The alarm on my iPhone wakes me up each morning and after turning it off, before getting out of bed I often scan my inbox and my twitter stream bringing me up to speed on the hours that I missed. This morning I got the news. Steve Jobs had died. And it shook me. And I am really sad. And I cried a little. And all of this surprised me.
I didn’t know Steve. But he made my life better. And he inspired me to have the courage to give up my safe, well-paid job to do something that is more meaningful to me. To try to change the world, if only a little.
So we started Anthemis with a mission to help build the Apple’s of 21st century finance: to bring elegance, simplicity and deep engineering to create financial services that just work and empower their users.
The world needs more leaders like him. Perhaps his passing will shock some of our other leaders into pulling up their socks and start acting their parts. Or inspire new, better leaders to emerge. I hope so.
And I will stay hungry. And foolish. And I won’t settle.
Anyone who has ever used an Apple product understands that a key part of the value flows from the design aesthetic that covets simplicity, intuition and beauty; harnessing these attributes to provide solutions and services that users find a joy to use right out of the box. The complexity of their products is hidden from view, Steve Jobs having understood that the extra effort needed to transform complexity into simplicity was something that created tremendous value both for his customers and his shareholders.
Creating simplicity is hard. Much harder than creating complexity. Entropy and all that. But it is very often worth the effort. Helpfully, John Maeda wrote a great guidebook “The Laws of Simplicity” where he articulates 10 basic laws:
Reduce: The simplest way to achieve simplicity is through thoughtful reduction.
Organize: Organization makes a system of many appear fewer.
Time: Savings in time feel like simplicity.
Learn: Knowledge makes everything simpler.
Differences: Simplicity and complexity need each other.
Context: What lies in the periphery of simplicity is deï¬nitely not peripheral.
Emotions: More emotions are better than less.
Trust: In simplicity we trust.
Failure: Some things can never be made simple.
The One: Simplicity is about substracting the obvious, and adding the meaningful
Finance and financial markets are often complex. This complexity can arise within products (exotic derivatives), infrastructure (clearing, settlements and payment platforms) or regulation. And most financial services firms (and professionals) revel in this complexity. Not only do they not seek to hide it away, but they often compete vigorously to show it off in all its glory (and of course by association they seek to validate their virility and cleverness by navigating all this complexity on behalf of their hapless customers.) Of course – sticking with the computing metaphor – this ‘look how clever I am’ approach is very Microsoft-ian (and no, that isn’t a compliment) and very rarely does it provide the most utility or best value for the customer. So one of our key investment themes is to find and nurture companies who are to finance as Apple is to computing (and media!) The complexity of modern finance and markets is the ideal substrate for simple products and services, to quote John:
Simplicity and complexity need each other. The more complexity there is in the market, the more that something simpler stands out. And because technology will only continue to grow in complexity, there is a clear economic beneï¬t to adopting a strategy of simplicity that will help set your product apart. That said, establishing a feeling of simplicity in design requires making complexity consciously available in some explicit form. This relationship can be manifest in either the same object or experience, or in contrast with other offerings in the same categoryâ€”like the simplicity of the iPod in comparison to its more complex competitors in the MP3 player market.
One of our portfolio companies does exactly this. They take a simple service, using technology and their market knowledge to engineer a solution that keeps the complexity away from the customer and behind the scenes. (Where it should be.) A solution that embraces simplicity and transparency in a market heretofor characterized by complexity and obfuscation. It’s not a new music site or social network. It’s probably not something anyone would get too excited about. It’s boring. But it’s big. Billions big. And important. And for many individuals and corporates, unavoidable.
The service is foreign exchange (aka FX) and international payments. And the company, as you might now have guessed, is FX Capital Group. (See also my FX 2.0 post from this spring.) And the reason I am writing about them today is that they have just launched their new website and online trading platform and it is by far the best FX user experience I have seen. Simple. Transparent. Complete. Easy-to-use. From the initial client take-on, all the way through to the onward payment to the account of your choosing, every last detail of the process has been engineered to make the customer’s life simple. The “iTunes of foreign exchange”. After all selling one currency to buy another should not be that hard.
And now, it isn’t.
FX Capital Group’s vision is to combine technology and traditional phone base services with competitive and transparent pricing to deliver on the promise of simple, cost effective, and customer friendly foreign exchange and international payments services for clients.
Leveraging experienced individuals, the best technology and a deep understanding of both international foreign exchange and payments markets, FX Capital Group brings transparency, simplicity and automation to meet the foreign exchange needs of clients in a robust, easy and effective manner.
Buy, Sell and Hedge Currencies: A full range of phone based and online services to buy/sell currencies and hedge currency risk. Competitive, consistent and transparent pricing for all customers.
Manage Currency Risks: Guidance on strategies to hedge currency risk within your business. A great service for firms who contract in multiple currencies or import / export goods and services.
Sell on Your Website in Multiple Currencies: Expand your online customer base by selling to customers in multiple currencies using our real-time FX API’s at rates that are better than those “bundled” with merchant service providers.
Invoice in Multiple Currencies: Invoice your international clients in local currency. Embedded hedging of any currency movements and no need to maintain bank accounts in multiple currencies.
Make International Payments: Our international payments service (online and phone) will save you money over you bank for making international payments and may be free if you transact your FX with us.
And other brokers and financial intermediaries are also welcome to partner with FX Capital Group, either via API or white label agreements. Indeed, first and foremost this is very much a platform company, FXaaS really. The customer facing website is in fact just an implementation of the underlying platform, and shortly the company will be launching the second implementation – RabbitFX – which will be tailored specifically to private and retail clients. Going forward we hope that many other partners choose to build innovative and customized services on top of the core FXCG platform. We also are excited by the ability for partners to integrate FX into their products and workflows simply and powerfully. Imagine for example an ERP provider, or online accounting services, or an ad network, etc. etc. …the list of potential partners is almost endless.
One area that is particularly close to my heart is the ability to allow even the smallest start-up to offer their customers payment in any currency – easily, cost effectively and transparently. Or helping start-ups with geographically dispersed operations pay employees, contractors and suppliers in any currency without having their eyes ripped out by their bank or payments provider. I’m sure most of the seedcamp finalists from the last few years have foreign exchange payments to make from time to time, many on a regular basis. In the spirit of helping to get the ball rolling on this front, I’ve convinced them to sweeten the bargain for all the companies that have applied to seedcamp (or mini-seedcamp) over the past three years.
If you have been a seedcamp applicant, finalist or winner, if you open a corporate account and do a trade before December 25th, FX Capital Group will send you a Â£25 iTunes or Amazon gift card and also contribute Â£25 to the charity of your choosing. Just let them know when you register for which seedcamp event you applied or attended. They’ll do the rest. And then sit back and save time, money and energy and never worry about managing FX payments again.
Like all good start-ups a big part of the excitement and frustration is knowing what is ‘in the pipeline’ and wanting it all to be released to users ‘yesterday’. However we also know that the best ideas and certainly the best prioritization algorithms emerge from getting a product into the wild and so after 9 months of development and private alpha, I can’t wait to hear ways in which customers and developers will want to use the platform. So for all you early adopters out there, know that the platform is probably not perfect (although we’ve stress-tested it up to 250,000 trades a day without any problems, which gives us a bit of headroom to grow into! lol) but (we think) it’s damn good and would rather challenge you to help us make it even better than pretend we’ve got it all figured out.
In case you were wondering, the team is indeed working on putting a screencast/video demo of the trading platform online and but in the mean time they are more to happy to walk you through a short online demo if you are interested. Alternatively you can go yourself to https://demo.fxcapitalgroup.co.uk/ and use the following credentials:
pet’s name: splashy
favorite animal: whale
favorite city: atlantis
Have a go and be sure to let the team know what you think. Best channel is probably twitter where you can find them at @FXCapitalGroup or on Facebook.
Finally it’s important to make clear that I’m not just writing this post as an investor, commentator or director but first and foremost as a customer. My entire adult life I have had to deal with managing FX risk and struggle with the pain and cost of doing international transfers. When the founder Nigel Verdon came to me with his vision, I thought ‘Hallelujah!’ – at last. It may not be the sexiest business in the world but there is real pain and real profits to be made in using technology to disrupt the old way of doing business and give customers a better deal. And so I did a ‘Victor Kiam’. So next time you have to make a foreign payment, whether its for yourself or your company, give FXCG/RabbitFX a chance, I’m sure you won’t be disappointed.
GigaOm writes today on the growing divide between the leading and lagging companies on the web:
The web is entering a period of intense creativity. Companies like Google and Apple are positioned to ride, if not generate, the momentum driving that creativity. The laggards are at risk of being stuck in perpetual catch-up mode. If that happens, the bluebirds will have flown for good â€” and the landscape of Internet companies will soon look dramatically different.
And yet this is nothing compared to the ‘creativity gulf’ that is emerging between leaders and laggards in other sectors of the economy, including in banking, insurance and finance generally. Only here, the leaders are still small and just starting to emerge. Further, GigaOm points out that even once this creativity divide is created and continues to grow, the deleterious effects of being on the wrong side of this divide can take many years to really start to bite:
Other Internet names seem mired even further in the past. Yahooâ€™s interest in a deal with Microsoft for â€œboatloads of moneyâ€ is a headline that belongs in 2008. eBay keeps trying to recapture the magic it had five years ago. And MySpace is still trying to renew its lifeline to Google.
None of these laggards will see a quick end. Theyâ€™ll be able to endure for years serving the people who havenâ€™t taken to Facebook or maybe tried and then abandoned Twitter, people who are comfortable with a simpler, more familiar experience on the web. But itâ€™s an ever-shrinking crowd. A decade ago, AOL chose a complacent path by maintaining its gated online community, shunning the migration of content and services to the web itself. And look where AOL is today.
Substitute ‘financial’ for ‘internet’ in the analysis above and the parallels are obvious. The big difference of course is that the analogs for Google, Facebook, Apple and Twitter in finance are not yet obvious and indeed probably don’t yet exist (or are at the very early stages of their development.) However, the environment supporting the emergence of new digital leaders in finance has never been more fertile. This is one of the main reasons I created Nauiokas Park with Amy: in order to discover, support and develop the next generation of leading companies delivering financial services and products from the right side of the digital divide. The next several years promise to be exceptional vintages in our opinion.
A few years ago I bought a few Apple shares (AAPL) in my pension plan. When I got the idea they were trading in the high 20s and when I finally capitulated and pulled the trigger (after chasing it for months with unfilled limit orders) it was in the high 50s. I bought it because the first time I saw an iPod I was blown away and the great experience we had had with our iMac at home after ditching our old Dell. It’s been a pretty good investment and my expectations in terms of their success with iPod/(then iPhone) driving gains in marketshare for their computers has been met or surpassed. I probably should have sold when it ticked over $200 (if only to reload when it traded lower) but that is back-trading and oh so easy. A more useful question would be: is it worth buying today? and if so, what is going to drive the next leg of the company’s growth. I think the answer is yes, and I think you’ll find the kernel of the answer as to why in this graph (hat tip to @azeem for the pointer):
The latest computing survey results from the University of Virginia’s freshman class show evidence of continued Apple marketshare growth in the higher education market (via Daring Fireball). The chart above shows that Apple has made steady gains since 2003 in the percentage of incoming UVA freshman who own a Mac. The latest year (2008) shows that 37% of incoming students owned a Mac while the percentage owning a Windows computer had shrunk to 62% from a peak of 96% in 2001.
Ok, so Apple’s selling lots of laptops to college undergrads, nice but not a game-changer, right? Wrong. I think it just might be. And better yet, it’s all about tipping points and power laws and stuff.
Firstly (and most obviously) substantially growing market share with this key demographic (young, upwardly-mobile, educated, proto-professionals), in a product with significant (perceived) switching costs, is great for long term sustainable sales growth. But it gets better (and here is where tipping points come in.) Very soon, over half of university graduates entering the workforce will have grown up / come of age using Macs. And they won’t exactly start doing cartwheels if they are forced to use PCs at work. (As an aside, this will thrust into stark relief the coming colossal collision between big company culture rooted in a 1990s technology paradigm – ie a bright line separation between corporate and personal IT assets and usage – and the reality of the 2010’s when the best and brightest will expect (almost) complete convergence of the two and regard trying to distinguish between the two as ridiculous and anachronistic.) I fully expect a story in Fortune or the WSJ etc. within the next 2-3 years, reporting on graduates
…who had turned down a job with ABC Inc in favour of one with XYZ Inc. because the former allowed only corporate PC’s at work while the later was a (mainly) Apple environment and was happy for employees to buy their own laptops as long as they complied with data and security policies…
Apple as a competitive recruiting advantage. You don’t want to be short the stock the day after this tipping point triggers.
As an added bonus, catalyzed (or at least accelerated) by the current Great Recession, a large number of 30/40/50-something professionals are leaving big corporations and striking out either on their own or in smaller enterprises. Many of these professionals have never worked with anything other than a PC at work and quite frankly never gave it a second thought. But many of them also had Macs at home – they were cooler, easier to use – especially for music and home media (which drove the purchase decision) and could even run Windows easily if absolutely necessary (like for the kids EA game collection…) And when these folks leave Megacorp Inc and start working on their next venture, doing a bit of consulting, writing a business plan, day to day networking…they’re using the Mac at home. And then when it’s time to get an office, it hits them: why on earth would I want to go back to using a PC. So they don’t.
People criticize the smugness of the cool Mac vs. the loser PC commercials but the reality is that this positioning is only gaining momentum amongst some of the most desirable demographic groups in the economy. Here’s a little experiment: if you are a senior executive in a Fortune 1000 firm, send an email to all of your employees (that your currently provide with a PC) and ask them if they could choose what computer to use at work, what would they prefer: iMac/Macbook or a Windows PC? (A few smart-assed geeks might answer they would like a Linux Box but you can ignore them because they are probably using whatever they want already, being smart and geeky enough to have circumvented standard corporate policy.) Warning: only do this survey if you know how you will react if 30% or more say they’d rather use a Mac. Waking sleeping giants and all that…
…thereâ€™s incredible power in a device that knows where it is and that can purchase stuff based on its location…We already have an example of this power in the form of iPhone-friendly Starbucks outlets. Walk into such a Starbucks and a new Starbucks entry appears within the phoneâ€™s iTunes application. Tap it and you can learn whatâ€™s recently been played in the store and then purchase one of these tracks simply by tapping a Buy button…
It’s not (yet) as sophisticated, but the success of mobile-based payment systems like M-Pesa in Kenya is not only very exciting but is a precurser to much much more. (I first wrote about M-Pesa in November 2006; seeing opportunities like this with no way to ‘participate’ was a significant motivator in developing my current venture.)
(from the CGAP technology blog:)
Since its introduction in March of 2007, the M-PESA application has had great success all over Kenya. There are currently over 2.3 million registered users. Over 18 Billion Ksh had been moved through the system, via person-to-person transfers.
Some of the work that I have been doing makes several arguments as to why M-PESA has become so popular. Firstly, it is the young, male, urban migrants who are driving the uptake of services â€“ customer adoption. These migrants are what innovation researchers call â€˜early adoptersâ€™ of a technology. They are usually better educated and earn higher incomes than those in the village. Because these migrants are the senders, they can choose the channel for money transfer…
…Despite these cash float problems, the majority of customers in both the urban and rural areas assert that they prefer M-PESA over other money transfer services. This means that M-PESA must be offering them some kind of substantial benefit. In Bukura, this benefit comes in the form of savings on transport. Customers do not need to travel into Kakamega, the nearest town, to access the service. One elderly farmer commented that â€œI can just walk from my shamba (farm) and get money. I donâ€™t have to spend and go into town. If the agent does not have cash today, then I will come back tomorrow. It is cheaper to waitâ€. Finding strategies to manage the cash float problem will undoubtedly be one of the greatest challenges for Safaricom. For now, however, it seems like customers are willing to accept the inefficiencies of the service. It is, after all, cheaper to wait.
One of the revelations (to me at least) of this year’s Supernova conference was Ken Banks of kiwanja.net. For anyone interested in the innovative use of mobile communications in developing markets, his essay “Mobiles in Africa: A Travellers Perspective” is a must read. (Sadly, I didn’t get the chance to meet him as I had to rush off but hopefully I will get a future opportunity.) An exerpt:
When it comes to mobile innovation, the gap between developed and developing countries is not much of a gap at all. Mobile innovation in the West, largely technology-lead, sits in contrast to that in the developing world where combating the geographic, economic and cultural constraints of users is considered a more sensible way to go. This explains the emergence of the torch phone, for users who live in areas with little or no regular light, or multiple phone books for users who share their phones with family members. On the heavyweight side, a plethora of financial applications have hit the streets, with Safaricomâ€™s m-Pesa service getting by far the biggest press to date…
…Innovation is not always as official or formalised as this, however. People in developing countries are rarely simple, passive recipients of a technology, and rarely wait for outsiders to provide solutions to their problems. The entrepreneurial spirit is alive and well, evident by the masses of thriving small businesses you find on the street corners of every village, town and city.
Many developing countries for all intents and purposes have ‘skipped’ the fixed-line telephony paradigm. Wanna bet that they ‘skip’ the branch banking/atm paradigm in retail financial services?
I know it’s not their typical market target, but I’d love to see Apple (or RIM) develop a ‘rugged’ iPhone (analogous to ‘rugged’ mobile hard drives), targeting emerging markets. Not as a competitor / replacement for existing mobile phones, but as a substitute to personal computers: effectively giving traders and business people an effective web appliance (ideally with Skype pre-loaded!)
On yesterday’s announcements from Apple. Many hundreds and thousands of professional and amateur commentators I’m sure have already insightfully and accurately dissected Steve’s keynote and written complete and intelligent reviews of Apple’s new products. So I’m not going to bore you by trying to compete. Just two observations – admittedly first impressions, one which is somewhat tangential but still germane to some of the ideas I’ve been throwing around with respect to the entertainment industry (although I’ve been mainly focused on music and live events.)
The new Apple TV might just be as transformative for the movie business, as the iPod was for the music business. Very impressed. The rental model also – while not ideal – is probably a good compromise (at least in the short term): a good transition model to clear the way for future business models that are completely digitally native. I would have liked to have seen slightly longer time windows, in particular for the once started viewing – say 48 or 72 hours (instead of 24) but not a bad start. And being able to buy DVD’s with digital copies is also a good idea. (What would be fantastic would be a DVD exchange facility whereby you could exchange your old DVDs for new (HD if available) DVDs that include a digital copy, for say half-price. I think the studios would make lots of money as people would then be motivated to renew their entire DVD libraries at once, and as an added benefit, the old DVDs (collected in bulk) could be disposed of in an environmentally friendly way.
Apple needs just one more piece of hardware – one more appliance – in order to kit out a 21st century digital home: something that combines the Apple TV, with a touchscreen (and iPod Touch GUI) and an amplifier. For anyone that has their home wired with speakers in each room, this appliance would allow you to access your iTunes music and play it through the speakers in each room.
Apple (AAPL) was down heavily yesterday with the rest of the market, but if my first gut feeling about Apple TV is right, it goes from being a very expensive stock to something worth considering once more (especially if this market sell-off knocks it even lower.) Thoughts appreciated. (Disclosure: I own a small number of Apple shares in my pension plan.)