Making Innovation Flourish

Silicon Valley comes to the UK

What is it about Silicon Valley that still sparks so much curiosity and interest for us in the UK? Perhaps it’s driven by our quest to find a perfect solution to the UK’s own innovation landscape – or our desire to be inspired by the luminaries from the Valley who have led the world in technology innovation.

We’re delighted to announce that NESTA is bringing Silicon Valley to the UK – 17 leading entrepreneurs, venture capitalists, and university / industry collaborators will tour the UK’s ‘Golden Triangle’ - Cambridge, Oxford and London – in November.

Included in the mix are Reid Hoffman (Founder of Linked In), Megan Smith (Vice President of New Business Development at Google), and Javes Slavet (a Partner at Greylock Venture Capital).

We have an exciting range of events for students, entrepreneurs and policymakers who will have the chance to learn from the entrepreneurs about their experiences - both successes and failures - hear about the latest developments in Web 2.0 and other technology, and to consider whether the Silicon Valley model can or should be neatly translated into the UK’s innovation landscape.

View the full range of speakers or click here for details of the events that NESTA is putting on.

Mixed signals from the future

Just back from the Future of Web Apps (FOWA) conference, and it seems that most of the posts so far cover the developer/tech side of the coin, so I hope my business perspective will add to the conversation...

I was definitely amongst the minority at the conference, being both female and not a developer. I went along in hopes of catching a glimpse of the future as well as a peek at the Seedcamp stand & winner, as I was thrilled to hear from my Investments colleague that NESTA is backing Seedcamp (more on this later). While I never quite managed to catch up with the latter, I'm pretty satisfied that I did get a preview of where online innovation is headed.

For some reason, in the past I've always considered the 2 facets of 'Web 2.0' meme to be discrete: one definition being all about 'the social web' (social networking), the other being about 'the web as platform' (web-based applications). But I came away from the conference realising that the point where these two definitions converge is the most interesting and useful. Quite a lot of the speakers I caught touched on making web apps social.

Another key theme was interoperability - that is, the need for all these cool tools to be able to work with each other, and to be able to move information seamlessly across from one place to another, without the user having to do anything, and all under a single sign-on. (I'd been meaning to blog about this very same thing for a while, until Michael Geist's article pretty much summed it all up for me with this statement: "The irony of the current generation of online social networks is that although their premise is leveraging the internet to connect people, their own lack of interconnectedness is stifling their potential.") At FOWA Jyri Zengstrom made a relevant analogy comparing all these 'silo'ed social networks and apps to the way the US phone system started up, with different phone networks that didn't allow you to call people who were on a different supplier's network. The same thing happened with IM, and so it is now with social networks & online apps. But change will come.

Speaking of irony, I had a good chuckle about the fact that at a conference about web apps, I couldn't get online. The wifi connectivity was awful, in direct contrast to the Office 2.0 conference where the speed was so fast I am sure things were loading before I clicked! UK conference centres could learn a thing or two from across the pond, but I digress...

Rashmi Sinha and Suw Charman offered very different advice to app developers & web start-ups. Rashmi's talk was aimed squarely at B2C applications, with the advice to launch publicly early, then refine the product based on feedback from real-life users, not a cobbled-together closed group of people you think will represent users. Funny that I had never considered SlideShare, an app that lets you share Powerpoint presentations, as B2C but I guess it is! Suw's talk focused on B2B, where the public launch/refine model doesn't work,  because (non-tech) organisations don't have the luxury of being able to mess around with Beta releases. They want products that work properly, NOW. If you can't deliver first time, they certainly aren't going to hold off buying a tool while you fix bugs or hire support staff. I actually think Suw's talk would have gone down much better at Office 2.0, as I got the feeling that a lot of the folks at FOWA were more interested in hearing about how to get rich quick with The Next Big Thing than how to deliver products that businesses would adopt and use across the enterprise. Which is odd, because I think the latter has great potential for impact and long-term earnings.

On the topic of enterprise apps: I had a look at the Huddle demo - with a critical eye, as I'm a big fan of Central Desktop. While CD isn't pretty, it is chock full of useful features. Huddle on the other hand, is all shiny and 2.0-y but left me feeling a little disappointed with what it actually does. It does offer a sign-off workflow for docs that need approval, and a more user-friendly way of seeing who's in your workspace, but overall I think Huddle's not quite ready for prime time yet. Imo things like Outlook/iCal integration and emailing into the system are essential requirements if you are going for the enterprise dollars.

But the best talks for me couldn't have been more different: youthful optimism from etsy.com's Robert Kalin, and experienced wisdom from Thomas vander Wal. Gum-chewing Kalin flittered all over the place, touching on topics as diverse as the history of money, the way we attach meaning to handmade objects, and how Rockefeller made millions selling oil to the Nazis. Kalin is a revolutionary in geek's clothing, and he wants Etsy to be the forum where crafters, artisans and makers of all types can rise up against the mass-produced soul-less factory goods so common in the WalMart economy. I've been a fan of Etsy since 2005 so I'm one of the choir, but I left his talk feeling there is still hope for changing the nature of markets. Even if you're not an 'act local think global' person, the Etsy story is truly compelling: Kalin was a high-school dropout carpenter who started Etsy from his living room, which in 2 years has grown into a global marketplace selling 7000 items per day and has over 1.4million items on the site from 100,000 sellers.

Thomas Vander Wal's talk was a bit less stream-of-consciousness, but no less inspiring (full notes on the talk here and here). The overarching message I took was that these tools (and the people who make them) need to respond to the very nature of human beings. We as humans have only a certain amount of attention, and we are being bombarded by 'social spam' due to the way social sites don't allow you to filter out all the noise generated by Twitter, Facebook, Jaiku, RSS etc. Sometimes you only want to know one kind of info from a friend/contact - and it should also be noted that not all 'friends' are created equal. Tools need to understand that you only want to hear Sally's views on aeronautics, and that someone you once met at a party is not the same kind of friend as one you grew up with. Social bookmarking needs to evolve so when you're looking at someone else's bookmarks, it only shows the ones that you haven't already seen. Sounds a lot like the semantic web to me.

Innovation Technology: How new technologies are changing the way we innovate

NESTA’s Provocations are regular extended essays by leading thinkers that showcase
thought-provoking work on innovation.  In 'Innovation Technology: How new technologies are changing the way we innovate', David Gann and Mark Dodgson argue that a new set of technologies is emerging that enables firms to innovate more rapidly, efficiently and accurately than ever before. This 'Innovation Technology' (IvT) includes eScience, virtual reality, simulation and modelling techniques, and rapid prototyping.

Indeed, it is possible that it will have as profound an impact on economic growth and social well-being in today's knowledge economy as the development of machine tools had on the industrial economy of the mid-19th century.

Over the next decade, understanding what IvT does, how to use it and where its limitations lie will prove critical for those running businesses, working in firms and providing public services. As a result, government policy-makers at all levels would do well to appreciate its implications.

I welcome your thoughts...

The future is smart machines (and soup)

Last week I read an interview with Tim Berners-Lee about the future of the internet, the so-called 'semantic web'. Not as catchy a name as 'Web 2.0' but potentially even more powerful. Reading the interview reminded me that while the concept of the semantic web has been around a while, and has been proclaimed the Next Big Thing by net gurus the world over, explaining the concept and why it could revolutionise our lives is difficult. Eyes glaze over as soon as things like "data-meshing" are mentioned, and even Sir Berners-Lee's explanation didn't quite hit the mark for me. So here's my own attempt at a Plain English explanation of this woolly and unfortunately named concept, hopefully in a way that even my mum would understand. Make of it what you will.

Let's start at the beginning, with Web 1.0: producers created content that was published on websites for consumers to find and consume.

In Web 2.0, the lines betweeen consumer and producer are blurred. Consumer-producers can now upload their own content, and consume the content of other consumer-producers, through blogs & sites like YouTube or MySpace. By exchanging this home-made stew of information with each other, online social networks are created.

Web 2.0 is also about doing more stuff through your web browser, things that you used to do on paper or on software that you had to install on your computer. BackPack replaces your personal datebook or Outlook calendar, Flickr replaces your photo albums, for example. You can label your photos and events with descriptive words or 'tags' that make it easy for you to find them. And of course, you can share this content with your friends.

Now on to the tricky part...

Missing the point: net radio's last stand

In the same week that NMA announced that online (download) sales now acount for 90% of British single sales (yes, ninety!), the UK Copyright Tribunal did exactly what I was hoping they wouldn't: they followed the US CRB in effecting royalty charges that could kill internet radio in the UK entirely. What's more, the UK fees will be up to 9 times the amount their US counterparts will pay. Pandora, one of the most respected US services that had only recently started broadcasting in the UK, is preparing to shut down their UK operation as early as this week.

What stations like Pandora do is provide an excellent way of selling more records. Here's how: you type in the name of a song or musician you like, and Pandora plays you music that is similar. You may never have heard of the artist or song that Pandora plays to you, but if you like it, you can buy it from iTunes or Amazon at a single click. I have no doubt that this has led to an increase in sales, especially for lesser-known artists.

The whole purpose of royalty fees is to protect composers and performers (and of course record companies) by compensating them each time their song is played in public, thus generating income for them. But actions like the new net radio fees will only end up hurting music sales, which generate more income than royalties. The UK Copyright Tribunal and the US CRB have effectively killed off one of music's cheapest and most effective marketing tools.

Until regulatory bodies like this recognise that the world has changed around them and learn to adapt their ways of working to account for the digital age, it's a lose-lose situation. Regulation needs to evolve to support innovative business models like internet radio, or nobody wins.

Secondfest: the shape of things to come?

This weekend I attended Secondfest, The Guardian- and Intel-sponsored 3-day virtual music festival that took place in SecondLife, the online virtual world. Intel donated the use of their SecondLife islands, and The Guardian sponsored what promised to be a stellar lineup of artists.

On the whole, it looked just like a real-life music festival: several stages, a campsite complete with tents, drinks stalls and whatnot. But this is exactly what let things down in my mind. Why would you build an exact replica of a real-life festival in an environment where you could have virtually anything? Why not put one of the stages on a cloud? Or inside a giant dinosaur? Or under water? Making the impossible possible is one of the joys of SecondLife. I think they missed a real trick here.

Internet radio: how regulation could impact online innovation

Today internet radio stations in the US are observing a day of silence to protest the Copyright Royalty Board (CRB)'s decision to hike royalty fees for internet radio stations - a hike of 3-12 times the fees currently being paid by stations. Small stations have complained that the fees would be more than their annual revenue, and many pundits argue that this could effectively 'kill' streaming internet radio in America. Even non-profit radio, such as NPR (National Public Radio) would be severely hit by the hike.

Roughly 1 in 5 Americans listened to internet radio regularly in 2006, so the potential impact shouldn't be underestimated. For reference, on this side of the pond, the picture is much the same: BBC's internet radio doubled its listenership in 5 months, and a year ago reported over 32million hours of net radio consumption (I'm sure it's doubled again by now).

To me, the tragic irony in this story is the fact that the proposed royalty fee model could never have existed without the online medium itself. The fees are per song, per listener - something which could never be accurately measured in the old broadcast model, but suddenly is possible for online stations due to the trackable nature of streaming media. Net radio campaigners say this is an unfair model, as it penalises online radio unjustly compared to satellite or standard broadcast radio fees.

Internet radio is the epitome of The Long Tail at work: thousands of small, non-commercial niche stations sprang up as an alternative to mainstream commercial stations littered with ads, churning out the same playlist over and over. A thriving new business model emerged based on broadband penetration, streaming media technology and consumer demand; a perfect example of innovation at work.

Looking at the bigger picture, this is a case in point of how something like regulation could seriously impact the growth of an innovative business model. What nascent markets like these need is not overbearing regulation, but forward-thinking. Of course I'm not saying they shouldn't pay (fair) fees, but this was a missed opportunity for the CRB to demonstrate leadership in the way intellectual property should be managed in the digital age. Instead, they opted for an approach that exploits the nature of the new medium to line the pockets of the record companies: none of the proposed fees would go to the recording artists.

Net taxation could kill collaborative innovation

Soon the US government will decide whether the ban on taxation of internet access should continue or not. If the ban is lifted, Americans could be taxed per access or amount of bandwidth used instead of the current blanket per month fee for broadband. Not only is this a backward step for consumers (remember dial-up?), this clearly has societal implications, allowing only the moneyed classes to readily access high-bandwidth content such as video, or to stay online for long periods in Second Life or MMORPGs. But there's so much more at stake than missing out on YouTube or online games. The entire economy of the internet would change. Would you do your banking, grocery shopping or check-in for flights online if you had to pay extra to do so?

The rise of cheap broadband also opened the door to exponential growth in online social networks and collaborative tools such as Basecamp and Central Desktop, not to mention online meeting tools and VOIP. There are millions of people online every day, collaborating on projects and ideas, sharing knowledge in ways that weren't possible before, and just plain getting things done. People from oppostie sides of the world can collaborate in real time without ever leaving their chairs. Taxation such as that being debated could kill these kinds of online collaboration. Without cheap & easy access would projects such as the IBM InnovationJam thrive - or even exist?

If the US were to lift the ban, other countries could be inspired to follow suit - I only hope that those of us who live our lives online can make sure this doesn't happen. It also highlights the fact that many of the factors in creating a climate where innovation can thrive reach way beyond 'innovation policy' or personal  entrepreneurship.

No wonder there's no UK-born Facebook or Flickr

I attended a presentation by my colleagues from NESTA Investments on Monday, and I have to say I never realised the gravity of the sad state of investment in tech startups in the UK. According to Paul & David, the overall amount of money invested by venture capital in the UK is £10billion. Of this, only £1billion is invested in early-stage companies. Of this pot of early-stage investment, only £160 million goes to tech startups. That's just 1.6% of the total. Sheesh. It's no wonder UK tech startups are struggling. I wonder what the comparative figures are for US venture capital?

The confusing ethics of modern life

Two stories which resonated with me this morning...

1) A colleague forwarded this nugget from popb*tch:
An avatar in Second Life has a larger carbon footprint than the average Brazilian

2) Slashdot commented on the world's biggest digital dump, where Chinese locals harvest the gold, copper and other valuable parts within discarded PCs from the West.

How should I feel about these things? It's a confusing state, as both coins have 2 sides.

I'll accept that the environmental cost in energy consumption of spending so much time online is greater than the footprint of most Brazilians. But on the other hand, it could be argued that the typcial American sitting at home on Second Life hanging out with virtual friends is actually making less of an environmental impact than s/he would if s/he drove his/her gas-guzzling car to meet up with real-life friends for a fast-food meal.

And sure, it's a real shame that there are so many toxic chemicals being carelessly dumped and unknowingly inhaled by Chinese workers in these PC-dumping grounds. But shouldn't I be feeling the warm fuzzies that this stuff is being recycled in some way, while also generating healthy incomes for poorer families?

I'm left in an emotional muddle by these things. My brain hasn't evolved the coping mechanism to process these kinds of confusing signals that we are bombarded with every day. I feel the real impact of the globalisation of media is constant mixed-message syndrome, in which people end up so confused about which angle to believe, they end up shutting down in hopes of ignoring it all.

Is anyone out there working on Emotions 2.0 ? If so, I'll gladly invest.