Silicon Valley – Auckland Edition

There’s been talk by Auckland Council to transform Auckland into a technology innovation mecca in the Asia Pacific Region. Specifically, the proposal is to transform the Wynyard Quarter precinct into a mini Silicon Valley much like the actual Silicon Valley in San Francisco Bay Area in the US. It’s good to see the government recognizing the importance knowledge driven technological innovation as a source of economic growth in New Zealand. However, I feel that the government might be overlooking what really makes Silicon Valley an innovation powerhouse and its definitely not the technology parks. In fact, most companies in the valley are famously started in suburban garages or university dorm rooms. I’m not saying don’t develop technology parks, by all means, please do and get the IBMs, the HPs, the Microsofts to move in there but its going to have a limited impact on the startup scene in Auckland. To forge a culture of innovation you have to make Auckland an attractive place for young smart people from around the world to move to live and work.

The easiest thing the administration can do to attract highly mobile young bright people is to develop world class universities. Our top universities are always crying out for funding and what they receive easily dwarfs in comparison to their American and European counterparts. Once you attract top geeks from around the world to your universities, eventually some percentage of them would fuel into the local economy and even smaller percentage would try to build companies and still a smaller percentage would be successful. This will start a feedback loop, smart people would attract other smart people and eventually you would have thriving innovation centre. Secondly, you have to make Auckland a city where venture capital is easily available for startup founders. While local government can and does help with capital but ultimately this would come from the ex founders who cashed in on their successful gigs and are hungry for more. Again, this comes back to the feedback loop which is started by the pouring money into the local university system.

This is roughly the model on which startup hubs all over the world are based on. Below are some that stand out, would be nice to see people adding Auckland to that list!

Silicon Valley, US – Stanford University, University of California – Berkeley
Boston, US – Harvard University, MIT
New York, US – Columbia University, Cornell University
Waterloo/Toronto, Canada – University of Waterloo, University of Toronto
London, UK – Kings College, Imperial College, University College, London Business School, Oxbridge
Singapore – Nanyang Technological University, National University of Singapore
Tel Aviv, Israel – Tel Aviv University
Bangalore, India – Indian Institute of Science, IITs (from all over India)
Auckland, NZ – University of Auckland, Massey University??

Thoughts on the Wheedle Fiasco

Anyone who works in technology in New Zealand is probably aware of the and fiascos from the past few weeks. Social Media has been abuzz with people complaining about the substandard user interfaces, security loopholes, faulty hyperlinks etc. I really admire the audacity of founders to launch products in the NZ online e-commerce market where TradeMe is the undisputed king by market share. The long list of startups that have failed in the process of competing with TradeMe is enough to put any potential founder off from even trying. Sadly, the audacity to compete with TradeMe wasn’t matched with a crafty execution. One cannot help but wonder why both companies failed so spectacularly, why their game was over so quickly, where did they go wrong? Looking closely, some things stand out.

First Impressions
In the web and mobile apps business first impressions are hugely important. They make or break your product. When you’re someone like Wheedle, taking on TradeMe, your site shouldn’t look like a poor cousin of TradeMe. User experience on your site is your first point of attack on grabbing the customer’s attention. The colour combinations, the fonts, the logos and buttons should be begging the customer to click. You’ve already lost the battle if your site looks unfinished and painfully similar to the big brother in the market. Remember, users are going to use your application because they think it will offer something different, something better, something that they’ve been waiting for and has finally arrived, something that really connects with them! If your site looks too similar then you’re already losing your customers. Both Wheedle and ListSellTrade should have invested more in the UI of their respective apps.

When you build an e-commerce application security is right up there with a great user-interface in the list of things you have to get right. For your first release you don’t have to exhaustively spend resources on security. You just have to get the basics right. Make sure your site doesn’t have any of the ‘OWASP top ten list of the 10 most dangerous security flaws’ and unlike Wheedle, please do not send users their passwords in plain text! Even a little suspicion that confidential information is not secure on your app will drive consumers away.

There is two types of outsourcing. The first, where you outsource because you cannot find people with a specific skill set in your country. For someone trying to innovate, trying to carve out a niche in the market such outsourcing is essential. Then there is the other type, the one where firms that are not really in the innovation business, that are just developing mediocre products and want to achieve that as cheaply as possible. While I personally have some reservations on this as a long term business mode, it seems to have worked for some companies (and others have miserably failed e.g. 2 Degrees). However, here is something to ponder – do you know of any company that launched a successful product, challenged the status quo, made leaps into a new market with a product that was outsourced to cheap overseas developers. I haven’t. Facebook, Google, Amazon, Yelp, Groupon and locally, Orion Health, Xero, MCom, INRO, Telogis and even TradeMe, founders didn’t just come up with an idea and outsourced the development work to India. Entrepreneurship and new product development is more about the execution of idea rather than the idea itself. When you outsource the development of your product you lose control over the execution and poor execution only paves way to failure. Wheedle made a major mistake of outsourcing the software development team to India.

Quiet roll outs
Part of the reason why Wheedle so spectacularly failed is because they created too much hype building up to the launch day. TV, radio, Social Media, they were everywhere. When they did eventually launch and failed subsequently, they got a lot negative press that they could have done without. A smarter way would have been to quietly launch their product, grow it organically, fix all the issues that are reported along the way and then finally go all guns blazing into TV and Social Media campaigns in order to market the product.

Software Development > Marketing Campaign
No Marketing campaign can ever make up for a shoddy product.