Tag: startups

• Conversational investing

  I’ve been spending my mornings this weekend, listening, watching, and reading things. I’m always reading to find content for this blog, but I’ve allocating more time to consumption this weekend. So you might be noticing a slightly different varietal of posts over the past few days.

  This morning it’s a podcast called Dorm Room Tycoon. It’s an interview with Andy Weissman, who is a partner with the New York venture capital firm, Union Square Ventures. The topic is “how we invest” and I’m enjoying the discussion.

  Andy describes their firm as being boutique and thesis-driven. Meaning they have theses and they look for companies that dovetail with them. But in addition, he also labels their approach as “conversational investing.”

  What does that mean?

  It means they listen, watch, and read. They blog (all the partners write their own personal blog). They engage and discuss. They put themselves and the firm “out there”. And they don’t pretend to have all the answers or to be able to predict the future. Instead they let their conversations – both internal and with the broader market – help them make their investing decisions.

  So why do I bring this up?

  Because in my own small way, I am trying to do the same with real estate development, architecture, and city building. I write every day to learn and because I am infinitely curious. If you want to know what I’m thinking about, read this blog.

  It’s for this reason that my favorite blog posts are the ones in which there’s lots of discussion in the comment section. It’s the market talking back, telling me whether I’m out to lunch or not. Ultimately, this idea of “conversational investing” is really about iterative decision making.

  Here’s the podcast embed in case you would also like to listen:

  [soundcloud url=”https://api.soundcloud.com/tracks/266734055″ params=”auto_play=false&hide_related=false&show_comments=true&show_user=true&show_reposts=false&visual=true” width=”100%” height=”450″ iframe=”true” /]

  Regardless, the Dorm Room Tycoon is worth checking out. They have other interviews with people like Malcolm Gladwell and Simon Sinek.

  2016.06.12

• The change order (ruminations on innovation)

  If any of you are in the
  business of creating – whether that’s a mobile app or a building – I’m sure
  you understand that the product or thing you’re working on will naturally
  evolve and change over time – probably in unexpected ways.

  In fact, I usually take this as a positive sign. When I have my
  head in a project and I’m focused on solving problems, ideas will naturally
  start to flow. I start thinking of things that I never would have thought
  about at the outset. That’s why I generally think of creativity as a process,
  rather than as some divine gift.

  But the challenge with all of this is that many of our existing business
  processes are not set up to deal with this kind of ambiguity. If anything we
  try and punish these sorts of deviations. If it wasn’t pre-meditated at the
  beginning of the project, we call it “scope creep” and charge extra for them as
  “change orders.” These two words equal death in construction.

  Now, don’t get me wrong, I completely understand the realities
  of running a business and the importance of managing scope and resources. It’s
  a balancing act. Without some structure, nothing would get done. 

  But the more that iterative
  lean methodologies and “design thinking” can be embedded into our processes,
  the more value creation I believe we will see.

  My thinking is as follows: At
  least part of the reason that innovation comes from startups and new market
  entrants is that the founders aren’t usually sitting around talking about defined
  scope and laying out elaborate business plans. They’re focused on creatively
  solving problems and doing whatever it takes to get there.

  It’s also one of the reasons
  that conventional wisdom dictates that tech startups shouldn’t outsource development.
  It’s too core a competency and you can’t “move
  fast and break things” if you don’t have that in-house and you’re constantly worried
  about eye-popping invoices hitting your desk.

  I have always seen lots of
  parallels between startups and architecture. In both of these worlds, the idea
  you start with is rarely what you end up with (at least that’s the case in
  architecture school). You research, learn, and iterate along the way and that
  leads you in new and unexpected ways.

  And in my view, that’s often what
  the path to innovation looks like. Because if you define the entire path at the
  outset, how can you expect to go anywhere new? And if you’re not going anywhere
  new, how can you expect to outperform the market?

  2016.06.08

• A money back guarantee on your next home

  

  I’ve written about Opendoor.com a few times. As far as I can tell, they are the furthest ahead in terms of disrupting the residential real estate market. So I like to follow them quite closely.

  They’ve recently launched some new features, so I figured it would be a good time to check-in on what they’re up to. But first – for those of you might not be familiar with Opendoor – here’s what they do.

  Opendoor offers instant liquidity to homeowners by buying homes site unseen. The fee they charge seems to amount to less than 10% of the value of the home. 

  They also say that they typically offer prices that are about 1-3% less than the market value of the home 3 months into the future. (Apparently 3 months is the average time-on-market for the cities in which they operate.)

  Once they’ve bought the home, they then make improvements and put it back on the market. As of today, they are buying about 10 homes a day in the two markets in which they operate (Phoenix and Dallas). They are spending about $75 million a month buying homes.

  To mitigate their risk, they won’t buy a home built before 1960, a home that was pre-fabricated, a home with a solar lease, and so on. They also stick to values that are between $100,000 to $600,000. But apparently this covers off about 90% of homes in the United States. (You can read their full FAQ here.)

  To accomplish all of this, they have raised about $110 million in venture capital.

  What’s fascinating about all of this is that they are starting to create a seamless marketplace. As they continue to buy more homes (and aggregate supply), more buyers are starting to come to their marketplace. They also allow people to easily find local contractors.

  Over time as they gain scale and as their algorithms improve, one could imagine their pricing becoming more competitive, them taking more of the market, and them bearing much less market risk as homes quickly trade. 

  They liken their model to car trade-ins. Apparently 60% of people who buy a new car are trading in an old one. That’s an interesting comparison that I hadn’t thought about before.

  So what’s new?

  Two things…

  First, they are offering a 30 day full refund on new home purchases. In other words, if you buy a home through their platform and, for whatever reason, you end up not liking it, they’ll buy it back (minus some transaction costs and so on).

  Second, they are providing a 180-point inspection report to buyers and if anything breaks in the first two years of ownership (presumably it is something that contravenes the inspection), they’ll come and fix it.

  These additions are helpful because it starts to target buyers, which will help them fill out the other side of their marketplace. It also promotes greater transparency because now they’re partially on the hook for the home’s performance.

  I like what they are doing and, again, I can’t think of any other company making such big bets in this space.

  2016.06.07

• Trust & attention

  Over the weekend I received a marketing email from a real estate company advertising their new mobile app. I didn’t download it.

  Nowadays, every company and brand seems to have a mobile app. If you don’t already have one for your organization, I bet many of you have thought about creating one. This is natural given how profound the shift to mobile has been.

  But I can’t help but feel like we are overestimating the kind of attention that many of these apps will receive. App usage is highly concentrated. We’ll spend hours on Instagram, but almost every other app in existence gets ignored.

  I love how marketer Seth Godin puts it: “the two scarce elements of our economy are trust and attention.” Attention is not scalable. Each of us have a finite amount of attention to give. And there’s lots of competition for it.

  At the same time – to borrow Godin’s thought process – a lot of people will sacrifice trust for the sake of attention. We overpromise because we become desperate. I mean, if you think about it, every company or organization is trying to figure out how to get you to pay attention to them.

  But I’d like to think that trust can also help you garner attention. Once I trust someone or some organization, I’m more likely to give them the time of day. They’ve earned it. And I feel like that’s where things are headed in today’s information economy.

  Trust and attention. Think about it. They’re pretty powerful things, no matter how you spend your days.

  2016.05.18

• Rentberry brings open bidding to rental market in San Francisco

  A new startup out of San Francisco, called Rentberry, has just launched, allowing tenants to openly bid on rentals in the city. Think of it like a rental auction. Landlord lists property. And then tenants compete for it by submitting offers. 

  Not surprisingly – especially since we’re talking about San Francisco – there’s concern that this will do nothing but drive up the city’s already high rents.

  But I think the key detail is that the platform will make public the total number of applicants. As a tenant, it’ll even tell you how your credit score compares to those of the other bidders (presumably, so you can gauge how aggressive you might need to be on your bid).

  The real estate industry is rife with information asymmetries. So anything that improves transparency is something that catches my attention. If you’ve ever bought or rented a place in a competitive market, you know that one of the worst things you can hear from the broker is: “We have another offer.” (Even worse: “We have 12 other offers.”)

  It’s frustrating because it now means you’re competing. But even more frustrating is the fact that you have no way of assessing whether or not that statement is fact or fiction. Yes, I realize that there’s a code of ethics that’s supposed be followed, but you and I both know that games are played all the time.

  In fact, I think someone could easily make a full career out of just trying to correct the information asymmetries inherent in the real estate industry. Who knows what sort of impact they might be having on the market. So I’m excited to see how things pan out for Rentberry.

  2016.05.17

• How much market share are New York’s yellow cabs losing to Uber?

  Todd W. Schneider recently mined data from the New York City Taxi & Limousine Commission to create a chart summarizing yellow taxi, Uber, and Lyft usage. 

  The data only runs up until January 2016, but here’s what he found:

  “…yellow taxis provided 60,000 fewer trips per day in January 2016 compared to one year earlier, while Uber provided 70,000 more trips per day over the same time horizon.”

  The Uber data only begins in 2015, but you can still see how quickly it is growing and how yellow taxis are losing market share. Five years ago, yellow taxis were reaching over 500,000 trips per day (a pretty amazing number) and in January of this year they were at about 350,000 trips per day. 

  It also appears that Lyft is struggling to gain traction.

  

  What’s also great about Todd’s blog post is that he has set it up so that his chart will automatically update as new data becomes available. So if you’re interested in this topic, you should bookmark his post.

  2016.04.10

• Why Toronto needs a night mayor

  

  Recently I wrote about the first Night Mayor Summit being held in Amsterdam. As part of this, I spoke about Amsterdam’s first night mayor – Mirik Milan.

  Since then (but obviously not because of my post), the idea has seemingly taken off. Below are a couple of excerpts from a recent Guardian article.

  This pragmatic and classically Dutch notion is now being copied across Europe: Toulouse, Zurich, Paris as well as several other Dutch cities have night mayors too.

  This week the mayor of London, Boris Johnson, announced plans for a “Night-Time Commission”, a six-month assessment of how to protect and manage the city’s £66bn night-time economy which is likely to recommend the creation of a “night-time champion” role. 

  Berlin is considering it too, and in April, Amsterdam will host the first global Night Mayors’ Summit.

  Why is this happening? Simple:

  “Late-night people are typically young, educated, creative, entrepreneurial – people you want in your city, and who work in the creative industries and startups you also want. If places like Berlin have flourished, it’s not just because of low rents. It’s because they’re nightlife capitals.”

  So if you’re reading this, Mayor John Tory, now is probably your last chance to make Toronto a North American leader in this regard. 

  It’s great that we are trying to push the Toronto – Waterloo region as a global startup hub, but so is every other major city and region in the world. A focus on startups is so commonplace in today’s economic development strategies, that at this point it almost feels meaningless. What are we going to do to stand out in this competition for the world’s best talent?

  If everyone believes something to be true – such as, there’s value in having a robust startup ecosystem – then it’s no longer innovative. It’s just the way things are. To take it to the next level, we’re going to have to do things that will probably feel uncomfortable at first – particularly for old establishment Toronto.

  I’m not saying that having a night mayor is going to be the silver bullet for our startup ecosystem. There’s no such thing. But I am saying that it should be one component of our larger strategy. 

  Because already there’s a growing number of European cities who have come to this one simple realization: people are drawn to kickass places.

  If you agree with this post, I would encourage you to leave a comment below and also tweet the Mayor of Toronto.

  Image: Berlin nightlife by Tom Stromer

  2016.03.26

• Technology x Business x Design

  John Maeda – Design Partner at venture capital firm KPCB – recently
  published the second and 2016 edition of his #DesignInTech
  Report. I shared his first one almost exactly a year ago.

  His core thesis is that we are heading towards a world where technology,
  business, and design become closely integrated – in school, in business, and so
  on. Throughout the report he looks at the increasing impact that design and
  designers are having within the startup ecosystem.

  Here are a few verbatim bullet points:

  – Design isn’t just about beauty; it’s about market relevance and meaningful
  results.

  – 36% of the top 25 funded startups are co-founded by
  designers, up from 20% in 2015.

  – The general word “design” will come to mean less as we
  will start to qualify the specific kind of design we mean.

  – Currently design education lags the technology industry’s
  needs for data-oriented, coding enabled graduates with business acumen.

  – We must consciously invest in education to develop a
  more hybrid perspective on creativity in the 21^st century:
  Technology x Business x Design.

  – President Obama’s signing of ESSA (Every Student
  Succeeds Act) into law in 2015 is a positive sign: by turning STEM into STEAM (adding Art) in K-12 education as a US priority.

  As somebody who studied design (architecture), business,
  and computer science (briefly, before switching to architecture), I probably
  have a bit of a biased view here. But to the extent that I can be objective, I
  really see this as the future. I am a big supporter of the transformation from STEM to STEAM.

  Below is a quote that Maeda uses to end his report, which I will also use to end this post:

  “Engineers are efficient problem solvers. Business people think short term. Designer want things to be elegant and beautiful. All three need to create collaboration and harmony, and honor the value each other brings. There needs to be a new kind of ‘multi-dimensional’ approach to design that is yet to be invented.” –Linda Holliday

  2016.03.21

• The advantages of disadvantages in business and entrepreneurship

  This morning I stumbled upon an interesting book by Claudia Kalb called Andy Warhol Was a Hoarder: Inside the Minds of History’s Great Personalities. 

  I obviously haven’t read it yet, but I like the premise. The book examines 12 famous figures and makes the argument that each of them had some sort of mental health condition that aided them in their success. 

  Here is an excerpt from a recent Harvard Business Review interview with the author:

  “The most common one may be narcissism. Frank Lloyd Wright is a good example. He had classic narcissistic qualities — a sense of grandiosity, superiority, a huge and complete belief in his aesthetic sensibility, and disregard for architecture that did not live up to his standard. Narcissists also have an ability to be charming, and to lure people into their orbit. That’s obviously useful for an entrepreneur. The issue is that while these qualities may make you a good leader, they may not make you a winning boss. Employees often feel that narcissistic bosses are ruthless or lacking in empathy. Also, unlike people with depression or anxiety disorders, narcissists don’t suffer as much personally from their condition — but the way they behave can be much harder on the people around them.”

  Related to this topic is an emergent body of research that, more specifically, looks at the relationship between mental illness and entrepreneurship. And according to work done by professor Michael A. Freeman of UC-San Francisco and professor Sheri Johnson of Berkeley, there’s a significant relationship. 

  Below are two excerpts from a Washington Post article published last year.

  “Forty-nine percent of entrepreneurs surveyed reported at least one mental health condition. Nearly a third reported having two or more mental health issues, such as ADHD, bipolar disorder, depression, anxiety or substance use conditions. And half of the entrepreneurs who reported no mental-health conditions identified themselves as coming from families with a history of mental illness.”

  Why would these conditions be of any benefit to entrepreneurs?

  “For all of its ills, depression also brings empathy and creativity. Martin Luther King Jr. and Mahatma Gandhi attempted suicide as teenagers. Uncommon levels of empathy can allow a businessman to better understand a customer’s need. And a creative mind won’t be satisfied on the corporate ladder, but instead in a fast-moving start-up where he or she can unfurl ideas and dreams.
  

  Individuals with ADHD naturally make decisions faster, are comfortable working independently and are more creative, necessary skills at a start-up. They’re likely to be bored working for someone else.”

  From a city building standpoint, all of this is quite relevant. Because for all of the focus on promoting innovation and entrepreneurship, we don’t seem to be talking about healthcare and mental health systems. And there’s clearly an argument to be made that the two are connected.

  2016.02.23

• 3 real estate + tech startups

  

  On Thursday night I spoke at Product Hunt Toronto about the overlap between real estate and tech. My slide deck will be made available online and I’ll be sure to tweet it out and link to it in the comment section of this post.

  What was amazing to see was a room filled with 250 people coming together from almost two different worlds. I’m generalizing here, but you had the real estate people in suits and the tech people in t-shirts. But they were all mixing together to figure out how technology is going to disrupt the real estate industry. That is great to see.

  This was not the case 5+ years ago when I started obsessing about the overlap between these two spaces. I remember pitching at a Startup Weekend here in Toronto where I was pegged as the fringe outlier for wanting to work on a real estate idea. Now I can’t keep track of all the startups who are tackling this space.

  But this is a trend that is happening not only in real estate but in almost every other vertical. Here’s a quote from Fred Wilson that I used last night:

  “One of NYC’s great strengths is the diversity of its economy – finance, real estate, media & entertainment, retail, fashion, health care, education, and now tech. And the reason tech is growing so fast in NYC is that it is embedding itself in all of these other industries.”

  It’s an exciting time.

  In any event, for those of you weren’t able to attend, the 3 startups that presented were Evercondo, PiinPoint, and MappedIn.

  Evercondo is a condo communication and management tool for property managers and boards. PiinPoint is a data-driven tool that helps businesses find the best places to locate within a city. And MappedIn creates digital wayfinding solutions for (primarily) retail stores and venues.

  If you know of any other interesting startups tackling the real estate space, please share them in the comment section below. Early stage companies need all the support and exposure they can get.

  2015.11.27