If you’re looking to disrupt any of these markets with location based technology… I’m there
A number of NYC’s finest startups presented at the latest Entrepreneurs Roundtable at Microsoft’s west side offices, where guest investor Jason Klein discussed GeoDisruption – transforming industries through the use of location-based technology, and investing.
Jason E Klein, from media industry executive to angel investor:
Jason E. Klein is currently an active investor with New York Angels, Chairman of Harvard Business School Alumni Angels of Greater New York, and is Founder and CEO of On Grid Ventures, supporting both Entrepreneur’s Roundtable Accelerator and Metamorphic Ventures. Klein is a master of the “[reinvention of] legacy businesses — in ways which take full advantage of the ongoing digital transformation of media, information, and marketplaces.”
Previously, he pioneered new forms of GeoDisruption within top media and magazine companies (Klein has a deep background in media and content), helping to pave the way for the today’s entrepreneurs. Merging traditional marketing with technology for eight years with Times Mirror Magazines culminated in a $475 million sale. After nine years at NNN (a limited partnership that included The New York Times, Tribune, Gannett, Hearst, Cox, Advance/Newhouse, and Washington Post) he spoke before the FCC as an advocate the information needs of local communities.
A few highlights of Klein’s thoughts on investing:
Klein lent an interesting perspective on investing in general:
- the average angel spends 20 hours per investment on due diligence, and by a factor of around four, the more time they spend, the more successful they are
- looking for an investor with domain experience can help you to achieve customer and potential acquirer objectives
- having general management experience with large companies (>100M) can add to an investor’s helpfulness (often it is someone with this background who is making the decision to acquire a startup)
- the median for company valuation is around $2.4M nationally; 45% of exits are made at less than $50M (only 10% are IPOed); 67% of exits occur before the series B
- Klein likes to see entrepreneurs who dive in deep to be the operator and who aren’t afraid to really understand the market
- the CEO him/herself can be the competitive edge
- maintaining simplicity, focus and balance in product can be key
In addition to his common sense attitude toward starting up and evaluating investments, Klein is not afraid to break down location-based applications into their marketing and customer-facing components. He elaborates: “geo-intent is a way to describe the customer decision journey and underlines these customer stages: discovery, sharing and review and transacting.” McKinsey, Jason’s alma mater, says: “Marketers need a more systematic way to satisfy customer demands and manage word-of-mouth….strategy, spending, channel management, and message.“ When geo-intent is successfully employed, GeoDisruption takes place, and this guides, and hits, many of Klein’s investment ‘hot-spots.’
CLICK NOW FOR THE STARTUPS THAT PRESENTED AT ER 74
Sailing is the win: Sailo
88 million yearly US boat renters, and an addressable market of $25B, propels Sailo’s efficient, three-way marketplace for boat rental as they expand along the East Coast. Sailo aims to improve the safety, utility, and experience of sailing and boat rentals, focusing on user customization and personalized experience. Within this large, fragmented, yet definable market, Brass stated that their true passion may lie in opening up the world of boating to the inexperienced sailor, which is at least 60% of the US population. With the help of their star engineers, marine expertise, diligent team, coordinated evangelism and community passion (one community they did thank was the active Columbia University business school community — two of three founders went to school there), Sailo has brought together renters, boat owners, licensed captains, insurance companies and responsible industry stakeholders, such as the US Coast Guard. Already covered here at AlleyWatch, Sailo is now in NY, CT, and NJ are expanding to Florida and the Caribbean beginning in October, after which they will be seeking to progress their growth rate.
Nuts and Bolts: In the vein of Airbnb or Uber-like reinvention, Sailo has defined a clear target market and illustrated the ability to surmount significant technical and industry barriers in a collaborative and competitive way (they offer around $1M in insurance, conduct boat diligence and reviews, interviews captains and automatically verify theirs license with the US Coast Guard). They are well positioned to realize their vision of a user-friendly, localized and customer-centric experience that seamlessly transforms a new American pastime.
Founder take away: Pairing a large, fragmented, yet accessible, industry with a comprehensive, diligent and fun approach can reinvent a popular industry and address consumer demand.
Investor Q and A insight: Leaning in to scale properly might mean honing your marketing strategies
Cute, cuddly and Turing-tested: hello FANG (Friendly Anthropomorphic Networked Genome)
Child: “Why does my birthday come once a year?”
FANG: “We only celebrate birthdays once a year because you are only born on one day out of the year. That way all the other people can celebrate their birthdays, too, on all the other days.”
This adaptive educational product with an nlp (natural language processing) layer aims to be “the first cognitive smart toy.” The prototype is a networked chip that can be combined with an item (for instance, a teddy bear) and that collects audio information through a microphone, sending the language to be interpreted to aid in child-centered activities: games, learning, development, automated conversational responses and parental participation and review (via IPad or Tablet).
Citing that there are 22M five-year-olds in the US, hello FANG aims at being a product a price point of around $99, and counts as its partner IBM with which they share a creative split . If that isn’t enough to impress you, take a look (scroll down) at their veteran NYC team. Advisors and team members include Calvin Chu and Lorenzo Thione (founder of Powerset, the company that would be bought by Microsoft and would go on to help create Bing). FANG, as a company, was inspired by the winning of a contest to train and utilize WATSON, the famous AI (Artificial Intelligence) technology by IBM.
The idea behind this adaptive technology is that the product not only self-learns and self-improves with high accuracy, but that FANG truly has the right team to guide this machine mastery into the hands of the people who may benefit from it most: the new generations entering into this information-saturated world.
Nuts and Bolts: Could potentially wrap machine learning already customized for young children into devices as small as the size of a stamp, allowing consumers to use it with already trusted products such as teddy bears. (I can’t help but compare the personal machine learning revolution to 1977 when the personal machine revolution was ignited by Apple distribution).
Founder take away: Using the best of the best technology to benefit kids in novel ways.
Investor Q & A insight: Consider the uniqueness of your product, cost of goods, and your competitive edge.
Keeping the Class in Klass: Kid Klass does
While running a top NY law firm – GRIFFITTS O’HARA – which this founder began only three years out of law school, Havana Madonna created a directory designed to help parents find quality after-school and enrichment programs for their children (she had been through the lengthy process as well). That directory has blossomed since into a transaction and commission-driven resource for Brooklyn parents looking to get the best of the best information on local education and enrichment activities for their children.
Kid Klass takes the pain out of parental search through customized experiences to the actual WOM (word of mouth) needs of parents. While CourseHorse and Camperoo may focus on the vendor (courses) side of the service, Kid Klass has tightened their focus to only parents in Brooklyn’s district 15, putting on hold other geographic areas (Brooklyn’s district 15 includes the exclusive and trendy Park Slope area; representing a $4M opportunity). As a result of focusing on quality and service, Kid Klass has seen recent sales conversions of 25%. With 400 providers, Kid Klass also offers concierge services for those options that are not digitally available.
I spoke with Havona a bit, and have to say, that I admire a company that is not afraid of using math to prove its position in its chosen market. While directory-type startups can scale quickly. no one beats fundamentals for very long.
Nuts and Bolts: Open table for after school enrichment classes: the site sorts, lists, matches and sells child enrichment programs to parents, but does not lose a sense of that special attention necessary to capture this busy market.
Founder take away: Kid Klass excels at listening to and meeting the needs of parents and their children as their top priority. Emphasizing quality and results in a market which has been traditionally challenging for larger companies and startups alike, sounds like a great differentiator.
Investor Q & A insight: If you prove scalability through localizing (keeping your service local) how are you taking the discovery process from the playground to the online world? Broadly, is it better to aggregate and collect or to iterate in this situation?
See What’s in the Foods You Buy: CTHRU Nutrition
CTHRU Nutrition is like a nutritionist you take to the store with you. The app allows you to scans products, matching the ingredients with your food preferences, and enables you to lose weight, avoid restricted substances, and achieve your health goals. Those questionable preservatives (don’t ask where fake vanilla comes from), synthesized chemicals and newly minted FDA warnings? CTHRU aims to compute, match and sift away those pesky seven syllable Greek words in the supermarket, letting you relax and enabling companies to be more transparent. With plans for near field communication capability, and an existing beta of 5,000 products, some of which have Walmart-linked integration, C THRU hopes to add that personal touch to the Good Guides, FoodApps, and ShopWells of the world. This company is led by a programmer and endorsed by a celebrity nutritionist from Miami.
Nuts and Bolts: Matches food products with consumer preference, enabling real time ingredient analysis and automated big picture health decision.
Founder take away: Large brands from all levels of the food distribution chain want to be transparent, which consumers need convenience during shopping.
Investor Q & A insight: Consider the market and imagine a defined niche to which this app may really apply.
