India’s nearly 100 million smartphone users are beginning to shop online at a pace that the country’s biggest e-commerce companies such as Flipkart and Snapdeal are expecting the mobile traffic to surpass their desktop user base anytime this year. And as these e-commerce marketplaces shift their models to woo customers buying on mobiles, Paytm — a mobile shopping app —… Read More
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Whether it’s the 16 mobile apps in Botswana that Jim Goetz mentioned in his take on Facebook’s acquisition of WhatsApp; the launch of IBM’s new innovation centers in Lagos and Casablanca; Microsoft’s partnership with three incubators in Africa, or the African Development Bank’s recent summit on how to engage the private sector more effectively, African entrepreneurship is on investors minds.
In fact, 2013 was the most active year for technology investment on the continent, according to data from CrunchBase.
And Africa’s community of entrepreneurs is only growing. Those IBM Innovation Centers in Lagos and Casablanca will give founders of new tech companies access to IBM technology and expertise around big data, analytics, and cloud computing, as well as skills training and business and marketing support.
“In the last decade we’ve seen a lot of transformation [in Africa]. There’s increased stability and a lot of bandwidth that’s come on line, tremendous economic growth, plus a lot of infrastructure being built and a lot of foreign investment,” said Solomon Assefa, an IBM researcher and vice president of Science and Technology.
Assefa, who also currently serves as a Program Manager for Growth Markets and Strategic Initiatives in Science and Technology at IBM, said the goal is to create an ecosystem where entrepreneurs can create new products using existing technologies. “We believe Africa is vital and we think IBM is going to be very very essential for productive growth and development.”
Other executives at America’s largest corporations agree. Microsoft, which launched its 4Afrika program in February 2013, has recently instituted a new lending initiative which selected its first five startups from across the continent earlier this month.
The program began in Kenya, Uganda, and Nigeria, but Microsoft expects to expand across Africa with the grant program and partnerships with African startup incubators, according to Amrote Abdella, the director for VC and Startups in Microsoft’s 4Afrika Initiative.
“The criteria we use [are] based on a couple of things: Is this a disruptive technology [and] is it relevant to Africa?” Abdella said. “We have a couple of really fast growing sectors where technology will change the way we operate [like] healthcare, education, and agriculture.”
While Microsoft’s investments in the continent will be in the tens of thousands to hundreds of thousands, global technology investor Intel Capital is in the early stages of making multi-million dollar bets on continental African startups.
“The growth we’re going to see here is tremendous,” said Marcin Hejka, a managing director for Intel Capital and head of its Eastern Europe, Middle East, Africa and Russia/CIS investment group. “I’m quite positive about that because we’ve seen it before in other emerging markets, in Russia, in Eastern Europe, In Latin America and in China.”
Hejka would not disclose how much Intel Capital is willing to commit across the African continent, but would only say, “This is the message I give my team in Africa: behave like there is no limitation [on capital].”
Intel has two investments in Africa and has made three commitments to its portfolio since it opened its office in Lagos last year. In December 2013 the firm committed to follow-on financing for Rancard Solutions, an Accra-based company which sells mobile content delivery software. “I’m absolutely certain we will see multi-billion exits in the technology space in Africa in a couple of years,” Hejka said.
Africa’s technology revolution is a function of the dramatic rise in access to cheaper bandwidth and the proliferation of mobile devices and the development of a home-grown market for content and commerce.
“The availability of bandwidth in Africa increased by a factor of 200 over the last two years, and now this bandwidth is propagating inland from the coast” said Intel Capital’s Hejka. “Furthermore, wholesale prices of bandwidth have dropped 90% in the past two years.”
Indeed, the development of Africa’s technology infrastructure and ecosystem is happening at breakneck speed. “Africa is getting everything at once… and there might be a risk of it being too much at once,” said Mbwana Alliy, the founder of the seed-stage investment firm Savannah Fund. “A lot of things are happening at once: smartphones and undersea cables at once and private equity investors and startup accelerators at once.”
The startups in Alliy’s accelerator have managed to ride the surge of interest. Five out of the ten companies he’s backed have already raised subsequent rounds of financing. “Is there a Series A crunch that I’m experiencing here? Not really,” he said.
International investors, both private equity firms and technology-focused investors have already staked claims across the continent and are backing new companies.
Private equity firms like Actis, Abraaj Group, Helios Investment Partners, and Emerging Capital Partners have been active in the market for years, but tech investors like Rocket Internet and Tiger Global Management have recently joined the fray. Some of private equity’s heaviest hitters like The Carlyle Group are investing in the continent now. Rocket alone will commit roughly $200 million to its African Internet Holding portfolio company.
Africa Internet Holding, which is backed by Summit Partners, Rocket, and Millicom International Cellular, is taking the platform approach to building African clones of successful internet enabled businesses like Amazon and others.
“The reason why this is happening is because Africa is a very different place for the internet than anywhere else in the world,” said Jeremy Hodara, the co-Chief Executive of Africa Internet Holdings. “People in Africa will directly buy online [and] if you take all the big internet businesses, we can do them in Africa and we can do even more because there are no brick and mortar competitors.”
Not only are African startups building the internet infrastructure for Africa, but they’re also building the physical infrastructure to support their businesses at the same time.
“There’s a lot of wealth in Africa. A whole lot of wealth in Africa,” said Chris Folayan, the founder of MallforAfrica, another e-commerce startup focused on the continent, which is backed by an undisclosed multi-million dollar investment form Helios Investment Partners.
“[And] Nigerians even today can not buy items directly for over 90% of the global e-commerce sites,” Folayan said. “They have the funds and they have the means to buy these items, so why not create a platform where they can buy these items?”
MallforAfrica has done just that. Using the company’s website or mobile app, shoppers can browse directly on web sites that do not allow consumers on the continent to buy goods, buy them, and have them delivered through MallforAfrica for a fee.
There are 70 sites which have partnered with Folayan’s company, representing some 7.8 billion items. Since its launch the company has processed 25,000 transactions.
“You have all of these things in place that literally create the foundation for a very advanced infrastructure,” Tofayan said. “When those things are in place you can see this is a continent and [Nigeria] is a country that are ready to play ball.”
Photo via Flickr user Jon Gosier
Article courtesy of TechCrunch
Apple is sending out a survey asking shoppers who have recently purchased an iPhone to provide some feedback about their purchase and their experience with the device. TechCrunch ran through the survey, providing sample answers to determine the outcome, and found that there were a few areas in particular Apple wanted to hear more about from its customers.
The survey is relatively long, taking around 10 minutes to complete (probably a bit longer if you’re really focusing on the answers). One area that indicates what Apple might be looking to divine with this questionnaire is the section that you get into if you tell the polling process that you considered buying an Android phone before settling on an iPhone. As you can see below, Apple is very interested in finding out why you might be considering going over to the Android side.
Apple also asks which Android OEMs that survey participants considered buying devices from, and in a later section, what features and smartphone characteristics (design, build, battery life) were important to their purchase decisions, as well as how influential they were. The picture painted is of an Apple doing a lot more direct-market research than it ever had a reputation for in the past. Apple founder and former CEO Steve Jobs was quoted multiple times effectively saying Apple didn’t believe in market research as a concept, in fact, but that’s changed under Tim Cook, as Apple partnered with a survey and data collection firm last year for iPod-related feedback. An in-depth post from NetworkWorld also reveals that Apple conducts surveys on products frequently for “high level” internal use, and has done so on multiple past products.
Apple also asks about iPhone 5s-specific features, feeling out what particular part of the iPhone 5s resulted in a purchase decision over other models in its lineup. Essentially, it lists the same key elements that it does both on the iPhone 5s feature page on its homepage, as well as those it drove home during its iPhone launch event last September. One area it pops out for additional feedback is Touch ID, the fingerprint-based unlocking mechanism that operates via the iPhone 5s home button.
Since the iPhone 5s launch, there have been reports of Touch ID accuracy changing or degrading over time, sometimes tied to seasonal shifts and other possible causes, so Apple could be looking to get a better sense of how iPhone buyers are finding the tech post-purchase. It’s also likely looking to figure out what areas related to Touch ID it can improve to boost customer satisfaction with the tech in the future. Apple also asks for feedback about the iPhone 5s camera.
The survey in question was sent to someone who bought an iPhone on December 6, and a MacRumors user reported receiving the survey this AM after a purchase last month as well, so recent purchasers might want to check their inboxes to see if they’ve also been selected to take part. We’ve contacted Apple to see if they can provide any more info about the survey process and its goals, and will update if we hear more.
Scan has raised $7 million from Entree and existing investors, including Menlo Ventures in its Series A round. It’s also announcing its new Scan to Pay service, which allows people to purchase items or donate money via a quick QR-code scan, regardless of whether a person — or even a venue — is present.
Scan to Pay is at the heart of the need for more funding — and the story of that funding is interesting, as well. Scan founder Garrett Gee credits listing Scan on AngelList with getting this round done, and getting it done so quickly.
“We did not know who Entree capital was, they did not know us,” says Gee. “They found us on AngelList and gave us a call. After a 20-minute phone call they liked us enough that they flew us to London. And within 24 hours, the deal was done.”
Gee says that when they flipped the raising switch on AngelList it garnered them 40-50 calls or meetings within days. But though the deal was quickly done, that likely had a lot to do with the fact that Scan had deals waiting at home. Its list of current investors isn’t anything to shake a stick at, and sometimes names do open doors or help to quell worries.
Scan has previously raised $1.7 million in seed funding from Menlo Ventures, Google Ventures, Charles River Ventures, Start Fund, Social + Capital Partnership, Transmedia Capital, Ludlow Ventures and angels Ariel Poler, Naval Ravikant of AngelList, Jim Pallotta of Raptor Group and Troy Carter. Some of those investors like Menlo are back in this round or taking their pro-rata.
The pitch that the team went to London with had a lot to do with Scan to Pay and its potential to enable payments in a way that’s significantly different than the methods offered by providers like Square or PayPal. And it’s doing that throughout the more than 50 million installs of its mobile apps.
Scan to Pay is deceptively simple: someone who wants to collect money — say, to sell merchandise or collect donations — signs up for Scan and generates a QR code. That QR code can be attached to a specific item at a fixed price or a range of prices for things like a donation to an organization.
That QR code can be scanned by any QR app, and iOS 7 now even has APIs for this so expect to see it pop up in more places. Once you scan it, you’re presented with a way to enter payment information and check out. That’s it, you’ve paid.
Gee says that over 175K businesses have registered and have an active QR code or campaign out there. And Scan continues to generate about 500K QR codes a month. On the consumer side of things, there is about a 33-35 percent retention rate on downloaders grabbing the app and becoming actual users.
There are also some interesting stats around the scanning of barcodes versus QR codes. On iOS, says Gee, around 65 percent of scans are of QR codes, which are generally attached to some sort of action. On Android, it’s exactly the opposite, with 65 percent of users using it for barcode scanning. It’s hard to draw any hard conclusions from this, but the primary use of barcode scanning is for price checking, so perhaps Android users are more actively using devices for shopping help.
There are advantages to scanning the code with Scan’s app, of course. Payment information will be saved in an account, allowing you to subsequently check out very quickly. On scan of a code, a user enters a four-digit pin to confirm the payment with stored payment info.
The advantage to this kind of payment flow is that there are no humans required on the sales end.
This is where Scan’s approach flips the models of players like Square or PayPal’s recent QR entry. Instead of requiring an interaction where a sales clerk will scan your barcode to initiate payment, Scan lets you initiate and complete your own transaction, completely independent of staff or location. The power of this is pretty insane once you start parsing some scenarios.
Here’s one for you: You’re walking down the street and see a posted flyer for a concert with a Scan-generated QR code and a price. Hey, $11 for tickets doesn’t look too bad. Scan, enter your pin and boom, you have tickets for the concert and a confirmation email. No additional apps, no payments flow, no entering information, no websites, no sales staff. Just zap and pay and done.
Now another scenario: You’re reading a magazine and see a fantastic watch; you know you have to have it. There’s a Scan code right there on the page, but it isn’t one of those “send you to another page to click on some links to enter some info to maybe finish the payments flow and purchase the item”-type codes. Instead, you scan the code, enter your pin and you now own the watch, which shows up in a few days.
The potential here is pretty massive, and it comes from a simple flip of the model that everyone else seems hard driven to make work.
There are also plenty of scenarios involving donations and nonprofits that work really well with a code to scan and pay a variable amount. If you have fundraisers staffed by volunteers or widely distributed teams, for instance, all they need is a QR code from Scan to enable payments. No special accounts, no handling money or credit card processing on site. Simple. And there seems to be a lot of room here to craft new uses of the payment codes.
Gee points to Zappos as an example of how companies are already thinking of new ways to use the Scan QR payments. Zappos has noticed over time that tons of customers filled up their carts with merchandise but never completed the payments flow. There could be a lot of reasons, but the complexity of the flow or reluctance by customers to enter payment info in yet another site are easy picks. Instead, Zappos thought that it could display a Scan code right on the screen for people to scan, paying with their pre-set info.
Though we might laugh about projecting a QR code on one computer to scan it with another, that scenario is actually more applicable to the real world than you might think.
The Philippines, for instance, has an incredibly low penetration of PCs in the home. But almost 4 in 5 Filipinos own a mobile phone. Much PC use is done at Internet cafes in urban zones, where people may be happy to browse and “add things to their cart” but might be reluctant to enter personal information, especially payment info. Instead, they could proceed through the entire process to the point where payment is required, then scan the code displayed with their personal “PC” smartphone and, boom, transaction (safely) complete.
If Scan were a public company, the risks section would be absolutely packed with references to competing payments giants like Square, PayPal, Visa, Amazon and more. But there is a distinctly unique approach being taken here, one that flips the traditionally accepted model on its head. And sometimes that’s all it takes to get a toehold.
Article courtesy of TechCrunch
In order to put our money where our hype is we like to take a closer look at Kickstarter products we’ve talked about on the site. Today we have the Bohemian Guitar Company’s “oil can” guitars, a Kickstarter project that raised $54,000 – $20K over their $32,000 goal. The company, based in Georgia, just started shipping their cleverly-designed gitfiddles and I got the chance to try one out.
The guitars have a single pickup controlled by a set of volume and tone dials. A wooden bridge at the bottom and a nice maplewood neck that continues into the oil can body. The body itself is ostensibly recycled and repainted and adds an excellent bit of twang to your picking. The machine heads are serviceable – the ones I tested were a little tight – and the pickup, while simple, seems to be nicely placed for resonance and sound quality.
How does it sound? Take a listen. Excuse the quality here – I’m not a good guitarist.
Generally you will get a twangier sound out of this guitar and it resonates enough to even act as a sort of steel acoustic. I’m positive a superior guitarist can use the unique body to positive effect. I showed it to Charlie Appicella of Iron City Jazz who found it playable and light, if a little too cute for his purposes as a professional jazz guitarist. That said there’s no shame in bringing this thing out especially if you’re a surf or country band and want a little Bo Diddley-like authenticity.
The guitars now cost $299 and a portion of the proceeds go to charity to help spread a love of music in children. It’s a noble goal and it looks like the team, Adam and Shaun Lee, have succeeded in building a business with the Kickstarter push. Most of the models are currently sold out and they’re working on their Boho line – complete with hipster-ish can designs – as we speak. It’s an interesting end to a compelling and surprisingly cool project.
Article courtesy of TechCrunch
Editor’s note: Peter Relan was VP of the Internet Division at Oracle, founding head of technology at Webvan from 1998 to 2000, and founder of the YouWeb Incubator program in 2006 and the recently launched 9+ accelerator program. Follow him on Twitter @prelan.
Webvan is well-known as the poster child of the dot-com “excess” bubble that led to the tech market crash in 2000. Business schools around the nation study Webvan’s overly ambitious rush to the biggest IPO to date in Silicon Vally, as a prime example of what to avoid doing while scaling. Ironically I recall guest teaching the first case study on Webvan at Stanford, the day before the market crash in 2000. While it’s true that the impatience to go public helped steer Webvan off a cliff, the once darling company made two other critical, but often overlooked mistakes.
Are those mistakes being repeated a dozen years later in the slew of activity — even excitement — in the home-delivery space? If not, why? Is it simply a matter of investors needing a decade to reconsider home-delivery plays? Or is there more to it? Are today’s home delivery specialists realizing that they can avoid these mistakes to slowly but surely conquer an untapped market?
Webvan’s go-to market strategy in each city was: the quality and selection of Whole Foods, the pricing of Safeway, and the convenience of home delivery. In other words, it was a mass-market strategy (unlike Whole Foods which is an upmarket strategy). The target audience therefore was not selected to be “price insensitive.” If you advertise yourself at Safeway pricing, you will attract a price-sensitive audience. Whereas those who go to Whole Foods are more price-insensitive: They believe they are getting a higher quality of selection and product, so price matter less.
The customers who would have made Webvan profitable were those who said, “Wow, I can get quality selection and products delivered to my home: heck I’ll pay anything for that.” Yes, that’s a smaller audience than a mass-market audience, but after all, even smartphones started out as a tool for stockbrokers and corporate executives before becoming mass-market devices. Webvan should have priced at least 30 to 40 percent higher and ignored the customers who didn’t want to pay those prices. A company must be clear on what it is providing and price for it – Webvan was providing a luxury; an ability to order sushi and organic fruits directly to the home, and thus it shouldn’t have tried to compete with Safeway’s prices.
Webvan decided to build its infrastructure from scratch. I was responsible for the hundreds of engineers who built the software algorithms to make five miles of conveyor belts in our Oakland Distribution Center (DC) transport 10,000 totes around the DC daily. After conveying the item to automated carousel pods, which would spin like juke boxes to transfer the item in question into the tote, the entire process would rinse and repeat until the order was completed and integrated at the shipping dock. Additional real-time inventory management algorithms would make sure that if a customer ordered milk on the website, it was currently in stock; software algorithms would route delivery vans to multiple delivery stops while minimizing drive time; and software on Palm Pilots in drivers’ hands would deal with real-time delivery confirmation or returns.
Combining mistakes Nos. 1 and 2 was a dangerous cocktail of the lower margins of mass-market pricing, and colossal capital expenditure associated with complex infrastructure. This cocktail, combined with mistake No. 3, pushed Webvan over the edge.
This is the more well-known and final mistake. Most people view Webvan’s capital raise of $800 million as excessive and ill-spent. The pressure to “grow big fast” in those days blotted out all other considerations. This desire for massive, immediate growth was so intense that we started launching in new cities on the thesis that the unit economics of home grocery delivery would be profitable. Our DCs and vans rolled out in the Bay Area, Seattle, Chicago, Atlanta, and each city’s capital requirement was well over $50 million just to start. We touted our 26-city expansion plan, signing a $1 billion Bechtel contract to build several state-of-the-art warehouses worth more than $30 million each.
Today the most popular acronym in the valley is MVP (Minimum Viable Product). In the dot-com era it was GBF, or Get Big Fast. The problem was the Bay Area model was taking a long time to iron out, and in the meantime, all our cities were burning through the cash. Our entire strategy depended upon the reassurance that the Bay Area model would inevitably become successful. Maybe it would have eventually succeeded, but we would never find out: With the market crash of 2000, capital dried up and the company was starved into a forced asset sale to Kaiser Permanente in 2001. The infrastructure in Oakland, as well as the software systems, were bought by Kaiser in order to deliver drugs and supplies to its hospitals.
Instacart and Postmates are both avoiding the infrastructure model mistakes. They are leveraging the existing infrastructure of grocery stores, not building their own infrastructure. They focus on two areas, delivery and customer service, and concentrate their resources on excelling in those departments. Good start: Mistake No. 2 avoided.
Instacart prices its items very cleverly. Rather than charging a delivery fee, they simply “mark up” the prices on the items so the “real” prices are not visible. In a certain sense they are following the target audience and pricing mantra I think Webvan should have used: They are focused on convenience-oriented customers who will ignore the mark-ups. Those who follow and remember the hundreds of prices of grocery items are not likely to be their target audience. Plus they charge a small delivery fee of $3.99, which in itself is not enough to pay for the unit economics, but along with the price mark-ups it probably works. And they have an Instacart Express model like Amazon Prime, which makes sure that if you order enough and subscribe for $99/year, delivery is free. Sir Michael Moritz of Sequoia was on the board of directors of Webvan, so he knows the math well and is an excellent adviser to Instacart.
From what I can tell, Postmates doesn’t directly mark up prices, but it recognizes that delivery economics is very central to overall unit economics. So they charge a delivery fee based on their proprietary algorithm for determining how “expensive” your delivery will be. It’s a classic “service platform” model, like AWS almost, where they build in a margin per delivery requested. That way they won’t lose money on orders overall, even though any particular order may not be profitable.
Instacart and Postmates have studied the history of home delivery. They are avoiding mistake Nos. 1 and 2 that Webvan made. Now only two questions remain. How profitable will their models be? And how quickly will they expand nationally. Stated otherwise, will they avoid mistake No. 3? Time will tell. I would love to hear your opinions.
Article courtesy of TechCrunch
The names are pretty self-explanatory — they’re both Pinterest-style sites where users can save, share, and browse adult content.
It turns out that there are several Pinterest-inspired for porn sites, including sex.com and Snatchly. Pin-Digital founder and CEO Christian Thorn suggested that until now, there hasn’t been “real social media for adult content”.
The Pinterest model is one that makes sense for this kind of content, he added, because it’s “very visual” while also having an aspect of social following. As for what will set Thorn’s sites apart, he said he’s hoping to turn them into the place where porn stars can connect with their fans, and he has already signed one model, Vanilla DeVille.
He added that the funding includes his own money, along with undisclosed angel investors. He admitted that he has faced “resistance” from traditional investors, but he said the company is exploring other models, such as trading media (i.e., promotional ad space) for equity.
“I see it as any other business, but I definitely think there are many taboos to break,” Thorn said.
By the way, I checked out both the PinSex and PinGay sites, and I did it from the office. (Why? Something something research.) So if this turns out to be the last thing I write for TechCrunch, now you know why.
Article courtesy of TechCrunch