Who gets to educate who? the switch between the big corporations and the end user

In the WEconomy, consumers change the rules of the game and become those who educate the large conglomerates  (10.6.2014)

In a discussion I had lately it suddenly occurred to me that in the WEconomy (collaborative economy) it is not the corporations which are the educators (i.e. the ones who through commercials and market education teach us, the consumers, what is best, what to buy and how to act), but it is us - the crowd (and the individuals), who educate the old industry players and introduce new realities. As an example I used airbnb, a platform that revolutionized the hospitality industry and taught the industry giants a thing or two.

But there's a more recent and inspiring example which comes to mind. Mink, a sub-$300 3D printer that prints custom makeup pigments on demand was recently introduced and made a tremendous buzz for itself and its inventor, Grace Choi, who told Techcrunch that she wants to take out the middleman markups served to consumers by high-end cosmetic companies. To create makeup using Mink, you simply use a color picker to pick a shade you'd like to recreate (even from a photo of your favorite super-model or friend), click print and within a few minutes a real life beauty product comes out. In the demonstration Choi created an eyeshadow, but lipsticks, creams, and other items can also be easily made (https://www.youtube.com/watch?v=cBZHFUQiP8Q). I have no doubt this empowerment of users will disrupt this immense industry (~$50B yearly in the US alone).

All of this would not happen without the existence of WEconomic platforms, having the power to disrupt industries or even change the world. Not too many years ago, in an internet-free environment, which multi-billion dollar cosmetic brand would even notice Mink? Note that Grace has nothing but an idea and a prototype (no funds, no marketing or sales channels) while the giants who dominate the cosmetics industry have it all. But with today's platforms, the crowd and the individual have such potential powers, it's almost unbelievable. Today, with Grace’s demo getting over 270K Youtube views, and her ability to both leverage this buzz and quickly raise (crowd) funding and get the attention of early adopters through social networks, changing this industry seems more viable and feasible than ever before.

Thanks to such WEconomic platforms which empower the individual and enable him or her to get to the attention of the crowds and empower the crowd to act as one, there are an ever growing number of opportunities to disrupt and change, tap in and revolutionize. And what's more, this unique and unprecedented phenomenon is fast, merciless and effective. So the balance of the real industry power is slowly but surely shifting from the large and dominant corporations into the hands of individuals and crowds, and the importance of funding and resources becomes secondary to the importance of both gaining trust and getting access to the masses.

And all those sated corporate executives may wake up one day and find that their industry has changed beyond imagination, as they were beaten, not by their competition, but by their users. End of lesson.

Israel's high tech is prominent in both Agro and Medical- / Healthcare- technologies. Foodtech is exactly in the middle (19.5.2014)

I am involved in a very interesting food packaging technology startup. We developed incredible technology (and supporting IP) with only small amounts raised. But still, the efforts in this market seem to be other than technological development. As strange as it may sound, and despite some efforts (for example Strauss Alpha), the industry giants are acting as if they are not interested in new technologies. They know that their R&D departments are not capable of any disruptive R&D, such that will enable them to change (for the good) what we eat and drink (and how we do it) and seem to agree to integrate technologies only after they are already… mature.

I do understand that food and beverages is a steady and old-fashioned industry. But the world around it is changing. fast.

Vegans, vegetarians, gluten-free eaters, sugar reducers, and even just your common consumers are more and more aware. And they will not wait 5 years for the giants to slowly but surely change their ways. They want their healthier foods now. They want to eat preservative free, they want longer expiration dates and as soon as possible.

So the demand is there. And the technology people, especially here in Israel, are working hard. Improving packaging, reducing preservation substances amounts, reducing sugars and what not. So where does this loop break? At the funding.

Because of the strong demand, the entrepreneurs are at work. But as the industry is not receptive, time frames are long, and so are exit potentials, Hence – your average VC fund is not equipped to fund such a long horizon venture, and angels are also having similar difficulties…

I apologize for not being conclusive. I don’t know yet how this mismatch will turn out. What is evident is that we will continue to eat loads of sugar, salt and preservatives before anything will happen, but is will. 

While the benefits of social messaging apps are evident – pricing is skyrocketing while monetizing remains a puzzle (23.2.2014)

The social networks, predominantly Facebook, are said to be stagnating in the developing countries (e.g. Latin America, India and Asia). This leads them to acquire large messaging platforms and overpay, with the hope of gaining market share in the future.
Rakuten, one of Japan's largest Internet companies, has recently announced that it will acquire messaging platform Viber for $900 million. This valuation indicates an estimated $8.57 per (hopefully active) user, based on 105 million monthly active users. The fact that Viber is nowhere near monetizing its users seems irrelevant. In contrast, Facebook's recent acquisition price values WhatsApp at roughly $42 per user, with $16 billion paid in cash and stock, and another $3 billion in restricted stock that vests over the next four years. These two acquisitions followed Microsoft's acquisition of Skype nearly a year ago for a remarkable price of $8.5 billion ($14.7 per user).
Such high pricing (WhatsApp’s but even Viber’s) puts an unimaginable pressure on these apps, such that their business models are clearly unequipped to face. This also allows competitors to set up seemingly exaggerated valuations, such as messaging company Line with its $28 billion expected IPO (over $90 per user!!!).
While there are numerous other market players (such as KakaoTalk Messenger, with its 100M users) that may be still acquired for reasonable pricing, one truth stands out. Those acquisitions will prove successful if, and only if, they endure and truly prosper, or as Facebook’s CEO Mark Zuckerberg put it: “Once we get to being a service that has a billion, two billion, three billion people one day, there are many clear ways we can monetize…”. The problem is this: if we can learn something from history, it’s that every few years (and the time frames are getting shorter and shorter) dominant players vanish and newcomers overtake their place. Thus, top dollars are currently spent with the clear understanding that they will not contribute to the acquirer’s competitive position. And moreover, no one seems to mind which messaging app is being acquired, as if they are mere copies of one another. This means to me that not only that the pricing has gone horribly wrong, but also that both strategic and organizational fit between the acquiring firms and the acquired messaging platforms are doubtful and indicate process mistakes. Only time will tell who spent an unimaginable fortune on a growth tool and who wasted capital resources that would have been so desired in the future to come.