Philco's 1.9 Cents

Tata Announces World's Cheapest Water Filter - BoP Strategy

2009-12-10T00:28:10Z

The new buzz word (acronym) I’ve been hearing over and over again is BoP – Base of Pyramid. According to a World Bank report, there are 1 billion people living on a dollar a day or less. More importantly to the concept, however, there are 3 billion people that live on $5 or less a day. BoP experts believe that this massive group of people have urgent needs that need to be fulfilled, and they also have some form of income to provide in exchange for the fulfillment of these needs. I recently had the opportunity to speak with Josh Tetrick, the founder of 33needs.com - and his main argument is that it can be profitable for companies and startups to focus on this segment (the BoP), and is passionately working to convince companies to do so. You can learn more on his venture at 33needs.com

Seems like the idea is taking hold – Tata launched the world’s cheapest car a few years back, and has now announced the world’s cheapest filter. 894 million people lack access to clean water - a clear need – and this filter aims to provide families with clean water for 200 days. The filter is estimated to cost 21 dollars, or approx 10 cents a day for clean water.

Another startup targeting the BoP is D.Light, which sells solar powered lanterns, which also double up as phone chargers. “One in four people don’t have electricity in the dark” is the lead quote on their website – and if they can create a dependable source of light for cheap enough, this provides a massive market opportunity.

Ultimately I wonder if startups alone will be able to fulfill these needs – there are few if any good distribution systems in third world countries, creating a massive barrier to the selling of these BoP solutions and products. Nestle has one of the world’s most expansive and robust product distribution networks in the world – if it were to volunteer its distribution platform to such startups, I think we’d have a winning strategy. Without the ability to leverage these existing and costly distribution networks, I’m not sure how a startup for profit company could quickly make it to breakeven….

Here's what the filter looks like :

FlexVite - Your New Party Planning Tool

2009-12-08T18:46:48Z

Check out flexvite.com - a neat platform designed to maximize attendance to your party. You select the type of event you're looking to host (party, happy hour get together, going to the movies, coffee, whatever), and then suggest a date/time range that you're thinking of. You then send the invite to a group of people, and they all vote on the dates and times that work best for them.....once the vote is in, Flexvite automatically notifies everyone on the list what date and time won. I dig it, I think it's a smart way of getting people together.

Ideally this platform would sync with a service like Tungle (which I'm also a huge fan of), and automatically tell you what dates worked without having to bug people. There's a clear need for social calendar syncing, but the problem is that most people don't track their social plans on any one calendar...I wonder if that information will ever make it online. Maybe Flexvite is the first step towards that, we'll see.

Spudaroo - Where your tedious tasks are completed by others, on the cheap.

2009-11-30T21:45:39Z

I’ve been looking for a site that can effectively leverage collaboration, and finally I think I found something of note - Check out Spudaroo.com

Not sure what the title means exactly, but the site itself is quite well designed, and hits a very specific need – People have specific, time consuming, tasks that they would love to delegate to someone else. The problem is, for tasks as important as having someone write your business plan, or crafting your resume, you don’t want to entrust it to any single individual. You’d rather have several people work on the task, and pick the best one.

Historically, you’d have to hire 5 different people at once, and pay each of them for their work. Spudaroo enables people to price out the service they need done, and evaluate the individuals looking to do the work. I absolutely love this idea, and plan on submitting quite a bit of work/tasks/projects to Spudaroo in the near future.

What Black Friday Really Looks Like....According to Ebay

2009-11-30T16:29:53Z

Ebay just posted a new site that the data junky in me is in love with - they overlayed ebay purchases on black friday with a map of the united states, helping us visualize which regions of the United States are purchasing the most.

Here's what it looks like :

Imagine your Social Security card came with your very own government issued email address....

2009-11-28T21:23:20Z

That's right - the Turkish government is issuing an email address along with an every new identity card. From birth, Turkish citizens will have their very own, government hosted email address, with up to 10GB of storage space.

Couple quick thoughts...

1) Do you remember how hard it was to come up with your own screen name for AOL? This definitely gets rid of that stress, furthermore, as all imagineable names get taken up in yahoo, hotmail and gmail, this ensures that everyone who is born gets a standard identity that belongs to them.

2) The libertarian in me can't help but worry - if the government is issuing the email address, and hosting, then it also will have access to everything you do. This announcement comes hot on the tail of Turkey declaring that it was launching its own search engine due to "security concerns". Let's put it this way, do we feel better about a place like Google having ALL of our information, or the government? (Some argue it's picking between the same evil....)

3) The power that companies like Google are capitalizing on is increasingly drawing the attention of foreign governments. Either these governments are worried that too much information is being concentrated into the hands of few firms (most of them being American), or they are seeking to have access to this information and firms like Google aren't giving it up. Either way, it's a lot of power to be concentrated, and the more power is aggregated in firms like Google, the greater the headway they're going to encounter from Governments.

4) Is the Turkish government going to build its own facebook? That might be a bit weird....

Fore more info, check out :
http://thenextweb.com/europe/2009/11/28/turkey-give-70-million-citizens-email-address-search-engine/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+TheNextWeb+(The+Next+Web)&utm_content=Google+Reader

Reflections on Andy Rachleff's Talk

2009-11-06T13:28:40Z

I recently had the opportunity to hear Andy Rachleff give a primer on Venture Capital - and I have to say, Andy is one of the most interesting personalities I've ever encountered. He's a pure contrarian at heart...I don't think he ever answered a question with "I agree" or "yes" - he always said something like "What do you think?", "I don't think X and Y are possible, let's consider Z." This constant questioning ensured that we all walked away from the talk having expanded our line of thinking.

Quick summary of his talk...

Premise I:

Take two types of funds.

Fund I has ten million dollars, and makes ten, one million dollar investments, earning 1 million dollars on each investment over ten years.

Fund II also has ten million dollars, and makes ten one million dollar investments as well. The difference, however, is that eight of the investments brought back zero, and two of the investments brought in 20 million dollars.

Which fund would you rather invest in, and which fund would you rather be a partner in? Andy argues that both investors and partners want to be with Fund II, because the returns are significantly higher. Furthermore, the partner makes significantly more money off of the fund fees in the latter.

Premise II :

There are two ways to invest, you're either a consensus investor or a non consenus investor. Furthermore, if you're either, you can either be right or wrong.

Andy's thesis (and it's borrowed from one of his favorite investors, whose name I forget) is that you should be a Non-Consensus investor, and right. 95% of Venture Capital returns are brought in by the top 2% of VC firms...and according to Andy, they're the only ones that can be non-conensus investors, and right. Furthermore, they align themselves with Fund II - that is, they swing for the fences with every investment, knowing that 8/10 will fail miserably, but they hope that 2/10 will make 20x the investment over 10 years. Andy's argument states that the remaining 98% of VC firms that bring in lower returns, attempt to be non conensus, and are wrong in their investments. This means that out of the 10 investments, maybe 1 makes 10x the return, or maybe none. They swing for the fences and strike out every time.

Andy also proposed the thesis that if you're a consensus investor, you're investing in trends that have already been formed, and you're missing most of the upside. He claims that the best VC's find inflection points and invest in them before a market is even created. Take Twitter for example - there was no market in 140 character "micro-blogging" - they created the market opportunity from scratch. Any type of due dilligence on that type of business would have yielded negative information - there was no market to study! HIs point is that they created a new pie that they now own entirely - and it's a VC's job to indentify the cooky entrepreneurs out there that are capable of creating new markets entirely.

Philco's 1.9 Cents....

Although it is true that 98% of VC firms compete for 2% of the overall returns in that asset class, I think that all hope isn't lost for smaller firms. Those that are using Non-Consensus investing and are right, should continue to do so. But those that struggle with that investment thesis, should look at the opposite of what Andy and Benchmark do - they should become Consensus investors and be right. It's true that they might miss some of the initial upside, but if the trend can be their friend. If they know that a certain technology works, and that a new market is growing in it, they can invest in similar businesses that can ride the wave created by the market leader. Think of Facebook - they were the last entrant in the space...there was friendster and myspace YEARS before them, but they knew how to ameliorate the business model despite the market existing already. Furthermore, I think VC's should focus on VOLUME plays. Making two investments a year is contrary to what modern market investment theory suggests - there's no diversification of risk. VC's should put a little bit of money everywhere, and take on momentum/consensus plays. By being with the consensus, they have a higher likelihood of obtaining returns on their investment (albeit diminished), and by doing a volume play, they're more likely to be in any investment that takes off. As we all know, the history of a VCs success (Ie, stating that they invested in google, or facebook, or twitter, when everyone else looked away), helps that VC capture new dealflow. Entrepreneurs send them more business plans, and they're more likely to be appraoched by future succesful ideas. By playing on volume, they increase the likelihood of both seeing the next Google, and investing in it.

Worldwide Internet Adoption

2009-10-25T15:12:30Z

A summary of world internet penetration rates, and number of users by region. Are mobile phones going to change this dynamic completely?

Coming to a Domino's Near You....

2009-10-22T04:56:26Z

Review of the GreenBox - a NY Startup that has redesigned and revolutionized your everyday pizza delivery box.

Mobile Phones As Payment Mechanisms

2009-10-19T00:54:11Z

There's been a lot of buzz about the Mobile space being used to pay for things, and I found a fascinating company today - TransferTo. TransferTo is a site that enables users to transfer credits from their phones to other phones seamlessly.

Custom Shoe Designing Service - I'm a BUYER!

2009-10-16T23:05:26Z

Women can design their own shoes! Shoes of Prey has an awesome platform where you can select the heel (height and style), back, toe, and flare of the shoe, as well as colors and types of leather.