The Next Web |
- Show, don’t tell: How to live your mission statement
- Three years later, Facebook is bringing back its F8 developer conference to San Francisco on April 30
- Banjo updates mobile apps to create TiVO for social media
- Microsoft hints DirectX 12 is coming to the Xbox One
- Flickr teases a slick visual revamp of its photo data display
- Julian Assange rails against NSA surveillance as he plans an “important” new WikiLeaks release
- PayPal adds Techstars to its Startup Blueprint program, offers to waive Braintree fees
- Artificial Intelligence could kill us all. Meet the man who takes that risk seriously
- The disappearing paper: Why cash is a dying payment method
- Why being a partner at VC fund is like running a rising startup
| Show, don’t tell: How to live your mission statement Posted: 09 Mar 2014 05:00 AM PDT  Andrea Ayres-Deets is the Lead Writer at ooomf, an invite-only network connecting short-term software projects with handpicked developers and designers. Andrea writes about psychology, creativity, and business over on the ooomf blog. I once worked for a company who was really proud of their mission statement. They had it printed on everything and talked about it often. For all that talk, there was very little action. Somewhere along the way I realized that we were deluding ourselves. We weren't changing the system, we were working directly in the confines of it. We weren't only lying to ourselves, but we were being disingenuous to the consumer about what the main intention of the company was. You could turn on your television and see the management reciting the mission statement with an impassioned plea to viewers, but no one in the company was living it. This is not an isolated problem. It's one so many companies, especially startups, must confront. How do you live your mission statement, honestly, thoughtfully, and with purpose? If there was any doubt in your mind about the precarious position of mission statements, look no further than the mission statement generator:
The mission statement has become the cornerstone of corporations, higher education, CEO's, and even families. Beginning in the 1970s the mission statement began its surge in popularity—dominating the corporate world for the next thirty-odd years. You couldn't turn around without being assailed by books touting the benefits of mission statements. But do they work?Research on the effectiveness of mission statements is shaky at best. At worst it relies on anecdotal evidence and presumptions as proof of their usefulness.
Perhaps the best explanation for why we continue to use mission statements comes from Christopher C. Morphew:
We've become so accustomed to seeing mission statements that the absence of one would cause us to question the company or organizations legitimacy. Where do mission statements go wrong?They are either too boring or too presumptuous to make any impact. The worst mission statements over exaggerate and rely on flowery language to give the impression that they are a company of action—even if the reality is much different. Let's take a look at this mission statement as an example:
Ah, yes the age old tradition of achieving objectives. It's certainly vague enough to give you the impression that the company acts with the best interests of all people. Unless I told you this is from a corporate law firm composed of a few hundred attorneys who mostly help Fortune 500 companies obtain their objective of absolving themselves of expensive asbestos litigation. Does saying you are committed to serving stakeholders really put you in a better position to actually serve these stakeholders? Isn't there a better way to get employees to buy into your company without offering them a slice of bullshit pie? Why yes, yes there is. Mission statements can provide a sense of purpose and clarity, but they mean nothing if you can't fulfill the objectives of your mission statement. Here are five tips to help you live your companies mission statement: 1. Lose the hubris
Success doesn't come because someone chose the right buzzword. If your mission is to provide a free app for people as a utility to improve their lives, than let this guide your mission statement. This doesn't mean that you can't be optimistic, but a healthy dose of realism is needed. Overreaching only undermines your company instead of helping it. 2. Do be concise
If your mission statement is longer than eight words, you may want to reconsider it. Employees and customers won't remember what your company is about if they have to consult a jargon filled paragraph. Your mission statement should be something no one easily forgets. 3. Be inclusive and ask questions
You should not write your mission statement in a vacuum, devoid of any outside help. It's important to have as much input as possible about the purpose of the company. Ask employees why they believe the product or service is needed? What values are important to them? What's more important than money? These are just some of the questions Warren Berger of FastCo believes companies should answer in the quest to define your mission. Questions before content; make sure you've thought it all through. 4. Don't hire someone to write your mission statement
Hiring someone to write a mission statement gives the impression that there is more concern about outward appearances than the real purpose of the company. The act of writing a mission statement is about learning what matters the most. The exercise of writing the statement is almost as important as what you finally end up with. 5. Enough talk, do it
The mission statement means nothing if you aren't living it. Your mission statement has to be clear, it has to quantify what you want to accomplish. If it does that, it will help crystalize what policies and decisions you need to achieve your goal. Mission statements should evolve as your company evolves. Always search for how to improve, for ways to better live your mission statement. This means constantly asking questions and searching outside for inspiration. Writing a mission statement should help you focus on what matters most in language that is clear and accessible to everyone. Do that, and living your mission statement should come effortlessly. Top image credit: Shutterstock/ollyy This posting includes an audio/video/photo media file: Download Now |
| Posted: 08 Mar 2014 02:30 PM PST  At SXSW today, Parse co-founder and CEO Ilya Sukhar announced Facebook's F8 conference will be held this year on April 30 at the San Francisco Design Concourse. That the announcement comes from Sukhar is fitting because Facebook, Instagram, as well as Parse engineers and product team members will be available throughout the conference to provide 1:1 help and advice. The conference will be a little different this year: it will be squarely aimed at developers eager to learn how to best use Facebook, Instagram, and Parse to build, grow, and monetize their apps. The company is promising a full day of technical sessions and hands-on labs, open to more than 1,500 mobile and Web developers from all over the world. By having a pure developer conference, Facebook says it is "going back to its roots." The first F8 event, held in May 2007, introduced developers to the social graph. In July 2008, Facebook showed off Facebook Connect for websites, but also introduced a new profile design. In April 2010, Facebook unveiled social plugins (including the Like button), the Open Graph Protocol, Graph API, and OAuth 2.0 support. In September 2011, Facebook introduced the Timeline profile and a broader version of its Open Graph. In 2012 and 2013, Facebook chose not to host F8 in favor of multiple smaller events. Now, three years later, the company looks eager to build on its Parse acquisition. If we are to believe the message going out today, there won't be much user-focused news at F8. That being said, if Facebook has decided to bring back its only major conference, chances are it has something notable to share. F8 2014 will open with a morning keynote, followed by four tracks that cover getting started guides, technical best practices, infrastructure strategies, engineering deep dives, and advertising tips for apps and games. Facebook says it will also have sessions dedicated to open source technologies. Facebook will start accepting applications for the event "soon." Top Image Credit: Brendan Smialowski/AFP/Getty Images This posting includes an audio/video/photo media file: Download Now |
| Banjo updates mobile apps to create TiVO for social media Posted: 08 Mar 2014 01:19 PM PST  Banjo has released an update today for its Android and iOS applications as well as a brand new website that brings a new feature called "Rewind." The new feature allows users to pinpoint a specific time during an event to view the updates and experiences of others at that moment, which the company says will do to the Internet what TiVO did for TV. Once you click on an event — such as SXSW or the Kiev protests — you're able to quickly go back in time to see how the event unfolded on social media and in the news and see how it unfolded through the updates of those who were there.
It's amazing just how powerful this functionality is for following events as they unfold, especially since Twitter itself doesn't provide any tools that help with tracking developing stories or for following events in a meaningful way. Banjo captures social media updates from across many platforms, including Instagram, Twitter, Google+ and Facebook to try and piece together the best picture of how an event unfolded. What's amazing is just how high-quality the content is; Banjo automatically filters out a lot of the spam that's seen on social media so that it's clean and easy to read. Banjo originally launched at SXSW in 2012 as a service for meeting new people in your area, but the service pivoted in January to tracking events on social media. The new Banjo presents itself as something that appears on the surface to be very similar to Storify, except much of the service is automated and uses a secret algorithm to analyse social media in real time to present it in a readable banner. Download the updated version of Banjo from the iOS or Android store to try the new Rewind feature and you'll never be behind on a trend again. This posting includes an audio/video/photo media file: Download Now |
| Microsoft hints DirectX 12 is coming to the Xbox One Posted: 08 Mar 2014 11:38 AM PST  A few days ago, Microsoft posted up a teaser site that announced the company will be unveiling the next version of DirectX at Game Developer Conference on March 20.
Today, the company added the Xbox One logo to the site and tweeted a second tease, saying that the new version of DirectX will also work on its flagship console. The Xbox One shares a kernel with Windows, which means it's likely much easier for the company to port such innovations across to the console quickly. It's not yet clear what changes DirectX 12 will bring, but if Microsoft is making a fuss like this it probably has something big to show off. Headline image via Robyn Beck/AFP/Getty Images This posting includes an audio/video/photo media file: Download Now |
| Flickr teases a slick visual revamp of its photo data display Posted: 08 Mar 2014 10:46 AM PST  Yahoo has unveiled the beta version of an upcoming user interface for showing EXIF data on its Flickr photo sharing site. EXIF data—those specs that detail how a particular photo was shot, such as camera make and model, lens type, ISO, F-stop, flash, and other image-specific information—are now available in a standard tabbed listing. The new interface currently features artistically rendered line-art illustrations for some 40 of the top cameras used on Flickr, as shared in a tweet by Flickr's product manager, Markus Spiering.  Flickr is revamping the format it uses for displaying EXIF data on its site. "Where applicable, we show the device name, a line-art illustration of the device (and a generic lens if lens data is present), along with camera settings," wrote Scott Schiller, a Flickr front-end engineer, in a post. According to Schiller, "If we don't have an exact match for a given camera, we try to fall back to the general device class/category if known (i.e., smartphone, DSLR, point-and-shoot, and the like. EXIF data can vary widely since it's generated per-device, so there may be some variations in formatting of values and numbers." For camera bodies, there are generic designs for a range of DSLRs. "The Canon 1D through 5D for example, as shown, looks more like it would in real life with a battery pack attached," Schiller said. There will be some design compromises, but Schiller said that Flickr aims to represent the most common and popular devices sooner and revise later.  Elegant line drawings depict camera models for new EXIF design. Lens renditions are still largely under construction—there's only one lens icon right now. However, some ideas include pancake lenses for 4/3rds and flat circle lenses for smartphones. The new interface is out there for observation, but is not widely available to Flickr subscribers right now. While the new EXIF data interface is only one small aspect of the overall Flickr interface, it does speak to the detailed attention Yahoo is devoting to all aspects of the site. Image Credit: Shutterstock This posting includes an audio/video/photo media file: Download Now |
| Julian Assange rails against NSA surveillance as he plans an “important” new WikiLeaks release Posted: 08 Mar 2014 10:34 AM PST  At SXSW today, WikiLeaks founder Julian Assange Skyped in from the Ecuadorian embassy in London to take part in an hour-long Q&A session. While the main topic of the discussion – government surveillance of the Internet – and his opposition to it, was unsurprising, Assange had some interesting points worth sharing. He said that the most important transition of the past decade has been the politicization of the Internet, as demonstrated by the likes of WikiLeaks, Edward Snowden and Glenn Greenwald. He noted that Greenwald and other national security reporters have had to leave the US for countries that are more amenable to them to avoid the fear of being arrested at any time due to the "growing militarism in the USA and UK." However, he pointed out that this allows them to do work that is even more powerful than they did in the US. Assange referred to Internet surveillance as "the penetration of our human society," stating "now that human society and the Internet have merged – the laws of the Internet become the laws of human society." On his enforced exile in the Ecuadorian embassy to avoid deportation to Sweden where he faces sexual assault charges, Assange described his situation as "a bit like a prison," although "arguably prisoners have it worse due to the restrictions on visitors (at the embassy)… I operate in a situation that's any security reporter's dream," he said, as he's free of subpoenas and police interference. Indeed, Assange said a new WikiLeaks release of "important" material was in the works although he didn't want to offer a timeframe for its publication as he didn't want to tip-off "alleged perpetrators." He criticized the standard journalistic practice of approaching subjects of stories for comment ahead of publication, as it simply gave them time to spin a counter-argument to the allegations. While this may annoy many journalists, it will come as no surprise to anyone who followed the unredacted release of the US diplomatic cables in 2010 and 2011. While the content of the session wasn't Earth-shattering, it amused us to note the irony that Assange was criticizing NSA surveillance while his head was being displayed next to a Skype logo.
Catch up with all of our SXW coverage This posting includes an audio/video/photo media file: Download Now |
| PayPal adds Techstars to its Startup Blueprint program, offers to waive Braintree fees Posted: 08 Mar 2014 09:26 AM PST  At SXSW today, PayPal announced improvements to its Startup Blueprint program, adding 15 new partners and an additional offer to waive fees for payments processed on Braintree. Startup Blueprint launched last October as an initiative to help startups focus on growth during their early stages. The 15 new partnerships, which include TechStars and the program's first VC firm, Kima Ventures, brings the total number to 18 with a global reach of 5,000 startups. PayPal already had agreements in place with 500Startups, Elevator Fund and SeedCamp. Other new partner organizations include: Better Ventures, Entrepreneurs Roundtable Accelerator, Founder Institute, LeCamping, H.FARM Ventures, K5Launch, StartupBootcamp, StartupWiseGuys, SURF Incubator, TheFamily, UpWest Labs, Venture Hive, and Village Capital. Through the program, startups can get have their Paypal fees waived for up to $1.5 million in payments and up to $100,000 on Braintree (US-only), potentially saving them as much as $50,000. "One of our primary ways that we're looking to enable [a new way of doing payments] is startups and early stage companies. We think by giving them fantastic payment capabilities, we'll make their jobs easier," PayPal CTO James Barrese told TNW in an interview. Also part of the announcement, Braintree has expanded its new Ignition program to include any US startup. Previously the initiative, which waives processing fees for the first $50,000 of revenue, was limited to 1,000 companies. Head over to our SXSW event page for all of our coverage from the show. Photo credit: ERIC PIERMONT/AFP/Getty Images This posting includes an audio/video/photo media file: Download Now |
| Artificial Intelligence could kill us all. Meet the man who takes that risk seriously Posted: 08 Mar 2014 06:30 AM PST  Thinking about the end of the world is something that most people try to avoid; for others, it's a profession. The Future of Humanity Institute at the University of Oxford, UK specializes in looking at the 'big-picture' future of the human race, and notably, the risks that could wipe us out entirely. As you'd probably imagine, the risks considered by the Institute include things like nuclear war and meteor strikes, but one perhaps unexpected area that it's looking into is the potential threat posed by artificial intelligence. Could computers become so smart that they become our rivals, take all our jobs and eventually wipe us all out? This Terminator-style scenario used to seem like science fiction, but it's starting to be taken seriously by those who watch the way technology is developing. "I think there's more academic papers published on either dung beetles or Star Trek than about actual existential risk," says Stuart Armstrong, a philosopher and Research Fellow at the institute, whose work has lately been focused on AI. "There are very few institutes of any sorts in the world looking into these large-scale risks…. there is so little research… compared to other far more minor risks – traffic safety and things like that."  HAL 9000 from '2001: A Space Odyssey' "One of the things that makes AI risk scary is that it's one of the few that is genuinely an extinction risk if it were to go bad. With a lot of other risks, it's actually surprisingly hard to get to an extinction risk," Armstrong explains. "You take a nuclear war for instance, that will kill only a relatively small proportion of the planet. You add radiation fallout, slightly more, you add the nuclear winter you can maybe get 90%, 95% – 99% if you really stretch it and take extreme scenarios – but it's really hard to get to the human race ending. The same goes for pandemics, even at their more virulent. "The thing is if AI went bad, and 95% of humans were killed then the remaining 5% would be extinguished soon after. So despite its uncertainty, it has certain features of very bad risks." An AI meets a human in a bar…So, what kind of threat are we talking about here? "First of all forget about the Terminator," Armstrong says. "The robots are basically just armoured bears and we might have fears from our evolutionary history but the really scary thing would be an intelligence that would be actually smarter than us – more socially adept. When the AI in robot form can walk into a bar and walk out with all the men and/or women over its arms, that's when it starts to get scary. When they can become better at politics, at economics, potentially at technological research."
The first impact of that technology, Armstrong argues, is near total unemployment. "You could take an AI if it was of human-level intelligence, copy it a hundred times, train it in a hundred different professions, copy those a hundred times and you have ten thousand high-level employees in a hundred professions, trained out maybe in the course of a week. Or you could copy it more and have millions of employees… And if they were truly superhuman you'd get performance beyond what I've just described." Why would AI want to kill us?Okay, they make take our jobs, but the idea that some superior being would want to kill us may seem presumptuous. Google's Director of Engineering, Ray Kurzweil, for example, has an optimistic view of how organic and cybernetic lifeforms will become increasingly intertwined in a more positive way – Skynet doesn't have to become a reality, and if it does, it doesn't necessarily have to turn against its creators. Armstrong thinks we should be aware of, and prepared for, the risks though. "The first part of the argument is they could get very intelligent and therefore very powerful. The second part of the argument is that it's extremely hard to design some sort of motivation structure, or programming… that results in a safe outcome for such a powerful being. "Take an anti-virus program that's dedicated to filtering out viruses from incoming emails and wants to achieve the highest success, and is cunning and you make that super-intelligent," Armstong continues. "Well it will realise that, say, killing everybody is a solution to its problems, because if it kills everyone and shuts down every computer, no more emails will be sent and and as a side effect no viruses will be sent. "This is sort of a silly example but the point it illustrates is that for so many desires or motivations or programmings, 'kill all humans' is an outcome that is desirable in their programming."
Couldn't we program in safeguards though? A specific 'Don't kill humans' rule? "It turns out that that's a more complicated rule to describe, far more than we suspected initially. Because if you actually program it in successfully, let's say we actually do manage to define what a human is, what life and death are and stuff like that, then its goal will now be to entomb every single human under the Earth's crust, 10km down in concrete bunkers on feeding drips, because any other action would result in a less ideal outcome. "So yes, the thing is that what we actually need to do is to try and program in essentially what is a good life for humans or what things it's not allowed to interfere with and what things it is allowed to interfere with… and do this in a form that can be coded or put into an AI using one or another method." Uncertain is not the same as 'safe'Armstrong certainly paints a terrifying picture of life in a world where artificial intelligence has taken over, but is this an inevitability? That's uncertain, he says, but we shouldn't be too reassured by that. "Increased uncertainty is a bad sign, not a good sign. When the anti-global warming crowd mention 'but there are uncertainties to these results' that is utterly terrifying – what people are understanding is 'there are increased uncertainties so we're safe' but increased uncertainties nearly always cut both ways. "So if they say there's increased uncertainties, there's nearly always increased probabilities of the tail risk – really bad climate change and that's scary. Saying 'we don't know stuff about AI' is not at all the same thing as saying 'we know that AI is safe'. Even though we're mentally wired to think that way. " When might we see true AI?As for a timeframe as to when we could have super-intelligent AI, Armstrong admits that this is a tough question to answer. "Proper AI of the (kind where) 'we program it in a computer using some method or other'… the uncertainties are really high and we may not have them for centuries, but there's another approach that people are pursuing which is whole-brain emulations, some people call them 'uploads', which is the idea of copying human brains and instantiating them in a computer. And the timelines on this seem a lot more solid because unlike AI we know exactly what we want to accomplish and have clear paths to reaching it, and that seems to be plausible over a century timescale." If computers can 'only' think as well as humans, that may not be so bad a scenario. "(With) a whole brain emulation… this would be an actual human mind so we wouldn't have to worry that the human mind would misinterpret 'keep humans safe' as something pathological," Armstrong says. "We would just have to worry about the fact of an extremely powerful human – a completely different challenge but it's the kind of challenge that we're more used to – constraining powerful humans – we have a variety of methods for that that may or may not work, but it is a completely different challenge than dealing with the completely alien mind of a true AI."  David from 'AI: Artificial Intelligence' As for those true AIs that can outsmart any human, timeframes are a lot more fuzzy. "You might think you can get a good estimate off listening to predictors in AI, maybe Kurzweil, maybe some of the others who say either pro- or anti-AI stuff. But I've had a look at it and the thing is there's no reason to suspect that these experts know what they're talking about. AIs have never existed, they'll never have any feedback about how likely they are to exist, we don't have a theory of what's needed in any practical sense. "If you plot predictions, they just sort of spread over the coming century and the next, seemingly 20 years between any two predictions and no real pattern. So definitely there is strong evidence that they don't know when AI will happen or if it will happen. "This sort of uncertainty however goes both ways, the arguments that AI will not happen are also quite weak and the arguments that AI will not happen soon are also quite weak. So, just as you might think that say it might happen in a century's time, you should also think that it might happen in five years' time. "(If) someone comes up with a nearly neat algorithm, feeds it a lot of data, this turns out to be able to generalize well and – poof – you have it very rapidly, though it is likely that we won't have it any time soon, we can't be entirely confident of that either." The philosophy of technologyWhat became apparent to me while talking to Armstrong is that the current generation of philosophers, often ignored by those outside the academic circuit, have a role to play in establishing the guidelines around how we interact with increasingly 'intelligent' technology. Armstrong likens the process behind his work to computer programming. "We try to break everything down into the simplest terms possible, as if you were trying to program it into an AI or into any computer. Programming experience is very useful. But fortunately, philosophers, and especially analytic philosophers, have been doing this for some time. You just need to extend the program a bit. So see what you have and how you would ground it, so theories of how you learn stuff, how you know anything about the world and how to clearly define terms become very useful."
AI's threat to your jobThe biggest problem Armstrong faces is simple disbelief from people that the threat of mass extinction from artificial intelligence is worth taking seriously. "Humans are very poor at dealing with extreme risks," he says. "Humans in general and decision makers at all levels – we're just not wired well to deal with high-impact, low-probability stuff… We have heuristics, we have mental maps in which extinction things go into a special category – maybe 'apocalypses and religions or crazy people', or something like that." At least Armstrong is making headway when it comes to something that seems a little more impactful on our day-to-day lives in the nearer term – the threat AI poses to our jobs. "That's perfectly respectable, that's a very reasonable fear. It does seem that you can get people's attention far more with mid-size risks than with extreme risks," he says. "(AI) can replace practically anybody, including people in professions that are not used to being replaced or outsourced. So just for that, it's worth worrying about, even if we don't look at the dangerous effect. Which again, I've found personally if I talk about everybody losing their job it gets people's interest much more than if I start talking about the extinction of the human species. The first is somehow more 'real' than the second."  Car assembly, one area where robots long ago replaced many human roles. I feel it's appropriate to end our conversation with a philosophical question of my own. Could Armstrong's own job be replaced by an AI, or is philosophy an inherently human pursuit? "Oh interesting… There is no reason why philosophers would be exempt from this, that philosophers would be able to be AI much better than humans because philosophy is a human profession," he says. "If the AI's good at thinking, it would be better. We would want to have done at least enough philosophy that we could get the good parts into the AI so that when it started extending it didn't extend it in dangerous or counterproductive areas, but then again it would be 'our final invention' so we would want to get it right. "That does not mean that in a post AI world that there would not be human philosophers doing human philosophy, the point is that we would want humans to do stuff that they found worthwhile and useful. So it is very plausible that you would have in a post-AI society philosophers going on as you would have other people doing other jobs that they find worthwhile. If you want to be romantic about it, maybe farmers of the traditional sort. "I don't really know how you would organise a society but you would have to organize it so that people would find something useful and productive to do, which might include philosophy. "In terms of 'could the AIs do it beyond a human level', well yes, most likely, at least to a way that we could not distinguish easily between human philosophers and AI." We may be a long way away from the Terminator series becoming a documentary, but then again maybe we're not. Autonomous robots with the ability to kill are already being taken seriously as a threat on the battlefields of the near future. The uncertainty around AI is why we shouldn't ignore warnings from people like Stuart Armstrong. When the machines rise, we'll need to be ready for them. See also: Can machine algorithms truly mimic the depths of human communication? Image credits: YOSHIKAZU TSUNO/AFP/Getty Images, Metro Goldwyn Meyer, Troll.me, Disney/Pixar, Christopher Furlong/Getty Images This posting includes an audio/video/photo media file: Download Now |
| The disappearing paper: Why cash is a dying payment method Posted: 08 Mar 2014 06:00 AM PST  Jon Norris is a freelance content specialist who splits his time between the U.S. and the U.K. This post was originally published on the TransferWise blog. A cashless society has been a talking point for futurists for years, but for one reason or another, has never quite been within our grasp. Now, like the electric car and clean energy, it's finally happening – and it's about time. The arguments for ditching notes and coins are numerous, and quite convincing. In the US, a study by Tufts University concluded that the cost of using cash amounts to around $200 billion per year – about $637 per person. This is primarily the costs associated with collecting, sorting and transporting all that money, but also includes trivial expenses like ATM fees. Incidentally, the study also found that the average American wastes five and a half hours per year withdrawing cash from ATMs; just one of the many inconvenient aspects of hard currency. While coins last decades, or even centuries, paper currency is much less durable. A dollar bill has an average lifespan of six years, and the US Federal Reserve shreds somewhere in the region of 7,000 tons of defunct banknotes each year. Physical currency is grossly unhealthy too. Researchers in Ohio spot-checked cash used in a supermarket and found 87 percent contained harmful bacteria. Only 6 percent of the bills were deemed "relatively clean." Cash is expensive, inconvenient, wasteful and unhealthy – it's time to call it quits with physical currencies.
The first attempts to replace cash with something more convenient was the credit coin – a small metal disc used to tie receipts to a customer's credit account in department stores and hotels. Their modern successor – the credit card – has been the most successful in dethroning the banknote. According to Visa, in 2012 card payments accounted for 32.8 percent of worldwide consumer spending, while cash accounted for 38.3 percent (cheques and other payment methods made up the remainder). When you consider that the entire card payment industry, including American Express, Visa and Mastercard (companies with combined assets of over $200 billion), has not managed to eclipse cash payments in 60 years of existence, it seems that cashless solutions that want to have a permanent impact have a mountain to climb. There are also wider societal issues involved with the end of cash. Paper money is used more frequently by low-income groups and independent businesses – street traders, panhandlers and one-man bands — those who cannot get a bank account or absorb card processing fees. The working classes incur much higher costs from the move to cashlessness than those with higher incomes – one in twelve US households deal only in cash primarily because they cannot afford banking fees. That's not to say it's impossible – Stockholm's homeless population recently began accepting card payments.
Perhaps counterintuitively, a lack of cash can result in us spending more money. A University of Kansas study concluded that frictionless spending results in more frequent purchases, while consumers paying with cash are more focused on the cost, whereas those paying with plastic think more about the immediate benefit of the purchase. Even more worryingly, a study by Dan Ariely, a Professor of Psychology and Behavioural Economics, found that transacting without cash makes us less honest. Subjects in Ariely's study had to report – honestly – how many maths questions they were able to solve from a test sheet, receiving a reward per correct answer. Those rewarded with tokens (which could be exchanged for cash) were twice as likely to lie about the number of questions they answered than those rewarded with hard currency. Ariely concluded that although the tokens had an equal monetary value to the cash, subjects perceived a lesser value – and so were more likely to lie – because it was not actual money. Whether or not we're ready to face the issues thrown up by the demise of paper currency, it's happening. Cash transactions worldwide rose just 1.75 percent between 2008 and 2012, to $11.6 trillion. Meanwhile, non traditional payment methods rose almost 14 percent to total $6.4 trillion. This group includes online and mobile payments, and all modern cashless alternatives.
Cash is dying in the unlikeliest of places: M-Pesa in Kenya, a money transfer system that can be used on even rudimentary mobile phones, sees around 25 percent of the country's gross national product pass through its system each year. In Zimbabwe, where hyperinflation has rendered paper currency impractical, a similar system called EcoCash has seen explosive growth recently. In some locales, stocks of paper currency are declining for the first time. According to the European Central Bank's figures there are 15.6 million fewer €500 notes in circulation now than in 2011. Whether the final nail in the coffin will be a new cashless innovation, impracticality of use or the running costs of cash itself, has yet to be seen, but the death knell of notes and coins could very well sound within our lifetime. Pennies and dollars are already being replaced by ones and zeros with the rise of cryptocurrencies like Bitcoin. As the shackles of traditional financial systems are shaken loose the real innovation can begin – currency will be just another data feed for developers to play with. Top image credit: Shutterstock/LDprod This posting includes an audio/video/photo media file: Download Now |
| Why being a partner at VC fund is like running a rising startup Posted: 08 Mar 2014 05:00 AM PST  Jason Lemkin is the Managing Director at Storm Ventures, a venture capital firm focusing on early-stage enterprise and IT companies, including MobileIron, Marketo From the standpoint of a founder, the life of a venture capitalist can seem very, very different. It certainly did to me when I was an entrepreneur. The drive down to Sand Hill Road, the corner offices, the Range Rovers and Teslas in the parking lot. The empty parking lots on Friday afternoons. On the surface, that seems to have absolutely nothing in common with the struggles of the common entrepreneur. And it is different, no doubt. The pace is different, in particular. A VC firm doesn't go bankrupt if it doesn't make payroll. VCs are paid to say "No" far more often than "Yes." Your results are judged over years, not months and quarters, and it takes a long time to truly fail. But at the end of the day, I've learned that being a partner at a successful early-stage VC firm is not quite as different from being a founder as you might think. In fact, I've learned that being a partner at a $150m Venture Fund (more or less my new job) is quite similar to what it is like being CEO of a start-up with a $250,000 monthly burn rate. Specifically, it feels eerily similar to how I felt when I was CEO at EchoSign when we were at about $4m in revenue. How can a $150 million fund be anything like a startup with just a few million in revenue? Peel the layers back on this onion and it becomes a little more clear. The money isn't really thereFirst, you need to understand that as a VC, you don't get all the money upfront. You invest it, in dribbles, over a decade, as you make investments. That $150 million doesn't just sit in your bank account on Day 1 of your venture fund. Second, to pay salaries and expenses, venture funds typically charge a 2 percent management fee. That means the VC's own investors (the "Limited Partners" or LPs) pay them $3 million a year to manage a $150 million fund, an expense that is debited from any profit sharing down the road on the investments. Now that $3 million sounds like a lot, but you still have to run the firm. You might have three to five partners, three to four associates and principals, and some support staff, plus an office to pay for that has to be somewhat presentable. Don't forget to factor in lots of unreimbursed expenses — conferences, airplane tickets, and the like. All of a sudden, that's a significant amount of expense to cover with $250,000 a month. Ten senior professionals, taxes, offices, trade shows… it's not that different in fact, from a reasonably well-funded start-up trying to raise a Series B round, with a $250,000 a month burn rate. In fact, personally, I make less money now as a VC than I did as a Vice President at Adobe after they acquired EchoSign, my last start-up as a founder/CEO. So having a $150 million venture fund is a nice place to be, indeed, in the grand scheme of things. But it's not exactly resource rich – very late Series A or early Series B-esque, in fact. Waiting gameThird, even if you do well, it takes seven to ten years to make any real money – and that's the case with many startups out there. Storm Ventures' 2005 vintage fund is on a tear, and should return perhaps 400 percent to its investors. This puts it in the top five to ten percent of VC funds, with $2 billion dollar+ unicorns in the portfolio and a number of other strong exits, with more on the way. But as an early-stage fund, it takes a lot of time for companies to mature. In fact, it's only in 2014 – a good nine years later – that the fund has returned more than 100 percent of the cash invested. Until then, there are no profits to the VC partners. And you have to pay back all those expenses we talked about above first. That means no liquidity for nine+ years, even in a very successful $150 million venture fund! That's about as long as getting your start-up to IPO – and maybe a lot longer. You and me? We're not so differentSo don't get me wrong, being a VC isn't the roughest job on the planet from a quality-of-life perspective. But compared to be a successful founder-CEO, it feels a lot like having just gotten my Series B round done. A fun time, indeed, but with another seven to ten years of hard work left to IPO before there's any economic reward. Who knew? This posting includes an audio/video/photo media file: Download Now |
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