The deeper question then is how does the region keep on innovating? What keeps companies here so successful? One study, ‘The culture of innovation: what makes San Francisco Bay Area Companies different’ found companies in the area said their innovation and strategies were not only much more aligned than average but they also had much stronger cultural support for innovation.
I was recently lucky enough to spend time at BCG DV, the Digital Ventures arm of the renowned Boston Consulting Group. In its words, the company helps “uncover, incubate, scale and back game changing businesses and products for the world’s more important companies”.
Even though I am immersed in the tech world, several key themes struck me as worth noting from visiting the incubator and some of the interesting businesses they back and work alongside.
CONNECTING, STREAMLINING, SIMPLIFYING: THE FOUNDATION FOR MANY STRONG DIGITAL BUSINESS CASES
If you connect different groups who need each other, and do it in a streamlined and simple way, chances are you’ve got yourself a good business case.
One example is AutoGravity, a digital attacker business transforming the way consumers buy cars and get finance.
Consumers can search for a model of car on their smartphones, find a dealer that sells that car and see the finance offers available to them. They can then take their chosen offer into the dealership to complete the process.
The business model streamlines the car-buying process by building strong relationships with three participants in the value chain – customers, lenders and dealers – and then connecting them with an easy to use app.
STANDING OUT IN A CROWDED MARKETPLACE CAN START WITH KNOWING YOUR TARGET AUDIENCE REALLY WELL
SoFi (short for Social Finance) knows their predominately millennial customer base is less loyal and more likely to switch to other lenders than other demographics. They create loyalty by orientating themselves on the key drivers of millennials: money, careers and relationships.
For example, if a customer loses a job, then they’re provided with career counselling until they find a new one. Its ‘career strategy program’ is also used by young professionals who are in work but want to progress their careers.
SoFi also organises social events, including singles events – presumably targeting the life decisions like home loans which are more frequently made in couples.
FEELING THE BEAT: SOMETIMES YOU’VE GOT TO THINK OUTSIDE THE BOX TO GET INSIDE THE MARKET
The Chinese market is notoriously difficult to crack for foreign companies.
Global insurance giant Allianz has backed a product called XinKaishi, which is a foetal heartbeat monitor which connects via Bluetooth to an accompanying ‘pregnancy companion’ app.
The app gives expectant mothers all sorts of personalised and relevant health information, as well as giving them the ability to save, share and track heart beats over time.
Once XinKaishi has established itself with device sales and in-app marketing, Allianz will look to generate leads for their insurance business – thus providing themselves with a digital channel into the most populous nation on earth.
IT’S NOT EASY TO GET FUNDED IF YOU’RE A START-UP
There may be venture capitalist and angel investors aplenty but that doesn’t mean it’s easy to get funding. Talk to any Lyft driver - no-one in the SF tech industry uses Uber anymore - and there’s a chance they’ll be the founder of a failed start-up.
Javelin Venture Partners invests in early stage seed funding, specialising in FinTech. Each year, it hears about 1,700 pitches and it invests in just six to eight of these.
Interestingly, its criteria for success revolve around the potential for a start-up to work with banks – how they can use a bank’s assets, how they can be a distribution channel for the bank, and how can they use new technology and functionality to improve the bank’s processes.
IT USED TO BE MOBILE FIRST. NOW IT’S AI FIRST.
Artificial Intelligence is huge. In fact, Visa’s EVP of Innovation & Strategic Partnerships, Jim McCarthy, told us voice-activated ‘assistants’ like Google Home and Amazon’s Echo have become so mainstream users report them to be like a part of the family and have separation anxiety when they’re apart.
While this sounds a touch scary for those of us yet to welcome one into the family, it also demonstrates the big benefit of AI and machine learning: the highly personalised interaction it enables with customers.
Banks, for example, will look to apply this in the way they communicate with customers and provide offers to them.
THERE’S A WHOLE NEW BREED OF BUZZWORDS OUT THERE
If you’ve ever watched HBO’s hilarious ‘Silicon Valley’ show, you’ll be familiar with the lingo . But ‘bio-break’ – the latest way to excuse yourself to go to the bathroom - was a new one for me.
So, before you head off for a bio-break, know that the future this industry is creating is exciting, somewhat confronting at times, but absolutely all about the customer and making their life easier.
Denise Buckton is Senior Manager, Digital Tools at ANZ NZ