On-Demand Business Model Not Sure Cash Flow
December 23, 2016
The on-demand car service Uber established a business model that startups in Silicon Valley and other cities are trying to replicate. These startups are encountering more overhead costs than they expected and are learning that the on-demand economy does not generate instant cash flow. The LA Times reports that, “On-Demand Business Models Have Put Some Startups On Life Support.”
Uber uses a business model revolving around independent contractors who use their own vehicles as a taxi service that responds to individual requests. Other startups have sprung up around the same on-demand idea, but with a variety of services. These include flower delivery service BloomThat, on-demand valet parking Zirx, on-demand meals Spoonrocket, and housecleaning with Homejoy. The problem these on-demand startups are learning is that they have to deal with overhead costs, such as renting storage spaces, parking spaces, paying for products, delivery vehicles, etc.
Unlike Uber, which relies on the independent contractor to cover the costs of vehicles, other services cannot rely on the on-demand business model due to the other expenses. The result is that cash is gushing out of their companies:
It’s not just companies that are waking up to the fact being “on-demand” doesn’t guarantee success — the investor tide has also turned. As the downturn leads to more cautious investment, on-demand businesses are among the hardest-hit; funding for such companies fell in the first quarter of this year to $1.3 billion, down from $7.3 billion six months ago. ‘If you look in venture capital markets, the on-demand sector is definitely out of favor,’ said Ajay Chopra, a partner at Trinity Ventures who is an investor in both Gobble and Zirx.
These new on-demand startups have had to change their business models in order to remain in business and that requires dismantling the on-demand service model. On-demand has had its moment in the sun and will remain a lucrative model for some services, but until we invent instant teleportation most companies cannot run on that model.
Whitney Grace, December 23, 2016
Google Moonshot Targets Disease Management, but Might Face Obstacle with Google Management Methods
May 17, 2016
The article on STAT titled Google’s Bold Bid to Transform Medicine Hits Turbulence Under a Divisive CEO explores Google management methods for one of its “moonshot” projects. Namely, the massive company has directed its considerable resources toward overhauling medicine. Verily Life Sciences is the three year-old startup with a mysterious mission and a controversial leader in Andrew Conrad. So far, roughly a dozen Verily players have abandoned the project.
“But “if they are getting off the roller coaster before it gets to the first dip,” something looks seriously wrong, said Rob Enderle, a technology analyst who has tracked Google since its inception. Those who depart well-financed startups usually forsake potential financial windfalls down the line, which further suggests that the people leaving Verily “are losing confidence in the leadership,” he said. No similar brain drain has occurred at Calico, another ambitious Google spinoff, which is focused on increasing the human lifespan.”
Given the scope of the Verily project, which Sergey Brin, Google co-founder, announced that he hoped would significantly change the way we identify, avoid, and handle illness, perhaps Conrad is cracking under the stress. He has maintained complete radio silence and rumors abound that his employees operate under threat of termination for speaking to a reporter.
Chelsea Kerwin, May 17, 2016
Sponsored by ArnoldIT.com, publisher of the CyberOSINT monograph
Venture Dollars Point to Growing Demand for Cyber Security
April 4, 2016
A UK cyber security startup has caught our attention — along with that of venture capitalists. The article Digital Shadows Gets $14M To Keep Growing Its Digital Risk Scanning Service from Tech Crunch reports Digital Shadows received $14 million in Series B funding. This Software as a service (SaaS) is geared toward enterprises with more than 1,000 employees with a concern for monitoring risk and vulnerabilities by monitoring online activity related to the enterprise. The article describes Digital Shadows’ SearchLight which was initially launched in May 2014,
“Digital Shadows’ flagship product, SearchLight, is a continuous real-time scan of more than 100 million data sources online and on the deep and dark web — cross-referencing customer specific data with the monitored sources to flag up instances where data might have inadvertently been posted online, for instance, or where a data breach or other unwanted disclosure might be occurring. The service also monitors any threat-related chatter about the company, such as potential hackers discussing specific attack vectors. It calls the service it offers “cyber situational awareness”.”
Think oversight in regards to employees breaching sensitive data on the Dark Web, for example, a bank employee selling client data through Tor. How will this startup fare? Time will tell, but we will be watching them, along with other vendors offering similar services.
Megan Feil, April 4, 2016
Sponsored by ArnoldIT.com, publisher of the CyberOSINT monograph
Watson Is Laying Startup Eggs
December 21, 2015
Incubators are warming stations for eggs. Without having to rely on an organism’s DNA donor, an incubator provides a warm, safe environment for the organism to develop, hatch, and eventually be ready to face the world. Watson has decided it is time for itself to propagate, but instead of knitting tiny computer cases Watson will invest its digital DNA in startups. The Chicago Tribune discusses Watson’s reproduction efforts and progeny in “Watson, IBM’s Big-Data Program Is Also A Startup Incubator.”
While IBM sells Watson’s ability to scan and understand terabytes of data, the company also welcomes developers to use Watson for new ideas. What is even more amazing is that IBM gives developers the ability to use Watson for free for a limited time.
“In Ecosystem, everyone is invited to play with Watson for free (for a limited time); some 77,000 developers have accepted. If your Watson-powered startup shows promise, it becomes a “partner,” often via a quasi-incubator model, and enjoys access to IBM business and technology advisers–and a shot at a capital infusion from the $100 million IBM is making available to Watson startups…”
Ecosystem has been used for startups that feature lifestyle coaching, personal shopping, infrastructure guards, veterinarian advice, fantasy sports calculator, 311 information, and even a hotel butler.
To quote the biblical justification for propagation: “Go forth and multiply the [Watson startups].”
Whitney Grace, December 21, 2015
Sponsored by ArnoldIT.com, publisher of the CyberOSINT monograph
Google Admits to Being a Copycat
August 28, 2015
In elementary school one of the biggest insults a child could throw a their fellow classmate was the slur “copycat.” All children want to create original work, but when they feel their skills are subpar the work of another student their feel is superior. Tossing in the old adage that “copying is the sincerest form of flattery” gives way to arguments about patents, theft, and even time outs for those involved. The Techdirt podcast discussed copying in a recent episode and how big tech companies simply copy the ideas of their rivals and put their on name on it. The biggest copycat they could find was Google: “The Failure of Google Plus Should Be A Reminder That Big Companies Very Rarely Successfully ‘Copy’ Startups.”
Techdirt points out the fallacy with big companies trying to steal the little startup’s idea:
“As we’ve discussed, in the rare cases when “copying” succeeds, it’s because the second company doesn’t really copy, but actually comes up with a better product, which is something we should celebrate. When they just copy, they tend to only be able to copy the superficial aspects of what they see, rather than all the underlying tacit thinking that makes a product good.”
The article discusses how Google finally admitted that Google Plus was a copy of Facebook, because they search mogul was fearful of losing profit, users, and Web traffic. The biggest problem that Google Plus had was that it was “forced” on people, like the Star Trek Borg assimilating unsuspecting planets. Okay, maybe that is a bit of a drastic comparison, but startups are still fearful of their ideas being assimilated by the bigger companies. This is when the patent topic comes in and whether or not to register for one.
There is good news for startups: “if a startup is doing something really amazing and innovative that people actually want, you can almost always guarantee that (1) the big companies will totally miss the boat for way too long and (2) once they finally wake up, be clumsy and ridiculous in their attempts to copy.”
Also Techdirt sums everything up in an eloquent paragraph that explains the logic in this argument:
“People think it’s easy to copy because copying seems like it should be easy. But it’s not. You can only copy the parts you can see, which leaves out an awful lot of understanding and tacit knowledge hidden beneath the surface. It also leaves out all the knowledge of what doesn’t work that the originator has. And, finally, it ignores the competing interests within a larger business that make it much harder for those companies to innovate.”
In other words, do not worry about Borg assimilation if your startup has a good idea, but do be on the defensive and arm yourself with good weapons.
Whitney Grace, August 28, 2015
Sponsored by ArnoldIT.com, publisher of the CyberOSINT monograph
Developing an NLP Semantic Search
May 15, 2015
Can you imagine a natural language processing semantic search engine? It would be a lovely tool to use in your daily routines and make research a bit easier. If you are working on such a project and are making a progress, keep at that startup because this is lucrative field at the moment. Over at Stack Overflow, an entrepreneuring spirit is trying to develop a “Semantic Search With NLP And Elasticsearch”:
“I am experimenting with Elasticsearch as a search server and my task is to build a “semantic” search functionality. From a short text phrase like “I have a burst pipe” the system should infer that the user is searching for a plumber and return all plumbers indexed in Elasticsearch.
Can that be done directly in a search server like Elasticsearch or do I have to use a natural language processing (NLP) tool like e.g. Maui Indexer. What is the exact terminology for my task at hand, text classification? Though the given text is very short as it is a search phrase.”
Given that this question was asked about three years ago, a lot has been done not only with Elasticsearch, but also NLP. Search is moving towards a more organic experience, but accuracy is often muddled by different factors. These include the quality of the technology, classification, taxonomies, ads in results, and even keywords (still!).
NLP semantic search is closer now than it was three years ago, but technology companies would invest a lot of money in a startup that can bridge the gap between natural language and machine learning.
Whitney Grace, May 15, 2015
Sponsored by ArnoldIT.com, publisher of the CyberOSINT monograph
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