The wonderful world of Upwork & remote co-working

Today I received this message via Upwork from my colleague Kirandeep in India. I say ‘colleague’ - I’ve never met Kirandeep. In fact, I’ve never spoken to him. My sole interaction with him is via the UpWork messaging app - and we get on very well. I set him tasks. He does them. Well and on time and without fuss, and at a good price (for both me and him no doubt - $10 an hour is a princely sum for technical work in India, and a snip in the UK).

"Also Christopher, This is to inform you that I won't be available tomorrow as there is a national holiday on the auspicious day of "Mahatama Gandhi - Indian Freedom Fighter's Birth anniversary. I 'll back to my work station on Thursday. I'll manage the work by giving extra hours. I hope you understand !”

Why I warmed to this message was on a number of levels 1) Firstly, it showed great diligence to warn me he wasn’t going to be working 2) I had know idea what Mahatma Gandhi day was (though I possibly should) 3) I liked his use of the word ‘auspicious 4) He showed extra levels of diligence and communication by saying he’d work extra hard the days after.

Thank you Kirandeep for your hard work. Thank you Upwork for creating the technology to facilitate such positive working relationships ;-)

KittenCapital 2019 - mid-year review

Silence is generally a good thing when it comes to reporting - along the ‘no news is good news’ vein. And that’s been very much been the case in the last 6 months for KittenCapital, as I’ve continued to help nurture my various businesses.

Nurturing has also meant shutting some businesses that have reached the end of their life value, accelerating others and investing in new ideas.

I’ve put together a summary of my portfolio activity for H1 2019 below. Dead-heading is a good thing in business (more on that here).

> Closed / exiting

Rubber Republic: EXIT

Rubber Republic was the first ever business (initially called Rubberductions) that I founded back in 2001 making viral videos - so I have a great fondness and emotional attachment to it. A lot changes in 18 years, and I’m sad to say that I’ve decided to sell my shareholding and exit the business. I wish it - and Matt my co-founder and CEO - well for its future, as it progresses and changes. The proceeds of the Rubber Republic exit will be re-invested in other / new KittenCapital ventures.

Hackers.Media: CLOSED

Hackers.Media was one of the most recent companies I set up, aimed at providing data and consultancy services to global ad tech businesses off the back of my exit from Sharethrough. Hackers.Media had some stellar successes, the being ongoing strategic consultancy work with Polymorph Labs’ CEO leading to their sale to Walmart in April.


#KittenCamp: CLOSED

KittenCamp was an amazingly successful meet-up celebrating trending memes and the underbelly of the internet. Set up in a basement bar in Soho in 2009, it turned into a global sensation (of sorting) with #KittenCamp events held around the world - including New York, Austin, Sydney and San Francisco. As memes went mainstream and thrived, it was time to kill #KittenCamp.

That said, the ethos of #KittenCamp very much continues at the heart of KittenCapital . . .

> Thriving

Delib: THRIVING

Delib, specialising in digital democracy software, continues its growth establishing itself as a global leader in digital democracy software - based around a SaaS business model - with c.60% of UK central government departments and 15% of UK local government. The biggest growth area remains Australia / NZ where Delib is still very much a challenger product against more established local brands. Lots still to do, but nice / fun to have a business the other side of the world (especially with the weak pound) ;-)

As part of my work at Delib I’ve started building out various elements of content, including a Podcast series . . .

AMCO: THRIVING

AMCO Security, started by my father, specialises in monitored security systems. The security industry is being rapidly disrupted by cloud-based technologies like Ring (Amazon) and Nest (Google), so navigating AMCO through through these technology shifts is an interesting and exciting challenge - and definitely not easy. Testing / trialling / building / killing / building-again is very much an ongoing process. The latest product launch is LiveViz - a smart monitored alarm camera . . .

SmartSecurity: THRIVING

SmartSecurity is to AMCO what GiffGaff is to O2 i.e. a ‘pay-as-you-go’ security service. SmartSecurity’s a spin-off service from AMCO, filling the gap in the market for pay-you-go & self-fix security services - vs the traditional contract-based security companies. We’ve created x3 different SmartSecurity services, each filling a different user-need:

  • SmartSecurity.Store: where users can buy peripheries (like batteries etc.) to fix their alarm themselves. View .store here >>

  • SmartSecurity.Guide: a series of how to guides (both text and video format) helping users fix their own alarms. View .Guide here >>

  • SmartSecurity.Support: an engineer support service where users can book engineers via an online booking form. View .Support here >>

> NEW / emerging

ComCaddy: NEW

This idea started as ‘terms-and-conditions-as-a-service’ and has morphed into providing ‘legal-compliance-as-a-service’ for small web businesses - for example fixing the problem for online shop owners of knowing whether their website complies to Europe’s GDPR legislation or Australia’s consumer rights laws.

PeckhamConkerClub: EMERGING

Not much to say about this apart from I help organise a conker competition and have started ageing conkers in my cellar - along with my wine collection. Is the world ready for a premium conker brand? Probably not . . .

The importance of dead-heading

One of the unintended consequences of starting to work from my new garden office - still work in progress - is an appreciation of the importance of gardening, as everyday I my commute takes me past various flower beds all of which I noticed have started to become a bit unruly and unloved.

Inspired by an article in the FT by their gardening correspondent Robin Lane Fox on ‘pruning in late summer’, I’ve become mildly obsessed by ‘dead-heading’.

Dead-heading is, for the less horticulturally inclined, is the process of removing old / dead flowers from plants, to encourage them to re-flower. According to Robin Lane Fox with increasingly long summers in the UK, it’s important to dead-head to get more flowering through the later parts of summer (into September and beyond).

Excitingly I’ve already started to see positive results of my dead-heading work - with new flowers blooming from previously non-flowered plants (results shown below)

IMG_3188.JPG

This started me thinking about how you might apply the concept of dead-heading to businesses. Cutting out the old to encourage the new? Interestingly dead-heading is about cutting ‘dead stuff’, the non-productive / past-it elements of a flower to focus the plants energy on new buds.

I haven’t quite worked out my thinking here - but I think there might be something in applying dead-heading to businesses . . .

IMG_3187.JPG

Wise words from Warren Buffet's 2019 Annual Shareholder letter

Warren Buffet’s Berkshire Hathaway’s annual shareholder letter is stuff of legend. My favourite quote from his 2019 letter - just released is:

Truly good businesses are exceptionally hard to find. Selling any you are lucky enough to own makes no sense at all.

Read the full letter here >>

Videographer needed (South London)

We’re looking for a freelance Videographer / video-maker to make some films with us.  You might be a young film-maker starting out, a part-timer who makes films for the love of it or a wise old film-making owl.  Experience isn’t really the factor.  The key thing is that you have the right skills and the right chemistry with us.

The kind of skills we’re looking for is an all-round, all-in-one film-maker, so someone who can shoot and edit.  Ideally you’d be based in London - preferably South London, as we’re based in Peckham.

The kind of films we’re looking to make are mostly product videos for the various products we make / sell across our companies.  To start with we’ll be making films around AMCO’s security product range.  AMCO are a pretty innovative company in the space of home security, and have some natty products we want to bring alive - so we can promote and sell them more effectively across the UK.

We may also be interested in making some films for Delib - a digital democracy company, that sells software to governments around the world to improve democratic processes.  Completely different to the AMCO brief, but equally as interesting.

If you’re interested in collaborating, drop us a note via email - including some links to examples of your work and anything else we should know.  Email: chris@kittencapital.com

[Photo credit to: Kai Teoh via BoingBoing]

Learning: Shareholder letter from Jeff Bezos

It's probably a useful thing to at least listen to what the richest man in the world has to say to his shareholders; it's probably even smarter to try to learn a thing or two from him.  Here's some sage words from Jeff Bezos' latest shareholder letter - along with a nod to his shareholder letter from 1997 N.B. interesting stat: in 1997 he'd grown the Amazon team to c.500 (from 150 the year before), now they're 500,000+ . . .

2018 LETTER TO SHAREHOLDERS

To our shareowners:

The American Customer Satisfaction Index recently announced the results of its annual survey, and for the 8th year in a row customers ranked Amazon #1. The United Kingdom has a similar index, The U.K. Customer Satisfaction Index, put out by the Institute of Customer Service. For the 5th time in a row Amazon U.K. ranked #1 in that survey. Amazon was also just named the #1 business on LinkedIn’s 2018 Top Companies list, which ranks the most sought after places to work for professionals in the United States. And just a few weeks ago, Harris Poll released its annual Reputation Quotient, which surveys over 25,000 consumers on a broad range of topics from workplace environment to social responsibility to products and services, and for the 3rd year in a row Amazon ranked #1.

Congratulations and thank you to the now over 560,000 Amazonians who come to work every day with unrelenting customer obsession, ingenuity, and commitment to operational excellence. And on behalf of Amazonians everywhere, I want to extend a huge thank you to customers. It’s incredibly energizing for us to see your responses to these surveys.

One thing I love about customers is that they are divinely discontent. Their expectations are never static – they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’. I see that cycle of improvement happening at a faster rate than ever before. It may be because customers have such easy access to more information than ever before – in only a few seconds and with a couple taps on their phones, customers can read reviews, compare prices from multiple retailers, see whether something’s in stock, find out how fast it will ship or be available for pick-up, and more. These examples are from retail, but I sense that the same customer empowerment phenomenon is happening broadly across everything we do at Amazon and most other industries as well. You cannot rest on your laurels in this world. Customers won’t have it.

How do you stay ahead of ever-rising customer expectations? There’s no single way to do it – it’s a combination of many things. But high standards (widely deployed and at all levels of detail) are certainly a big part of it. We’ve had some successes over the years in our quest to meet the high expectations of customers. We’ve also had billions of dollars’ worth of failures along the way. With those experiences as backdrop, I’d like to share with you the essentials of what we’ve learned (so far) about high standards inside an organization.

Intrinsic or Teachable?

First, there’s a foundational question: are high standards intrinsic or teachable? If you take me on your basketball team, you can teach me many things, but you can’t teach me to be taller. Do we first and foremost need to select for “high standards” people? If so, this letter would need to be mostly about hiring practices, but I don’t think so. I believe high standards are teachable. In fact, people are pretty good at learning high standards simply through exposure. High standards are contagious. Bring a new person onto a high standards team, and they’ll quickly adapt. The opposite is also true. If low standards prevail, those too will quickly spread. And though exposure works well to teach high standards, I believe you can accelerate that rate of learning by articulating a few core principles of high standards, which I hope to share in this letter.

Universal or Domain Specific?

Another important question is whether high standards are universal or domain specific. In other words, if you have high standards in one area, do you automatically have high standards elsewhere? I believe high standards are domain specific, and that you have to learn high standards separately in every arena of interest. When I started Amazon, I had high standards on inventing, on customer care, and (thankfully) on hiring. But I didn’t have high standards on operational process: how to keep fixed problems fixed, how to eliminate defects at the root, how to inspect processes, and much more. I had to learn and develop high standards on all of that (my colleagues were my tutors).

Understanding this point is important because it keeps you humble. You can consider yourself a person of high standards in general and still have debilitating blind spots. There can be whole arenas of endeavor where you may not even know that your standards are low or non-existent, and certainly not world class. It’s critical to be open to that likelihood.

Recognition and Scope

What do you need to achieve high standards in a particular domain area? First, you have to be able to recognize what good looks like in that domain. Second, you must have realistic expectations for how hard it should be (how much work it will take) to achieve that result – the scope.

Let me give you two examples. One is a sort of toy illustration but it makes the point clearly, and another is a real one that comes up at Amazon all the time.

Perfect Handstands

A close friend recently decided to learn to do a perfect free-standing handstand. No leaning against a wall. Not for just a few seconds. Instagram good. She decided to start her journey by taking a handstand workshop at her yoga studio. She then practiced for a while but wasn’t getting the results she wanted. So, she hired a handstand coach. Yes, I know what you’re thinking, but evidently this is an actual thing that exists. In the very first lesson, the coach gave her some wonderful advice. “Most people,” he said, “think that if they work hard, they should be able to master a handstand in about two weeks. The reality is that it takes about six months of daily practice. If you think you should be able to do it in two weeks, you’re just going to end up quitting.” Unrealistic beliefs on scope – often hidden and undiscussed – kill high standards. To achieve high standards yourself or as part of a team, you need to form and proactively communicate realistic beliefs about how hard something is going to be – something this coach understood well.

Six-Page Narratives

We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon. Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of “study hall.” Not surprisingly, the quality of these memos varies widely. Some have the clarity of angels singing. They are brilliant and thoughtful and set up the meeting for high-quality discussion. Sometimes they come in at the other end of the spectrum.

In the handstand example, it’s pretty straightforward to recognize high standards. It wouldn’t be difficult to lay out in detail the requirements of a well-executed handstand, and then you’re either doing it or you’re not. The writing example is very different. The difference between a great memo and an average one is much squishier. It would be extremely hard to write down the detailed requirements that make up a great memo. Nevertheless, I find that much of the time, readers react to great memos very similarly. They know it when they see it. The standard is there, and it is real, even if it’s not easily describable.

Here’s what we’ve figured out. Often, when a memo isn’t great, it’s not the writer’s inability to recognize the high standard, but instead a wrong expectation on scope: they mistakenly believe a high-standards, six-page memo can be written in one or two days or even a few hours, when really it might take a week or more! They’re trying to perfect a handstand in just two weeks, and we’re not coaching them right. The great memos are written and re-written,shared with colleagues who are asked to improve the work, set aside for a couple of days, and then edited again with a fresh mind. They simply can’t be done in a day or two. The key point here is that you can improve results through the simple act of teaching scope – that a great memo probably should take a week or more.

Skill

Beyond recognizing the standard and having realistic expectations on scope, how about skill? Surely to write a world class memo, you have to be an extremely skilled writer? Is it another required element? In my view, not so much, at least not for the individual in the context of teams. The football coach doesn’t need to be able to throw, and a film director doesn’t need to be able to act. But they both do need to recognize high standards for those things and teach realistic expectations on scope. Even in the example of writing a six-page memo, that’s

teamwork. Someone on the team needs to have the skill, but it doesn’t have to be you. (As a side note, by tradition at Amazon, authors’ names never appear on the memos – the memo is from the whole team.)

Benefits of High Standards

Building a culture of high standards is well worth the effort, and there are many benefits. Naturally and most obviously, you’re going to build better products and services for customers – this would be reason enough! Perhaps a little less obvious: people are drawn to high standards – they help with recruiting and retention. More subtle: a culture of high standards is protective of all the “invisible” but crucial work that goes on in every company. I’m talking about the work that no one sees. The work that gets done when no one is watching. In a high standards culture, doing that work well is its own reward – it’s part of what it means to be a professional.

And finally, high standards are fun! Once you’ve tasted high standards, there’s no going back.

So, the four elements of high standards as we see it: they are teachable, they are domain specific, you must recognize them, and you must explicitly coach realistic scope. For us, these work at all levels of detail. Everything from writing memos to whole new, clean-sheet business initiatives. We hope they help you too.

Insist on the Highest Standards

Leaders have relentlessly high standards – many people may think these standards are unreasonably high.

-- from the Amazon Leadership Principles

Recent Milestones

The high standards our leaders strive for have served us well. And while I certainly can’t do a handstand myself, I’m extremely proud to share some of the milestones we hit last year, each of which represents the fruition of many years of collective effort. We take none of them for granted.

 • Prime – 13 years post-launch, we have exceeded 100 million paid Prime members globally. In 2017 Amazon shipped more than five billion items with Prime worldwide, and more new members joined Prime than in any previous year – both worldwide and in the U.S. Members in the U.S. now receive unlimited free two-day shipping on over 100 million different items. We expanded Prime to Mexico, Singapore, the Netherlands, and Luxembourg, and introduced Business Prime Shipping in the U.S. and Germany. We keep making Prime shipping faster as well, with Prime Free Same-Day and Prime Free One-Day delivery now in more than 8,000 cities and towns. Prime Now is available in more than 50 cities worldwide across nine countries. Prime Day 2017 was our biggest global shopping event ever (until surpassed by Cyber Monday), with more new Prime members joining Prime than any other day in our history.

 • AWS – It’s exciting to see Amazon Web Services, a $20 billion revenue run rate business, accelerate its already healthy growth. AWS has also accelerated its pace of innovation – especially in new areas such as machine learning and artificial intelligence, Internet of Things, and serverless computing. In 2017, AWS announced more than 1,400 significant services and features, including Amazon SageMaker, which radically changes the accessibility and ease of use for everyday developers to build sophisticated machine learning models. Tens of thousands of customers are also using a broad range of AWS machine learning services, with active users increasing more than 250 percent in the last year, spurred by the broad adoption of Amazon SageMaker. And in November, we held our sixth re:Invent conference with more than 40,000 attendees and over 60,000 streaming participants.

 • Marketplace – In 2017, for the first time in our history, more than half of the units sold on Amazon worldwide were from our third-party sellers, including small and medium-sized businesses (SMBs). Over 300,000 U.S.-based SMBs started selling on Amazon in 2017, and Fulfillment by Amazon shipped billions of items for SMBs worldwide. Customers ordered more than 40 million items from SMBs worldwide during Prime Day 2017, growing their sales by more than 60 percent over Prime Day 2016. Our Global Selling program (enabling SMBs to sell products across national borders) grew by over 50% in 2017 and cross-border ecommerce by SMBs now represents more than 25% of total third-party sales.

 • Alexa – Customer embrace of Alexa continues, with Alexa-enabled devices among the best-selling items across all of Amazon. We’re seeing extremely strong adoption by other companies and developers that want to create their own experiences with Alexa. There are now more than 30,000 skills for Alexa from outside developers, and customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa. The foundations of Alexa continue to get smarter every day too. We’ve developed and implemented an on-device fingerprinting technique, which keeps your device from waking up when it hears an Alexa commercial on TV. (This technology ensured that our Alexa Super Bowl commercial didn’t wake up millions of devices.) Far-field speech recognition (already very good) has improved by 15% over the last year; and in the U.S., U.K., and Germany, we’ve improved Alexa’s spoken language understanding by more than 25% over the last 12 months through enhancements in Alexa’s machine learning components and the use of semi-supervised learning techniques. (These semi-supervised learning techniques reduced the amount of labeled data needed to achieve the same accuracy improvement by 40 times!) Finally, we’ve dramatically reduced the amount of time required to teach Alexa new languages by using machine translation and transfer learning techniques, which allows us to serve customers in more countries (like India and Japan).

 • Amazon devices – 2017 was our best year yet for hardware sales. Customers bought tens of millions of Echo devices, and Echo Dot and Fire TV Stick with Alexa were the best-selling products across all of Amazon – across all categories and all manufacturers. Customers bought twice as many Fire TV Sticks and Kids Edition Fire Tablets this holiday season versus last year. 2017 marked the release of our all-newEcho with an improved design, better sound, and a lower price; Echo Plus with a built-in smart home hub; and Echo Spot, which is compact and beautiful with a circular screen. We released our next generation Fire TV, featuring 4K Ultra HD and HDR; and the Fire HD 10 Tablet, with 1080p Full HD display. And we celebrated the 10th anniversary of Kindle by releasing the all-new Kindle Oasis, our most advanced reader ever. It’s waterproof – take it in the bathtub – with a bigger 7” high-resolution 300 ppi display and has built-in audio so you can also listen to your books with Audible.

 • Prime Video – Prime Video continues to drive Prime member adoption and retention. In the last year we made Prime Video even better for customers by adding new, award-winning Prime Originals to the service, like The Marvelous Mrs. Maisel, winner of two Critics’ Choice Awards and two Golden Globes, and the Oscar-nominated movie The Big Sick. We’ve expanded our slate of programming across the globe, launching new seasons of Bosch and Sneaky Pete from the U.S., The Grand Tour from the U.K., and You Are Wanted from Germany, while adding new Sentosha shows from Japan, along with Breathe and the award-winning Inside Edge from India. Also this year, we expanded our Prime Channels offerings, adding CBS All Access in the U.S. and launching Channels in the U.K. and Germany. We debuted NFL Thursday Night Football on Prime Video, with more than 18 million total viewers over 11 games. In 2017, Prime Video Direct secured subscription video rights for more than 3,000 feature films and committed over $18 million in royalties to independent filmmakers and other rights holders. Looking forward, we’re also excited about our upcoming Prime Original series pipeline, which includes Tom Clancy’s Jack Ryan starring John Krasinski; King Lear, starring Anthony Hopkins and Emma Thompson; The Romanoffs, executive produced by Matt Weiner; Carnival Row starring Orlando Bloom and Cara Delevingne; Good Omens starring Jon Hamm; and Homecoming, executive produced by Sam Esmail and starring Julia Roberts in her first television series. We acquired the global television rights for a multi-season production of The Lord of the Rings, as well as Cortés, a miniseries based on the epic saga of Hernán Cortés from executive producer Steven Spielberg, starring Javier Bardem, and we look forward to beginning work on those shows this year.

 • Amazon Music – Amazon Music continues to grow fast and now has tens of millions of paid customers. Amazon Music Unlimited, our on-demand, ad-free offering, expanded to more than 30 new countries in 2017, and membership has more than doubled over the past six months.

 • Fashion – Amazon has become the destination for tens of millions of customers to shop for fashion. In 2017, we introduced our first fashion-oriented Prime benefit, Prime Wardrobe – a new service that brings the fitting room directly to the homes of Prime members so they can try on the latest styles before they buy. We introduced Nike and UGG on Amazon along with new celebrity collections by Drew Barrymore and Dwyane Wade, as well as dozens of new private brands, like Goodthreads and

Core10. We’re also continuing to enable thousands of designers and artists to offer their exclusive designs and prints on demand through Merch by Amazon. We finished 2017 with the launch of our interactive shopping experience with Calvin Klein, including pop-up shops, on-site product customization, and fitting rooms with Alexa-controlled lighting, music, and more.

 • Whole Foods – When we closed our acquisition of Whole Foods Market last year, we announced our commitment to making high-quality, natural and organic food available for everyone, then immediately lowered prices on a selection of best-selling grocery staples, including avocados, organic brown eggs, and responsibly-farmed salmon. We followed this with a second round of price reductions in November, and our Prime member exclusive promotion broke Whole Foods’ all-time record for turkeys sold during the Thanksgiving season. In February, we introduced free two-hour delivery on orders over $35 for Prime members in select cities, followed by additional cities in March and April, and plan continued expansion across the U.S. throughout this year. We also expanded the benefits of the Amazon Prime Rewards Visa Card, enabling Prime members to get 5% back when shopping at Whole Foods Market. Beyond that, customers can purchase Whole Foods’ private label products like 365 Everyday Value on Amazon, purchase Echo and other Amazon devices in over a hundred Whole Foods stores, and pick-up or return Amazon packages at Amazon Lockers in hundreds of Whole Foods stores. We’ve also begun the technical work needed to recognize Prime members at the point of sale and look forward to offering more Prime benefits to Whole Foods shoppers once that work is completed.

 • Amazon Go – Amazon Go, a new kind of store with no checkout required, opened to the public in January in Seattle. Since opening, we’ve been thrilled to hear many customers refer to their shopping experience as “magical.” What makes the magic possible is a custom-built combination of computer vision, sensor fusion, and deep learning, which come together to create Just Walk Out shopping. With JWO, customers are able to grab their favorite breakfast, lunch, dinner, snack, and grocery essentials more conveniently than ever before. Some of our top-selling items are not surprising – caffeinated beverages and water are popular – but our customers also love the Chicken Banh Mi sandwich, chocolate chip cookies, cut fruit, gummy bears, and our Amazon Meal Kits.

 • Treasure Truck – Treasure Truck expanded from a single truck in Seattle to a fleet of 35 trucks across 25 U.S. cities and 12 U.K. cities. Our bubble-blowing, music-pumping trucks fulfilled hundreds of thousands of orders, from porterhouse steaks to the latest Nintendo releases. Throughout the year, Treasure Truck also partnered with local communities to lift spirits and help those in need, including donating and delivering hundreds of car seats, thousands of toys, tens of thousands of socks, and many other essentials to community members needing relief, from those displaced by Hurricane Harvey, to the homeless, to kids needing holiday cheer.

 • India – Amazon.in is the fastest growing marketplace in India, and the most visited site on both desktop and mobile, according to comScore and SimilarWeb. The Amazon.in mobile shopping app was also the most downloaded shopping app in India in 2017, according to App Annie. Prime added more members in India in its first year than any previous geography in Amazon’s history. Prime selection in India now includes more than 40 million local products from third-party sellers, and Prime Video is investing in India original video content in a big way, including two recent premiers and over a dozen new shows in production.

 • Sustainability – We are committed to minimizing carbon emissions by optimizing our transportation network, improving product packaging, and enhancing energy efficiency in our operations, and we have a long-term goal to power our global infrastructure using 100% renewable energy. We recently launched Amazon Wind Farm Texas, our largest wind farm yet, which generates more than 1,000,000 megawatt hours of clean energy annually from over 100 turbines. We have plans to host solar energy systems at 50 fulfillment centers by 2020, and have launched 24 wind and solar projects across the U.S. with more than 29 additional projects to come. Together, Amazon’s renewable energy projects now produce enough clean energy to power over 330,000 homes annually. In 2017 we celebrated the 10-year anniversary of Frustration-Free Packaging, the first of a suite of sustainable packaging initiatives that have eliminated more than 244,000 tons of packaging materials over the past 10 years. In addition, in 2017 alone our programs significantly reduced packaging waste, eliminating the equivalent of 305 million shipping boxes. And across the world, Amazon is contracting with our service providers to launch our first low-pollution last-mile fleet. Already today, a portion of our European delivery fleet is comprised of low-pollution electric and natural gas vans and cars, and we have over 40 electric scooters and e-cargo bikes that complete local urban deliveries.

 • Empowering Small Business – Millions of small and medium-sized businesses worldwide now sell their products through Amazon to reach new customers around the globe. SMBs selling on Amazon come from every state in the U.S., and from more than 130 different countries around the world. More than 140,000 SMBs surpassed $100,000 in sales on Amazon in 2017, and over a thousand independent authors surpassed $100,000 in royalties in 2017 through Kindle Direct Publishing.

 • Investment & Job Creation – Since 2011, we have invested over $150 billion worldwide in our fulfillment networks, transportation capabilities, and technology infrastructure, including AWS data centers. Amazon has created over 1.7 million direct and indirect jobs around the world. In 2017 alone, we directly created more than 130,000 new Amazon jobs, not including acquisitions, bringing our global employee base to over 560,000. Our new jobs cover a wide range of professions, from artificial intelligence scientists to packaging specialists to fulfillment center associates. In addition to these direct hires, we estimate that Amazon Marketplace has created 900,000 more jobs worldwide, and that Amazon’s investments have created an additional 260,000 jobs in areas like construction, logistics, and other professional services.

 • Career Choice – One employee program we’re particularly proud of is Amazon Career Choice. For hourly associates with more than one year of tenure, we pre-pay 95% of tuition, fees, and textbooks (up to $12,000) for certificates and associate degrees in high-demand occupations such as aircraft mechanics, computer-aided design, machine tool technologies, medical lab technologies, and nursing. We fund education in areas that are in high demand and do so regardless of whether those skills are relevant to a career at Amazon. Globally more than 16,000 associates (including more than 12,000 in the U.S.) have joined Career Choice since the program launched in 2012. Career Choice is live in ten countries and expanding to South Africa, Costa Rica, and Slovakia later this year. Commercial truck driving, healthcare, and information technology are the program’s most popular fields of study. We’ve built 39 Career Choice classrooms so far, and we locate them behind glass walls in high traffic areas inside our fulfillment centers so associates can be inspired by seeing their peers pursue new skills.

The credit for these milestones is deserved by many. Amazon is 560,000 employees. It’s also 2 million sellers, hundreds of thousands of authors, millions of AWS developers, and hundreds of millions of divinely discontent customers around the world who push to make us better each and every day.

Path Ahead

This year marks the 20th anniversary of our first shareholder letter, and our core values and approach remain unchanged. We continue to aspire to be Earth’s most customer-centric company, and we recognize this to be no small or easy challenge. We know there is much we can do better, and we find tremendous energy in the many challenges and opportunities that lie ahead.

A huge thank you to each and every customer for allowing us to serve you, to our shareowners for your support, and to Amazonians everywhere for your ingenuity, your passion, and your high standards.

As always, I attach a copy of our original 1997 letter. It remains Day 1.

Sincerely,

Jeffrey P. Bezos

Founder and Chief Executive Officer

Amazon.com, Inc.

 

1997 LETTER TO SHAREHOLDERS

(Reprinted from the 1997 Annual Report)

To our shareholders:

Amazon.com passed many milestones in 1997: by year-end, we had served more than 1.5 million customers, yielding 838% revenue growth to $147.8 million, and extended our market leadership despite aggressive competitive entry.

But this is Day 1 for the Internet and, if we execute well, for Amazon.com. Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon.com uses the Internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established and large markets.

We have a window of opportunity as larger players marshal the resources to pursue the online opportunity and as customers, new to purchasing online, are receptive to forming new relationships. The competitive landscape has continued to evolve at a fast pace. Many large players have moved online with credible offerings and have devoted substantial energy and resources to building awareness, traffic, and sales. Our goal is to move quickly to solidify and extend our current position while we begin to pursue the online commerce opportunities in other areas. We see substantial opportunity in the large markets we are targeting. This strategy is not without risk: it requires serious investment and crisp execution against established franchise leaders.

It’s All About the Long Term

We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.

Our decisions have consistently reflected this focus. We first measure ourselves in terms of the metrics most indicative of our market leadership: customer and revenue growth, the degree to which our customers continue to purchase from us on a repeat basis, and the strength of our brand. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise.

Because of our emphasis on the long term, we may make decisions and weigh tradeoffs differently than some companies. Accordingly, we want to share with you our fundamental management and decision-making approach so that you, our shareholders, may confirm that it is consistent with your investment philosophy:

 • We will continue to focus relentlessly on our customers.

 •  We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions.

 • We will continue to measure our programs and the effectiveness of our investments analytically, to jettison those that do not provide acceptable returns, and to step up our investment in those that work best. We will continue to learn from both our successes and our failures.

 • We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.

 • When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.

 • We will share our strategic thought processes with you when we make bold choices (to the extent competitive pressures allow), so that you may evaluate for yourselves whether we are making rational long-term leadership investments.

 • We will work hard to spend wisely and maintain our lean culture. We understand the importance of continually reinforcing a cost-conscious culture, particularly in a business incurring net losses.

 • We will balance our focus on growth with emphasis on long-term profitability and capital management. At this stage, we choose to prioritize growth because we believe that scale is central to achieving the potential of our business model.

 • We will continue to focus on hiring and retaining versatile and talented employees, and continue to weight their compensation to stock options rather than cash. We know our success will be largely affected by our ability to attract and retain a motivated employee base, each of whom must think like, and therefore must actually be, an owner.

We aren’t so bold as to claim that the above is the “right” investment philosophy, but it’s ours, and we would be remiss if we weren’t clear in the approach we have taken and will continue to take.

With this foundation, we would like to turn to a review of our business focus, our progress in 1997, and our outlook for the future.

Obsess Over Customers

From the beginning, our focus has been on offering our customers compelling value. We realized that the Web was, and still is, the World Wide Wait. Therefore, we set out to offer customers something they simply could not get any other way, and began serving them with books. We brought them much more selection than was possible in a physical store (our store would now occupy 6 football fields), and presented it in a useful, easy-to-search, and easy-to-browse format in a store open 365 days a year, 24 hours a day. We maintained a dogged focus on improving the shopping experience, and in 1997 substantially enhanced our store. We now offer customers gift certificates, 1-ClickSMshopping, and vastly more reviews, content, browsing options, and recommendation features. We dramatically lowered prices, further increasing customer value. Word of mouth remains the most powerful customer acquisition tool we have, and we are grateful for the trust our customers have placed in us. Repeat purchases and word of mouth have combined to make Amazon.com the market leader in online bookselling.

By many measures, Amazon.com came a long way in 1997:

 • Sales grew from $15.7 million in 1996 to $147.8 million – an 838% increase.

 • Cumulative customer accounts grew from 180,000 to 1,510,000 – a 738% increase.

 • The percentage of orders from repeat customers grew from over 46% in the fourth quarter of 1996 to over 58% in the same period in 1997.

 • In terms of audience reach, per Media Metrix, our Web site went from a rank of 90th to within the top 20.

 • We established long-term relationships with many important strategic partners, including America Online, Yahoo!, Excite, Netscape, GeoCities, AltaVista, @Home, and Prodigy.

Infrastructure

During 1997, we worked hard to expand our business infrastructure to support these greatly increased traffic, sales, and service levels:

 • Amazon.com’s employee base grew from 158 to 614, and we significantly strengthened our management team.

 • Distribution center capacity grew from 50,000 to 285,000 square feet, including a 70% expansion of our Seattle facilities and the launch of our second distribution center in Delaware in November.

 • Inventories rose to over 200,000 titles at year-end, enabling us to improve availability for our customers.

 • Our cash and investment balances at year-end were $125 million, thanks to our initial public offering in May 1997 and our $75 million loan, affording us substantial strategic flexibility.

Our Employees

The past year’s success is the product of a talented, smart, hard-working group, and I take great pride in being a part of this team. Setting the bar high in our approach to hiring has been, and will continue to be, the single most important element of Amazon.com’s success.

It’s not easy to work here (when I interview people I tell them, “You can work long, hard, or smart, but at Amazon.com you can’t choose two out of three”), but we are working to build something important, something that matters to our customers, something that we can all tell our grandchildren about. Such things aren’t meant to be easy. We are incredibly fortunate to have this group of dedicated employees whose sacrifices and passion build Amazon.com.

Goals for 1998

We are still in the early stages of learning how to bring new value to our customers through Internet commerce and merchandising. Our goal remains to continue to solidify and extend our brand and customer base. This requires sustained investment in systems and infrastructure to support outstanding customer convenience, selection, and service while we grow. We are planning to add music to our product offering, and over time we believe that other products may be prudent investments. We also believe there are significant opportunities to better serve our customers overseas, such as reducing delivery times and better tailoring the customer experience. To be certain, a big part of the challenge for us will lie not in finding new ways to expand our business, but in prioritizing our investments.

We now know vastly more about online commerce than when Amazon.com was founded, but we still have so much to learn. Though we are optimistic, we must remain vigilant and maintain a sense of urgency. The challenges and hurdles we will face to make our long-term vision for Amazon.com a reality are several: aggressive, capable, well-funded competition; considerable growth challenges and execution risk; the risks of product and geographic expansion; and the need for large continuing investments to meet an expanding market opportunity. However, as we’ve long said, online bookselling, and online commerce in general, should prove to be a very large market, and it’s likely that a number of companies will see significant benefit. We feel good about what we’ve done, and even more excited about what we want to do.

1997 was indeed an incredible year. We at Amazon.com are grateful to our customers for their business and trust, to each other for our hard work, and to our shareholders for their support and encouragement.

Jeffrey P. Bezos

Founder and Chief Executive Officer

Amazon.com, Inc.

KittenCapital 2017 Review - a year in kittens & $$$

2017 was the first year of trading for KittenCapital.  Set up as my personal investment vehicle I’ve gone through various iterations / developments over the last 12 months as I work out what’s working / what isn’t for the long /mid / short-term.

For certain there’s been a lot of change in 2017, and a lot of learning & adventure as usual.  Two core things I have embraced are *getting my hands dirty* and *learning new sh*t* - which has been fun / interesting / trying in equal proportions.

What has been consistent throughout the year is KittenCapital's (my) vision of:

  • Building long-term value
  • In ventures that are interesting / have some sense of being *mould-breaking*
  • Whist having fun doing it
  • & working with awesome / smart / inspiring people a long the way
  • && trying to work according to rules (and working out what those rules are)

And with the super sad passing of my old TeamRubber CFO Rick H late in the year, 2017 gave some perspective of the importance of *enjoying the journey* whilst it lasts.  It’s only when you lose what you had that you realise what you had - which is very much the case with Rick who is very much missed.

On a happier note, highlights from 2017 across my various companies (many of which Rick was instrumental in helping grow), include:

> Delib

Delib is - finally - going from strength-to-strength.  Delib, like most companies, moves at the speed of its market, and given its market is *democracy* and *government* you’d expect growth to be slow (which it has been).  That said, even slow markets speed up, and Delib’s has finally hit a roll.

Importantly growth has been strong on both sides of the globe - with our Australian business gathering momentum with a series of significant new business wins - including Isle of Man government, Armagh City Council (Northern Ireland), The Post Office, UK & Australian Civil Aviation Authorities (won separately) and City of Austin (USA).  View more Delib clients here >> 

Delib’s UK business now cover c.60% of Central Government departments and 10% of Local Government - with 100+ government organisations using Delib’s digital democracy tech.  Whilst I’m immensely proud of these figures 60% means there’s 40% still left on the table, and 10% means there’s 90% left.  With the ultimate aim of turning 7 figure SaaS revenues into 8 figure recurring revenues.

IMG_8363.JPG

The Civic Tech scene is ever growing, and Newspeak House has become its Mecca.  I’ve been trying to carve out as much time as possible to get involved in the wider civic tech scene, and hosted a Ration Club communal dinner (where Andy and I cooked up a mean Spag Bol) at Newspeak House in October, along with the first of our series of Practical Democracy Project events in June.

> AMCO

I’ve been involved with my family company, AMCO Security, since my university days and its been growing nicely over the years.  I started getting more involved in early 2017, with a focus on product, sales & growth.  Like Delib, AMCO is underpinned by a very strong subscription business engine - with 1000’s of homes / businesses across the UK signed up to AMCO’s specialised alarm monitoring service.

In 2017 I took a more hands-on involvement with AMCO, initially focused on marketing & sales, and in the latter half of the year focused on operations and product (including the re-brand of AMCO’s core product as LiveTalk) - realising that selling is important, but good sales needs to be matched with strong operations & good product-market-fit.

Screen Shot 2018-01-27 at 12.39.08.png

To fully get to grips with the family business I spent the summer getting my hands properly dirty, working on site with our engineering team helping install security systems to protect two giant solar panel farms outside Swindon & Newport (Wales). 

> SmartSecurity

SmartSecurity is a spin off from AMCO’s work.  With the realisation that a smart home technologies are chipping away at traditional home security companies like AMCO it was clear that we needed to create a complimentary brand that could cater for the emerging demand for smart security equipment - the likes of Ring, Canary, Nest etc.

Say hello to SmartSecurity.Guide, where you can read about emerging smart security technologies - and SmartSecurity.Store, where you can buy smart security equipment.

Screen Shot 2018-01-27 at 12.04.35.png

SmartSecurity is a *content-as-commerce* business at its heart, creating expert content in its niche - driving knowledge / traffic and ultimately sales via SmartSecurity.Store.

The SmartSecurity.Store play is split into two - with a B2C and B2B proposition.  Ultimately I see the B2B proposition paying the biggest dividends, with a plan to become no.1 in a number of completely un-sexy (but profitable) product categories like ‘alarm batteries’ and Texecom security equipment.

> SuperVu

SuperVu was a further logical vertical spin-off from SmartSecurity.Store.  Once I realised that the world of online consumer sales is hugely commoditised (a point which is fairly obvious in retrospect) I realised the need to spin up a unique hardware brand specialising in smart security devices.

And that’s where SuperVu comes in.  We’ve started life with a small selection of products - all focused on a mix of *security* and *video* - including the DoorVu (a smart doorbell), WifiVu (wifi security camera) and DashVu (Dash Cam).  SuperVu’s ethos is simplicity, in a world of complexity.

Screen Shot 2018-01-27 at 12.12.11.png

SuperVu is still in its early stages - but showing the right signs for an early-stage hardware business.

Product plug ;-) If you're looking for a Smart Doorbell or Wifi Security Camera (to check what's happening in your house when you're out), you can buy our various SuperVu products here >>

> Hackers.Media

After exiting Sharethrough, and working in the media / ad tech world for such a long time launching Hackers.Media was an obvious choice - providing a platform to view the world of media from.

In 2017, Hackers.Media provided a weekly media industry news summary (delivered as a newsletter and via a blog).  Hackers’ main x2 commercial offerings was 1) a European Media data product - providing companies, largely US ad tech companies, with data on the European media scene to aid swift / successful market entry 2) a consultancy service, actively helping media tech businesses manage product and market growth.

Hackers.Media published our annual guide to the biggest media companies in Europe, which provides strong audience and commercial growth for the site.

Separately, doing advisory at a couple of US AdTech businesses (NYC & San Francisco-based), giving advice around product development & market growth strategies.

> Rubber Republic

Rubber Republic has been the business I’ve been involved with for perhaps the longest and the one that this year I perhaps had the least involvement - other than helping with some strategic commercial partnership work.

2017 was a strong year for Rubber Republic both creatively and financially, with the biggest boom to its business being Rubber’s continued relationship with Ebay - creating a series of epic films for them, including creating building a life-sized Tie-Silencer for Star Wars (aka a massive space ship!)

> Sharethrough

My involvement in Sharethrough - having sold VAN to them in 2014 - is now very much passive.  Sharethrough, has seen a good amount of growth in 2017 - even in the turbulent world of adtech - with $250+ million running through its native ad exchange (up 80% on 2016).  

What’s in store for 2018?

Things I’d like to happen in 2018 include:

  • focusing & speeding up scale for the more mature businesses in my portfolio (AMCO, Delib & Rubber Republic)
  •  finding product market fit for my new ventures (in particular SmartSecurity & SuperVu)
  • getting #KittenCamp back on track (as a way of keeping innovation & inspiration alive)
  • seeding some new ideas, including: pixel art, fashion theory and conkers ;-)
  • finally moving into our new house in Peckham, which has been lovingly crafted by Catherine ;-))
  • learning more . . .
Screen Shot 2018-01-27 at 12.25.10.png

I’ll be relieved to finally move into our Peckham house, as for the last 18 months I’ve been working out of a hut at the end of our garden (see the hurricane-style chaos above!) - a hut that has reached near arctic conditions and has had its broadband cut for the last 6.  Roll on the Spring 😉

Identifying *real value*. How to build a valuable business.

Strong / valuable businesses are built on *real value*.  *Real value* in the case of many valuable tech companies is generated from *expertise*.

Expertise is distinct from the value of *product*.  A company may be famous for its product, but its real value lies in the expertise behind that product.  For example, Amazon was initially famous for *selling books*; it quickly identified that its expertise was in *selling online* (with its logistics capabilities / marketing conversion efficiencies etc.) so turned to selling everything; as it grew further it then identified it had built expertise in scaling server infrastructure so turned to selling servers (AWS); with huge scale it then identified it has built expertise in advertising (via its valuable data) so turned to selling advertising (AMS) etc. etc.

Today Amazon isn’t an online book retailer, it’s essentially several different companies with several different products - all built around different expertise.  To get a glimpse at its businesses, read Amazon's financial statements.

It’s important to flag therefore that a business’s product can often be a distraction (i.e. at any point in time a business may well be selling the product, and therefore not achieving its full value) and that a business should always consider what its *expertise* is to discover its *real value*.

Real value lies in expertise NOT product.  Product is an output of expertise; product choice can be wrong.  Understand that the first product isn’t necessarily the best output of your expertise and don’t be distracted by finding the most valuable output from your expertise.

4 Steps to building real value

Step 1: understand what your expertise is

Step 2: embrace / externalise / share that value

Step 3: build / market test products around that value 

Step 4: iterate & constantly challenge your product (commercial output) choice.  Make sure you're not still just selling books.

Entrepreneur stack v.1 - notes on what my *personal entrepreneur stack* looks like

Since leaving University and starting my first venture (a Drum & Bass music video company) I’ve always worked closely and been supported by a team of technically, operationally and creatively awesome people, who have always very much complimented my skill sets.  First off it was Andy and Matt (when we were setting up Team Rubber), then Ally at VAN, and subsequently at Sharethrough where I was supported by a whole beast of an operational engine at our San Francisco HQ.

After exiting Sharethrough last summer I found myself for the first time flying solo, which is both hugely liberating but also has meant that for the first time in 15+ years I’m having to do my own laundry - so to speak (i.e. I’m now having to run my own entrepreneurial operations).

This is isn’t necessarily a bad thing, and what I’ve discovered is that being an entrepreneur in 2017 is a lot easier than it was in 2000.  I say that because there are now a tonne of free / low cost apps available which make an entrepreneurs life so much easier.

Over the few months I’ve reflected on my life at the coal-face of being an entrepreneur again for the last 12 months, and sketched out (as below) how I manage my work, and keep on top of my various ventures - from Digital Democracy at Delib to helping protect people’s homes and businesses at SmartSecurity.Store.

>> Notes / thinking / idea building

The first stage of any new venture is the ideas stage.  Ideas generally take a while to evolve, and a mix of internalisation and externalisation / collaboration.

  • Evernote: this is the engine for all my note taking.  I’m *quite* organised and diligently use the tag system, but find the search pretty solid, and like the web and image clipping tools.  Evernote
  • Pocket: Pocket’s a great way to track / store interesting articles, especially for train / tube consumption whilst on the go.  Pocket
  • Feedly: Feedly’s my feed aggregator of choice, and a nice way to browse through a selection of blogs.  I will often then share the best articles via Buffer.  Feedly
  • ToDoist: I list my everything I need to get done in my ToDoist list, and break them out into daily tasks every morning.  Todoist

>> Sharing / collaboration

As ideas develop, the fluid sharing ideas / knowledge / links is important.  This is something I do across numerous platforms . . .

  • Buffer: Buffer’s how I manage my various social media profiles and idea / content sharing.  I usually share on desktop, and monitor the analytics via the mobile app. Buffer
  • Twitter: Twitter’s my go to social channel for following interesting (work-related) people, and then sharing out ideas. Twitter
  • Linked-in: I use Linked-in mainly for sharing content / ideas, but also for directly connecting to my network Linkedin
  • Tweetfull: Tweetfull has been useful for managing the growth of my various Twitter channels.  It’s not too spammy in the way it help connect to like-minded people, and has been pretty effective at growing my social network.  Tweetfull
  • MailChimp: MailChimp’s my go-to for newsletter management  MailChimp
  • Slack: Slack’s great for communicating / collaborating within a team  Slack
  • Google Drive & docs: I found Google docs, and Google Drive a simple way to collaborate on documents / sharing files  Google Drive

>> Idea building / making / managing / collaboration

Once I'm in the *making stage* of a project, I then need tools to help me build / test minimal viable products quickly.

  • Hover: product naming / branding is still reliant on access to a good URL.  Hover’s a simple way to manage domain research and buying.  Hover
  • Squarespace: once you’ve got an idea together, bought the URL, then comes *idea articulation* / the launch of a MVP (minimal viable product).  I mostly do this by whipping together a website using SquareSpace.  SquareSpace
  • Shopify: for e-commerce ideas, Shopify is an amazingly powerful / easy-to-use platform for running online shops  Shopify
  • Trello: as the idea matures, and more people are brought into handle different tasks, I then use Trello to manage tasks across teams.  Trello
  • Liquid Lizard: when it comes to design, my go to partner is *Liquid Lizard* (aka Dave).  With a tight brief, Liquid Lizard is great at turning around awesome-looking graphics, to make any idea super shiny.  LiquidLizard
  • UpWork: Upwork’s a v.efficient way of outsourcing repetitive tasks (like researching something / gathering data) and also more specialist tasks like SEO.  Simply add your brief, targets and budget - and a few days later, someone the other side of the world will deliver for you.  Upwork

>> Other

Beyond the above, I also use a range of other tools in my everyday work . . .

  • Privy: I use Privy on top of SquareSpace (and connected to MailChimp) to collect email addresses from interested parties  Privy
  • AirBnB: I’ve been using AirBnB since its launch, and it still delivers great value accommodation, and is an especially nice way of discovering interesting parts of new cities when travelling alone.  Airbnb
  • Google Calendar: keeps me organised and knowing what I’m supposed to be doing / when  Google Calendar

>> Missing / areas for improvement

The two areas I haven’t 100% sorted as yet are my *expenses and accounts* and *CRM* system - which are areas I'm working on, but still haven't mastered in a super organised way ;-)

I'd love to hear from you as to what other tools you use / tools that I've maybe missed / tools I really *should be using* (leave ideas below in the comments section) ;-) 

Looking at the insurance industry through the Google lens

Whenever I’ve asked an executive of one of the big insurance companies why they’re interested in InsureTech (insurance technology) they’ve universally said ‘Google’.  The insurance industry is already in a pretty difficult / profit-strained place, and it realises that they’re one knock-out disruptive punch from a technology giant like Google from obliteration.  OK, obliteration may be overstating it, however technology undoubtedly has a habit of making fat / slow moving industries feel uncomfortable - just ask any London Cab driver about the impact of Uber on their livelihoods.

Having spent the last 10+ years working in advertising technology I’m hugely aware of the disruption a company like Google can have on a market.  Google now owns 30.9% of all digital advertising revenues around the world (via its Adwords and ADX platforms), and 80% of publisher infrastructure (via its DFP product).  Of course, it also owns 63.9% of search - which is where Google’s fortunes started.

In short, today Google owns digital advertising.  But that wasn’t always the case.  15 years ago Google was just a couple of guys in a garage with an idea.

Given that Insurance companies are so worried about Google, I thought it would be interesting to chart Google’s meteoric rise to global advertising dominance to give some context, and providing some kind of indication of whether Google’s shaping to take the world of insurance in the same way it took over the advertising industry.

 

  • 1998: launches search engine which quickly becomes popular
  • 2000: works out how to monetise search results via sponsored listings ‘AdWords’ product
  • 2003: grows non-Google owned advertising revenues (e.g. on 3rd party publisher websites) via launch of ‘AdSense’ through the purchase of Applied Semantics
  • 2005: launches Google Analytics, as a 3rd party measurement service, based on technology acquired from Urchin.  At the same time quietly acquires mobile operating system Android (an early prescient mobile bet)
  • 2006: acquires YouTube seeing the future of video
  • 2007: sees the future of the internet is mobile, and formally launches Android (after its previous acquisition in 2005) along with AdSense for mobile
  • 2008: decides it wants to own the wider internet advertising plumbing on the supply side by acquiring ad technology company DoubleClick
  • 2009: doubles down on mobile monetisation via the acquisition of mobile ad network Admob
  • 2011: furthers its 3rd party publisher monetisation technology stack via the acquisition of Admeld
  • 2014: acquires Nest, seeing the future of connected devices in homes
  • 2015: Google becomes Alphabet, allowing to legitimately (from a brand and markets perspective) carry on its diversified investments

Data has been core of Google’s strategy from Day 1.  Openly stating in its mission early on that Google was dedicated to ‘making information more accessible’.  With its own platform it worked out how to monetise this data via its native ad product ‘adwords’.  It then worked out how to monetise the web outside of its owned platform (and control major parts of both the supply and demand sides).  Now that Google has a strong grasp of how pretty much everyone around the world interacts with the open web, and specifically what people’s ‘intentions are’ - as that’s what search is about, it’s about your intention to do something / know something.

Given Google knows pretty much everything about your virtual life via data, the biggest area that Google doesn’t know about, is what happens in your real life (although it can obviously infer a great deal).  And that’s what I’d say Nest is about - putting sensors in people’s homes that generate data on people’s real-life behaviours.  At present the use of this home behavioural data is inert, unused -  in the same way that a person’s Google search results were a few years ago.  And, it’s likely that Google will continue to play dumb and not do anything about this data for the near future, just as it did with Google search, YouTube and its other services.

I can guarantee that in the future Google will make a play to unify people’s virtual behavioural data with their real-life behavioural data, and with such a chunk of real-time and historic data of individual behaviour, along with aggregate meta trends and predictive AI-driven data, you can see how this puts Google in a hugely strong position to develop industry-changing insurance products.

That said, Google doesn’t win at every industry it enters - anyone remember Orkut, Google’s social network?  The big insurance companies can either pray that Google gets insurance wrong, or work out how to beat Google at its own game.  The main challenge for insurance companies is that insurance is an industry ultimately based around ‘data’, and Google has a particularly strong record of winning when data’s at play. 
 

We're hiring: Personal Assistant (part-time) required

I’m looking for a personal assistant to help me with my everyday work at KittenCapital.  Ideally you’d be organised, good at getting stuff done, entrepreneurially-minded and a good writer.  Flexibility is also useful.  Oh, and you should be pretty tech savvy too - as technology is at the heart of everything we do.

My work is pretty varied (and interesting), and essentially I need someone to help me do more / better, by helping me  be more efficient and do the things I don’t have time to do / am bad at doing.  By *personal assistant* I don’t mean I want you to fetch my laundry or walk my dog (although Mr Scraps may persuade you otherwise); I mean I want you to be an extension of my working life - getting involved in all parts of KittenCapital’s work.

KittenCapital is a *venture vehicle* very much in its infancy, dedicated to building *interesting companies*.  We may be small (i.e. it’s mostly me at the mo + some helpers at the mo), but we are ambitious.  The  core companies we’re actively involved with are:

> AMCO: pioneers in *Smart Security* technology and services

> Hackers.Media: European Media industry blog

> Delib: world-leading digital democracy company

> #KittenCamp: an event dedicated to unearthing the under-belly of the internet

I’m fairly flexible about where you’re based, however ideally we’d hang out in our Peckham HQ (my house) some of the time.  I’m also flexible on hours.  If this sounds like your bag, drop me a note with your CV (or similar): chris@kittencapital.com

Oh, and if it doesn’t sound like your bag then pass it to a friend or two.  Thanks for listening 😉

Observations on the UK InsureTech industry: 8 iOT companies shaking up the insurance industry

I’m very much new to the InsureTech industry - well at least the ‘insure’ bit.  Via my work with AMCO I’ve observed that the worlds of security and insurance have always been close - but the two have never had the inter-connected impact that perhaps they should have, and nothing hugely innovative has ever spun out of the security/insurance intersection.

That’s arguably about to change, with the increasing ubiquity of smart home devices / sensors that can collect data about a person’s home activities - good and bad.

Last night InstechLondon hosted their ‘Connected Insurance' event in which 8 of the most interesting InsureTech-related iOT companies were showcased.  Here’s a quick run down of what I learnt, and how they’re trying to shake up the insurance industry . . .

Domotz

Domotz is a remote monitoring service for your network devices, giving your more knowledge of what’s going on with your smart home devices.  The idea came from an individual problem that one of the founders identified: i.e. the fact that he’d amassed 10’s of different connected devices in his home, but a lot of them didn’t work / weren’t connect properly to each other / the network.
The platform is completely device agnostic, and is designed as a ‘plug-in’.  From a business perspective, the Domotz team said they were developing out x3 proposition:

  • Connected home monitoring product
  • Cyber attack monitoring tool
  • Application gadget insurance.

They stated that they were already embedded in various hardware companies, had a partnership with BestBuy and were building out an analytics platform with SwissRe.  All-in-all they seemed to have got some good traction, and identified a growing problem within the iOT infrastructure - given that there’s estimated to be c.26 billion iOT devices by 2020.


Leakbot

In short, Leakbot is a water leak monitoring service.  Spun-off from Home Service company HomeServe, Leakbot identified that most leak detectors require you to second guess where your water leak is going to happen.  Leakbot is designed to monitor your hole mains water system for leaks - meaning that you only need one Leakbot device per home.

The Leakbot system works by monitoring the flow of water through your mains water pipes, detecting any anomalies from usual day-to-day patterns - and warns you when it spots any anomalies.  All of this is done via a software layer of machine-learning.

With Escape of water claims making up 25% of all UK home insurance claims (totalling c.£700 million) this has an obvious application in lowering insurance claims - through early prevention.
For the insurance industry, the good news is that Leakbot is cheap enough per-unit that it’s possible for Insurance companies to give the product away for free - which Aviva has recently started doing.

Neos

The starting point for Neos is that ‘customers don’t like insurance’ and so Neos’ proposition is that they can add value to a person’s experience of insurance.  To do this they’ve based their product around ‘Smart Home Technology’, providing a suite of smart home sensors covering burglar, smoke and water detection.  All of these devices are designed to collect data, fed through a user’s app.  They’ve created a ‘service layer’ on top of all of this, meaning that whenever there’s an issue detected, they can provide a service to solve the issue - i.e. sending police, plumbers etc. 

They claim that their core IP is around creating an iOT platform - starting with the home, but in time moving into the car and health.
Their founder, Matt Poll, stated that the core challenges to the business are:

  • How to get an insurance carrier to cover (which they’ve recently done via a partnership with Hiscox)
  • How to get distribution.  Matt said that distribution is key, but that he was proud to announce a 'distribution partnership’ with a company who will make the quotation process easier / more friction free.

Audatex

Audatex is a B2B service provider to the insurance industry that steamlines the assessment and estimating process for insurance claims.  Their biggest space is the motor assessment space, seeing 95% of motor assessment - providing processes to help check mechanics are quoting accurate time and parts for repair work.

Expanding beyond this role, Audatex are starting to help use data to flow through to risk assessment - with a mission to make the most of our are and (now) connected home data.  As a business they’re connected to carriers and car manufacturing - placing them in a very strong position to help both industries innovate.

They stated a statistic that 80% of people are happy to share data along as there’s a value to it.  Their position is how to help customers make the most of that data - and how to create a policy of the future which takes into account data.

There’s an interesting wider question of how an actuary would price this data into a policy - which is still something the underwriting industry is grappling with.

Esri UK

Esri are a specialist GiS company, providing insurance companies and government clients with GiS mapping data.  For insurers, historically they’ve used GiS to track things like properties to the proximity to flood zones, however they’re now looking at how GiS data can be used to track ‘movable asset’s (e.g. like huge container ships).

They’re now working with a partner that track AiS feeds (which is shipping data).  This data is mostly used to help ships from bumping into each other, but what they’re now doing is providing this data to insurers so they know where their assets are, enabling them to get alerts when their assets approach high risk areas (e.g. piracy / high-risk weather areas).

Similar to Audatex, there’s a question of whether there’ll be any traction from insurers: e.g. providing data to enable them to insure on a minute-by-minute basis.

360GlobalNet

360GlobalNet is a platform that allows all parties to claim efficiently - by providing processes to the claimant to gather appropriate data to share with the insurer (e.g. photos / videos of the claim).  Through using 360GlobalNet, insurers have seen indemnity claims down 15/20% and costs down 20%.

Interestingly the representative from 360GlobalNet stated that they don’t use an app, which may be representative of the one of nature of an insurance claim - meaning that the user-experience of downloading an app was not relevant.

The example he talked through was the event of an incident e.g. escape of water. The first point of contact is via email and phone.  The claimant is then sent an SMS, which links to a webpage where the claimant can fill in all the relevant information and upload relevant images and videos. The claims handler can see all this information in real-time and is able to make decisions - via a simple workflow.  The system can also live streaming too - which is important especially with complex claims / large loss.  Using video they see a massive lowering in claims charges from contractors, as the information provided is 100% real.

Overall they claim to see an average claim response time of 87 minutes from upload of information and settlement of claim - which seems impressive.

Felcana

Felcana provide dog and cat monitoring - hence the name (for all your latin students!).  Their bold claim is that by 2025 they expect to see all pets connected to the internet, and what Felcana allows pet owners to do is to track the health of their pets.

Founded by Dr James, who’s a vet and ex-Bain consultant, Felcana’s product is a mix devices (a pet tracking device and home sensors) and an app.  The pet tracking device (the Helix) fits on the pet’s collar, and is elegantly designed.  The home detectors (beacons) are designed to enable owners track the activity of their pets around the house e.g. how often they go through the cat flap.

The connection to insurance is linked to Felcana’s aim to spot ailments early - like hip displacement which affects a high percentage of all dogs - therefore lowering vet bills and claims.
Felcana is currently raising funds via a KickStarter campaign.

30mhz

The 30Mhz pitch is simple: smart sensors for industry grade insights, giving industrial organisations (farms, ports, factories)  real-time metrics for their assets.

Anthony, one of the founders, explained that they were called 30Mhz as 30Mhz is the radio frequency with the highest frequency radio wave - and the one with the longest range.
The 30Mhz is a platform that goes from sensor, to cloud to dashboard.  30Mhz was initially set up as an API, but now provides dashboards - as most clients wanted dashboards to deliver the data they collect.  The 30Mhz is technology agnostic, working with any type of sensor - creating a sensor network.

Two examples / case studies Anthony gave included:

  • Port of Amsterdam: the Port of Amsterdam has a lot of fixed assets.  Using 30Mhz they’ve attached pressure sensors to ‘docking plates’ (amongst other things), so that they can measure the wear and tear of the machinery, spotting issues early and enabling the Port to repair machinery before it breaks - and causes any issues - therefore optimising port utilisation.
  • Pepper farmer (agriculture): apparently peppers burn easily - easily getting something 'sun scold'.  To prevent sun scold the farmer (and any solution) needs to know the temperature on the skin of the pepper.  30Mhz created aIR temperature gauge that points at the skin of the peppers, and measures temperature on skin - alerting the farmer to peppers whose skins are getting too hot.  According to the farmer with the help of 30Mhz  they’ve increased yield by 6%, and generated 1000% ROI from the technology.  Impressive stuff.

Concirrus

Concirrus provide a platform that enables insurers to turn iOT data into risk data, usable by underwriters to factor into their risk profiling.

In a world in which there’s an increasing amount of iOT data being created from devices, Concirrus provides a way for the insurance industry to make the most of this data.  The company was started by 2 guys a few years back who spotted that there was a lot of data being made available from the iOT, and so wanted to connect the dots to how this data might be made useful - in the context of the insurance industry.

Ultimately Concirrus helps insurers get a better understanding of their customer - via data.  What the product looks like in practice is a series of APIs (connecting the data) and dashboards, helping visualise the data.  The platform is agnostic, connecting to all types of sensors.
As a vision of where the product may go next, they understand that revenue from home insurance premiums is limited, and see the data provided by Concirrus as a way to cross-sell new services.

Flock

Flocks pitch was quick and simple: Flock provides big data driven risk analysis for drones.  As drones increase in prevalence there’s a need to insure the risk against these.  Flock provides the ability to indentify, quantify and minimise this risk. 
 

How lots of little improvements turn into big results (in theory)

I’ve always been a big fan of business biographies, and have chewed through a fair few in my time, from Richard Branson to Warren Buffet to Ben Horowitz (and bizarrely Conrad Black in-between - one I wouldn’t recommend).  The one thing that the better biographies had in common was the narrative detailing their journey to the top; and the best ones (or at least the most useful ones to me) were the ones that reflected on the fact that success didn’t just happen like some kind of lottery win, but was due to hard work and a series of events.  Yes, generally there was some kind of luck along the way - being the right place right time - however, in all cases the huge success - the billionaire win (in the cases of Branson and Buffet) was down to the small stuff, the every day work and wins that on aggregate lead to the headline success we read of today.

 

Small gains, big results

A simple articulation of these small everyday wins is a theory called ‘marginal gains’.  The idea of marginal gains is that if you make a 1% improvement in everything you do, then on aggregate these small improvements will add up to a remarkable improvement.  Marginal gains very much borrows from Toyota’s Kaizen, 'lean manufacturing' philosophy.

Marginal gains - diagram

Perhaps the most famous example of the application of marginal gain theory in recent times was  by British cycling chief Dave Brailsford, who turned the British cycling team into the Gold-winning force that it is today - from zero.  

Brailsford started optimising the obvious things like the nutrition of riders, training processes and bike design - the ergonomics of the bike seat and weight of tires.  However, Brailsford didn’t stop there, and searched for improvements in all areas of the British cycling team’s process and operations, going as far as identifying the pillow that offered the best sleep, repainting the team bus floors to improve hygiene levels and testing the most effective type of massage oil.

Brailsford believed if they could execute this strategy, then Team Sky would be in a position to win the Tour de France in five years.  He was wrong - they won it in three.

Results flowed even further from Brailsford’s focus on marginal gains; in 2012 Sir Bradley Wiggins became the first British cyclist to win the Tour de France.   Brailsford also coached the British Olympic cycling team in the same year, with them winning 70% of gold medals available.

To give some context to Brailsford and team’s success, 10 years earlier, when Brailsford started, Britain had won only one Olympic gold in 70 years.

 

Don’t think of today, think of tomorrow

One of the challenges when implementing marginal gains is that on a day-to-day basis a 1% improvement isn’t noticeable.  Making small changes to your behaviours isn’t going to have the big whizz-bang headline winning effect that we all crave.  And it’s because of this that putting a good process in place to manage implementing and measuring marginal gains is important.

 

Practical tips for success

One idea is to ‘game-ify’ the process.  At AMCO, I’ve started to introduce the concept of marginal gains to the team, and created a kind of ‘scorecard’ to monitor each gain / improvement implemented.  In practice what this scorecard looks like is a shared Google doc which lists all the improvements introduced, listing which team it affects and including a ‘results’ tab - which we’re using to make notes on any noticeable improvements over time.

Giving ownership of each of the gains is also important.  I’ve started by introducing marginal gains to one team (sales and marketing) to test the model, and will further role out the process in the new year - once we’ve tweaked / iterated the model.  To introduce the concept of marginal gains to the wider team, I’ve also bought copies of Matthew Syed’s ‘Black Box Thinking’ book for the whole company - which seems to have gone down well / got people discussing the idea casually.

Insights into how the Smart Home landscape is evolving: a beginner's guide to Smart Home technology

I spent a week earlier in the summer in San Francisco, exploring the burgeoning Smart Home technology space, trying to get my head around what’s really happening under the surface beyond the headline-grabbing fundraising activities of companies like Ring (a next-generation doorbell company that raised c.$100m) and emerging battles for the space amongst the big tech boys (including Google’s $3.4 billion acquisition of Nest and the launch of Amazon’s Alexa).

What was most obvious from my travels is that the Smart Home technology space is definitely *busy* - in an exciting way.  I say exciting, as I’ve been involved in Smart Home technology for about 20 years (via my family company AMCO, which specialises in alarm monitoring) and the rate of innovation and disruption in the space over the last few years has been impressive compared to the years before.  Like much technology, this disruption has been driven by the proliferation of smartphones, increase in broadband power and the shift away from home ownership to renting.

From my various conversations in San Francisco, here are the main insights I took away:

  • The platform / device divide: as with most evolving technology spaces (e.g. the mobile space), Smart Home technology has evolved into a mix of platforms and devices.  So as with mobile where we have platforms like iOS and Android and a giant mix of apps that sit on top of these platforms, with Smart Home technology you have a split between Smart Home platforms (e.g. Amazon’s Alexa, Google’s OnHub, Apple’s HomeKit, British Gas’ Hive) along with a myriad of devices that are designed to work on top of these platforms (e.g. Nest’s smoke detector, August’s smart locks and Zuli smart plugs).  
Image of the first Zuli Smart Plug

Image of the first Zuli Smart Plug

  • The market’s still really early & fragmented: the difference between mobile tech and Smart Home tech is that the Smart Home space is still really immature.  A reflection of this is the multitude of different platforms (you can easily count 20 without trying) compared to the evolved space of mobile where there are essentially only two (Google’s Android and Apple’s iOS).  The reason for the multitude of Smart Home platforms is the fragmentation due to the history / background of the space, with a range of different companies / markets (e.g. security, energy, entertainment, home commerce) being brought together under this unified Smart Home banner.  The challenge of working in this fragmented space for device makers is to work out which platform to back and build support for your device on, which is tricky when there are so many to pick from.

 

  • Security is the killer for market demand (at the moment): speaking to one of my contacts in San Francisco he flagged up the fact that home security had become the biggest *product market fit* driver for the whole of the Smart Home industry.  The point being that consumers see a real need for home security, but would question the need for automated lights or curtains or entertainment systems.  And if you look at which businesses are attracting the biggest investments and gaining the greatest market traction it’s Smart Home businesses focused on home security like Nest / Canary / Ring.  

 

  • Beware of the power of the stomach: out of the tech gorillas I’m most fascinated by Amazon’s Smart Home play that is separately based around the Dash button and Alexa platform.  Unlike a company like Apple which anchors its products and consumer interaction with the virtual and entertainment world, Amazon’s relationship is mostly in the real / physical-goods world; and its the real world that Smart Home technologies bring the most value to.  With Amazon starting with their Dash buttons, there’s a clear market demand for their simple Smart Home tech driven by consumers’ stomachs (i.e. the need to re-order food - and other products) giving signs that Amazon has a good chance of scaling the first iteration of their Smart Home tech via *stomach-led demand*, highlighting that there are other emerging market needs for Smart Home tech outside of security.
Amazon Dash Button
  • Is *home data* the real battle ground?: Google buying DropCam was a big surprise for me, and one I questioned given the size of the cheque (c.$400 million).  The DropCam investment along with the Nest investment very much makes sense within Google’s data-led business focus, and highlighted the fact that Google is not after your online data but also your home data i.e. they’re not just interested in what you’re doing online, but also what you’re doing offline - in your home.  Home data is also seemingly what Amazon is after; similar to Google, Amazon knows pretty much all your shopping habits online, they now want to extend their tentacles into your home.  Making use / sense of your home data obviously has a whole load of benefits for home-owners, yet there are obvious uncomfortable privacy issues which ride alongside these benefits.

Perhaps the most telling moment of my one week Smart Home technology whirlwind tour, came when sat in San Francisco International airport watching FoxNews play out over the bar TV screens I was curious to see 2 out of the 5 commercials were for Smart Home products (August and Canary).  Whether this was random chance I don’t know, but it certainly reinforced how far Smart Home technology has come in the US market and how it’s no doubt about to scale globally - at speed.  For me and my colleagues at AMCO the question is what to bet on next, and how fast to move; something we’re working on . . .

Smart Research Analyst wanted - part time

Data is very much at the core of all facets of our work.  We’re developing out various data-based products for our partners, and are looking for smart research assistants to join the team and help build out the core of these products.  The first product will be for Hackers.Media, and will be research piece into media activity across Europe.

 

> Role

This role will involve working alongside KittenCapital founder Chris Quigley to research different industries and to produce / publish different *media industry reports* for Hackers.Media.  Research will be a mix of desk / phone / active research.

The role is initially part-time, but has the potential to expand into a full time role, and also to expand in scope for collaboration on other KittenCapital work.

A passion for both the media sector and start-ups is essential, as this is at the core of much of KittenCapital’s work.

 

> Responsibilities

  • Desk research of specific EU country media landscape identifying leading publishers and media influencers in the country
  • Presentation of data, both graphical and text-based
  • Build databases of contacts for marketing purposes

 

> Skills / requirements

  • Strong analytical mind and proven research skills
  • Good Excel Spreadsheet knowledge
  • Strong written (English) skills
  • Passion for media and start-ups
  • Entrepreneurial / self-starter
  • Strong language skills (non-essential)

 

> About KittenCapital

KittenCapital is a venture vehicle set up by Chris Quigley, focused on growing unusual / challenger ideas into profitable businesses.  KittenCapital has three main verticals: media, home automation and parental well-being.

Hello World and KittenCapital explained (ish)

I’ve been playing around with the internet since 2001, when me and a couple of friends from university (Andy and Matt) tried to cause trouble and break the internet uring the 2001 UK General election by creating a political satire website called Spinon.  We succeeded to varying degrees with both, and this experiment provided a random but but interesting platform for our careers.

Off the back of Spinon and after much procrastinating, we built three successful businesses in three very different areas (digital democracy, ad technology and film production) but all very much rooted in understanding how the internet works and most importantly how people use the internet / will use the internet in the future.

Fast forward 15 years, I’m now at that point in my life where I’ve learnt a lot - but want to learn more; I’ve had a play with the internet - but want to play more; I’ve made a bit of money - but want to make more.

And this is what KittenCapital is about.  KittenCapital’s a platform to learn, play and make.  And it’s very much a collaborative platform.  At present KittenCapital’s powered by me and some friends and family, but I’m always looking for new people to learn, play and make stuff with.  In everything I’ve done I’ve always done it with other people, and I’m now looking for awesome new partners.  You could be investment partners, partners who’re interested in advisory roles with portfolio companies, entrepreneurs with awesome business ideas, individuals with deep skills in a specific area or just plain interesting people with ambition.  So please do get in touch.

And finally I guess the question is *why the name KittenCapital?*.  I guess a large part of it is very much linked to spirit of KittenCamp - the event I founded in a bar in Soho, and grew to scale around the world (from London to Sydney to San Francisco) and which has taught me so many things, opened so many doors and made me so many good friends.  The second part of the reason is a bit of a f*ck you to all the overly cold / dull sounding venture businesses around the world.  Yes business is serious, but you’ve also got to lighten up a little and enjoy the journey whilst you’re at it ;-)

Just don’t tell my dog Mr Scraps.  ScrapsCapital doesn’t have the same ring ;-)