Since last year a remarkable percentage of 10% of the Business Information Management graduates was entrepreneur, 12 months after graduation I thought it might be interesting to write a blog post about the emergence of tech startups. Considering this fact, I assume that a large group is interested in launching a tech/internet related startup, and that even some of you might have chosen for BIM in a pursuit of their dreams to become the next tech millionaire.
As many successes stories appear on the tech sources we use to feed our curiosity in the field of BIM, some of you might have observed what makes tech/internet startups so attractive. For the ones who did not notice, the point is that tech/internet related ideas for startup can become very big in a short time with relatively less fund. Funding is in most cases only needed for hiring the right people with the right knowledge for the development of your idea. Since the value of such a company is mostly based on its potential, its really hard for an investor to claim a large part of the shares as an investor already admits that the company has potential by investing in it. This way the one behind the startup idea can raise fund at the start of the development of his/her idea in exchange for a unnecessarily large part of the shares. This boosts the over all value of the company making it even more attractive for more investors to do the same trick the next round of raising fund. In addition, innovative startup ideas are interesting content that easily can be spread over the web or even could go viral.
For example, the Dutch internet related startup Blendle, or e-market in terms of BIM, was found in 2014 and was valuated at an amount of €13.000.000,- after New York Times and Springer saw the potential of the company (Angel.co, 2014). This company claimed to be the ‘’iTunes of press’’. This company was found by two journalists which even more emphasizes that the only thing needed to become as successful as these guys is having a good idea and executing it smartly. The point I am making here is that we have chosen to act in the best and most dynamic field of business. It is our advantage that we as Business Information Management students are home in the area of internet and new technologies. It even might be assumed that all of use know how to develop and execute good software ideas at the end of the year.
Other successful startups from RSM alumni that has gained global awareness with publication in Business Insider are Housinganywhere and Symbid. Housing anywhere is a platform where the demand and supply of short term accommodation can come together. It is a simple yet effective tool which increases the amount of short term accommodation available to incoming exchange students (Housinganywhere.com, 2015). Symbid is a funding network where companies get fund and grow (Symbid.nl, 2015).
The ideas entrepreneurial BIM student are looking for need to be disruptive in order to gain global scaled success. Therefore, here are 4 points listed that can be adapted to businesses to become more disruptive (Inc.com, 2015):
- Innovation: Disruptive companies are one of a kind.
- Marketing: People want what disruptive companies have to offer.
- Business model: Disruptive companies make things affordable.
- Attitude: Disruptive companies are led by delusional and disagreeable people.
I would like to close this blog post with telling you about Cheeky. It is a platform where new startup ideas and gaps in society are discussed. The website provides one idea per day and helps you to extend your creativity. Finally, some feed for commenters; referring to the significant percentage of BIM alumni that become entrepreneur, what could Erasmus University Rotterdam organize in order to stimulate our creativity and stimulate collaboration as well as the rise of new startups that can serve as business cards for our university?
Angel.co, (2014). Blendle. [online] Available at: https://angel.co/blendle [Accessed 9 Oct. 2015].
Housinganywhere.com, (2015). About us | Housing Anywhere. [online] Available at: https://housinganywhere.com/about [Accessed 10 Oct. 2015].
Symbid.nl, (2015). Over ons|symbid. [online] Available at: https://www.symbid.nl/pages/about?locale=nl [Accessed 10 Oct. 2015].
Inc.com, (2015). 4 Disruption Concepts to Help Your Pivot Your Startup. [online] Available at: http://www.inc.com/neil-patel/4-disruption-concepts-to-help-your-pivot-your-startup.html [Accessed 10 Oct. 2015].
Technology of the Week: Electronic Markets and Auctions
The business models of iTunes and Blendle compared
In recent years, information technology and the internet have drastically changed how markets and auctions work. In electronic markets, supply and demand meet by means of an electronic platform. An e-market as market maker provides a new potential source of revenues for all involved participants; namely customers, suppliers and the e-market provider itself, which is iTunes in the music industry and Blendle in the publisher industry. The ones who come up with an innovative idea can have a very disruptive impact in its industry. So were the founders of Blende thinking: ‘Why pay a monthly or even a yearly subscription fee of the newspaper while only interested in just a few articles of the paper?’. Blendle is an electronic market where various individual newspaper and magazine articles can be bought for a small price. This relative new startup has disrupted the publisher’s industry like iTunes has caused a major shift in the music industry. Where traditionally music was bought in whole albums or cd’s, iTunes enabled customers to separately purchase songs. This way, customers are now buying single articles and songs which they might have never bought if they had to buy the whole newspaper or album (Malone, Yates and Benjamin, 1987).
iTunes was the first to disrupt the music industry by providing an online platform where consumers can buy any song separately out of the biggest base of music globally available. This began with a great success which makes it remarkable that it took the publishing industry so long to come up with a comparable platform, because this research has made it clear that the business models have many aspects in common. Therefore, the business model of iTunes seems to be successfully applicable for Blende as well, which might be the reason that investors consider this relatively new startup as extremely promising. It turned out that iTunes missed the technological development of music streaming, which, in spite of the strong positioning of iTunes, has made room for new competitors resulting in a big loss in market share in the music industry (AdWeek, 2015).
A remarkable similarity is that both business models are e-markets that bundles suppliers to make a personalized offer for customers, resulting in an easier way for customers to find what they want as well as a way to offer a customer the broadest offer globally available, the so called long tail principal. This has been made possible by the internet and is the main driver for the success of both business models. They serve the mass market as well as the niche market on a worldwide level. Therefore, this kind of companies tend to be or become very profitable as they both charge a fee for every item sold. In addition, both business models leverage the network effect it has gained as first mover, this includes that their platforms become even more powerful while its customer base increases. Finally, it can be seen as advantageous that the costs are limited to platform maintenance and business development.
iTunes has clearly shown that its business model not necessarily has to hold on regardless of the strong position gained by both companies. As a result of technological developments, namely music streaming, iTunes suffered from a huge loss in market share. This technology has made it more attractive for customers to offer unlimited consumption of music for a monthly fee, enabling new entrants to develop more advanced options with the collected data. So far Blendle competes only with physical publications as there are no signs of technological developments that could disrupt the industry again. Although the possibility of giving customers unlimited access for a monthly fee seems to be preferred by customers, looking at what happened with the music industry, Blendle might be aware of the impact that a new entrant introducing this business model could have. Apple has introduced Apple Music in an attempt to fix the incurred loss in market share. Blendle could avoid being forced making such a strategic move if they timely investigate what kind of business model its customers prefer. Some argue that only the Spotify-model will work in the long run, other think that publishers will only do business with Blendle as a Spotify-model would be destructive for publishers own businesses, since consumers would not have an incentive to subscribe for a newspaper or magazine if they contribute to a Spotify-model (De Nieuwe Reporter, 2013).
Floris Hol 419214
Tim Prein 346786
Wouter Bakker 357176
Jesse van Hofwegen 375283
Jeroen Gelderblom 371908
Your personal data is worth something, and actually we do deserve the value of these (our) data. Meanwhile are the large companies, such as Google and Facebook, the ones who collect our data as input and use it to transform it in valuable output. Via personal devices they record every step we take save it into their datacenters, these datacenters are the heart of what is called Big Data. A treasure of valuable data and new insights derived from e-mails, location based services, photo’s and many more sources most ordinary people are even not aware of.
Companies are willing to pay huge amounts for our personal data. Not only for advertising, but they can also use it to predict your future behavior. They are able to find indicators of a persons purchase intent and interests that we may be giving subconsciously. Some argue that Google’s business model is a threat, because its directly making money from what they have in control. They key is to regard data as an asset, as something valuable that’s our property and maybe we should even think a little bit about it like it’s money. Thinking different about it is controversial, data has always been used to sell goods and services, nowadays it’s the product.
Viktor Mayer Schonberger, author of ‘The Big Data Revolution’, found that companies do already look this way at big data so they’ve created new business models. Companies such as Facebook and Google have valuations of respectively $225 billon and $376 billion. All created with the value of our data. That’s why Jaron Lanier, author of ‘Who owns the Future’, wonders out loud, and so do I, weather we should get paid for this data supply. He estimates that the data should be worth hundreds of dollars for each person that’s active on the internet, if not thousands for some people. Every company nowadays sees data as a potential asset to generate value with, and we give it away to every company that we use services from because we don’t know how to possess our data and turn it into value ourselves.
Recently people fear that advances in technology will throw people out of work. The answer to this has always been ‘’No we are just making new ways of work that are even better than the previous ones’’, but the problem is that as things become highly automated and highly efficient because of digital technology, the question remains; can we still make that answer work? If cars are driving themselves and our products are printed by 3D printers instead of manufactured in a factory, is there then still anybody making a living? Then the only possible answer is that you can make a living with your information, because information is what becomes valuable in an highly advanced society.
So the value of personal data is going up which raises the question will this ever reach the poverty line? So weather the average value of information for a person in a certain country will be as much as the poverty line at some point. Jaron Lanier has made calculations and thinks that this is something that could happen. If information could eliminate poverty, then there are new ways to think about society, that might be something we should think about.
As a ambitious and entrepreneurial BIM student this futuristic philosophy keeps me thinking about ways to facilitate this shift from giving data to selling data. Feel free to leave a reply or contact me if you would like to share any thoughts about this.
Schonberger & Gukier, V, M. & K (2013) The Big Data Revolution, Houghton Mifflin Harcourt.
Lanier, J. (2014) Who Owns The Future, Simon & Schuster.
Kim, Eugene (2015) Uber has grown faster in its first five years than Facebook did, http://uk.businessinsider.com/uber-vs-facebook-valuation-in-years-one-through-five-2015-6?r=US&IR=T 09-13-2015.
Forbes, (2015) The World’s Most Valuable Brands, http://www.forbes.com/companies/google/ 09-13-2015