick for this. Whenever she is at a conference and it’s question time, she raises her hand fast before she even knows what question she wants to ask. Then she has to figure out a question to ask.

Otherwise you stay in a tight line with everyone else. You have to step out of the line to see how the entire formation works.

Curiosity will fuel this giant engine we call our brain. It will help you learn things that nobody else knows. It will help you figure out what you want to do and be and what problems you want to solve faster than all the people who are too afraid to ask questions.

The next thing is: always be healthy. You can’t be creative if you are sick. Every seven years your body is made up of 100 percent new cells and the old cells die.

Where do the cells come from? Mostly from the food you eat. Eat junk and you are junk. Eat well and you are well.

Every day is the only day we have to work with.

Also remember this saying: “You are the average of the five people you surround yourself with.” If you surround yourself with good, creative, smart people then you will be a good, creative, smart person. These are like your “emotional cells.” They change 100 percent every six months.

Every day remember to be creative, even a little bit. Write, or read, or draw, or write down 10 ideas. This builds your “creative cells.” Note that my biology skills are off the chain.

Finally, remember that every day is the only day we have to work with. Regrets are already dead in the past. And worries about the future are unpredictable. So be grateful for the many blessings you have right now. You have a blessed life with an entire world that is your drawing board. Paint a beautiful picture on it.

Featured Image: Pete Pahham/Shutterstock

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London Is Redefining Tech Startups Through Adventurous Capital

London hit an important milestone this month, but you may have missed the news as it emerged with a characteristically British lack of fuss. For the first time, the city’s technology startups attracted in excess of half a billion dollars of VC funding in a single quarter – $646.98 million for the period January to March 2015.

The data, collected by London and Partners (the evangelical wing of the London Mayoralty) puts the city on course for a $2 billion-plus investment year. That feels a lot like progress when you consider that London’s tech firms scraped together a miserly $10 million in Q2 2010. However, on purely numerical terms, our achievements are still modest.

London’s 2014 funding total of $1.35 billion puts it on par with Redwood City, Calif., population 76,000 and home to Evernote, Reputation and Turn. Even more humbling is the fact that San Francisco-based Uber raised $3 billion on its own last year.

But size isn’t everything. London exerted architectural influence long before its sedate skyline was punctured by the monolithic Shard. So it is with our technology companies – modestly proportioned, but globally significant.

Consider fintech and the foundations on which this rapidly growing sector is built; London is the world’s leading foreign exchange hub, handling $2.6 trillion per day, more than double that of New York City. It sits on the prime meridian, literally the centre of the world, at least in terms of time zones.

The U.S. is so large and service-hungry that there’s also money to be had launching the first, second and even third valet parking app.

Yet, Britain is a small island with a population of just 60 million people. The need to seek and service markets beyond our own borders shapes London’s burgeoning technology firms. Many of the companies that have attracted substantial investment – our own included – have internationalized rapidly.

By contrast, some of the best known and most generously funded U.S. startups are focused on American solutions to American problems. And why shouldn’t they be? The U.S. is a huge and lucrative market whose financial system is creakingly antiquated and ripe for disruption. Domestic bank transfers still take several days and the slow adoption of chip and pin technologies and NFC cards primed shoppers for the likes of Square and Apple Pay.

Beyond finance, the U.S. is so large and service-hungry that there’s also money to be had launching the first, second and even third valet parking app.

It is still possible, in 2015, to create a multi-billion-dollar business without venturing beyond the borders of the United States. By contrast, European startups enjoying a level of success are compelled to internationalize almost immediately.

Compare Square, which, six years after launch, is only available in the U.S., Canada and Japan, to its younger Swedish counterpart iZettle, which is already being used in 10 countries.

Early in the growth cycle we are faced with operating in multiple legal jurisdictions, setting up local business entities, language translation, international recruiting, marketing and customer support. That drives very different business models.

International agility is increasingly important in a connected world because common platforms and global distribution means that dominant players in one territory can quickly find themselves under siege from overseas. Facebook’s defensive purchase of WhatsApp showed that entrenchment in one or two large markets is no match for global virality.

Having a different perspective on internationalization also opens up new business opportunities. It is tempting to turn first to big, homogenous markets like the U.S. and China. Everything else is seen as “long tail” because the ratio of set-up effort to financial return is less favorable. However, there is such a thing as a “rest of the world” business.

And the potential rewards are far from long tail. In the case of international remittances, $5.5 billion is sent annually, most of which is currently offline. These growth patterns are not exclusive to London; we see them elsewhere in Europe also.

Having a different perspective on internationalization also opens up new business opportunities.

Adyen is a Netherlands-based online payments service (and fellow-member of the European fintech 50). Fewer than 10 years old, it now handles more than 180 currencies and is used by the likes of Facebook, Spotify and Airbnb. Adyen is favored precisely because it solves the problem of diverse local payment systems. Its rival, the longer established WorldPay, is based in London.

The effect of investors’ increasing engagement with these ‘rest of world’ opportunities is startling. Although the UK’s share of global fintech investment is still relatively small in financial terms, our rate of growth is not. According to Accenture, investments in UK fintech increased by 3x the global average and 5x that of Silicon Valley over a five-year period.

In 1982 Chariots of Fire screenwriter Colin Welland proclaimed to the Oscars crowd “the British are coming.” More than 30 years later, few in Hollywood would dispute that prediction.

There is some way to go before UK startups and London fintechs in particular enjoy Benedict Cumberbatch levels of acclaim stateside, but we are already more than ones to watch. We’re building something here, we’re doing it differently, and it looks like we’re onto something.



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A Fundraising Template Every Entrepreneur Can Use

Raising massive rounds these days is so commonplace that most of us tune out fundraising news altogether. The fundraising environment has changed so dramatically over the past four years, it’s almost incomprehensible to those of us who lived through it.

A lot has been made of how ridiculous late-stage rounds have gotten, as well. Bill Gurley penned one of the best pieces I’ve read on the subject recently; to raise late-stage rounds, startups go through far less diligence and scrutiny than they would if they decide to go public. As a result, a lot of late-stage startups lack the operational discipline necessary to go public. I would argue that trend trickles down all the way to the earliest stages of venture-backed companies and really starts there.

Early-stage CEOs are practically taught to not even put a financial model in any of their fundraising decks until they get to their Series B. It’s all about building product in the early stages right? You don’t need to worry about figuring out a business since it’s all about growth in the early stages, right? Wrong.

Every CEO needs to fully understand the cost of doing business before deciding to raise any outside capital. You don’t want your burn rate to get ridiculous in the early days, so force yourself to put something basic together, even if it’s out of your comfort zone.

For those of you short on time, I decided to put something together very basic for you, which will at least give you a start in understanding how much you need to raise to get to your next milestone. I used Gumroad to share the link – you don’t need to pay anything to download the model – just donate “$0.” A few notes about my template are below.

This is not a one-size-fits-all solution. Think about customizing this in the context of your business. As an example, some companies may want to get a lot more granular about sales expenses to see if it makes sense to build an enterprise sales team. In order to analyze those costs, you will need to, as an addendum to this, add a lot of details on the quotas of individual salespeople, seasonality, ramp time, and numerous other factors. My model, simplistically looks at the fully loaded cost of salespeople if they hit their quota.

Include all of your recurring expenses, however small. The little things add up and you will discover that you are spending way more than you should on services you don’t use. Once you write down all of the little expenses, you’ll realize you’re burning a big hole in your wallet.

Write down everything as small as a domain that you bought from GoDaddy for a $19.95/year; you need to be frugal in the early days in order to be disciplined. Unanticipated, or unaccounted-for expenses will kill your startup faster than a bullet.

You should eventually take the time to build a marketing funnel. As you mature as a company, the marketing tab should be more granular and based on a real-life cost per acquisition number. For example, if you know that it costs you $200 to acquire a customer, and you know what your conversion rate by channel is (Facebook, Google, email, etc.), you should build an addendum to this that gets granular about which channels you intend to spend on.

Really sophisticated companies (generally at the growth stages) can get fancy with this and know exactly how many leads they are going to “buy” with their new funding, how many will convert to sales-qualified leads, and how many will eventually turn into paying customers (and know the LTV). This helps companies understand how quickly they can grow in the context of their funding.

You will spend more on vendors than you think, so cushion that substantially. The one that always gets people is “recruiting expenses.” The market is hyper-competitive right now for talent, and you may think for a while that you can do it yourself. The reality is, you will hire a contingency recruiter at some point in your company’s life cycle, and when you do, you will get a $25,000 surprise bill. I recommend third-party services to hire engineers; it takes the risk out of this type of expense because you only pay if the employee works out for a prolonged period of time.

“Fringe” is much higher than you think. The cost of hiring a salaried, full-time employee in the San Francisco Bay Area is expensive. It’s not limited to salary itself – you have to burden the employee’s cost to account for things like healthcare, 401k (if you’re going to have one), payroll tax and so on. To hire a $100k full-time employee in San Francisco in reality costs substantially more than $100k.

Office space prices are getting ridiculous. I often joke with my other founder friends that the reason companies have to raise so much is to pay their leases. Depending on the neighborhood, you will spend up to $97 per square foot in San Francisco. Not only that, but it’s rare to find a property management company that will take you in these days for lease terms less than three years. Kiss a few hundred k of your new shiny money behind to office space.

The bottom line is the money goes extremely fast depending on where you’re based. Bay Area salaries and office space are out of control (but the talent pool and access to capital are amazing), and if you are building a company here you will need more capital. With that being said, do not raise a dollar more than you need to – otherwise you may end up like Javeed from “Silicon Valley.”

I encourage every early-stage entrepreneur to use this, or something like this when considering how much to raise.



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The Obsession With Silicon Everywhere

There are many commentators who argue that there is a bubble in Silicon Valley today. They may or may not be right, but there is certainly a bubble in places named after the preeminent global tech ecosystem.

Silicon Border. Silicon Hills. Silicon Steppe. Silicon Prairie. Silicon Roundabout. Silicon Gulf. Silicon Avenue. Silicon Canal. Silicon Alley. Silicon Beach. Silicon Forest. Philadelphia has a groaner of a region with Philicon Valley (whoever invented this should be banished from marketing for five years or forced to market Path). That leaves Korea as one of the only places in the world to emphasize geography over metals with its Honghap Valley district.

Silicon may be one of the most abundant materials on the earth, but the absolute obsession with naming any tech office park after Silicon Valley is a trend that needs to stop.

Innovation ecosystems don’t just pop out of the ground once a sign blasting “SILICON!” is staked. Instead, they are inculcated over many years through effective government policy around education and business regulation, plus are usually offshoots from other globally-competitive industries. It is no surprise that some of the most successful new high-tech regions of the past decade are in Los Angeles, New York, and London.

Pursuing disruptive technology companies as a policy is deeply distracting, and governments will find that their time and money would be better spent investing in the quality of life of their residents.

The Silicon Mirage

Every government in the industrialized world is talking about high-tech growth. It’s understandable. High-tech jobs tend to pay well in many parts of the world, and the jobs are “clean” relative to other areas of the economy like manufacturing. Rapidly growing companies make for a great economic revitalization story, and the creation of millionaires can get voters to ignore more fundamental issues with an economy.

Plus, it’s just pure fun. It’s rare in policy where science fiction and reality get to meet, and one of those is innovation ecosystem development. Witness all the politicians who have stopped by Facebook, Google, or Twitter over the past few years. There is a sexy quality to these companies that politicians want to be near.

Of course, never mentioned during those photo ops is the dark underbelly of Silicon Valley. Inequality is growing rapidly in the region, driven by the hollowing out of the middle class. Also growing are the rents, which have surged in all the high-tech areas due to increasing demand from high-income earners and limited housing construction. In addition, politicians seem willfully blind to the millions of jobs displaced by computer automation over the last few decades.

High-tech can have incredible economic performance, but it is not an inclusive industry like manufacturing, where highly-paid executives, designers, and product managers can work alongside middle-income factory workers. It really is an all-or-nothing industry: either you can perform at a peak level and net the full SV compensation package, or you are mostly irrelevant. The bus drivers of tech’s private shuttles and the security guards at Google would probably know a thing or two about that.

It’s certainly not unusual for politicians to pursue these sorts of elite jobs out of status and glamour. Many state governments in the United States offer film tax credits to production companies to shoot movies within their states, a system of corporate welfare that is now starting to be repealed since it doesn’t work.

Unfortunately, tech is a harder beast to analyze, which is why it continues to flourish in policymaking circles. There is all of this supposed “magic” that happens when we add the high-tech powder into the urban economy soup. Industries become more competitive, quality of life should improve, and the city becomes more attractive to potential workers. Like magic!

The reality is harder to discern, but we are probably spending too much. Technology is indeed a “good” industry that adds value to an economy (as do many other industries, of course). The challenge is matching the value created with the policy incentives and programs that suck up government revenues. In many places throughout the world, spending remains grossly unbalanced.

The Silicon Valley Playbook

One of the incredible parts of attending government policymaking conferences on innovation ecosystems (and you thought C-SPAN was boring!) is that few politicians and their policy managers even know what Silicon Valley is, or more specifically, what makes it tick.

The region has many “key” qualities, but two are far more important than the others. The first is risk-seeking behavior, which should be self-evident every time you hear about another crazy entrepreneur with a crazy idea, and especially when you hear about the venture capitalist willing to throw millions behind him or her. Everyone in this industry understands risk, albeit with different tolerances, and is willing to play the game to make huge returns.

The other characteristic is that the region is entirely centered on extremely fast growth. Engineers inexorably move to faster growing companies so talent is concentrated in the most likely future success stories. Lawyers and accountants are willing to push the law around taxes and valuations in ways that firms in other regions are simply not willing to do.

Here is the thing: Silicon Valley is not unique in the United States as a dynamic innovation ecosystem. Both New York in finance and Los Angeles in media are examples of regions that have many of the same qualities of San Francisco. Producers in Hollywood are just as calculating about creativity and returns as their venture capital brethren. That’s why Silicon Beach and Silicon Alley have had disproportionately faster growth than other newer tech regions in the world.

The good news is that most nations already have some sort of industry that fits this pattern. Rather than trying to reinvent the wheel by importing tech companies, governments would do better to invest their time into increasing the competitiveness of these already-existing industries. In other words, accentuate the strengths.

Balancing Silicon And Reality

The tech industry is held in high status by many throughout the world, so it is little surprise that politicians would try to attract this industry to their home districts. Unfortunately, that spending is often wasted on useless initiatives designed to build a startup ecosystem at the expense of the actual strengths of the local economy.

Instead of spending, try listening. Maybe the regulations around venture capital need to be reworked. Maybe hiring and firing for startups is prohibitively expensive. Maybe broadband networks need to be modernized. Every region and city in the world has something it is doing well that could be potentially world-changing. That will always be your best ticket to the high-growth lottery.

Along this line, realize that the most impactful change is going to come from bottoms-up ecosystem development. There is incredible money to be made in innovation ecosystems, and so there is rarely an incentive problem when it comes to the numbers. Often a change in culture is the first step to building these regions, and that will only come when the people decide it themselves.

Finally, and most practically, spend the time you would have spent on startups on the fundamentals of your region instead. Well-diversified economies with great public amenities are always going to be desired by the kinds of workers these types of industries attract. Random startup incentives are almost certainly less useful than, say, a great transportation system.

Part of the Silicon Valley ethos is learning to forge your own path. My advice to politicians is to do the same. A Silicon Path.

Featured Image: Danny Crichton

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Push For Greater State Surveillance Powers Could Have Chilling Effect On U.K. Tech Sector

The U.K. government is lining up a new piece of legislation to expand the state’s digital data capture powers. The incoming bill, the Investigatory Powers Bill, was announced in the Queen’s speech this week. It has not yet been published in draft form so specific details of what is being planned remains unclear, but in recent times the Conservative party has been banging the drum to expand the type and volume of captured comms data. The U.K. Prime Minister has even appeared to suggest that strong encryption should be outlawed.

The Telegraph newspaper this week suggested new powers to be outlined in the Bill will require companies like Google and Facebook to give U.K. intelligence agencies access to the encrypted conversations of suspected terrorists and criminals. That scenario presupposes Internet companies have the ability to access their users’ encrypted messages. While that is certainly true for some digital services with a sloppy attitude to security (or with business models that rely on data mining their users), others, such as Apple, claim they intentionally do not hold encryption keys — which presumably sets up a legal clash with security- and privacy-conscious tech companies and the U.K. government. Does the Tory government intend to make iMessage illegal? That really will be a *gets popcorn* moment…

The Tory’s prior attempt to expand the state’s data capture powers, the Communications Data Bill — widely criticized as a ‘Snoopers’ Charter’, on the grounds that it would have required ISPs to retain detailed data on web usage — failed to pass through Parliament owing to the lack of support from the Conservative’s Lib Dem coalition partners. The new Tory majority government has no such limitation. Former Lib Dem MP Julian Huppert, who lost his seat in the election this month but was a prominent critic of the Communications Data Bill, tells TechCrunch he has concerns about the surveillance powers that the government will be pushing for.

The concept of keeping track of every website everybody ever goes to, or of requiring ISPs to keep track of what you do on Facebook all the time are deeply intrusive.

“We’ll have to see how much they’ll try and throw in to it. When they were trying to push the Communications Data Bill, initially, the first version was incredibly broadbrush and afforded powers to do any data collection. They then admitted, during the process of our [parliamentary committee] enquiry, that actually there were only three things they particularly wanted. One of which was IP addressing matching, which there was good evidence for and we agreed to do… One was about requiring ISPs to keep track of web logs, effectively. So a list of every website you go to, and things like that. And the third thing was to have a power to require ISPs to keep track of third party information — so what you do on Facebook, what you do on any other site,” says Huppert.

“Those were the three things they said they wanted. The IP address matching basically was the only thing they had any evidence for. And it doesn’t involve any significant privacy intrusions but has huge advantages. Whereas I think the concept of keeping track of every website everybody ever goes to, or of requiring ISPs to keep track of what you do on Facebook all the time are deeply intrusive. And actually they couldn’t come up with any significant evidence of why it was useful.”

“There should be a clear piece of legislation that sets out what is ok, what is not ok, what the processes are for changing it. And it needs to be written with an acceptance of the need for accountability. And the need to have as much transparency as is consistent with the genuine requirements for operational work. But that’s not the approach that’s been taken before. It’s not the approach that the Home Secretary has previously urged. Maybe she will change her mind this time but I’m sceptical,” he adds.

“I worry that the Home Secretary will largely try to simply procure more powers for the state without justifying it or consider the count of balancing issues that there are. And certainly, like we’ve seen with the Prime Minister’s comments about encryption, those are huge threats to the UK technology sectors. And is definitely not the right way to proceed.”

Beyond the overreach and privacy intrusion of having the state require systematic logging of citizens’ web browsing habits and social media activity, another reason to oppose more expansive state data retention is that it makes the intelligence agencies’ job harder — given it increases the noise to signal ration, as Huppert notes.

“There’s no doubt that if you demand more things you have more data, and if you believe that the problem the intelligence services face at the moment is a shortage of data then it would address the problem. I think the problem is they don’t know what to do with all the data that they have. If you look at the killing of [U.K. soldier] Lee Rigby for example the problem isn’t that they have no idea. The problem is they have so much data they couldn’t prioritize it properly,” he argues.

“So unlike IP address matching where there really was a strong case, there isn’t a clear case here. Beyond ‘we can think of some situations where it might be useful’. And I think one of the things that people should look very very carefully at this is what is the evidence for any of the claims that are made. We certainly found the ones given initially were, I think the word we used was ‘misleading’.”

He also notes that the Joint Committee report on the draft Communications Data bill was hugely critical about the lack of data ministers were able to provide to support assertions that expanding data capture powers for counter-terrorism purposes would save lives. So that’s another thorny problem with legislation in this area — the government can and does shroud its arguments in claims of national security secrecy. Saying, in essence, ‘we need more data — but we can’t tell you why’.

And where the U.K. Parliament’s Intelligence and Security Committee should be playing a robust role in holding the government to account in such a sensitive area, Huppert says there has been further failure. So he’s also not putting much store in claims that the Investigatory Powers Bill will “provide for appropriate oversight and safeguard arrangements”.

“We do need better oversight. The intelligence services play an incredibly important role and we want them to be able to do their jobs in a clear and accountable way. But the ISC has not played that role,” he adds. “The Investigatory Powers Tribunal ruled against the government but the executive response was to do nothing and soon after deny that the ruling had happened. So I don’t have much confidence in that.”

One portion of U.K. legislation he does support overhauling is RIPA. Aka the Regulation of Investigatory Powers Act 2000, which regulates the powers public bodies have to carry out surveillance and communications interception. Briefing notes for the Investigatory Powers Bill state it will aim to “modernise our law in these areas and ensure it is fit for purpose”.

RIPA has been criticized for years for eroding press freedoms and sanctioning disproportionate surveillance — by, for instance, enabling police and local councils to spy on journalists. Or, in another instance, a local authorities to check if a family was living in a school catchment area. So there’s a clear need for ripping up RIPA and starting again.

But again Huppert has concerns about the government’s approach here.

“RIPA does need to be re-written. There’s no doubt about that,” he says. “It is an atrociously written piece of legislation… I think that everybody agrees RIPA is not fit for purpose. And that would include strong critics like myself but also if you look at some of the things that [Commissioner for the Global Commission on Internet Governance] David Omand has said… He’s argued for full public and parliamentary understanding of new powers… So I do think we need to have a re-write of RIPA but the correct way to do that is through the joint committee process, thinking about it slowly and carefully — not something rammed through by a new government eager to get on with it.

“And the intention, which the Tories had agreed to or stated publicly, was that [to get this balance] there would be a joint committee set up between both houses to consider how to re-do RIPA. And it does seem to me that they are jumping the gun somewhat on it.”

Huppert is not alone in his concerns either. This week a UN report dubbed encryption an essential tool for protecting the right of freedom of opinion and expression in the digital age. While Sir Tim Berners-Lee, inventor of the world wide web, called for checks and balances on government surveillance. Speaking at an Internet festival taking place in London this week he asked of politicians: “Can you show us that you can build a system which is accountable to us, where when the security services take the ability to look at private data, they do it in a way where it goes through a court, they do in way so my personal data is not going to be snooped on and when people do have their data snooped on it’s only used in a very serious process of tracking down organised crime and terrorism?”

The Investigatory Powers Bill is one of a series of initial bills announced in the Queen’s speech, which sets out the government legislative agenda for the new Parliament — so shoring up and expanding state surveillance and data capture powers is evidently front of mind and a clear priority for the new U.K. government. How that preoccupation with supporting and enabling greater state powers of intrusion on the one hand vs an apparent desire to modernize problematic older laws pertaining to interception powers plays out remains to be seen. But the government’s anti-encryption rhetoric suggests another serious clash of politics vs technology is incoming — the outcome of which will ripple out to affect both U.K. web users and their online behavior, and global companies doing business in the U.K.

The U.K. is often referred to as the most surveilled country in the world — typically a reference to the pervasive use of CCTV. At the last count there were estimated to be between 4 million and 5.9 million of these surveillance cameras in the U.K. (which has a population of around 64 million), although the vast majority are privately owned and operated — rather than being directly controlled by the state. (The number of publicly operated cameras in England and Wales is around 100,000.)

This month the U.K.’s surveillance camera commissioner warned that budget cuts are forcing councils to switch off CCTV cameras. But the idea that state surveillance capabilities will diminish because of shrinking government resources seems fantastical. Rather the role of providing state surveillance apparatus continues to be outsourced to private operators. So U.K. police and intelligence agencies obtain whatever CCTV footage they’re after from the private operator funding a camera in their shop or carpark or driveway — or, hey, even that in-home Dropcam or the lens on that life-logging wearable that never stops recording what’s going on around you. Imagine the power of state surveillance tapping into an expansive Internet of Things infrastructure that ceaselessly gathers real-time data on every point of human intersection — public and ‘private’.

When it comes to surveillance of digital comms data, this same outsourcing modus operandi used with CCTV is being applied by governments to Internet companies — with the U.K. government now preparing to push one of the most hawkish data retention agendas in the Western world, and that despite the censure that has been directed at systematic digital dragnets in the wake of the Snowden revelations. How hugely powerful commercial digital platforms respond to being co-opted as the coal face of state surveillance, where their user data is then subject to systematic mining by the state as a byproduct of citizens’ digital participation, continues to be one of the most pressing issues of our technology-fueled times.

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