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Posts Tagged ‘Innovation’

So you’ve got this busy life as well? Probably have quite a few gadgets and electronic devices around you. Sometimes you feel it takes too much time to learn to use the full potential of those devices. Sometimes they just make life more complicated than it should be, let alone updating those devices to the latest software. Of course if you have a Mac (as I do) and a Nokia phone, you know that there is no need to update the software (as it’s only possible with Windows). If you are having difficulties with these issues, think about your mother, and how she’s doing all that (she’s not).

The question of the day is the following: Why is managing life so complicated even though you have all these gadgets (or maybe because of that) that should be helping you? How should they help you?

Play a game?

Let’s envision a day how things could go if you would have what I call “Life Wizard”.

Let’s start with your mobile phone. It already knows

  • who you are
  • who you know
  • where you are (and where you should and should NOT be)
  • where you are going to be
  • who you communicate with

You wake up in the morning. It’s 6:45. You walk to the kitchen and take a quick look of your phone to see if you have any messages (yes, some people really do that). Now the Life Wizard knows that you are awake. It can also detect the movements and audio around it.

You grab your iPad, along with the breakfast and read the personalized news. There are certain benefits reading news on a device like this. It’s more local, more up-to-date and more relevant just for you. If your wife reads the news on the same device, the news may look different. And oh yes, even ads are customized for you.

While reading the news, an alert window pops up and wants to confirm something.

Are you are ready to leave in half an hour to a meeting marked in your calendar?

There are no worries with the weather, the traffic on the freeway is normal (traffic jam, as normal) so you may want to activate the carpooling in order to use the carpool lanes and avoid the bridge toll. You say “yes” and keep reading. Now the Life Wizard knows where you are going, what time, how and which route.

Rest of your family is now joining you for the breakfast so you put away the gadget. Time to talk person to person 🙂

Just before you leave the house, you remember that you don’t have a babysitter for the evening. No problem. You tap the screen of your iPad (you could really do it with your mobile or computer as well) and post an ad to Jobita. Outsourcing tasks to reliable people couldn’t be easier. The Wizard knows what you need, what time, where and what are the requirements for the candidates. Off you go!

You hit the road. Your navigator knows where you are going, and how to get the ride-sharing passenger onboard. Well, that’s because the Wizard told that, there is no need to enter the same information again.

The phone rings. It’s your Wizard calling. Well, using a mobile phone while driving is forbidden but hands-free audio is still ok. It’s about  weather this time, there is heavy rain ahead. So your passenger is going to be wet.

(more…)

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We are testing new kind of production for high quality video pitches in February, 2010 (in Helsinki).

The thing is as follows: many startups (and actually other companies as well) have a need to produce video clips for investors, customers and other stakeholders. Typically there are two main options here:

  1. Produce it yourself, typically ending up with pretty low quality production due to lack of time and experience
  2. Outsource the production to professionals, ending up with probably high quality video but it easily costs more than 10,000 €

We have drafted new way of doing this process.

  1. We are using professional television producer and editing facilities
  2. We have created “standardized” templates and scripts what’s on the video and what needs to be filmed
  3. Participating startup gets instructions how to prepare, we have on-stage coach helping and filming is done “as industrial process”
  4. Editing is done by the professionals and the results are going to be fabulous!

The scripts will take care of asking the right questions, focusing on the right things and getting the message clear. And unlike traditional “elevator pitch” done in one shot, editing will help to make the video deliver the message properly even if you would not be so experienced in doing this.

In this pilot we will create two videos: 100 seconds “teaser video” which the startup can distribute publicly and another, 5 minutes version with more details (for a financing round) and that is to be given to selected investor candidates only.

The cost per company is going to be less than 1,500 €, the potential value for these being much, much higher. As it is commonly known that investors only have few minutes per startup to make up their mind (Go or No-Go), this will greatly help to make the great first impression. The second video sent for those gives more details and then you’d be already arranging a meeting.

There are six places available for the first session, half of them are gone already. If you are a Finnish startup  (or know somebody who is), and are interested in this then hurry up. Deadline is around beginning of January.

You can see some production examples (for television, not startup pitches yet) here.

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Yesterday I tweeted about a simple question.

So far I’ve received 15+ excellent comments.

Initially and based on discussions with some fellow (active) entrepreneurs I was of an opinion that we are mainly missing the people (entrepreneurs) to make the idea into action.

This line of thought was justified as we all know there are more ideas than what we can implement. Many of the ideas should, honestly, never be implemented. And many of them are just copycats, yet another facebook-youtube-socialmedia clone which is a pity. Even after these taken away there are many more great ideas than people to implement them. In this light it seems almost funny how desperately (still) some people value just the idea (or an idea in PowerPoint slides).

On the other hand many people, again initially, were of an opinion that you can actually find money if you have a really good idea. The money just may not come from your home country, in this case Finland. There is no real Venture Capitalists left in Finland, and the angel investor community is not very large nor truly active, yet. Luckily at least Veraventure is doing good work to get this changed.

I made earlier a little poll which says many (academic) people skip entrepreneurship as they either don’t have a business idea nor a team.

This week a Finnish business magazine Kauppalehti Optio published a cover story of 80 young people born in the 80’s, the people who are our future and who are going to take over. Guess how many of those persons were entrepreneurs? One. There is hope that some of those classified as “students” still could become entrepreneurs…

The responses to my tweet mainly said, however, that we are missing money and financing. There were also good comments about timing and luck, no matter how good the idea is. For example our idea of mobile carpool service (year 2002) was given no serious attention in the Finnish VC community (luckily the angel investors in Finland, Italy and The Netherlands trusted us) but this year two young students won Venture Cup with the idea of mobile carpool. So it’s also about timing, seven years later. See also a briefing to the subject here. As a side note I would say that if Nokia really would like to “think different”, they should use this Ecolane technology to enter mobile carpool business before Google or Apple do. Disclaimer: I’m a shareholder in both of the companies mentioned.

One thing what I’ve been wondering – if having not enough entrepreneurs is NOT the problem – why as there so little active serial entrepreneurs? I mean those who have tried at least once, possibly succeeded and become a driving force of another start-up with all that experience? Many of those people seem to be now in a more convenient “advisor” role. As one of the active entrepreneurs I respect, Marko Parkkinen, said this week: “After failing in the recent start-up, I was at one point almost desperate enough to become an employee, but luckily I run out of battery in my mobile phone before I said ‘Yes'”.

As one active entrepreneur friend of mine said, “At the first stage of ‘making it big’ the lack of true entrepreneurs makes the start-up market very small. Money matters only after a start-up has started its journey – if there was all the money available, but no real motivation to make ‘my/our company big’, I doubt there would be much success.”

However, I do belive that funding is a key element in building new success stories. Early this year  we start building a new initiative code named “GrowthOS“.

“GrowthOS is an ecosystem for entrepreneurs to build online presence enabling them to receive funding from one or more private investors as well as facilitate all the activities before and after the investment has taken place. Extensive use of web-enabled communication, reputation building and other tools offer a unique platform for private investors to follow, communicate with, invest in as well as follow or participate the development of those startups they mostly believe in.”

If you are interested in the GrowthOS ecosystem (it’s going to be Europe-wide), feel free to contact me.

But coming back to the main question: “Which one of the following is the most critical and the least supplied resource: ideas, entrepreneurs or money?”

What do YOU think?

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Movie Production

Movie Production

I recently had a very interesting discussion with Antti Sipilä, a producer from Luoda Production Oy. As he is a professionally trained movie producer, and I’m myself coming from the software industry, we were comparing the similarities between these industries. The question was, can the software industry learn something from the way movies always have been produced?

The first question is why should we even discuss this matter, what’s wrong with the software industry anyway?

Not necessarily anything. There are few interesting issues here, however:

  1. Do we utilize a model where we can get the best possible resources for each production (software project) we do?
  2. Do we respect and motivate the individual talents needed for a production… a project, to achieve best possible results in the given timeline?
  3. Why doesn’t the software industry respect deadlines?

Let’s start by describing the way how the movie industry works.

The first group in our focus is called the scriptwriters. This profession is specializing in writing the scripts, the actual idea of the whole thing. Sometimes the script is based on a book, sometimes not. You can think about these guys as the ones who write Business Plans in the software industry, in a way. The scriptwriters themselves do not go after each script on their own, in order to produce a movie, but they sell it to somebody. There are specialized agents shopping for these scripts. The buyers typically pay few hundreds of thousands of dollars for a good script. The buyers then develop these scripts further, and it can take years before a script goes further, if at all. Sometimes the scripts are even combined in order to create one better script.

When a script is ready for the next step, it is sold to a Movie Studio. It’s the factory that will produce the movie. One team can produce about 20 movies per year, taking care of the production and marketing alike.

Producing the movie needs talents, many different kinds of talent. And the talent set required for a movie can be each time different. The studios do not actually keep all the possible talents on the payroll, nor utilize only the talents they have on their payroll. They hire the actors and all the other talents and skills (such as light expertise) on a per project basis. There are specialized Casting Companies who find and contract these talents. Many famous movie stars have their own agents who take care of this process on their behalf.

The movie production can start when

  1. The script is in the shape it can be turned into a movie
  2. There is a movie studio producing it
  3. There are all the actors needed to implement it
  4. The studio has arranged financing for the movie, which could be done also with crowdfunding model

Each movie production is (or should be) a master piece of project management. As each actor and other resources needed cost money all the time, all the steps are well planned and go in parallel, including marketing and distribution. If there are unexpected changes, as there always are (like rain for a scene meant to be sunny), changes are done on the fly to keep the train going. Deadlines are respected, this is built-in feature of the industry. If some person will not do her task in the deadline agreed, she will not be respected by the others. Actually, nobody really wants to be the one who caused the delay of the production, and that also motivates everybody. Being will prepared for one’s role is always part of the success, and people take this seriously. The Crew Commitment is important!

On the other hand, the timelines (often defined by the Assistant Director) must be realistic in the first place, which takes experience to master. We discussed this long time with Mr. Sipilä and it was obvious that the respect of the deadlines, intensity of team work and mutual trust and respect are the core values for any successful movie production. Individual talents are, as we all know, respected highly and this is indicated for example by showing a long list of them at the end of movie. It’s like the Hall of Fame, and you want to be there.

As the movie industry is “hit driven”, the success or failure can often be measured for example by the sales of the first weekend. There is of course a long tail and other longer term revenues, but this first weekend often gives indication how it will go. The marketing and distribution actions are well planned and executed, nowadays utilizing many different media channels, like the Internet and mobile phones In order to control this the movie studios often own the delivery channels (like movie theaters and ticket offices) in many countries.

So what can we learn about this concerning the software industry? That will be covered next week, stay tuned!

… and comments are very welcome, thanks!

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Crowdfunding puts people and money together

You’re an entrepreneur, raising money for your start-up but you’ve hit the wall? Looking for angel round funding in the range of 50,000€ to 200,000€ is not easy if you don’t already have a working product along with some cash-flow and growing number of other requirements. And Venture Capitalist aren’t interested anymore. Some people even say the Venture Capital (VC) model is broken. That may not be exactly true. They just aren’t investing in your start-up. Or maybe in no start-ups at all.

The financial crisis has had a severe impact on the venture capital industry and the funds have largely stopped funding higher risk areas of innovation. Many venture capital companies have woken up into a reality where the VC model is just not working anymore (and some of them focus on other things, like maximizing the management fee).

According to research by Deloitte, funds are reducing their overall investment, supporting existing portfolio businesses and shifting investment focus to later-stage businesses that are either profitable or close to profitability.

“We’re seeing reduced investment levels as firms either invest smaller sums in very early-stage companies, or invest traditional sums in fewer and much later-stage companies. The middle ground has been largely vacated.”

On the other hand, there are new kids in the block who can potentially redefine the game. People like Paul Graham (Y Combinator) as well as Marc Andreessen and Ben Horowitz (Andreessen Horowitz Fund) are introducing new funding vehicles for certain kind of start-ups. The problem is, that is not enough, and they are quite local. What if your start-up is in Europe or in Asia?

Recognise yourself from the above? Don’t worry, raising money for a good start-up is still possible. It just may come in smaller amounts from more sources. It’s now called Crowdfunding. And it’s not only for start-ups, actually.

Crowdfunding in a Nutshell

Crowdfunding is an alternate approach to get investments for a start-up. It’s not actually a new idea as it has been developed over the last decade, mainly in the film and music industries. Unlike traditional models which rely on large contributions from one or two institutions, crowdfunding is based on raising small sums from many people. Instead of raising 300,000€ from three angels (100,000€ each), you collect 10,000€ from 30 private investors.

Crowdfunding isn’t going to replace venture capital, private equity, debt finance or stock-markets. In many ways it’s an evolution of “friends and family” and “angel” models, just operating with greater transparency and on a larger scale. It may even turn out to be an essential and complementary part of the financing tools needed to cultivate and grow new businesses.

But What’s the Actual Problem?

Number of traditional investors interested in start-ups who are looking for money in the range of 50,000€ to 500,000€, has decreased rapidly. It is also true that in today’s world more can be done with less money (“the old 5 Million euros is nowadays 500,000€). Investments in this category are high risk investments with potentially high return. But most of the companies will fail. That is only one reason why traditional investors are moving (and have already moved) away from this category. When alternate investment vehicles are invented to fill the gap, also the traditinal investors will benefit as they can this way have more companies in the funnel for additional investments.

Is Crowfunding The Solution for this?

A successfull crowdfunding solution has to solve many problems in order to be a feasible alternative for the start-ups and investors alike. There is an obvoius need for process simplification (de-mystification) and standardization concerning documents such as Term Sheet and Shareholders’ Agreement. An initiative in this field already introduces a Standardized Term Sheet acceptable by both entrepreneurs and investors. Trust and transparency are also probably some of the biggest issues. How do you create trust in the online world? How do you manage the communication with so many stakeholders? There will most likely be new innovative solutions for all of these challenges in the near future. The change is inevitable. Additionally, private investors can invest 5,000 € euros in ten start-ups, instead of putting 50,000€ to one single company, effectively decreasing their risk as well.

Case Trampoline Systems

Trampoline Systems, a London-based social analytics business, is already using crowdsourcing approach to finance its growth. Trampoline is raising £1 million from up to 100 investors with a minimum stake of £10,000. This is most likely the first time a technology business of Trampoline’s scale has used the crowdfunding approach. The effort has been quite successful as in the first two weeks they raised £330,000.

Not everyone can become a Trampoline investor. The Financial Services Authority (UK) puts some limits on what you can cannot do. For example, one has to be certified as high net worth individual or as a sophisticated investor (details are here).

What’s Next

I’m expecting to see things happening in this space within a year or two. There is no reason why this could not happen (despite possible obstacles set by authorities, for example). There are a few interesting additional aspects into this. For example, having so many people as investors may enable you to use them as advisors or contact makers.

So what do YOU think about this?

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Innovation in the big corporations is in crisis. This is obviously no news to many of us. Either there are not enough innovations in the company (typically due to corporate culture focusing on maintaining the Status Quo) or alternatively, there are too many of them. This is the case with Nokia which has in the recent years spent hundreds of millions of euros (if not more) in inventing new ideas, researching many of them, trying out some and patenting quite a few. For one reason or another, many of them have got “no-go” decision for any further action.

Technopolis Ventures, a subsidiary of a Finnish public real-estate corporation, has made an agreement with Nokia to offer some of these left-over innovations for Finnish Start-ups in Oulu and some other selected cities in Finland. Sounds too good to be true? Read on!

Nokia Outsources Finding the Golden Eggs to the Finnish Startups

Nokia Outsources Finding the Golden Eggs to the Finnish Startups

The project itself has been launched already some time ago in Oulu, the home city of Technopolis. Today there was the first marketing event for the project in the capital area. The concept is aiming to find an alternative way to commercialize innovations, the traditional way being focusing on inventing new technologies within VTT (state-owned research center) or in the universities. The new idea is find a way to commercialize ideas born within large companies (such as Nokia).

The idea is good, maybe even excellent. The project is taking place in next three years (2009-2011). The total budget is 5 M€ and is paid by Tekes, the participating cities and companies. The amount of money seems somewhat small if they really aim to get 100 projects/startups involved.

The ideas now available cover some 60 Nokia-selected  innovations in the fields of Near-Field Communication (NFC), Environment, Health Care, Location-Based Services (LBS), Mobile Security and Future Internet Services.

There’s a catch, however. There is no free lunch, right?

The companies willing to take advantage of this must have a Finnish VAT number. Technopolis Ventures will match the companies and available innovations in the Nokia innovation pool. After evaluation and screening by Technopolis Ventures, and signing the NDA and contract with Nokia, the funding can be applied from Tekes. It is currently unclear whether the company actually MUST look for Tekes funding or can it also do without.

There were few interesting questions asked in the event today. Here are some examples:

Q: Can I get in touch with the original inventors of an innovation at hand?
A: Maybe, it depends.

Q: Can we see the list of the innovations available?
A: No, you have to provide some keywords describing your own idea (or company business) and we will see if there are matches with the available innovations.

Q: Inventing new ideas and innovations is easy. What about Go To Market strategy and help concerning that?
A: As Finland has one of the best innovation systems in the world, it will take care of that… (Note: This answer was given in a sarcastic tone)

Q: As Nokia keeps parallel rights to everything they “give away”, does it mean that Nokia can at any later time do the same thing than the startup?
A: Yes.

Q: Are there any restrictions concerning the exit phase of a company building its business on one of these innovations?
A: Yes, for example Nokia may forbid selling the company to a Nokia competitor (definition of this remained unclear).

You can also take a look of the Presentation Slides (in Finnish).

Nokia Technopolis Innovation Mill (Process)

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