Tag Archives: business idea

Protecting investors against earthquake risk in Silicon Valley

I’ve often wondered what would be the impact on companies in Silicon Valley when the inevitable earthquake hits. Turns out I’m not the only one.

Earthquakes in the Bay Area: a “ticking time bomb”

The Bay Area is subject to major earthquakes roughly every 145 ± 60 years at the current rate. Given that it is 150 years since the Great San Francisco Earthquake of 1868, the next “big one” could happen any day now.

Apparently, about 2 million people live on the Hayward Fault and 7 million are in the surrounding area. A magnitude 7 quake would cause damage in the range of $95 to $190 billion, which would be a disaster for the citizens of the area.

Impact on the tech giants

However, my curiosity centers on what would be the impact on the giant tech corporations that are based in Silicon Valley and the wider Bay Area? Companies like Google, Facebook, Oracle, and Salesforce have their HQs and major footprints in the region, so they will be adversely affected by a natural disaster.

It doesn’t seem like they are particularly well-prepared for such an event, according to this report. Although most of the companies have data centers and operations distributed around the world, an earthquake could still cause potential disruption to the main office and therefore the leadership of the business.

As listed entities, this marks a real risk for their shareholders. Could their share prices or even the whole NASDAQ take a tumble if a major earthquake hits the Bay Area? After the 9/11 terror attacks, the Dow dropped by 14%, so this is not unthinkable.

However, I think the impact goes beyond just their own businesses. The services provided by these tech titans represent critical infrastructure for many European and American businesses, so any disruption could have a huge wider impact.

Early warning: a vital tool to prevent damage

Scientists are getting better at detecting earthquakes early. In Silicon Valley, there will soon be an app called QuakeAlert that can give up to 2-20 seconds of warning of an impending earthquake.

This might not sound like much, but even 2 seconds can be long enough for Internet of Things (IoT)-enabled devices to perform vital preparations such as: opening the doors of fire stations to prevent fire engines getting stuck; isolating certain parts of the electricity, water, and gas networks; slow down trains; and tell elevators to open their doors at the closest floor.

Solution: seismic sensor network to short the NASDAQ

Could it be possible to set up a network of seismic sensors to warn when an earthquake was just about to hit the Bay Area and then send an order to a trading algorithm that could short the NASDAQ?

A similar system could be used to create an early warning for tsunamis. One candidate is the mega-tsunami that geologists once predicted could be created by a volcanic eruption in the Canary Islands which would devastate the northeastern US coast (although further review of the original study showed that this is a worst-case scenario and probably will not happen for another 10,000 years at the earliest).

Hyperloop Alpha project concept

In 2012, Elon Musk and SpaceX published this project concept document for Hyperloop Alpha, a radical new method of intercity transportation.

The document is a 58-page proposed solution with rigorous calculations on all socio-techno-commercial aspects of the idea.

Hyperloop Alpha concept sketch (Source: original Hyperloop Alpha concept document)

How does it work?

Hyperloop Alpha is a public transport system that sends people in pods at high speeds through a tube kept at low pressure to reduce air resistance.

By using an electric fan at the front, you can mitigate the Kantrowitz Limit (think of the maximum speed limit of a liquid pushing through a tube such as a syringe). It also has the unique benefit of creating a low-pressure air cushion for the pod to ride on – known as an air bearing.

The design envisages using linear accelerators on the bottom of each pod to achieve a target speed of 760mph (1,2220 kph or Mach 0.99 at 20°C), albeit lower at points where there is a curve in the journey so that the g-forces experienced by passengers are lower.

On the topic of renewable energy, Elon mentions that the installation could be self-powered using solar panels installed on top of the tube. He also mentions that LightSail could provide energy storage, but this shows the age of the document as in late 2017 they all but went bankrupt. Perhaps Elon could consider Highview Power’s Liquid Air Energy Storage technology now!

Future of Hyperloop

SpaceX hosted a 1-mile long test track to help incubate Hyperloop technologies around the world. Now there are several organisations developing Hyperloop solutions, including Virgin’s Hyperloop One and a team from MIT.

Inspiration for me

The Hyperloop Alpha project concept was actually one of the main inspirations for me to create and write this blog, along with a previous thought of mine about Leonardo Da Vinci.

By publishing open source project concepts like this one, Elon found a neat solution to one thing that has always bothered me about Da Vinci’s notebooks.

The ever-creative Da Vinci noted down his abundance of ideas in personal sketchbooks that were way ahead of his time. However, as he didn’t always have the time or resources to follow them up and connect them with the right people that needed them, many of them represent lost opportunities for technology to advance.

Publishing an idea in an open source format, allowing access for others that are better placed to work on it, ensures that technology moves forward in a way that benefits humanity (even though the ideator as an individual may not benefit directly).

I am not assuming that anything I put on this modest site will be anywhere near the same league as those guys, but given that good ideas can come from anywhere it is a possibility that something I put up in my Ideas section may be useful to somebody, somewhere.

The Hyperloop Alpha concept document is more detailed than any of mine, but Elon Musk does have a big team of world-class engineers to draw from as needed!

Tom Hulme’s Business Model Canvas

I’ve stumbled upon an intriguing version of the Business Model Canvas, courtesy of Tom Hulme (link here).

Below is a 15-minute video as he explains it visually:

HackFwd: Visualize Your Business Model in 15 Minutes Flat from IDEO on Vimeo.

You can download a clean version here:

Tom Hulme’s Business Model Framework (clean)

Idea: Social Impact Bonds for mental health

The case for improved mental health services

The consequences of poor mental health on human well-being are becoming more widely understood, as are their impacts on other areas of society such as use of drugs, violence, lack of productivity, obesity, lack of creativity, unemployment, smoking and other addictions. Improvements in mental health can cause a cascade of positive multiplier effects throughout society.

Social Impact Bonds as a concept

As noted in my recent post on tackling homelessness, I am fascinated by the potential of Social Impact Bonds to help drive positive social change.

One idea that really resonates with me is the use of Social Impact Bonds to drive positive change in people’s mental health.

Inspiration for the idea

I was inspired by the potential for improvements years ago after reading Healing Without Freud or Prozac by the late Dr David Servan-Schreiber (which was once lent to me by the late Ismena Clout).

In the book, Dr Servan-Schreiber talks about combatting depression with the following:

  1. Meditation and heart coherence
  2. EMDR (Eye Movement Desensitization and Reprocessing)
  3. Maximising exposure to natural light
  4. Acupuncture
  5. Omega-3 Fatty Acids
  6. Exercise
  7. Social Interaction and Emotional Communication

Most of these activities can be undertaken by a beneficiary without any qualified medical assistance, which made me think that this would be an ideal area for a for-profit company or social enterprise to provide a service that would support sufferers of depression.

Indeed, people like Tony Robbins have companies focussed on this area with many of these areas being employed.

However, with Tony Robbins, the emphasis is on the beneficiary directly paying for services themselves. This means that many people that are not currently in a financial position to access the services can benefit.

Use of Social Impact Bonds to reward positive outcomes

What if a company or social enterprise could provide beneficiaries with all the benefits of this approach at no cost at the point of use but instead could be rewarded by a government or health service for delivering the beneficial outcomes?

I drafted this paper below on the back of the idea that Social Impact Bonds could be used to reward social enterprises for just this:

Concept Paper_ Social Impact Bonds for Improved Mental Health

Originally I designed this business so that it could be implemented by a Tony Robbins company because I am a big fan of the work they do to help people achieve transformational change in their lives. However, it could be undertaken by any organisation with a mission to help people make positive change in their own lives.

Below is a diagram explaining the value flows in the concept (note in this diagram I referred to beneficiaries as “patients”, which is not a terminology that I would use anymore):

Diagram: Social Impact Bonds for Mental Health

Risks and risk management

One major risk of this approach is that it could contribute to “privatisation of the UK’s National Health Service (NHS) by stealth”, with private sector organisations slicing off more and more of the NHS’ workload and sweating the assets for profit in the way that UK train franchises have done.

This could be mitigated by the fact that a lot of these activities are things that can be undertaken by individuals without any form of medical intervention, such as regular exercise, socialising, and improved diet. Therefore these would fall outside of current NHS services and would carry a low risk of this.

Another challenge is whether or not the activities would count as, or have the perception of, being medical treatment and therefore need to be regulated.

For the same reasons above, I think a strong argument could be made that this is not the case. Effective protocols that signpost beneficiaries to NHS services should be in-built so that the NHS and other authorities can have confidence that the social enterprise is not masquerading as a healthcare provider, but a “wellbeing-support provider”.

UK Government support

It’s interesting to see that the UK Government also sees the potential for Social Impact Bonds to stimulate change, as they have launched an Inclusive Economy initiative that includes a funding stream for Social Impact Bonds.

Contact me to discuss

I’d welcome any contact via my contact page from anyone interested in starting a social enterprise in this field. I’d be happy to share my ideas for potential methodologies that exist for the service, as well as potential funding streams to launch a pilot project.

New business idea: SecondChance – reducing retailer waste

The inspiration: Dumpster diving

I recently read this excellent WIRED article on a professional “dumpster diver” in the US.

Matt Malone makes $65,000 dollars a year as a part-time scavenger from dumpsters behind retail stores in Austin, Texas.

Diving has yielded many interesting and lucrative finds for Morgan, such as printers, laptops, and gifts,  with office supplies being (somewhat counter-intuitively) one of the most profitable sources.

It’s a great way to reduce the amount of waste going to landfill, but this is a niche hobby so the impact on landfill volumes will be minimal. This got me thinking.

What if there was a way to monetise this? Instead of having dumpster divers, could there not be a profitable business or social enterprise that would systematically give retailers the ability to reduce the amount of potentially-valuable waste from going to landfill?

Existing enterprise: FoodCloud

There is an existing version of this in the food retail industry: FoodCloud.

FoodCloud connects supermarkets and food retailers to local charities that can make good use of the food before it becomes unfit for human consumption.

This a win for the charity beneficiaries, environment and retailers alike.

If this could be done with other resource-intensive goods such as computers and printers, it would be like having an army of Matt Malone-style dumpster divers all over the country!

SecondChance: reducing retailer waste

The idea of SecondChance would be a for-profit version of FoodCloud for non-food products.

It would need better branding as that’s just a shorthand, but here’s how it could work:

  1. Retailers would upload any unsold goods that would otherwise be thrown away to the site.
  2. SecondChance would collect the goods for free and warehouse them.
  3. Local organisations or maybe even individuals could browse the site to look for bargains.
  4. They would buy them from SecondChance’s site.
  5. SecondChance would facilitate delivery to the end user after taking payment.

Risks and challenges

  1. It would probably be too tricky for individuals to be allowed to use the site, as it would be too expensive to have proper consumer rights for the goods sold.
  2. SecondChance would presumably have to have some smart buyers (or a very smart algorithm) to weed out the unprofitable goods as each collection would have a cost associated.
  3. The business model would be highly dependent on having no procurement costs at stage 1. As SecondChance takes off though, would the retailers want to charge for this?
  4. The business model is highly linked to the fees charged to retailers for discarding high-value items. If there are no fees or other penalties mandated by government in the area of the retailer, then the business case for participation in the SecondChance ecosystem would be diminished.

Potential entrants

1. Amazon

This is essentially a version of the Amazon business model but plugged into the back end of the retailer business process rather than manufacturers. Could it be something that Amazon would be interested in pursuing?

Without modeling the business directly, I suspect the margins would be too low to justify it for Amazon unless the cost of all goods were to remain at (or very near) to zero.

However, it is a good fit for their existing business model, with warehouses, delivery, and online retailing being the key infrastructure. It also marries well with their mission to bring goods to consumers as cheaply as possible.

2. eBay

Could an eBay business model work better? Would it make more sense to have the retailers simply auction all goods to consumers directly?

I personally think this would be too much of a challenge, as it would require a totally new shop area to handle the turnaround for the unwanted goods.

Arguably, why would the retailers even bother with listing the items online and then handling the traffic, when they could just resort to the low-cost alternative of having a very-steeply discounted bargain bin?

N.B. The name for this idea was changed from TrashNet to SecondChance on 11/02/2018 as I thought it better reflects the mission. Nobody wants to buy trash, so it shouldn’t be reflected in the company name!

Tackling Homelessness with Social Impact Bonds

One of the methodologies to achieve positive social change that really interests me is the concept of Outcome-Based Payments.

I recently saw a great example launched by The Big Issue, one of my favourite charitable organisations.

Homelessness in the UK: the challenge

Shelter estimates that there are about 300,000 people classified as homeless in the UK, with the National Audit Office estimating that there are about 4,450 people sleeping rough on any given night.

These are shamefully high numbers in such a rich and developed society as the UK.

How do Outcome-Based Payments and Social Impact Bonds work?

Social enterprises and charitable organisations target the social improvements that they want to achieve.

They find the relevant local authorities that would benefit from having these challenges dealt with and then enter into contracts with them. These contracts guarantee that the organisation will receive a certain payment once a measurable improvement has been made, known as an “Outcome-Based Payment“.

The organisation then provides the service in question and measures progress via the agreed methodology. Once this agreed target has been met, the local authority releases the agreed payment.

Of course, there is a delay between the provision of the service and the payment, meaning there is a need for startup capital. This capital can be issued in the form of a bond that is linked to the future income stream of the Outcome-Based Payments. Therefore, these bonds are often referred to as “Social Impact Bonds“.

Why are Outcome-Based Payments important?

This is a great model for local authorities because it means that the payments are made only after successful outcomes are achieved.

This means less taxpayer money is wasted on schemes that don’t work and it also means that funds can be diverted to the most effective strategies, obtaining maximum impact for the local authorities.

Big Issue Invest, the social investment arm of The Big Issue Group, launched the £10m Outcomes Investment Fund to target just these sorts of opportunties.

How could this work for homelessness?

Big Issue Investm via its Outcomes Investment Fund, has backed Changing Lives in its target to get 150 rough sleepers in Newcastle and Gateshead into long-term accommodation.

Source: The Big Issue, November 20-26 2017

I think this is a fantastic model that has potential to stimulate improvements for many other social challenges, such as mental illness.

What other organisations invest in Social Impact Bonds?

A non-exhaustive list of organisations that would make these sorts of investments are listed here.

Farewill: a great business idea!

I recently came across this amazing idea for a business: Farewill.

What is Farewill?

Farewill is an online service that helps you to make a last will and testament for £50.

Farewill claims that the wills are legally binding, takes 15 minutes, and will be reviewed by experts. For an additional £10 a year, you can also get coverage for updates to the law and unlimited revisions.

This is a really important idea as dying without a will (“intestate”) can cause major problems for your family and can cause major confusion over who inherits your estate. I know this from first-hand experience, as my father passed away suddenly without a will when I was 16.

Why write a will?

Leaving your loved ones with the burden of complicated legal procedures at a time when they are least able to carry them out causes a lot of anguish. Anything that gets more people to write a will gets my approval.

Providing this service makes fantastic business sense for Farewill, as around 60% of British adults do not have a will written up. That is an extremely attractive market size.

WillAid – cheap wills from a solicitor

Previously I had referred people to WillAid, a partnership between the legal profession and 9 UK charities. The participating solicitors draft your will for free in exchange for a donation to the targetted charities. £95 is the suggested donation but it is voluntary. It’s a great way to get a will at a cheaper rate than normal from a solicitor (usually around £200) and it runs every November.

However, this Farewill service has got my attention.

It’s one of those rare occasions where I see a new business and I am genuinely annoyed I didn’t think of it!

Nesta Inventor Prize

Nesta, a UK-based innovation foundation, has just launched the Inventor Prize.

It’s a new challenge prize aiming to support and inspire inventors to come up with physical and digital solutions to 4 major challenges in UK society:

  1. Financial Inclusion
  2. Mental Health
  3. Ageing
  4. Air Quality

The finalists get a £5,000 grant and mentoring support to help develop and test their invention. At the end of the competition, the top prize is £50,000.

The inventor must have a working model of their idea and it must have a clear market to improve lives in the UK. The final version will be developed through the prize with extensive user testing.

The deadline for submission of ideas is 11 pm on 22nd October 2017.

If their previous Dynamic Demand Challenge is anything to go by, this new Inventor’s Prize will be a great little initiative to support upcoming inventors.

Amazon and eBay rentals – business model of the future?

Isn’t it amazing that neither Amazon and eBay let users lend and borrow items between themselves? There are plenty of websites chasing the rental market currently, so why aren’t the e-commerce giants chasing it as a business model?

Connectivity = efficiency = sustainability

Connectivity within a system allows for greater efficiency, as it allows different elements of a system to pool resources and reduce the duplication of effort. From a sustainability standpoint, the rise of the internet is incredibly exciting as it facilitates the sharing of resources, meaning fewer items need to be fabricated for human use, which in turn reduces the total amount of effort and investment wasted on items that have a low usage factor.

Prior to the internet, the pool of objects and items that human beings could “leverage” (i.e. use) to achieve their goals without an outright purchase was mostly limited to those held by their within their own network of friends, neighbours and family. This was a pool constrained by the mind’s numerical capacity for relationships, the lack of a complete and quick way to search a person’s hypothetical inventory of items available for use, and also by the ability to convince others of trustworthiness.

Internet marketplaces facilitate sharing

The internet can disrupt this status quo through the use of marketplaces that can be used to connect borrowers and lenders of items. Items could be listed as available for borrowing/renting, and potential users could search for them. Possible features include:

  • rating the condition of an item by both parties before and after the transaction
  • insurance products could be offered to cover the item
  • payment (if needed) could be handled via the marketplace site/app
  • location of the borrowers/lenders could be matched quickly through mobile GPS
  • the option to buy the item could be provided if desired

There are startups working on this very concept as we speak, such as StreetBank in the UK. Watch their company trailer below:

Business case for Amazon and eBay rentals

Given the interest in the rental model by many startups around the world, driven by the fundamental capability shift that has been enabled by the internet, I find it intriguing that Amazon and eBay do not offer their customers the opportunity to search for rentals (with the exception of holiday home rentals on eBay and Amazon’s e-book and online film/movie rentals).

In my mind, allowing customers to lend/borrow in addition to buy/sell would be a source of additional traffic to the site, adding additional opportunity to grow revenue. The rental model itself would also be extremely appealing to the two companies as, in the case of popular items or items rented for long periods of time, it could yield regular cashflow. For example, it would be perfect for those who want to rent big items like TVs or sofas.

This business model would also hedge their position against a potentially disruptive market force and allow them to stay ahead of the curve (and potentially kill any upstarts dead in the water).

But why don’t they want to offer it as a service to clients? There may be a few reasons:

  • They do not want to lose the focus on their primary business model
  • They don’t want to create a new market that could potentially disrupt their current operations
  • They don’t believe their is a real demand for the service
  • They do not believe that the potential revenue streams do not justify the costs of lost sales and investment in their site infrastructure

I believe that the last two are the more plausible ones, as Amazon in particular are not known for shying away from innovation!

One thing worth noting here is the ingenious “Subscribe & Save” feature of Amazon that allows users to create a regular repeat transaction for an item they buy regularly (such as food or toiletries) and save up to 15% of the cost in the process. This is win-win for both parties: customers save money and Amazon gets a regular cashflow. The service is a step in the direction of the rental model and creates much more of a recurring relationship between the parties (making the user of the site a “client” rather than a “customer”).

Disrupting the very concept of “ownership”

Having wider access to use the items around us (i.e. having greater “personal leverage” of your community’s assets) will suddenly change the very concept of ownership. If an item is readily available to be lent or borrowed by thousands of people via an online marketplace, who will really “own” the item? Technology will blur the lines between group and individual ownership and the old definition of ownership being “the moral right to categorically control something” may begin to feel like an anachronism.

The economist and activist Jeremy Rifkin recently wrote an article for the New York Times heralding “the rise of Anti-capitalism”. He argues that the “zero marginal cost economy” being driven by technological mega-trends such as the Internet of Things will increase collaboration. This will reduce the opportunities for capitalists to make profits and increase the relevance of social enterprises and non-profit organisations.

Given how this could represent a threat to megacorporations, this is a concept worth serious consideration.

Business case for rental not sales

In my mind, this highlights the potential business case for companies renting items to us rather than selling. This is the lifetime cost model versus the upfront cost model of a transaction.

Upfront cost model characteristics

  • immediate access to cash = lower risk of cash loss via customer churn or default
  • Lack of cash flow predictability
  • Upfront cost is a barrier to customer acquisition
  • Vendor has no incentive to take responsibility for maintenance or disposal of product = higher margin

Lifetime cost model characteristics

  • Lower initial cost = lower barrier to purchase = more sales
  • High predictability of cash flow
  • Greater emphasis on client relationship = greater emphasis customer service = greater chance of add-on sales/repeat business
  • Responsibility for life cycle of product (maintenance and disposal) = incentive for sustainability = better quality products made and less wastage

Can you imagine a world where, instead of buying a pair of Jeans outright, you would instead rent them? The borrower would sign up for a certain amount of time (say 5 years) and the lender would be responsible for ensuring they last the allotted length of time (perhaps offering a post-back service to have them fixed or tailored).

This business model would reduce the amount of unused, unnecessary items in circulation, would save customers money, and would allow more responsible and competent companies to thrive. I for one would be keen to see this model take off!

Winners of Nesta’s Dynamic Demand Challenge announced

The winners of Nesta’s Dynamic Demand Challenge have been announced at the Finalists Awards Presentation last week.

The winners were Demand Shaper of Exergy Devices with Hestia, a “smart home controller specifically designed for electrically–heated homes, and could save these households over £200 per year. Using Demand Shaper technology, Hestia implements a time–shifting algorithm to subtly alter domestic heating schedules, modulating electricity demand according to the needs of electricity suppliers, or National Grid“.

Hestia Nesta dynamic demand Challenge winners

Hestia (aka Exergy Devices) received their award: Winners of the Nesta Dynamic Demand Challenge

To be perfectly honest, at the Hackathon I didn’t fully grasp understand their offering, as you can see from my previous post on the topic.  However, I should have guessed they would do well as the team have invested significant efforts in their academic research into this field, and already have a history of successful and profitable IP generation for the smart home market.

The focus on an initial target market (or “sandbox”) of electrically heated homes will lead to some impressive benefits:

Hestia could reduce energy consumption by 25% thanks to subtle alterations in domestic heating schedules which match the homeowner’s needs with the supplier’s capacity. The technology offers a peak demand shifting capacity of 1.7 GW if deployed across the UK and has the potential to reduce individual homeowners’ CO2 emissions by around 3 tonnes per annum and save around £200 a year.”

Hestia have won £50,000 in funding on top of the significant benefits and funding they have received from the Challenge already. Congratulations to Dr Peter Boait and his team!

I was also delighted to see that my favourite finalist, Upside, won a place on the Climate-KIC Accelerator which will see them receive €25,000 in funding and “continued support to develop their business”. In addition to this, Upside has recently confirmed their successful bid for funding from the Technology Strategy Board’s Localised Energy Systems Competition, in consortium with Siemens, Sharp Labs, Tempus Energy and the University of Manchester. Graham and his team now have a great combination of validation, investment, and partner support to take the idea forward. Well done guys!

This brochure from Nesta contains information on all the finalists: their progress to date, their future plans and any investment opportunities for those that want to support their work. On a side note, it’s nice to see my PowerCube Tariff idea get a little shoutout in there:

“An ultra low–priced electricity tariff, with a capacity ceiling that is hard wired into consumers’ electricity supply. A smart meter would be installed in house, including a switch, which will feed from the capacity limit that is fed from the smart meter. The Powercube will notify the user via green, amber or red lights and also via text message when they are utilising a surge of electricity. If a large amount of electricity is used at one time, the house’s full electricity supply will cut out for 60 seconds as a warning/incentive for the user to be more wary of their activity.”

I should add that paragraph was not written by me… 🙂

It was exciting to see how far the ideas have come in the 12 months of the Challenge and I’m optimistic for the potential environmental benefits that will come out of this successful initiative. I recommend this as a model project for all those seeking to stimulate smart grid entrepreneurship.