Spark Ventures CEO Rod Snodgrass speaks with Computerworld NZ the focus areas of the NZ unit within the larger group, and its semi-independent nature that allows the division to function like an incubator within a telco giant.
Q: What are the focus areas for Spark Ventures?
Rod Snodgrass: At the very top level, taking a corporate view, our focus is about generating long term wealth for Spark and that means overtime creating new sources of revenue. To do that you have to enter new markets or adjacent markets or sub-segments related to the core markets that the core business is not addressing well. That means you have to build new products and services, and new businesses.
To do that, you have to adopt different business models and different ways of doing things. We use the lean start-up methodology in terms of how we do market validation and testing. We use agile software development processes because that’s quite aligned to the lean model.
In terms of our focus areas, these would be markets where a different model is necessary to address a different segment – might be a different brand, different business model. Examples of these would be Skinny Mobile and Bigpipe, which are very digital centric businesses designed in a different way, with a different brand and different technology and people. That’s around more disruptive models in existing markets.
We also look at adjacent markets where disruption is occurring, a natural market for Spark to be in. Lightbox is a clear example of that in terms of media.
There are areas where by adopting disruptive processes and ways of thinking you can create new markets and new ways of doing things. Qrious clearly would fall into that. There is a lot of hype around big data at the moment but the reality is if you use data well and turn it into information and insight, you can create action and outcome. Qrious is just a recognition by us that there is a lot of data that other parties have and if you bring it together there are processes that you can use to create insights and information that you can then turn into action to drive business outcomes.
If you were to see what we are through all of that, we are about creating long-term wealth for Spark and doing that by adopting different ways of doing things, different processes and having a bias for disruption, bias for action, bias for partnering and trying to move quite quickly in small iterative steps rather than long development lead times.
The areas that we are operating in is much more uncertain and nascent than the other markets so you have got to make a lot of small, fast steps rather than long, big ones. We are about embracing new ways of doing things and being able to be disruptive, but in a positive way.
Q: How have you ensured that Spark Ventures functions as a semi-independent entity, separate from the parent, in developing these businesses?
RS: When we were set up we were set up with quite a clear and free mandate within reason from the CEO and the board. We do adopt quite different ways of doing things. We use agile instead of waterfall development, so we don’t adopt traditional long lead time market development processes. For a lot of the newer businesses, we would not do a business case until later days. We would do a quick market validation, we will do a proof of concept and we get a minimal viable product out there.
Digilife would be the perfect example. We do testing and co-creation with the end-user. If we think we have found a customer problem and a solution set, then we try to look at what would make the best market model. Then we will do a business case at that point, so that’s three steps in.
We adopt a different approach and business model from the core Spark business in all the new areas. As we see some of our businesses getting bigger and more mature we change the model slightly. Over time we would see Skinny, for example, be moved back into the core Spark when the business is big enough and mature enough to survive the transition; when the brand is strong, the business model is locked in, and there is some scale around it.
It is a bit of horses for causes, but generally with all the new stuff it is much more of a lean startup process. Over time, some of those businesses might die or have new owners come in. We remain quite flexible to that. Other businesses such as Skinny and Bigpipe have become more natural Spark businesses over time. We are sponsoring those businesses currently because we adopt a much faster cycle.
We built Bigpipe in a matter of months and got that into the market. And now we are scaling. That would have taken much longer with traditional business processes.
We use Google Docs, we don’t use the standard Microsoft systems that Spark uses. We operate in Wi-Fi within the building because it is more flexible and it is lower cost for us and we can do co-creation much easily in those platforms.
Plus it is about eating your own dogfood. We talk about being customer focused, digitally centred and led. That means you have to use those things that you keep preaching to people. So we are very much focused on using cloud-based solutions, and sort of future proof products and services ourselves.
Q: What is the people strength at Spark Ventures and what are your hiring plans?
RS: In total, across the ventures portfolio, depending on what day it and how many contractors are in, between a 120 and 150 people. That includes Skinny, which is 40 to 60 of the total strength. We have a core little group in the middle. We are sort of called the hub. We do strategy setting, we do early market validation and we look at things like doing the business case, standing up the business, et cetera. That’s around 15 people. And then there are a bunch of businesses of varying sizes. Bigpipe has got less than 10, Lightbox less than 15. It is very much a hub and spoke model and it dials up and down a little bit depending on where we are on the development cycle.
We are always looking for talent, particularly in the areas that we know we are going to need more resources. You look for in areas such as user experience (UX), interaction design, data science, media – some of it is based on the industries that we are moving into. We are very focused on what we call UX. We have just hired a head of design out of HP, from offshore to help drive that. Having very good customer experience is central to all of our stuff.
Just about everyone from the Lightbox team is from the media industry, not from telco. We are building a new media capability there.
We are always on the lookout for certain talent and skills that we need. We are more of a human centred business than a technology one. We don’t own the network. We are more about the IT and Internet and content type layers, so people talent is quite a critical component of our mix.
Our portfolio of ventures are working on an iterated model. They are all quite independent but not fully so. We do have a platform enablement team who do a lot of the build for some of the ventures. They do a lot of shared customer care on a shared customer experience platform, particularly across Lightbox and Bigpipe at the moment. We are using the same resources and people platform for that. We are trying to use the same design methodologies and principles, so there is a shared layer.
Q: Can you explain the internal processes that you follow to build or kill ideas?
RS: The process for finding new ideas is both top down and bottom up. We have a rough idea on the areas that we are interested in. We are in a mobile and Internet world now. We look at what is happening around that such as video, data, local, social and what are the key trends in areas that are logical for us to work in. Data tends to be involved in almost all of those. We have got a broad idea of the areas that we think are interesting and are quite adjacent and natural for us, and we do things in those areas.
At the same time there are a lot of people who come to us and say, “We have got this idea”. We generally look at it and say, “Does it fit on our map, do we think it is a business that could be worth tens of millions, not just millions?” We are a bit too big for those businesses. We are looking for ones that may not be billions of dollars but at least tens of millions.
App La Carte was an interesting one. It would maybe not pass some of our filters on size. But it has a portfolio effect, considering that we own a mobile data network and we sell mobile phones. Applications are a logical bundling and extension of that, which is we bought into App La Carte, and we believe we can extend their business through our channel.
We look at it quite simply – does it fit on our map, is it the right size and most importantly are we a natural owner? What we mean by that is, are we a better owner and supporter of the business than somebody else? What do we bring to it? We are not a venture company. So can we bring help with network experience? Or can we scale it through our distribution channels? Or can we put that product with one of our products and create a better outcome for a customer? We do have a structured process but I wouldn’t say it is tightly structured. It has got enough flex in it to introduce new opportunities.
Q: What have been your biggest challenges so far and what lies ahead?
RS: One of our major challenges to date is not doing too much. The reality is that we have spun off about eight or nine ventures and they are not fully independent. So you do end up finding some choke points, not so much in funding but in certain people capabilities, or certain platforms that multiple ventures rely on. So we have had some stuff around just managing the portfolio and across different constraints, mainly in capability.
Challenges looking forward are being very clear about where a venture is in its life phase and what it means to be in that. Few of our older ones have come out of that early phase and are now in execution, driving customer and market outcomes.
It is also about giving the CEO and the board confidence that we are not just out there spending a lot of money creating things, but that we are driving real outcomes and creating a path for long-term wealth.
Probably one of the biggest challenges for us is to stay true to our model and find the talent we need as we move into different life phases – particularly around businesses like Qrious that require quite a different skill set to what not just Spark but even its fringe units require. There is not exactly a big pool of data scientists lying around that we can easily grab onto.
For me the biggest challenge is about staying true to our way in the way we do things and the way we offer and finding the people we need as we move through those cycles.
Q: Can you provide an update on Digilife?
RS: That’s our initiative around the connected home or smart life. We have just finished customer trials. We went through the process little over a month, and it went incredibly well. We have got the initial customer feedback and research back. We are working through that now to work out what’s next. It was hugely positive. We have had a very high self-install success rate. That was one of the things we wanted validated.
Now we are looking at things like, given the customer feedback, what is the base proposition, what is the add-ons, what’s the branding model, service model, clearly who we are going to partner with to take that to market. In the classic lean start-up lifecycle process, we are into the third stage. Fourth stage is go to market.
The number of sensors varied across users. Everybody had the base panel unit, which is called the hub. Everyone had one or two door sensors, a proximity and motion sensor that takes a snapshot and one for a real-time HD camera. That was the base and there were variations on that. I have got 40 components in my house. They went a big bonkers in my house, just to test it. It was varied to see what the use cases were and how people used it.
I think the biggest value proposition for the consumer is peace of mind. The most powerful thing about the Digilife concept is that it puts power back in the hands of the consumer.
We see synergies potentially between Digilife and Vigil. How do you bring those together for private healthcare and peace of mind? With my mother, I would like to integrate Digilife with the Vigil concept, where you can give her something to manage her home, and also peace of mind about whether she has got up this morning and moved, for example. Has she opened her door? Should I alert the doctor or somebody?
With Internet of Everything (IoE), you have smart devices, sensors, mobile data networks and platforms that are capable of giving insight out of data – you can almost think of anything!
Q: What makes your Qrious solution different from the other big data solutions out there?
RS: A few things. The whole concept of Qrious is around more democratised data exchange where you have multiple data sources. The whole concept is to create a bigger data exchange where you are getting multiple data sources that can come together to create better insight.
You can bring together credit card transactions with mobile network data to work out, say, if you are offshore and the credit card is being used in a certain location, we can verify if the phone is near that credit card. If it’s not, it is likely that it is fraud because it is in a different country. Big data has been overhyped in many cases. We prefer to use the word smart data – because there are tons of data around, it is about what you do with it.
We are already using Qrious internally for Skinny and Lighbox, because that is our internal proof points. We are going external within the next month. We have already got one external customer we are working with. We are focused on getting out there in the market and creating a B2B product that drives better outcomes for the businesses.
We want to focus on commercial outcomes but we would also like to drive NZ by exposing data where we can and data owners are OK with that. [We want to make to available] to the data science community, the academia, the public in general to use it and see what they can do with it. We have not got a monopoly on innovation. We know that. So we would like to democratise data to the extent you can within the confines of keeping it secure and private where it needs to be.
Qrious is a multi-layered platform, and these can be consumed as products or services. You have got the storage, the compute, analytics and products built around those and there is a front end where they have got visualisation tools as well. So where the product is BI-as-a-service, they have their own dashboards where they can get the information they need in almost real time around things to do with cross-sell, up-sell within their customer base and those sorts of things.
Q: How do you expect Qrious to grow after launch?
RS: Currently full time staff at Qrious is less than five but there are a number of consultants and contractors supporting us at the moment through the early stages. Our focus now is getting business development people who know how to sell data solutions and the data scientists to help support the process and product development. To date it has been more development people building the platform. Now it is more moving them to classic commercialisation and moving them to market.
We do expect the team to grow as we launch to the market. And we will start with New Zealand. We are not excluding the idea of some of these businesses being able to be taken offshore, particularly elements like Vigil, but we talk about being NZ first. Our focus is here, but if it is a venture that can be scaled offshore, absolutely. That might mean bringing in new owners or different partners.