05.25.22

How early stage startups can deal with the changing VC landscape

BY Fast Company Contributor 3 MINUTE READ

Benchmark’s Bill Gurley tweeted in April 2022, “An entire generation of entrepreneurs and tech investors built their entire perspectives on valuation during the second half of a 13-year amazing bull market run.” With VCs raising larger and larger funds, startup founders had become accustomed to certain key performance indicators (KPIs) set by VCs who were simultaneously providing mammoth funding rounds. The global economic challenges, alongside a volatile stock market, has resulted in a fundamentally new VC marketplace. Business plans, go-to market strategies, and valuations that had all been tailored to certain VC criteria are being forced to rapidly change.

VCs now are much more prudent about their money, and they are unilaterally shifting the goalposts. They are increasing expected KPIs and milestones while also reducing their investment amounts–causing significant disruption to startups’ plans and ultimately impacting their business decisions and approaches.

This trend of rising KPIs and lower investment rounds is set to continue for some time, resulting in sustained uncertainty and a much harder market for startups to thrive in.

While the situation looks bleak, there are steps companies can take to mitigate the damage and build the foundations to succeed in the long run. Here are several strategies we recommend earlier-stage portfolio companies to adopt.

CALCULATE YOUR VALUATION BY LOOKING FORWARD, NOT BACKWARD

In order to avoid running into a financing wall in the near future, calculate your valuation based on where you think you’ll be in a few years’ time, then work backward to figure out your valuation today. This is an important mindshift for founders. It encourages companies to “test” their valuation against other companies in the sector, especially those that are already publicly-traded and therefore adjusting to the market changes to arrive at a more accurate and realistic valuation. It is also a prudent tactic: If your valuation is too high today, you run the risk of an undesirable down round tomorrow. In short, future numbers help “future-proof” your current ones.

DECIDE WHAT YOU CAN GIVE UP WHEN RAISING CAPITAL AND LOOK BEYOND THE CHEQUE

When approaching VCs today, it’s critical that you prioritize and be clear about your needs. Like when making any complex decision, it is far easier to decide in advance what you are willing to be flexible about rather than retrospectively changing course. The quality of investor, size of the round, terms or clauses and valuation are all elements to consider when raising capital, but for now founders need to resist the temptation to focus on company valuation.

The intuitive yet limited approach of starting a negotiation based on valuation in this climate is counterproductive. It’s imperative to limit the challenging clauses to the very minimum, making sure the round size is enough to comfortably fund the company going forward and prioritize working with the right investors. Only then should the valuation come into play.

INCREASE EFFICIENCY AND EXTEND YOUR RUNWAY

Rapid growth has been the watchword of tech companies for much of this bull run, but that’s now being replaced by an emphasis on profitability and efficiency. Can you cut unnecessary burn to achieve sustainable revenue faster? How can you demonstrate product-market fit while being capital efficient?

These are questions that board members and investors are increasingly going to ask, and prioritizing the answers while making a conscious effort to drive efficiency is key to providing a company with as much runway as possible and being as attractive as possible to investors.

RAISE MONEY, EVEN WHEN YOU DON’T NEED IT

The easiest time to raise money is when you don’t need it, and taking this step and preparing for a variety of eventualities prevents a situation in which founders are trying desperately to raise money at the expense of other pressing company issues.

Even if you have 12 to 24 months of runway, raise money now if you can. Go to your internal investors and take a hit on your valuation or raise a smaller round if necessary. This also demonstrates that yours is the type of company that can raise money in any kind of financial environment.

PREPARE FOR KNOCK-ON EFFECTS

Being mindful of all the players in your industry and the challenges that they, too, are facing, sets you up to make sound business decisions in an unpredictable and downturn market.

This trickle-down effect means that you’ll need to spend more time demonstrating the value of your service to increasingly hard-pressed customers. Do you need to tweak your Go-to-Market approach to cope with the changes?

AGILITY MAKES ALL THE DIFFERENCE

The good news is many of the best companies actually emerge during market corrections, and those who are savvy today are likely to ultimately reap the rewards for years to come.

It’s reminiscent of an anecdote: A few years ago, the organizers of the Jerusalem Marathon messed up the race’s signage, leading runners to inadvertently add a couple of kilometers going the wrong way. Incredibly, the marathon’s winner was not necessarily the top bet, but a guy who realized the signs were misleading and headed in the right direction.

Was he the fastest runner? No. But he was the most agile.

You can weather the new investing climate–just make sure you’ve taken the steps to head in the right direction.

About the author

Judah Taub is managing partner of Hetz Ventures.

FastCompany

05.24.22

It’s time to re-imagine the meeting room for the Hybrid workplace

BY Fast Company Contributor 3 MINUTE READ

Investing in employee experience is more important than ever, as the workforce collectively ponders what it wants. After a tumultuous couple of years, record numbers are reconsidering their values, lifestyles and goals. Business leaders are looking for staff retention solutions as they open their doors to hybrid working models. The answer may be right under their noses…

The new normal has arrived and many businesses are opting for a hybrid of remote and on-site working for the foreseeable future. As a result, screen time has increased significantly and the technologies we lean on to create seamless hybrid office experiences will play a key role in defining their successes. Prior to the pandemic, the rigidness of static, office technology was little more than an inconvenience. But with employees now accustomed to the flexibility of remote working, a pet peeve has transitioned into a deal breaker.

Making hybrid models work

Business leaders are now tasked with bedding down new, flexible working structures – while simultaneously giving employees what they want. This is a two-pronged challenge that hinges largely around focusing on human needs and technology transformations. Employees are looking for more meaningful, less transactional relationships with employers – so the office is set to become a space centred around collaboration and connection. Technology is the enabler of modern workplace contentment.

The meeting room is traditionally the epicentre of office interactions. In today’s world it holds an even more vital role as the bridge between remote workers and those in the physical office. The key to 5-star meeting experiences is doing away with glitchy connections and cramped screens. As team members connect into huddles and meetings, the need for seamless connection to multiple devices and colleagues is more crucial than ever before. When it comes to creating the most productive working environment, we must explore technology that nurtures collaboration. We don’t want to lose time or destabilise a great discussion or flow of ideas because the meeting room monitor can’t connect to the laptop. We also must think about our meeting room technology from all perspectives, if you are presenting from the meeting room, can everyone hear and see you clearly? And vice versa if you are working from home. What about questions? Can both sides of the meeting easily provide input? No great idea should ever be lost to impractical mute settings.

Being able to interact with 20 touch point displays and collaborate with content sharing during live meetings, impacts inclusivity. Not to mention meeting productivity and efficiency. After 18-months of close-up screen time with colleagues, expectations remain high for strong visuals and clear representation.

Meeting room tech: Go large, or go home

Investing in large format screens supported by intelligent, responsive technology will ensure a premier collaboration experience. For example, meeting solutions offer 86”, 75”, 65”and 55” options to choose from with interactive touch screen features. Bringing teams together comfortably is an important part of creating more meaningful connections, regardless of location. Hybrid working models are new for many but ironing out the kinks now will benefit everyone. That means ensuring there is no disadvantage based on location. After all, flexible working practices aren’t new. But now they are mainstream, and employees expect this to be seamless, functional and sociable.

As the job market continues to heat up, creating seamless hybrid working experiences is a competitive proof-point. Investing in technologies that underpin a highly connected and blended workplace, that embrace employees far and wide, will forge a greater sense of belonging. More than ever, it highlights the human impact of technology – and the nature of collaboration. All critical components on the route to employee retention as the great reshuffle continues.

Sujit Menon, Display & Client Peripherals Lead – MERAT, Dell Technologies

03.15.22

How Digital Workforce Can be a Cure to Unemployability Crisis?

How Digital Workforce Can be a Cure to Unemployability Crisis?
BY Fast Company Contributor 3 MINUTE READ

 

South Africa’s unemployment rate gets media attention every quarter when Statistics South Africa releases its report on the country’s state of joblessness. Right now, it stands at 34.9 percent, which translates to 7.8-million people. But there is a much bigger scourge looming – that of unemployability. It is characterised by an inadequately educated workforce and is quickly becoming the root cause of unemployment.

There currently exists a mismatch between the skills South Africans have and the jobs that are available. With Fourth Industrial Revolution technologies – such as cloud computing, big data, data security, artificial intelligence (AI) and machine learning – fast becoming integrated in the workplace, South Africa might find itself with an idle population incapable of filling thousands of jobs.

According to the World Economic Forum, South Africa has strong ties to advanced economies, particularly Europe, making it vulnerable to changes in those countries. With these developed markets becoming digitised, we risk falling off the global economic wagon. A digitally literate population is seemingly our only hope of remaining a global player and the springboard for companies looking to enter the African market.

We need a digitally astute workforce. Whatever the scope or focus of a company, all members of staff need to be digitally fluent, and those in leadership positions need a thorough understanding of what it means to lead successfully in the digital era.

Reskilling people to work alongside technology

American sociologist, Richard Sennet, said the greatest dilemma faced by the modern artisan-craftsman is the machine. He meant that mankind is still dealing with the idea of whether the machine is a friendly tool or an enemy replacing work of the human hand.

Since the First Industrial Revolution, machines have been edging humans out of workplaces, making menial jobs redundant while simultaneously creating new roles that required more skill. The Fourth Industrial Revolution, with its cyber-physical tools and systems, promises to do the same, but this time to both menial and highly skilled jobs. Soon, we might see the roles of accountants and news reporters changing drastically.

Today, technology already can do some jobs better than humans. Drones are delivering packages faster (The South African National Blood Service is already rolling out its drone delivery service), self-driving vehicles are already on the road, and self-service terminals at supermarkets are already replacing cashiers.

Reskilling for a digital future would mean that people will need to work collaboratively with machines. Simply put, more people will need to be skilled backend users for digital interfaces, inputting commands and algorithms. Software engineers, coders and content producers are some of the key roles that come to mind when thinking of the present day workers collaborating with technology.

Educational institutes hold the key to transformation

Perhaps South Africa’s only hope of a seamless digital transformation will come from our educational institutes. Before we can create a digital workforce, people will have to first understand the benefits and pitfalls of working alongside emerging technologies.

Business schools have been trying to fulfil the role of digital transformers for a number of years now. However, far too many of them are accessible only to executives and larger companies because of their steep price and limited intake. The Johannesburg Business School, based at the University of Johannesburg, is trying to buck this trend, making education accessible to individual entrepreneurs and small, micro and medium enterprises. Born in the digital era, it places Industry 4.0 technologies at the centre of its curricula.

A more flexible, future-fit approach is essential to ensure that executive education, in particular, is more specific to organisational strategy and individual roles. When it comes to ongoing education for executives, the one-size-fits-all approach just does not cut it. Businesses operating in such a constantly changing environment need a new kind of leader. They need leaders who are multi-disciplinary in approach, solutions-focused and digitally perceptive.

Organisations of all sizes recognise the need for a paradigm shift in how they are organised and managed. And from a skills point of view, their focus is on getting ready for digital transformation which requires digital literacy. Like all other educational institutions, business schools need to adapt to this reality and cater for the changing needs of their clients, their employees and society as a whole.

Perhaps creating a digital workforce tertiary level is not the answer. It might be a more logical approach to train people for a digital working world much earlier in life. The Department of Basic Education has recently undergone a rewrite of its Life Skills curricula, adding digital literacy and the importance of working alongside Industry 4.0 technologies within the workspace. It is an encouraging sign of the country’s future: we will have a generation of young adults who will form the core of a South African digital workforce. Hopefully, by then, all this talk of unemployability will be bunkum.

Tumi Nkosi, Director of Executive Education and Programmes at the Johannesburg Business School

03.09.22

Open Data is not Open to all

BY Fast Company Contributor 4 MINUTE READ

 

The cliché “Data is the new oil” appears in many discourses from various sectors of life, be it in business, civil society, or in government.

All over the world, data has been embraced as the new capital of the global economy, and as cities seek renewed governance systems, improved service delivery, and cooperative citizen engagement, the demand to exploit data is immense. Opening of data by governments has come with excitement about its potential towards enabling public good. Open data is seen as a foundation for a wide range of applications and services designed to improve citizen’s lives (Mutuku and Mahihu, 2014). Founding reasons for making government data available and open were aimed at increasing accountability and transparency. Today city governments at local level are releasing various datasets ranging from, city administration datasets, to urban environment, mobility, economy, demographics, and many other datasets that affect urban quality of life. African countries have remained far behind in the data revolution. It has been argued that the continent needs to embrace and harness the unfolding data revolution especially if it were to achieve its Africa Union’s Agenda 2063 targets and the 2030 Agenda’s Sustainable Development Goals.

Accessibility – Not just open, but also right data

The ability to discover relevant datasets is a requirement to unlock the potential of open data. For a city government to make their data accessible and shared with the greater public, these initiatives generally begin with a directive, or a policy followed by setting up an open data portal as was the case with the City of Cape Town in 2014 when it became the first African city to approve an open data policy with a portal.

But matching data supply with demand is often not a straightforward process. To promote the use/reuse of data by citizens and other urban stakeholders, governments often host various data challenge competitions and hackathons, but despite these, the response from citizens to exploit open data for innovative purposes has still been lacking.

A possible contributing factor to this has been alluded to the fact that little is known regarding how citizens engage with Open Government Data initiatives.

Governments have since been accused of supplying datasets without complete understanding of what citizens really needed. Results of data reuse are not discussed enough and there is little feedback provided to governments.

The Kenya Open Data Initiative (KODI) – Kenya the first Sub-Saharan African country to launch an open data portal had similar challenges in driving demand a year later after its launch, whereby the public had not used the open data portal as widely as it was anticipated.

This has been attributed to a variety of possibilities, for instance, a study by Mejabi et al. (2014), suggested, barriers to open data uptake by Nigerian citizens included illiteracy; ignorance; apathy; peoples’ lack of trust in government/corruption; and nonchalant attitude of citizens. Others have also contended that the pressing reason is the fact that not all citizens have the equal privilege and capacity to access and exploit these data platforms, arguing that citizens generally have a poor relationship with data.

With resources often restricted, it is critical for city governments to identify priority areas where open data can provide the most benefit (GovLab, 2020). Citizens can engage and confront governments using data if they have capacity and skills to understand and analyse it.

Citizen-generated data – alternative urban data production

Parallel to the emergence of Open Government Data, alternative forms of data production and sharing are blooming – not necessarily within city governments, but at the urban grassroots level, whereby citizens and community organisations are collecting, sharing, and benefiting from information produced in and about local areas (Ricker et al., 2020). This form does not only reduce the burden from government to collect urban data but also equips citizens with skills throughout the data lifecycle (collecting; processing; analysing; using/reuse; improving; validating, and monitoring data quality). This way citizens are empowered to effectively use data to solve their problems or confront their local authority. A good case example of citizen-generated data is Map Kibera in Nairobi – a community managed initiative that has seen a collective effort of slum dwellers from Kibera collecting and mapping data of their marginalised settlement. The Map Kibera initiative has made the settlement visible on a map through a free and open digital map identifying communal issues such as lack of water, sanitation, and security. With this evidence-based map, the citizens of Kibera have been able to lobby and approach their local authority to highlight the areas that needed services the most.

Prioritising open data portals

Overall results suggest that portals are at a very early stage of development in Africa. Studies have suggested that we need improvements in user help and analysis features, as well as inclusion of features to help citizens understand the data, such as more charting and analysis

The Africa Data Revolution Report 2018 strongly asserted there was generally very little commitment from many African governments to publish up-to-date or additional datasets, while there is also very little evidence of use or impact of the open data which is published. Davies et al., (2019) assert, open data in Africa is seen as a secondary priority, isolated from other development agendas, such as infrastructure, education, agriculture, water, and health. Open data is not yet engrained in law in the continent, with legal frameworks supporting it either incomplete or directly absent (Iglesias, 2019). It has been suggested that African countries encounter difficulties in their capacity to implement those policies intended to make data available and accessible in a user-friendly format (PARIS21 &MIF, 2021). This would seem an important area for initiatives such as the Open Government Partnership – to which at least 15 African countries are subscribed – should lend concerted attention. Other governmental, technical, and civic actors can also augment their important roles.

ABOUT THE AUTHOR

Majaha Dlamini is an urbanist with research interests in open data, civic tech, and urban digital innovation. He has working experience in the urban development sector and recently worked with the Civic Tech Innovation Network. He holds a Master of Philosophy specializing in Urban Studies from the University of Cape Town. His research focused on the challenges of implementing an open data policy in the City of Cape Town.

02.16.22

Why connectivity matters for South Africa

BY Fast Company Contributor 3 MINUTE READ

As the world moves towards an increasingly digital future, expanded connectivity infrastructure has become a defining feature of a modern economy. It allows people and businesses across the globe to connect with and access a world of digital innovation. Whether it’s for social media and entertainment, or improved business performance through digital processes, connected technologies are now part of nearly every aspect of our daily lives.

Connectivity is vital for the growth and future success of every global economy, the economic benefits of which have been widely researched in many countries. Only recently, however, has a thorough study been conducted on the economic impact of connectivity delivered by submarine fibre optic cables in South Africa. The study, which was conducted by RTI International, finds the overall economic impact of connectivity to be significant, leading to increases in GDP and improvements to the likelihood of being employed. But these economic gains were not broad-based because many South Africans still do not have access to or cannot afford fast and reliable Internet services. So, why are subsea cables so important to our economy, and what can we do to get more South Africans connected?

Transitioning to a digital-first economy

Over the last few decades, South Africa has transformed from a resource-based economy relying on rich mineral reserves, to an economy driven largely by tertiary sectors such as financial and business services, transport and communication, and manufacturing. Unlike more labour-intensive and low-skilled sectors, these sectors all rely heavily on ICT infrastructure that requires connectivity. The study by RTI International demonstrates this, finding that subsea cable connectivity led to a 6.1% increase in GDP per capita between 2009 and 2014. This can be attributed to factors such as technological innovation, access to international markets, and improved education for people living in connected areas.

Connectivity also has a role to play in addressing unemployment, which remains one of South Africa’s most pressing socioeconomic challenges. In the aftermath of the pandemic, unemployment rose to a record high of 34.9% by the third quarter of 2021. The RTI International study finds that people were 2.2% more likely to be employed if they lived within 500 metres of the fibre network. The study also highlights that connecting South Africa’s most densely populated areas would translate to the greatest increases in total employment.

Connecting Africa with the world

Subsea fibre optic cables are the backbone of the Internet. But before Africa had a subsea cable system, the entire continent relied on sporadic satellite connections that made Internet access largely inaccessible and expensive. At the same time, South Africa’s telecommunications market suffered because it did not have a competitive structure, which changed in 2008 when a court ruling allowed other industry players to build infrastructure and provide Internet services.

One year later, Africa saw its first commercial undersea cable. The SEACOM cable spans 17,000km and connects the Eastern and Southern coasts of Africa with the rest of the world with faster and more affordable fibre connectivity. The RTI International study credits this subsea cable for disrupting the market, resulting in a substantial decrease in wholesale prices for direct fibre and an increased uptake of broadband connectivity.

Since then, South Africa’s fibre-to-the-home connectivity has expanded significantly, connecting over 600,000 homes in a market that was growing more than 30% per year in 2019. Now, 90% of South Africa’s population also lives within 10km of a fibre line because of our extensive domestic network in most major cities and towns. But even though widespread fibre penetration is eminently achievable, only 1.2% of households in rural areas had access to Internet at home in 2019, compared to 15.4% of households in metropolitan areas. And despite the fact that mobile broadband coverage reaches over 95% of the population, more than 30% of South Africans still do not use the Internet.

One reason for this is the prohibitive cost of mobile data, and the lack of incentives for last-mile infrastructure development beyond the existing fibre network. While fibre connections require a higher initial investment, fibre ultimately pays its dividends by being orders of magnitude cheaper than prepaid mobile data and providing a much faster and more reliable connection.

Looking forward

Digital technologies are evolving rapidly, which is why we need a modern approach to policy and regulation to keep up with other digitally driven economies. Our policy and regulatory environment in the telecommunications sector has been characterised as sluggish and uncoordinated, such as the failed attempt to deliver universal broadband access through SA Connect.

But there are many reasons to be optimistic. Our government has recognised the importance of the Fourth Industrial Revolution (4IR) for the future of our economy, and at a BRICS meeting on 11 November 2021, our Minister of Communications announced a fast-track programme that aims to connect all South Africans to the Internet within 24 months. Additionally, government agencies will be funding the development of affordable Internet access for low-income neighbourhoods.

There’s no doubt that South Africa needs more partnerships between government, NGOs, and the private sector to help narrow the digital divide. By allowing more people and businesses to participate in the digital economy with affordable connectivity, we can create more jobs, accelerate economic recovery, and pave the way forward to a more connected future.

Steve Briggs, Chief Sales & Marketing Officer at SEACOM

02.14.22

Lessons from the Peloton Downfall

BY Fast Company Contributor 5 MINUTE READ

Peloton had a truly impressive run during the beginning of the pandemic: In the first quarter of 2020, subscribers more than doubled from a year earlier, and The Wall Street Journal credited a “coronavirus surge” for its 66% increase in sales. Health-conscious people sidelined by closed gyms ordered bikes despite wait times of a month or more, and the company ramped up production accordingly.

And then came its spectacular flameout. Its share price dropped 76% in 2021. Last month, the company announced it would halt production of its bikes and treadmills due to decreased demand. And last week, the company said it would cut 2,800 jobs and replace the CEO of the decade-old company.

At its core, this was a case of a wild mismatch between supply and demand, but even more critically, it was a case of the company not understanding that its market was finite. After all, what if I told you that every household in America would one day own a $2,000 stationary bike? Hopefully your response would be to stop reading. Logic dictates that there is a limited demand for expensive home exercise equipment, but that logic gets lost when a product captures the zeitgeist the way Peloton did. How do we stay objective when looking at the products we hold so dear?

Anyone working at a company or on a product that took off during the pandemic may be wondering how to avoid the same fate. In the decade-plus I’ve spent as a qualitative researcher, I’ve helped companies including Viacom, Mattel, Instagram, Netflix, and others understand their users. From designing intuitive UI to building accessible products, the secret ingredient remains the same: Asking the right questions of the right people is what allows us to design products that really “get” people and make their lives better. Let’s use Peloton as a case study for understanding how qualitative research can help prepare for the ups and inevitable downs in demand—and how to design products and experiences with staying power.

YOU ≠ EVERYONE

If you’ve used the logic “I like it, so everyone else will too,” now would be a good time to stop. For every person like you, there are dozens who aren’t, and those are the people you need to talk to. Bubbles are bad for business, and responsible design requires that you build a product for a diverse set of users.

For every complaint or concern a customer has, you likely have an answer—but just because you know that answer doesn’t make it intuitive. Just because it makes sense to you, the creator, doesn’t mean anyone else will understand it.

Research doesn’t need to be a long, costly endeavor; Peloton’s designers could have shadowed a delivery team for a few days, paying attention to personal details like where people put bikes in their homes, what other exercise equipment they owned, and how they approached the bike for the first time. When they turn it on, do they know how to ride without an instructor? If new and prospective users don’t know they can track their performance metrics without participating in an instructor-led class, or that they can cruise the streets in the South of France while listening to their own soundtrack, then Peloton’s position in the competitive landscape becomes increasingly small. Had they understood the potential value in those hard-to-find features, Peloton could have improved its UI and captured prospective customers who prefer self-led exercise.

When another person in the household wants to use the bike, do they know how to set up an account? Can they adjust and readjust the bike easily? For many prospective customers, a purchase at this price point is expected to serve multiple people in the household; early design mitigations could have been identified and implemented to make the bike more accessible and customizable.

A slightly higher investment would have allowed the team to check in with new users weekly for a month or two, whether by survey or interview, to see what pain points emerged and how the design was—or wasn’t—serving their needs. With so many stationary bikes flooding the market, gaining these insights could have helped the company stay a step ahead of its competitors.

PAY ATTENTION TO YOUR USERS—AND YOUR NON-USERS

Most people will only want to purchase one Peloton bike and, assuming they’re well designed, it should last for a long time. As a customer, this is fantastic. As a business, it poses some complications.

Early in the pandemic, Peloton couldn’t produce bikes fast enough to meet demand, creating months-long waiting lists. Once production ramped up, wait times declined and, eventually, so did demand. A significant reduction in cost worked to capture prospective customers who were on the fence based on price.

But price isn’t the only factor in a purchase decision of this magnitude. There are some hurdles that are too big to overcome—if someone desperately hates cycling or indoor running, or refuses to exercise at home, they’re not going to purchase a Peloton. Others may be on the fence because they have limited indoor space, don’t enjoy instructor-led classes, or are loyal Peloton app users but only want non-cycling classes.

Continuing to double down on production of their existing bike signaled a resistance from Peloton to listen to users, innovate their design, and expand into categories that could have attracted new customers. Introducing a more compact bike design, non-connected options, and equipment that supports other app-based classes like Pilates, boxing, and strength training may have allowed Peloton to continue serving their existing (loyal) user base while also appealing to new customers.

As a product matures and sales progress, so will the reasons why people aren’t purchasing it. The barriers faced when first launching a product aren’t the same ones poised in a mature market.

UNDERSTAND THE NEED YOU FULFILL

Peloton isn’t really about a bike. It’s gamified, at-home exercise with a strong social community element. It taps into people’s need to feel emotionally connected and physically active. It alleviates the feelings of stagnation and loneliness of the last two years. Its success was due, in some part, to luck. A need emerged and their product was already well suited to fill it.

Now let’s imagine a world where people are actually going to the gym or group spinning classes, where they’re commuting to and from work and lose that time they’d dedicated to the bike. The circumstances may have changed, but the need for community, connection, and endorphins remains. The question then becomes, how else can Peloton fulfill those needs? The company is in a unique position, as consumers trust them to design excellent digital and physical products. If Peloton wants to continue as both a digital content provider and designer of physical goods, it’s time to get off the bike and expand.

One pushback I often get from executives and designers alike is that “customers don’t know what they want.” That is to say, one can really only imagine things they’ve already seen and aren’t always aware of what’s possible. This can make testing individual concepts only somewhat helpful, since consumers are responding only to what they see and not what can be.

Co-creation sessions allow designers and customers to work hand-in-hand, with designers ideating and iterating based on immediate feedback and collective brainstorming. During my time at Mattel, many product improvements and breakthrough ideas were generated by designers who simply sat on the floor and played together with kids. In this way, they could see how their hands were (or were not) able to manipulate the toy successfully, understand their dexterity, see their frustrations, and make meaningful design changes.

DON’T FORGET YOUR COMPETITORS

People can buy a non-Peloton bike at half the price and participate in Peloton classes using the app. The market has already exploded with rival bikes equipped with tablet holders so you can stream classes, and these options will only get better.

But rivals and cheap knockoffs don’t need to signal the beginning of the end. Just look at IBM. After the success of its PC computers, machines running Windows flooded the market and, in 1993, IBM posted a staggering $8 billion loss. So what did IBM do? It completely pivoted the business away from producing low-cost computers and hardware and focused on B2B IT support. It had earned a tremendous amount of trust from its successful inventions and could seamlessly move into what was essentially an advisory support role.

If the magic of Peloton is in the classes, and you can use the classes on any bike, the question becomes why anyone would buy the expensive name-brand version. This is the core question that Peloton, and any brand with excellent, if non-patentable, design must answer about itself.

Annie Sklaver Orenstein is a qualitative researcher, writer, and storyteller who has spent more than a decade conducting research on behalf of companies including Viacom, Mattel, Instagram, Facebook, Pfizer, Netflix, Johnson + Johnson, and more. Follow her on Twitter @anniemollie.

02.08.22

Banking as a Service: Weapon for banks against disruptors

BY Fast Company Contributor 3 MINUTE READ

Years, and sometimes decades, of patchwork additions as new products and services were added have left many banks with a real tech headache. Now, as they struggle with the challenges of open banking and more recently the rise of embedded banking, traditional banks are increasingly turning to cloud-based Banking as a Service (BaaS) platform models to help them stay relevant.

“Traditional banks are dealing with real challenges. Most of them will have a ledger that was built 20 or even 40 years ago. Over time, banks kept the original ledger for its regulatory and reporting requirements, building new products on top of it. The result is that they are left with a coughing and spluttering banking engine, which impedes them from quickly and easily rolling out the services demanded by their digitally savvy customers,” says Sergio Barbosa, CIO of enterprise software development house, Global Kinetic, and CEO of its open banking platform, FutureBank

The pain of building solutions around monolithic infrastructure becomes particularly acute when banks try to access the information they need in order to deliver new digital products – or even just understand who their customers are.

“Traditional banking has slipped into the background, becoming a simple utility around which banks build their digital offerings. Today’s IT leaders are facing the reality that their core banking systems are holding them back. To overcome this they will often build API layers around the old systems, hoping that one day they will be able to simply switch the old systems off. It’s seldom that simple,” Barbosa explains.

When it comes to modernisation, Barbosa says there is mounting pressure on traditional banks to take immediate action. More than just a demanding customer base, the latest threat facing banks is coming from every side including mobile networks, retailers and even clothing and motoring brands.

Modernisation has become more urgent

“More and more banks are being disintermediated by brands. Younger generations would rather trust a person they have connected with – even if that connection is over social media – than a big corporation that their parents may have supported. This has been exacerbated by older banks which have simply digitised their existing products and even their old processes, without giving a moment’s thought to designing an offering that their customers really want,” Barbosa.

Brand banking, or embedded finance, is growing rapidly. Non-banks offering financial services, such as bank accounts, wallets, payments, and lending are the next evolution of companies looking for new ways to derive more lifetime value from their extensive customer bases.

“Brand banking is approaching at a frightening pace and we see many existing banks getting caught on the back foot. There are mass market brands that interact with customers on a more frequent basis which are ideally placed to offer financial services. They have all the insight they need on what their customers want, how they behave, and how best to reach them. It’s the perfect opportunity,” he says.

In fact, the Capgemini’s World Retail Banking Report 2021 shows that 70% of customers opt for non-traditional banking for lower fees, 68% for a superior user experience, and 54% because of speed.

Platforms tap into the strength of the old and deliver the power of the new

Barbosa says traditional banks are being forced to move at two different speeds. One at which the market moves, and the other at which their old systems allow them.

“Banks need to partner with companies which are able to help them design and deliver products which are in high demand. These partners have moved away from big clunky blocks of code, and focus on micro services or functional programming. Banks are now ringfencing these partnerships and building individual business models around each partnership to great effect. This new way of circumventing legacy challenges has saved many traditional banks,” he says.

And it is here that the power of platforms shows its worth.

“Platforms make it really easy for banks to wrap up their old legacy sets. Banks only need a very narrow functionality from their legers such as transaction history, the initiation of a payment or a transfer and beneficiary management. Platforms also enable new partner services and, through these two key activities, they can significantly accelerate the modernisation process,” Barbosa says.

BaaS platform models allow banks to access new value through open ecosystems while leveraging their existing strengths and extensive data.

“The speed at which new banking offerings are being delivered is certainly shaking up the market. But traditional banks still have a sizable advantage if they adopt a bold modernisation strategy. The first step must be leaving behind the legacy mindset,” Barbosa sums up.

Sergio Barbosa – Co-founder and CIO of enterprise software development house, Global Kinetic.

02.01.22

The Future of the Filling Station

BY Fast Company Contributor 4 MINUTE READ

The filling station as we know it is an endangered species. As electric vehicles gradually make up a larger share of cars on the road, entirely new kinds of service stations will be needed to fuel their journeys. A new design competition has come up with a vision for what those stations may look like, and it’s funded by one of the biggest filling station companies in the world.

Parkland, a Canada-based filling station operator with 3,000 locations in 25 countries, is the main sponsor of an international competition to create the electric fueling station of the future. The winning entry has just been announced, and the design envisions a facility where the time it takes to recharge a battery—easily a half hour longer than a typical gas fill-up—is seen as an opportunity to rest, relax, and maybe even explore.

[Image: courtesy Electric Autonomy Canada]

Next, Parkland wants to start building these stations. “We spend a lot of time thinking about where the industry is going, and there’s no question that mobility is starting to electrify,” says Darren Smart, Parkland’s senior vice president of strategy and corporate development. But when it comes to the customer experience of actually charging electric vehicles, Smart says, the industry is lagging. “Charging stations are located in uninteresting spots, they’re out of the way, and in some cases they may not be the safest locations. That is made all the worse by the fact that an EV driver needs to dwell at a location for 20 or 30 minutes to charge,” Smart says. “So it’s a bad combination.”

[Image: courtesy Electric Autonomy Canada]

James Silvester, an Edinburgh, Scotland-based architect, designed the winning entry, and it suggests a dramatically different kind of refueling, which prioritizes experience over expedience.

[Image: courtesy Electric Autonomy Canada]

Silvester’s design is a long linear building with charging ports ringing its perimeter. At the center is a mall-like space made up of stores, vendors, and non-commercial spaces meant to help drivers take a break from the road.

“The building needs to respond quite differently from a five-minute quick fill and drive off,” says Silvester. “It’s got to offer people some sort of destination or unique experience that can keep them entertained. If I was in a car for 40 minutes at a gas station, I’d be pulling my hair out by the end.”

[Image: courtesy Electric Autonomy Canada]

Designed with a modular system that allows the oval-like shape of the station to stretch out to fit different-size locations, Silvester’s EV charging station can provide a broader variety of services and spaces than a typical gas station. In addition to the traditional food and drink options available, his design offers space for things like an exercise area, massage therapy, and even just a small plant-filled garden where drivers can rest while their battery recharges. (Of course, charging technology itself is rapidly evolving, so it’s possible in the future, EV charging times will be much shorter, too.)

The building Silvester proposes would have sustainable materials like wood and stone and a roof capable of holding solar panels. He says its modular design would make it quick to build and flexible enough to accommodate a wide variety of sites.

[Image: courtesy Electric Autonomy Canada]

The design was chosen by an international jury of architects, designers, and electric vehicle advocates—and comes with a prize worth about $19,600. Second and third prizes are also being awarded, as are several honorable mentions. The competition was launched last August by Electric Autonomy Canada, an independent news platform focused on the transition to electric vehicles. Nino Di Cara is the group’s founder, and he says the competition’s main goal was to kickstart the thinking about how these facilities can and should differ from those built for internal-combustion vehicles. Another goal was to lure more gas drivers to the other side.

“We wanted to create a bit of EV envy amongst gas-car drivers,” says Di Cara, imagining a family on a road trip driving past one of these stations, and the kids in the back seat saying, “Why can’t we stop there?”

[Image: courtesy Electric Autonomy Canada]

Silvester says his design’s flexibility also gives the opportunity to even bring some local character to a road-trip stopover. Space within his EV-focused station could be set aside for local vendors or regional specialties. The stations could even be sited near lookouts or trails, giving travelers a chance to see the actual place they’ve stopped and not just the inside of a convenience store. “A lot of these places you just pass through but you never experience, so it’s an opportunity for the community to come get involved as well,” he says.

Silvester’s design may be more than just a clever idea. Parkland’s Smart says the company is beginning discussions with Silvester about how the design can begin to be implemented, albeit slowly. The company is in the early stages of its own electric vehicle transition, but has plans to open a network of 25 ultrafast EV-charging stations across British Columbia by midyear. That could be the start of the company’s shift toward meeting the needs of a growing community. Smart says Parkland is beginning to plan out how one of these EV-only charging stations can get built. “In the next couple of years, I think you’ll start to see these pop up,” Smart says.

NATE BERG

Nate Berg is a journalist covering cities, architecture and urban planning. Nate’s work has been published in a wide variety of publications.

FastCompany

01.26.22

The value of a startup act for South Africa

BY Fast Company Contributor 3 MINUTE READ

Towards the middle of last year, I was fortunate to be part of a panel discussion during which the question ‘does South Africa need a Startup Act?’ was posed. The answer was a resounding yes from the participating ecosystem stakeholders which included investors, ecosystem enablers, institutions, and entrepreneurs from around the country. Essentially, a Startup Act is a call to the President to unleash the growth and innovation inherent in the country’s entrepreneurs and youth.

The Startup Act is a collective effort by the ecosystem including government, academia, investors and startups and is driven by a Steering Committee comprised of representatives from AfricArena, Digital Collective Africa, Endeavor South Africa, i4Policy, Loudhailer, the Southern African Venture Capital and Private Equity Association (SAVCA), Silicon Cape, SiMODiSA, and Wesgro. It is also supported by partners such as the World Bank and UK-South Africa Tech Hub.

While there is existing legislation aimed at small businesses, SMEs are not necessarily the same as startups. We need to have a guideline in South Africa for entrepreneurs of young, high-impact and scalable businesses that speaks directly to them.

How will it benefit startups?

Desktop research, focus groups and research contributed by the World Bank (one of the main sponsors of the research) have all enabled the SA Startup Act Steering Committee to develop a position paper that provides a holistic overview of the problems affecting the ability of startups to establish, grow and scale in South Africa. From this, it has become painfully evident that existing policies and red-tape are constraining the growth of innovation-driven startups and, consequently, their ability to contribute to job creation.

Therefore, proposed interventions derived from this research include relaxations to current legislation and policies impacting the growth of, and investment into startups, such as exchange controls and Capital Gains Tax. Others entail simplifying procurement policies to scale up the involvement of startups in the national economy; direct funding of startup businesses through automatic reinvestment of PAYE and VAT; and easing of labour and immigration laws to foster the availability of and access to talent. It is envisioned that the removal of these and other barriers which are limiting the creation and impact of startups will accelerate the socio and economic spill over to the rest of South Africa.

Startup Acts around the world

In fact, stimulating the establishment of, and leveraging new business enterprises, or startups, has in recent times emerged as a vital instrument in reshaping economic activity in many countries around the world.

Young firms account for about 20% of employment but create almost half of new jobs on average across the Organisation for Economic Co-operation and Development’s (OECD) 38 member countries

With this in mind, many countries are emphasising the role of startups in their respective national development and economic policies.

For example, as far back as 2011, the United States implemented an Act to accelerate the commercialisation of university research that can lead to new ventures, review and improve the regulatory processes at federal, state, and local levels, as well as promote innovation and spur economic growth. The legislation also creates both entrepreneur and STEM visas for highly educated individuals so they can remain in the United States legally to promote new ideas, launch new businesses, and create American jobs. According to the Kauffman Foundation, which aims to help individuals attain economic independence by advancing educational achievement and entrepreneurial success, by creating just 75,000 startup visas, more than 1.6 million new jobs could be created over a 10-year period.

Closer to home, Tunisia established its Startup Act in 2018 as a solution to widespread youth unemployment. With roughly a third of all young Tunisians unemployed, the government is using the Startup Act to encourage young people to take matters into their own hands and become novel business owners. So far, this is proving to be a success with funding for startups increasing from $5m in 2017 to $18.5m in 2019. Tunisian Startup Act benefits include state salaries for up to three founders per company during the first year of operations; generous tax breaks and a one-year leave period for both public and private sector employees to start a company, with the right to return to their old jobs.

The South African Startup Act Steering Committee has actually been engaging with Tunisia with the aim of collaborating.

These and other countries around the world face many of the same challenges that we do in South Africa, the most pressing of which is unemployment. They have put Startup Acts into effect, so why shouldn’t we? Surely, we must give those who are creating the most jobs the best chance to succeed.

By removing the constraints that come with operating a South African startup business, the Act will maximise the value and impact of South Africa’s startups and successful entrepreneurs for the benefit of the country and her people. Ultimately, it is for South Africa, by South Africans.

Join the movement at https://startupact.org.za. The voices of all ecosystem players need to be heard if we are to drive awareness for the catalysation of policy that encourages the growth and development of innovative, high growth enterprises in South Africa and, in turn, encourage job creation and socio-economic development.

Matsi Modise – South African Startup Act Steering Committee chairperson and SiMODISA vice chairperson.

01.25.22

Digital Transformation – Business case for in-person meetings

BY Fast Company Contributor 3 MINUTE READ

As someone who works at a digital-first organisation, it’s been incredible to see how the past two years have accelerated digital transformation across Africa. With strict social distancing measures in place, especially in the early parts of the pandemic, organisations had no choice but to find new ways of working and move operations online. Those organisations that managed the change effectively have thrived.

I myself have benefited from the host of technologies that make seamless meeting and collaboration across borders possible. There is no way I would be able to connect with people in multiple countries around the continent on a daily basis if I was relying on in-person meetings. But on a trip to Kenya at the tail end of 2021, I was reminded that in-person meetings still have a place and may even be helpful in accelerating Africa’s digital transformation.

The power of in-person

Over the course of just a few meetings, bonds were strengthened and long-standing reservations were easily resolved. Even though it only lasted a few days, the trip was a powerful reminder of why in-person business is crucial, even for digital organisations.

There is, for example, a richness and openness to physical conversations that simply cannot be matched online. We are, by nature, social creatures and meeting people in person helps facilitate a sense of empathy from the get-go.

A physical presence also lets you experience what conditions are like on the ground in the communities where organisations operate. In Africa, this is especially critical for digital organisations. Someone can tell you that internet speeds are patchy in a particular location or that a mobile-first approach is necessary but experiencing those things for yourself gives you a much greater level of insight.

Similarly, speaking face-to-face with people can give you a much better sense of where an organisation is on its digital transformation journey (as much a mindset shift as the adoption of new technologies and processes) and where they feel its digital experiences could improve. That’s especially true for large organisations, where a lot of investigative work may be required to figure out what silos need to be broken in order for it to provide real, transformative digital experiences.

A hybrid future?

That’s not to say online meetings and virtual collaboration aren’t important. The opposite is true. There is, after all, a reason that remote work is consistently shown to improve productivity. It’s also true that some people just collaborate better in virtual environments, where they may feel less restricted in sharing their ideas.

And with an increasing number of African companies doing business internationally, online tools allow international teams to work together on projects, no matter where they’re located. This includes not only tools for communication but also robust digital platforms for collaboration and automation like digital workplaces. That, in turn, means that the best people within an organisation can work together on something, rather than just the best people in a particular location.

The ideal, then, may well be a blend of online and in-person meetings. Just as the future of work seems not to be fully remote, nor fully in-office, but a blend of the two, so the future of meetings could be a hybrid of virtual and in-person. And, as travel restrictions continue to ease up, achieving that hybrid balance will become simpler to achieve too.

Accelerating Africa’s digitalisation

There is no doubt that organisations across Africa are embracing digital transformation and looking to provide world-class digital experiences. There are even people who argue that the continent could leapfrog other markets on this front.

Many companies across the continent have made significant strides in their digital transformation journey over the past two years. But in that time, we’ve also learned the importance of flexibility and adaptability. And if African organisations are to thrive, they need to find the best possible flexible balance between online and in-person meetings and collaboration.

Greg Gatherer, Account Manager, Liferay Africa