Peter Fisk

77 Diamonds was founded on the premise that with the advent of modern technology and modern jewellery manufacturing methods, it was possible to create a new breed of jeweller to service customers in a better way.

The ambition was not only to offer the largest selection of diamonds in the world, but to manufacture the jeweller to such high standards combined with a market leading service that could outcompete even the finest branded jewellery companies.

But the most outrageous ambitious of all was to do all of this at prices so low that other retailers could not even source their own jewellery at the same prices we sell directly to our customers.

Founders Tobias Kormind and Vadim Weinig are old friends. From backgrounds in investment banking at Morgan Stanley and a third generation diamond manufacturing business respectively, the pair came together with a dream to sell diamond jewellery online.

After leaving Morgan Stanley, Tobias immersed himself in online ventures. First, he helped to restructure and successfully sell businesses, before founding an online marketing agency, taking luxury brands including Estee Lauder Europe online. He also helped other luxury businesses fully leverage the potential of e-commerce, including Anya Hindmarch and Astley Clarke. Tobias’s interest in diamonds began with his family, who established themselves in 1955 and are today a large global diamond manufacturer.

Meanwhile, Vadim had grown up as a young boy in South Africa joining his father for road trips buying diamonds direct from diggers. When his family moved to Antwerp, most of his classmates hailed from the city’s biggest diamond families. He started out as a diamond polisher, helping to broker important diamond deals, and later moved into risk management in London. But he was always looking for the right opportunity to return to diamonds.With similar passions and interests the two decided to set up 77 Diamonds in 2006 and the rest as they said is history.

They took their brand name from the year 1477 when the modern Western practice of giving engagement rings first arose.

“Today, 10 years after we opened our doors, we have managed to achieve all of our ambitions, having created the leading independent online diamond jeweller both into the UK and Europe” says Kormind.

“With a dedicated showroom in the London’s Mayfair, we can proudly offer our customers a truly luxury experience at affordable prices. Our customers can sit with our bespoke team of jewellery designers and create their own original piece, or choose from our extensive inventory of original, delicate designs or speak to our team of diamond gemmologists to learn more about the subtle differences in diamonds.”

The founders identity three drivers of their business

• Access to 80% of the world’s diamonds. Sourcing our diamonds directly from those that cut and polish the stones, we’re uniquely placed to offer you the world’s most luxurious stones at a price that’s affordable.
• All jewellery is handmade to order by our master craftsmen. We strongly believe that as no two diamonds are alike, neither should the jewellery and we make each piece to order which in turn keeps our costs down and therefore the price you pay.
• Proudly housed in the heart of Mayfair, London. With a showroom, workshop and head office all in central London, we are able to control all aspects of your order process in order to guarantee the best quality diamonds have been picked by our experts in order to produce the finest quality diamond jewellery.

Which translate into three simple benefits for customers

• Affordable luxury at your finger tips. Our business model ensures that you can guarantee the world’s most luxurious stone at prices that are up to 70% cheaper than the high street where the choice in diamond quality does not always exist.
• You’re in the right hands. With a company founder that is a third generation diamond dealer and a combined experience within our workshops of over 100 years we know what it takes to make your unique purchase extra special.
• Thousands of happy customers. Don’t just take our word for it, we have made so many dreams come true with our jewellery and you can read online from those that have experienced our products and customer service.

Here is a recent interview with cofounder Tobias Kormind in StartUps Magazine:

Describe your business model and what makes your business unique:

• We empower the consumer through choice – offering the largest selection of certificated diamonds in the world, sourced directly from diamond cutters
• Providing a luxury jewellery experience end-to-end, with our Mayfair showroom, online and on mobile, offering superb customer service, and luxury packaging
• With our own workshop, we are able to offer superior craftsmanship on our jewellery

What is your greatest business achievement to date?

Sealing the European market leadership position in online diamond jewellery without any third party investment within the space of 10 years.

What numbers do you look at every day in your business?

I am a numbers driven person, so I look at as many as I can every day. These include marketing spend, sales, leads, response times, SEO (search engine optimisation) rankings, etc.

To what extent does your business trade internationally and what are your plans?

We sell to 72 countries, but the UK is still our core market. We have big plans to expand overseas to various European, Asian and North American territories.

Describe your growth funding path:

Beyond initial seed capital which I lent the business and has since been repaid, we have grown organically and we hope to grow much larger, perhaps even list (IPO).

What technology has made the biggest difference to your business?

One of our main competitive advantages is having built a custom IT infrastructure, which has allowed us to be innovative and nimble.

Where would you like your business to be in three years?

Our ambition is to be become a major global jewellery brand with over £100m turnover within five years and showrooms across the globe.

What is the hardest thing you have ever done in business?

We over-hired while suffering from growth pains. We had to let a few people go, a really painful and unpleasant process that I hope not to have to repeat.

What was your biggest business mistake?

We once took our eye off the ball with marketing budget allocation, which caused a dip in sales. Since then, we have been obsessed about our marketing spend and as a result, have a much better performance than before.

Piece of Red Tape that hampers growth most:

In general, the business environment in the UK is excellent, with very little red tape. The only obstacles are the HMRC, which in my opinion takes a far too adversarial position against small and medium-sized enterprises who are just trying to survive.

What is the most common serious mistake you see entrepreneurs make?

Trying to get things perfect. I live by the 80/20 rule; sometimes you just have to throw it out there and see what happens. Waiting for something to be perfect can cause you to miss opportunities.

How will your market look in three years?

It is very difficult to predict as it depends on a balance between supply and demand. Supply is predictable but demand can fluctuate wildly with global economic turbulence.

Diamonds were formed billions of years ago in the earth’s core and brought up to the crust millions of years ago, so they are bound to run out at some point, but not in the next three years!

What is the single most important piece of advice you would offer to a less experienced entrepreneur?

Do not try to do too many things at the same time, pick a few … the right few and do them well. Learn to prioritise and build a strong team around you to help execute.

Personally, your biggest luxury:

A boys hiking trip once per year away from business and family to switch off and have some fun! British country side, exercise, good food and lots of wine…

Executive education or learn it on the job?

Learn it on the job. The academic side is important but the most crucial business skills have to be instinctive and the rest comes down to execution.

What would make you a better leader?

More empathy and an ability to listen to my team.

What one thing do you wish you’d known when you started?

Anyone who thinks the grass is greener on the other side, think again! You had better buckle your seat belt and prepare for a long and bumpy ride.

Business book:

Thinking, Fast and Slow by Daniel Kahneman.

Riot Games is an LA-based video game developer, and eSports tournament organiser founded by Brandon “Ryze” Beck and Marc “Tryndamere” Merrill in 2006. It is best know for “League of Legends” which was launched across the world in 2009. Over 100 million play every month.

The business is driven by the Riot Manifesto:

• Player experience first
• Challenge convention
• Focus on talent and team
• Take play seriously
• Stay hungry, stay humble

Riot Games is probably the most exciting company you’ve never heard of, but is reinventing sports more dramatically than any other brand.

 

Here is an extract from a great Inc Magazine article:

A Friday night in Madison Square Garden. The crowd was screaming for blood. And the ushers and cotton-candy vendors had probably never felt so confused.

In the center of the NYC  arena, two teams of five indoorsy-looking men sat at computers, facing one another. With their headsets clamped on and swivel chairs pushed in, they resembled grandiose telemarketers, one side dressed in spiffy red-and-white varsity jackets, the other in long-sleeve black crewnecks with white tiger logos on the chest. As they typed and clicked, a chaotic scene unfolded on the gargantuan screens above them: A monk, an archer, and a swashbuckling lady assassin were closing in on a cyborg.

An instant later, bullets and arrows rained down. The roaring crowd was merciless. Gladiatorial. They wanted this cyborg’s head. “That’s gonna be a kill for Rox Tigers!” boomed the announcer. Thirteen minutes later, the red-and-white team’s base exploded in a swirl of smoke and light–“Rox Tigers answer back with game 2!”–and the two sides retired to their locker rooms, each man rubbing hand warmers to keep blood flowing to his fingers.

Welcome to League of Legends, a team-based online game, and the raging, addicted, electrifying, vain, oddly beautiful, absurdly lucrative, and often bewildering world that swirls around it. If you’ve never heard of League of Legends or the company that makes it, Riot Games, you’re not alone. You probably aren’t a guy between the ages of 16 and 30, either. Every month, more than 100 million gamers play LoL, as its fans call it. While it’s free to download and play, devotees can purchase extra characters–champions, in LoL-speak–and buy them virtual clothing, known as skins, and plenty of other decorative stuff. This year, those virtual goods will yield nearly $1.6 billion in sales for Riot, estimates SuperData, which tracks in-game spending. Riot also sells corporate sponsorships, real-life merchandise, and streaming rights for its professional sports league. In 2015, investors swooped in to buy stakes in teams and purchase slots in the league to build their own squads. Newly minted pro LoL team owners include Washington Wizards owner Ted Leonsis, Hollywood producer and Los Angeles Dodgers co-owner Peter Guber, AOL co-founder Steve Case, life coach Tony Robbins, and owners of the Philadelphia 76ers.

“One day, there will be a Super Bowl of e-gaming,” says Leonsis, who co-owns Team Liquid, a portfolio of e-sports teams based in L.A. and the Netherlands. “Whenever I get the reports with the [League of Legends viewership] numbers, I almost do a double-take. In size and scope, it’s mainstream media already.”

Ten years ago, founders Marc Merrill and Brandon Beck started building a business based on improving an online game they loved. That business grew into a sprawling empire, brimming with creative potential and filled with salty and demanding fans. “Imagine we invented basketball,” says Merrill, “but we own every basketball court on earth, we sell you the shoes, and we built the NBA.” His comparison, while hardly humble, gets at the company’s dizzying scope. Still, LoL is bizarre and unprecedented. It is beloved by a hundred million people. But it is not only unfamiliar to the rest of the world–unlike, say, basketball–it is also completely unintelligible to outsiders. After that Friday night’s match, two LoL players joined a small crowd waiting to catch a glimpse of the pros as they left the arena. One, Preston Breedon-Glen, a 20-year-old student, said that he’d spent more than $1,300 on champions and skins in the past couple of years. How does he explain the appeal to nonplayers–or why, for him, spending more than a thousand dollars on virtual goods was worth it?

“That’s really hard,” he admitted.

LoL is not mass market. LoL is one massive niche. And as the world continues to fragment and consumers spend more of their lives online, more gargantuan niches will rise up just like it–with deeply passionate, demanding customers who devote large chunks of their lives to a world apart from everyone else. The next great challenge for business is understanding how to reach them and talk to them, and Riot is out on those frontlines. Its founders have made mistakes. They will make more. But that befits a company that’s aggressive, flexible, and never cautious. Merrill and Beck meet their fans on their fans’ turf, think constantly about what they want, hate, love–all the time honoring one key promise: They will match their fans’ obsessiveness with their own. “It’s not just about belonging,” says Merrill. “It’s our tribe, and it’s about love.” In fact, that’s exactly why they started their company.

“We were those players who were willing to spend a thousand hours playing your game if there was a compelling competitive experience,” Beck says. “But we often felt ignored.”

LoL fans speak their own language, and until you level up (get better) and stop being such a newb (novice), much will look and sound strange. But at its core, in League of Legends, five players take on five other players, each hoping to destroy the opposing team’s base. Everyone begins as a weak little warrior at level 1. To win, the whole team must improve individually by killing monsters and other players’ characters. Then the team attacks the other team’s territory.

On a recent afternoon at Riot’s 20-acre campus in Los Angeles, the founders met to do just that. A team was presenting the ultimate skin of a magician character named Lux. An ultimate skin is the character’s superpremium attire–the new look costs much more than most wardrobe changes ($20 to $25 versus about $7) and comes with new animations and sounds. For players who have heard Lux exclaim “Illuminate the enemy!” and “Banish the shadows!” endlessly over hundreds of hours of game play, that’s especially refreshing.

Beck, who wears the same gray hoodie frequently and a perpetual smile through unshaven scruff, loped over to a computer in the middle of the room. Merrill, a CrossFit aficionado who clips his hair as short as his beard, sat in the next row and began pulsing his leg restlessly. Beck started fiddling dreamily with Lux’s spells and movements, inspecting the animations, listening to the sounds. But Merrill immediately began playing to win, killing Beck within a few minutes. So Beck, whose chillness should never be mistaken for apathy, promptly killed Merrill. The game stretched to 40 minutes. Then an hour. Then more. Neither talked much. Nor did any employees, aside from an occasional whoop or joke after a great play. A nearby staffer shook his head. “Who knows how long this is going to take,” he muttered.

Beck, 34, and Merrill, 36, have long been very competitive gamers, very close friends– and very different people. Both grew up well-off around Los Angeles, both attended the University of Southern California, both loved games like Dungeons & Dragons, and both had ambitious parents who worried their video game-addled sons might not amount to much. But the similarities stop there. Beck never finished high school–“I had gnarly ADHD”–instead passing a test to attend college early. Merrill was an Eagle Scout, an A student, and a captain on his high school football team.

At USC, Beck loved how Merrill made their nerdy hobbies seem cool. “Someone would talk shit and Merrill would be like, ‘Dude, you don’t play D&D?’ ” says Beck. “Suddenly, the jocks were considering it.”

After college, they got jobs–Beck with Bain & Company, Merrill at a bank and then at a marketing firm–and an apartment in downtown L.A. They furnished their living room with back-to-back gaming rigs, with giant monitors and high-backed chairs for those hours of nonstop game play. There they fell in love with a game that would change their lives: Defense of the Ancients, a.k.a. DotA.

Even by the scattershot standards of online games in the early 2000s, DotA was a strange beast. For one thing, no one really owned it. In 2002, Blizzard Entertainment released the sprawling Warcraft III–a fantasy game pitting humans against orcs and other creatures–and included a function that let people tinker with the game as they pleased. This attracted a community of modders, fans who create their own versions. The most popular by far was DotA. In DotA, five players faced off against five others, with two bases in opposite corners of the map and three paths to get from one to the other. It had a certain tight elegance. DotA wasn’t a game in which you beat level after level until it was over. And the DotA community was a world unto itself, with fans gathering on forums to suggest improvements, post stats, and share stories.

Beck and Merrill spotted an opportunity. What if a version of DotA smoothed all of the game’s rough edges and continually introduced cool new features? Unlike typical video game companies, which followed a movie studio model and released one new title after another, the two could be stewards of one game, like the DotA community was now. Asian companies were then offering games for free, and charging for perks and items along the way. What if Beck and Merrill tried that in the U.S.?

The two leaned on skeptical family members and other angel investors for money, raising $1.5 million. Merrill and Beck had some experience with the video game business–in college they had helped raise money for another startup game studio, persuading their fathers and others to invest, and earned observer seats on the board. But neither Merrill nor Beck had ever built a serious game, and they had only tinkered with code. When they tried to gin up interest from publishers at a gamer conference, they didn’t realize they were embarrassing themselves. “Brandon was like, ‘Nicolo, look at this. I have a video of our prototype. We’ve done it in only four months,’ ” says Nicolo Laurent, who then represented a European game publisher. “He was so proud. And it was so sad, because it looked terrible.” (Laurent joined Riot Games in 2009.)

But they kept refining the game, and wooed a round of venture capital–$7 million–by selling investors on the idea that they would make a different sort of video game company, one rooted in e-commerce. (“That kind of model made sense,” says Rick Heitzmann, a managing director at FirstMark Capital, which invested in that round and a subsequent one.) At one point, the game’s outsourced code became so problematic that they had to scrap the whole thing, which delayed the launch by a year. Still, bit by bit, the game got better. For a long time, their game was so clunky and tedious that the staff would reward themselves by playing DotA after play-testing League of Legends. Steve Snow, a senior producer at the time, can still remember the day the staff knew the game would succeed: They didn’t want to play the other game. They wanted to play League of Legends again. They’d finally created a game that was fairly easy to learn, and nearly impossible to master, one with endless ways to self-improve, to help your team, and to compete with others.

Riot Games released League of Legends on October 27, 2009. The game was free to download, and offered 40 characters. A month later, Beck and Merrill launched an in-game store. They decided to never sell upgrades, such as special weapons or powers that gave some players an edge over the others. They believed doing so was anti-gamer–it was wrong to sell what others got with skill. Instead, they sold cosmetic improvements, like new clothes that changed the characters’ appearances. Just as you buy decorations for your home, the skins and accessories help players spruce up their game experience and make it feel personal and more fun. Gamers were spending hours a day living in the game, too.

By the end of 2010, Riot Games had rung up $17.25 million in revenue, according to SuperData. A year later, sales had almost quintupled, to $85.3 million. Its distribution partner in China and investor, internet giant Tencent Holdings, saw Riot Games’ meteoric rise and wanted to buy the company, offering $400 million in early 2011 for a 93 percent stake. Merrill and Beck accepted, persuading Tencent to let them operate independently. The two had big plans for LoL.

In December 2015, Tencent bought the remaining 7 percent of the company for an undisclosed sum. But Riot shows little evidence of being wholly owned by another entity. “There’s not much about the relationship that’s been typical,” says Tencent EVP and “chief exploration officer” David Wallerstein. “I feel like the more we own of Riot, the more independent they become.”

Behind one closed door at Riot Games’ campus, where most of its 2,500 employees work, it sounds like someone is bashing armor with a sword, over and over again. The door swings open to reveal Brandon Reader, one of the sound designers on the skins team, whacking tuning forks. He’s recording sound effects for a new character. To create the right sound, he’s layering that metal-on-metal effect over the sound of a didgeridoo and adding echo. During playback, it all sounds otherworldly–aggressive and alien. All characters, he explains, get their own aural profiles.

Each champion–each aspect of the game, really–is built with this level of customization and care, because nothing pleases Merrill and Beck like overdoing it. In addition to the sound designers, they employ four full-time composers and a team of music producers, who record new music for the log-in and load screens, as well as for standalone music videos. Hundreds of artists and designers work on the game itself; others work outside the game on those videos and animated vignettes that develop the backstories of its champions. Fourteen storytellers and artists are dedicated to creating the lore of the world surrounding League of Legends–a sort of J.R.R. Tolkien committee. These details barely appear in the game, but the founders believe they add richness–and lay groundwork for future projects. Riot also employs four documentary filmmakers to chronicle the hard work of all the creative employees for LoL’s fans.

But nothing is as over the top as Riot’s outsize e-sports division. After the company’s first world championship tour­nament, which it hosted in 2011 for a small crowd at a gaming conference in Sweden, Beck and Merrill went all out to make LoL look and feel like a pro sport. They set up the league, invested in broadcast equipment, hired a producer who’d worked on Sunday Night Football and the Olympics to make the game broadcasts resemble Riot’s much bigger brethren’s, and trained top LoL players to look and sound TV-ready. The next year’s event, which awarded $1 million in prize money, took place in USC’s Galen Center arena. Since then, Riot has booked arenas in Berlin, Seoul, and, of course, Madison Square Garden. In 2014, the company hired the Grammy Award-winning Imagine Dragons to perform at the finals and to record new songs for League of Legends. Beck wanted to let fans know that the band members were LoL players who loved the game as much as the die-hards. This year’s finals, at L.A.’s Staples Center, featured a performance by a full orchestra and new music by platinum-selling artist Zedd.

Beck sees the music videos and animations as steppingstones–proof that Riot can create exciting action sequences, emotionally poignant moments, and any other building blocks needed to tell immersive stories in any medium. Soon, he says, he plans to bring LoL to life in new ways. “From day one,” adds Merrill, “we wanted each character to be sufficiently interesting to be the star of its own film.”

Economic considerations rarely factor into these decisions. “To be candid, it’s not always comfortable for me,” says Dylan Jadeja, Riot Games’ CFO. “Return is very broadly defined, and it’s not quantifiable in all cases. It’s a gut sense that ties to where the premise of the business started”–a company built to be like a community for hardcore gamers. “We leave so much money on the table to ensure we’re doing the right thing.”

For now, the margins on virtual goods are so high, the cash flow so good, says Jadeja, that the company can afford to place long-term bets in the name of fan loyalty. That’s also why Riot goes to great lengths to recruit and hire only hardcore gamers who think like its customers (for more on Riot’s hiring, see “How Riot Guards Its Culture” below). Employees fervently embrace this mission. “I like to be very clear: I work for the players,” says senior producer Lance Stites. “I just happen to be accountable to Marc.”

But money has become a central issue in a dispute that has sprung up around Riot’s e-sports division. That’s where League of Legends resembles a pro sport, so investors, players, and team owners want ways to make pro sports money–and debates over how to do that have heated up online. Although Riot funds the championship prize pools and pays $12,500 stipends for pro players and coaches for each season split, teams have become increasingly vocal about sharing the revenue Riot makes when it sells world championship sponsorships, strikes distribution deals to stream games and tournaments online, and sells team-branded in-game goods. (Owners say that it costs around $1 million a year to maintain a pro team, most operate at a loss, and their primary source of revenue–sponsorships–can be fickle, especially when teams get relegated out of LoL’s championship tier.) Many fans, naturally, have sided with their favorite team, rather than with Riot.

Such tensions came to a head in August when Andy “Reginald” Dinh, owner of Team SoloMid, criticized Riot for making a major tweak to the game right before a big match. He found it akin to changing the weight of the basketball right before the NBA playoffs–and unfair and demotivating to players, he said, who already struggle with short and demanding e-sport careers. (LoL pros need sharp eyes and sharper reflexes, and both dull after a few years spent staring at computer screens.)

In response, Merrill jumped into a Reddit debate, which he’s done many times before, but he took a personal shot at Dinh. “If he’s so concerned about the financial health of his players,” wrote Merrill, “maybe he should spend more of the millions he has made/makes from League of Legends on paying them instead of investing in other e-sports where he is losing money.”

He later edited the post, toning it down and offering clarification, but the backlash was swift and brutal. He was widely criticized by the LoL community for being an out-of-touch corporate overlord. Merrill owned up to the mistake in a subsequent post and apologized to Rioters in a company meeting–and the next month Riot issued an open letter that promised a future in which the company will share revenue, give teams “permanent stakes” in the league, and collaboratively develop new business models. Some fans praised Riot for tackling the issue head-on. Others argued that Riot didn’t go far enough.

Those fans are so fervent because they’re used to having their voices heard. Riot built its wildly successful game by doing something no competing game publisher did: letting gamers into the creative process. “If you go back to some of the threads from year one or year two of League of Legends and all the Riot [online] forums,” says Steve Arhancet, a former pro gamer and now co-CEO of LoL team Team Liquid, “you had your developers, your executives, all chiming in to the conversation, listening to the community, making adjustments based on forum threads. The executive team didn’t just have a plan and roll it out.”

Beck and Merrill are still reconciling their dual role: corporate executives of a multibillion-dollar company who still see themselves as hardcore gamers. (Merrill is a platinum-level LoL player, putting him in the top 10 percent of players worldwide, and he sometimes streams his games online and chats with fans.) Both are deeply preoccupied with how the community views them and hate the idea of letting it down. The ethos that Arhancet described persists. Over the past year, LoL forums were ablaze with anger over Riot’s reluctance to release some much-demanded features, including an in-game instant-replay system. In October, the founders posted a missive to Reddit that read, in part: “We made a big mistake. We’re looking to make things right by trying to do something radical–giving you what you’ve been asking for all along.”

Fans poured out their appreciation in response. “This has been my favourite post in the history of League of Legends,” wrote Reddit user Acroblade. “Thank you for acknowledging your mistakes and making a REAL effort to please all of your players … I speak for the whole playerbase when I say that we forgive you Riot, and we love you, and we believe in you. 2017 is going to be a great year.”

“H2K!” responds another walking in the other direction. They’ve been drinking all day, explains Zach Smith, 24, as he passes a vape to a friend. It’s rainy and cold, and Smith is wearing only a tank top and jeans, but he’s impervious to the chill. He drove up with two friends yesterday from Maryland. At a bar, they’d met two other LoL players, guys who’d driven down from Albany; all were now luxuriating in the beery joy of being around those who understand what most of the world doesn’t.

“Ninety-nine percent of the time, we’re all outcasts,” says Smith. “We like video games. We’re really into watching other people play video games. When you say that to someone else, they’re like, ‘What are you talking about?’ And then,” he continues, “you congregate, and you meet people like this, and it brings people together–it’s seriously amazing.”

How much have they spent on skins?

One Albany guy groans. “Ugh–$200?” A buddy pipes up: He’s spent $300. Another adds he’s spent $200 too. Smith has spent $500–so far.

How do they feel about Riot?

They start talking over one another:

“They could do more–”

“They’ve been on the ball lately!”

“No, no, no! Marc Merrill fucked up!”

“As a player, I love Riot. As a competitive player, I think they could do more.”

“Players have a one-, two-year career! They should make it last longer!” They all want LoL’s pros to have five- or 10-year contracts–to play a video game that’s existed for only seven years.

Inside, the arena is crowded with fans wearing jerseys for LoL teams and cosplayers dressed up like their favorite champions. Meanwhile, merch lines are stacked with fans 30 or 40 deep, clamoring to buy $25 T-shirts, $65 hoodies, and $25 furry hats. Up on the second tier, five friends from the Penn State e-sports club get ready to head to their seats. They traveled five hours to see LoL, having bought tickets before they even knew who was playing. They say the e-sports club has grown from around 30 members to more than 200, and LoL is the most popular game. But now, so many kids play LoL in high school that they arrive at Penn with their own teams and cliques–they don’t need the e-sports club anymore.

H2K’s smash-mouth offense scores a few early kills, but the disciplined and efficient Samsung recover to dispatch their rivals and advance to the finals. (SKT will beat them in five games, to retain their championship.) But the fans don’t care that the match is lopsided. They shout for Samsung. They chant H2K. They chant for TSM, a fan favorite that isn’t even playing. As the fans file out of the arena, they linger by the entrance. They’re snapping photos with cosplayers. They’re snapping photos with one another. The security guards keep yelling for them to clear out. But they’re not going anywhere. League of Legends is their favorite game. They’re surrounded by their favorite people. This is their tribe. They aren’t going to let this moment slip away.

How Riot Guards Its Culture

Those who work at Riot should come to expect a very particular way of life. “Something-for-everyone culture will not really mean anything to anyone,” CEO and co-founder Brandon Beck told a conference in 2011. “Be polarizing and take a fricking stand.” As Riot does, every day.

1. Make your values nonnegotiable

An effective Rioter calls out stupid ideas (regardless of rank), is comfortable getting “brutal” feedback, and is obsessed with solving problems instead of making them go away. In other words: The ideal Rioter is a misfit at typical companies.

2. Look for fanatics

Riot’s interviews test candidates passion for game minutiae. Hiring managers often check Riot’s game logs to confirm an interviewee plays as obsessively as he or she claims. Shiny pedigrees? Riot doesn’t need ’em.

3. Sell people on the challenges

Gamers will want to win through effort and practice, not shortcuts, and Riot wants workers driven by this ethos. Instead of pitching Riot as a congenial place to work, hiring managers focus on how new hires can level up–that is, develop and fine-tune skills.

4. Friction is your friend

Applicants need approval from a hiring sponsor–in addition to the manager–before a job at Riot is theirs. Those sponsors vet against Riot’s cultural tenets and challenge the hiring manager’s case. The process can take months–but it protects the culture.

5. Help them quit

New hires have six months to decide if they fit–and an incentive to leave if they don’t: if they leave, they get 10 percent of their salary, up to $25,000.

Think about the passion that fans have for their sports teams. They are relentlessly obsessive in their devotion to their team, love of the sport, and competitiveness against other teams. In my hometown of Newcastle, the city’s football club dominates the city centre. To many hard-working fans, nothing matters more in their week than the next football match. Nothing occupies their daily chat more than their club. And nothing rouses their passion more than winning.

Imagine then, the ability to engage fans like this every day. FanDuel is the world’s largest fantasy sports game, and actually started just up the road from Newcastle, in Edinburgh. It has now spread globally, quickly across the USA, and now has its sights on the even bigger market of Asia. The model consists of traditional season-long fantasy sports leagues being compressed into a free and/or paid daily, and occasionally weekly, game of skill. Legally, it is not gambling, but a game of skill.

A professional sports season usually lasts five to eight months, depending on the sport. Why does a fantasy sports competition need to be just as long?

That simple insight has catalyzed what was already a booming business, giving birth to FanDuel, the fastest-growing fantasy sports platform. After five years of gradual growth, the Scottish startup achieved escape velocity in 2014. More than 900,000 new players signed up, a fivefold increase from the previous year, and handed over more than $600 million in entry fees for the chance to win cash payouts in daily tournaments.

In fantasy sports, participants act as managers of imaginary teams, selecting their real-life players into ideal lineups and then competing with one another based on the statistics their players produce.

FanDuel started in 2009 in Edinburgh as Hubdub, an online predictions market where users could win virtual money for correctly forecasting news events. As Hubdub ran out of money, its five co-founders, led by CEO Nigel Eccles, decided to refocus the company on American sports, the one area in which it seemed to have significant traction, and to replace the play money with real cash. The Unlawful Internet Gambling Enforcement Act, while crushing online poker and blackjack, had established a safe harbor for fantasy sports in the U.S., legally defining it as a game of skill, not chance. But the big fantasy league operators remained content to leave money collection and disbursement to the players themselves, deeming the opportunity too small to be worth getting into the messy business of payments.

Eccles and company believed the market for fantasy could be much bigger if entering a league weren’t a season-long commitment. They renamed the company FanDuel and started offering one-day leagues just as a number of other small sites were trying out similar models. “It’s ‘Here’s a product that will take the next six months of your life’ versus ‘Here’s a product that will take the next 15 minutes,'” says Eccles, a former McKinsey consultant and native of Northern Ireland. For the hardcore player, meanwhile, daily fantasy meant hundreds or thousands more competitions to enter per year.

Venture investors make bets for a living, but on this one they were risk-averse. FanDuel pitched 85 VCs before hearing a yes from Piton Capital. “It was yet another case of people looking at something as a hobby and underestimating the fans’ willingness to spend money,” says CFO Matt King. Those days are over. FanDuel has raised $88 million from investors including Bullpen Capital, Shamrock Capital, and Kravis Kohlberg Roberts. “We had the benefit of being Series D and seeing what the company had already achieved,” says Shamrock’s Alan Resnikoff. “It was very compelling and the story was very clear.”

Also invested are Comcast Ventures, NBC Sports Group, and the NBA, a sign of just how strongly the leagues and their TV partners have come to embrace fantasy-based gambling. That wasn’t always the case. As recently as two years ago, none of the major networks would accept FanDuel’s advertising. They warmed up after seeing how big an impact fantasy has on ratings: FanDuel says its players consume 40 percent more sports media after they join. They also benefit more directly–FanDuel is now one of ESPN’s 10 biggest advertisers.

The company’s revenue comes from the 10 percent commission it takes on entry fees; the rest it pays out in the form of prizes. In the fourth quarter of 2014 those revenues more than quadrupled to $36.8 million, and this year the company expects to generate more than $180 million.

Within the daily fantasy market, FanDuel, with its million-plus users, has an 80 percent share of revenues. Number two DraftKings has almost all of the remainder, and Eccles doesn’t expect many serious challengers to come along. “It’s a chicken-and-egg problem: You need the player pool to guarantee the prizes, but if you don’t have the prizes, you can’t get the player pool,” he says. “That’s what you find in this market. It’s very easy to launch but very hard to scale.”

The 400-strong FanDuel team is now based in New York City, with offices in Edinburgh, Glasgow, Orlando and LA.

Business:

• Daily Fantasy Sports (DFS): FanDuel started as a DFS platform where users could create fantasy teams based on real players and compete against each other for cash prizes. Participants draft virtual teams of professional athletes and earn points based on the statistical performance of those athletes in actual games.
• Sports Betting: As the legal landscape around sports betting changed in the United States, FanDuel expanded its offerings to include sportsbook services. It entered the online sports betting market, allowing users to place bets on various sports events, including pre-game and in-play betting.

Strategy:

• Market Expansion: FanDuel has focused on expanding its presence in the U.S. market as states legalize and regulate online gambling. The company has secured partnerships and market access agreements with various casinos and gaming entities to operate in multiple states.
• Technology and User Experience: FanDuel places a strong emphasis on technology and user experience. The platform is user-friendly, and the company has developed mobile apps to cater to the growing number of users who prefer to engage with fantasy sports and sports betting on their mobile devices.
• Partnerships and Acquisitions: FanDuel has engaged in strategic partnerships and acquisitions to enhance its capabilities and offerings. Notably, it was acquired by Paddy Power Betfair (now Flutter Entertainment) in 2018, providing the company with additional resources, expertise, and a global presence.
• Marketing and Branding: FanDuel has invested significantly in marketing and branding to establish itself as a recognizable and trusted brand in the industry. Sponsorship deals with sports leagues, teams, and high-profile events have contributed to its visibility.
• Innovation and Promotions: To attract and retain users, FanDuel continually introduces innovative features and promotions. This includes unique DFS contests, special betting offers, and loyalty programs designed to engage and reward users.
• Regulatory Compliance: Given the evolving regulatory landscape in the U.S., FanDuel has been proactive in ensuring compliance with state and federal regulations. This approach has allowed the company to navigate the complex legal environment surrounding online gambling.

Corning’s “Gorilla Glass” is the ultra-strong, highly-flexible, scratch-resistant material that is used in the screen over 1 billion devices including iPhones and iPads, flat screen TVs and in outdoor displays. The drive to create thinner, lighter, more perfect devices is as much dependant on screen materials as computing power or energy management. Corning’s glass has therefore become a crucial part of making digital visions a reality.

Two strategies stand out in helping Corning, part of the Dow Corning Group, to change its game – storytelling and branding. Both relate to take a more outside-in approach to engaging their business customers, and to engaging their customer’s customers. In similar B2B markets where most sales are based on price and supply terms, Corning recognised that business customers are human, and are better engaged as partners in a quest to make consumers lives better.

Gorillas in the Glass

Once an almost invisible manufacturer, Corning has seized on its new role to engage consumers in its brand and innovations. “A Day Made of Glass” became a Youtube sensation with over 25 million views. The company spent $1.5 million on the ad, only released on Youtube, not on TV. In the video, a narrator takes you inside a world made of Gorilla Glass, where edge-to-edge displays make nearly every surface interactive: windows, a car’s dashboard, walls, tables. Everything is touch sensitive and transparent. “How close are we to this?” the narrator asks. “Well, it’s do-able now, but not to this scale and not at an affordable price. Further innovation in manufacturing is needed to get us there at on a broad scale.”

“We spent far less than we would have for a Super Bowl spot,” says Corning CFO Jim Flaws, who believes the viral nature of the clip makes it more powerful than conventional marketing. “We’ve found this to be incredibly effective.” With every audience, he might add. Brands like Apple and Samsung mention Corning as an added value part of their proposition, whilst for investors it shows how the business is not just a manufacturer but part of a digital revolution in entertainment, healthcare, and lifestyles. Investors immediately look to different growth trajectories, and profit potential, transforming the perceived and real value of the business.

Xiameter by Segmentation

Another illustration of the change comes from Diameter. Here is an extract from Mark Johnson’s article describing the transformation:

In the early 2000s, Dow Corning recognized that silicone was starting to become a commodity and that they needed to rethink their business strategy. The company’s new business model was a complete shift from where they had found success in the past, but it was a shift that created a brand new market and customer base for the manufacturer.

https://www.youtube.com/watch?v=00yYBopQJTY&feature=youtu.be

What do you do when your chief product threatens to become a commodity? You can of course cede the low end of the market and try to shift your business model to something for which customers will continue to pay premium prices. Or, maybe more daringly, you can do what Dow Corning did: beat commoditization through business model innovation that faces the threat head on.

Business model innovation of either kind isn’t easy. You have to find ways of doing things that are new and sometimes diametrically different than the core business model.

In a few years leading up to 2002, the company recognized silicone was becoming a commodity as markets matured, the competitive landscape began to grow and customer needs began changing. A strategic review lead to an exercise in customer segmentation which revealed information that created a huge opportunity for the organization.

The segmentation lead to the discovery that, regardless of the market segment, customers existed within four segments ranging from pure “innovation seekers” to “price seekers” with varying degrees of each in between. With this segmentation, Dow Corning could easily see which segments it was serving very well and which left room for opportunity. In this case, Dow Corning, a highly innovative and service oriented organization, needed to find a way to better serve the “price seeker” segment. This segment knew what products they needed, how to use them, but didn’t need all the high value services bundled into the price of the product. They simply wanted to purchase their standard silicones at the lowest possible price.

Don Sheets, current CFO, worked to develop and implement a new business model that would tackle this customer segment. He knew that he couldn’t capture the price seekers merely by cutting prices. Charging less for the same goods would result in unacceptably low margins and make the model unattractive to Dow Corning in the long term. Instead, he had to ensure profitability by coming up with a business model radically different from the high-end, value driven model of the company’s core business.

Though innovation is too often thought of as a moment-of-inspiration thing, success is far more likely when the new opportunity is approached methodically, through a process of testing the most important assumptions one by one. So Sheets and his team carefully considered the four critical elements that make up any business model: key resources, key processes, a profit model, and a customer value proposition (CVP).

Because the CVP typically determines how the other three elements are configured, it’s critical to get it right by answering this question: what is the job that customers are trying to get done and how will the offering help them do it? Dow Corning’s CVP for these price-driven customers was to offer them products in a more direct, simplified fashion—with fewer services and at lower costs. This was potentially disruptive to Dow’s existing business, but if the revenue model, resources and processes were realigned to support this new CVP, the potential was great.

In keeping with the CVP, Sheets and his team determined that cutting services alone wouldn’t do it. There also needed to be a new price point that was lower than any of Dow Corning’s offerings at the time. This new venture had to have a much lower cost structure given these customers were much more price sensitive. For the most part, thought Sheets and his team, this customer segment knew what products they wanted and how to use these products. There were certain services they wouldn’t need. In order to build efficiencies into the model – so Dow Corning could afford to sell these products at lower prices and still like the profitability – standard operating mechanisms would be instrumental. In this case, business rules were designed and built into the model.

Rules such as minimum order quantities and order lead times were enforced. These alone created efficiencies in the supply chain, logistics and in the warehouses where less inventory is managed. Also, standard credit terms of 30 days were offered with the option of purchasing different terms at a premium. Prices are market-based and set at the time the customer places their order. All of this required a shift away from Dow Corning’s hands-on, service approach to one that was low-touch, standardized, automated and web-enabled – as close to an on-demand operation as possible.

A critical point in its development came when the management team sought the reaction of the organization as a whole. It’s an important step when an innovation requires radical new ways of thinking and operating. Not surprisingly, the idea was not particularly warmly received initially–it was alien compared with its core operations. Such reactions often lead companies to tie a potentially transformative business too closely to the core, binding it to the same cultural norms, incentive plans, and processes – a critical mistake that has sabotaged many an otherwise innovative offering. So Dow Corning created an entirely new brand – XIAMETER® – a business model under the Dow Corning corporate umbrella, yet operate independently, with its own identity and culture.

The remaining challenge was to fit this new entity to the overall organization. Because automating as much of the customer transaction as possible was essential to keeping down overhead, the Xiameter brand was designed from the start as a web-enabled business model. The customer would place an order with no human interaction, requiring far fewer staffers than a traditional Dow Corning business unit. Because those staffers needed to be much more comfortable managing business differently, the Xiameter organization sought out people at Dow Corning who could act differently with customers – a much more transactional approach than a nurturing approach. While still needing to be team players, they had to be experts who were comfortable making fast decisions. One test of this was how quickly they decided to accept a position with the Xiameter team when asked to join the new business model.

https://www.youtube.com/watch?v=LrjqCJhoFj0

Most new businesses need time before their success can be fairly gauged. Not so in the case of the Xiameter business model, which quickly delivered on its promise, sometimes in unexpected ways:

• Dow Corning earned back its investment in just three months.
• New orders allowed better use of under-utilized manufacturing capacity.
• By utilizing market-based prices, it drove more demand for silicone products, in some cases drove up prices, which in turn increased profits for Dow Corning as a whole.
• Prior to the launch of www.xiameter.com, the company had no online sales but now over 30 percent of Dow Corning’s sales are online – nearly three times the industry average.
• Despite worries that the new model would cannibalize the existing customer base, a majority of the new business was driven from new customers.

In the nine years since the Xiameter brand launched, it has transformed dramatically, while still staying true to its core business model. It now offers more than 2,100 standard silicone products, compared with just 400 when it launched. Originally, it was just for large-volume customers. It now also serves smaller volume customers through transparent tiered pricing so customers can now choose the pricing most appropriate for them based on the volumes they need. And while www.xiameter.com still maintains a minimum order quantity business rule, they have added the option of purchasing through local distributors for customers seeking flexible order options or customized services. Discounts are available for purchasing multiple items within a product family, and customers can lock in price and volume commitments through an online supply agreement. And the Xiameter business model has been able to maintain its efficient cost structure by implementing and automating all its business rules within www.xiameter.com which links directly to SAP.

Improved offerings are a natural outcome of innovation. It’s good for both customers and companies. Customers get better products; companies get higher margins or greater revenue. The trick is knowing when and how to make the next change. Like Dow Corning’s core business and the life cycle evolution of products, the Xiameter brand will also have to continue to evolve. When that point comes, Dow Corning, practiced in applying a methodical and repeatable process of business model innovation, should be ready to once again turn their world upside down.

 

 

Here is an extract from a recent Fast Company article:

Currency-exchange is an enormous business with trillions of dollars crossing borders each year, and historically an extremely inefficient and opaque one. Those conditions have made the business ripe for disruption by technology. TransferWise, a currency-exchange unicorn that uses peer-to-peer technology to charge significantly less than the banks do to exchange funds from one currency to another, has built a fast-growing business doing just that in Europe. It’s now also gained critical mass in the United States: In the eight months since it launched in the U.S. in February, TransferWise’s cofounder Taavet Hinrikus told me, it’s now completed more than $1 billion worth of transactions here.

I met recently with Hinrikus at the company’s New York office at WeWork during a whirlwind U.S. trip he was doing from his London base. He spoke excitedly about the prospects for growth in the United States, where he believes TransferWise can take market share from both the banks and from Western Union, that stalwart of money transfer. The cost savings for customers worldwide, Hinrikus notes, are enormous. “We’re helping them save $1 million a day in bank fees,” he says.

In the U.S., TransferWise generally charges 1% on transactions, somewhat higher than than its fees in the U.K., where costs are lower, but still a dramatic savings over the typical fees for currency exchange. More important, it saves customers on the hidden costs of currency transactions by using the mid-market rate – that is the mid-point between the buy and sell price – which generally isn’t available to retail customers. Its U.S. business includes transfers between U.S. dollars and more than 30 currencies, including the pound, the euro, the Thai baht, the Brazilian real and the Indian rupee, on which it says its saved its customers more than $50 million in fees.

TransferWise isn’t alone in trying to shift exchange away from the banks; others including Xoom (which PayPal agreed to acquire over the summer) and Remitly have also gotten into the digital currency-exchange business. But with a total of $91 million in funding from venture capital giant Andreessen Horowitz and others, TransferWise has been growing fast. As a private company, TransferWise doesn’t disclose a lot of numbers about it’s business. But it will say that it’s now doing more than $750 million a month in transaction volume – on top of the $4.5 billion it had done since inception as of January. By my calculations, that means TransferWise should, at the very least, top $10 billion in total transaction volume before yearend. With cross-border payments of $5 trillion to $10 trillion a year, “it’s a pretty sizable market,” Hinrikus says. “If we move 2% of that, it’s a big business.”

Hinrikus, 34, an Estonian who was one of Skype’s first employees, and his friend, Kristo Käärmann, 35, who then work at Deloitte Consulting, cofounded TransferWise in 2011. The idea came from Hinrikus’s frustration after he moved to the U.K. from Estonia, but stayed on Skype’s payroll there. He grew increasingly frustrated by the hefty fees of around 5% or so to convert his salary into pounds to pay his rent and other bills. Käärmann, also an Estonian living in London, faced the same problem in reverse: He was paid in pounds, and was equally annoyed by how expensive it was to send money home to pay a mortgage there.

The two came up with their own makeshift, peer-to-peer solution, bypassing the traditional banking system when converting funds from one currency to another. Soon, they had a little group of expat friends, trading currencies amongst themselves, based on the mid-market exchange rate. “We saved money, which was cool, but even more important, we were able to avoid our banks,” Hinrikus says.

Just as the emergence of new technology enabled Skype to eat away at phone companies’ dominance of global communication, so, too, was the banks’ grip on currency-transfer ready for disruption. In 2011, Hinrikus and Käärmann turned their little makeshift group into a company. “Banks will tell you that they’ll give you the best rate. But you can have endless amounts of fun when you call them up and ask,” Hinrikus says. “We are very committed to transparency.”

Today, TransferWise is no longer completely peer-to-peer – currency flows are never so evenly matched – but rather a system for passing on lower rates than were historically available for small customers. Like most fintech entrepreneurs, Hinrikus argues that technology will disrupt the way traditional banking is done – and shrink banks’ hold on many of their core businesses. Says he: “Pretty soon we’ll see a large chunk of banking done by technology companies.”

When the video of Bill Gates drinking water made from human waste went viral, Seattle-based Sedron Technologies (previously known as Janicki Bioenergy) was immediately inundated with phone calls requesting information about the machine behind the magic: the Omni Processor.

More than 2 billion people around the world lack sufficient sewage treatment and are forced to defecate in the open, leading to infection and huge economic strain. The Omni Processor aims to help by turning human waste into a valuable product. It dries the sludge and removes the liquid, which becomes water vapor that can be made into clean, FDA-approved drinkable water.

Other similar sanitation technologies are often short lived because they cost so much to power. The Omni Processor, however, is self-sustaining. The solid waste is burned to fuel a generator that creates electricity that gets fed back into the Omni Processor. Whatever is leftover can be added to the local power grid.

Last year, Janicki launched a pilot program in Dakar, Senegal, where the machine is processing a third of the local septage. The company is taking orders for its new and improved machine, the Omni Processor S200, as well as working on a self-sustaining household toilet that runs on waste.

Few technologies have attracted the sort of claims that IBM has made for Watson, the computer system on which it has pinned its hopes for carrying AI into the general business world. Named after Thomas Watson Sr, the chief executive who built the modern IBM, the system first saw the light of day five years ago, when it beat two human champions on an USA question-and-answer TV game show, Jeopardy!

But turning Watson into a practical tool in business has not been straightforward. After setting out to use it to solve hard problems beyond the scope of other computers, IBM in 2014 adapted its approach.

https://www.youtube.com/watch?v=_Xcmh1LQB9I
Rather than just selling Watson as a single system, its capabilities were broken down into different components: each of these can now be rented to solve a particular business problem, a set of 40 different products such as language-recognition services that amount to a less ambitious but more pragmatic application of an expanding set of technologies.

Though it does not disclose the performance of Watson separately, IBM says the idea has caught fire. John Kelly, an IBM senior vice-president and head of research, says the system has become “the biggest, most important thing I’ve seen in my career” and is IBM’s fastest growing new business in terms of revenues.

But critics say that what IBM now sells under the Watson name has little to do with the original Jeopardy!-playing computer, and that the brand is being used to create a halo effect for a set of technologies that are not as revolutionary as claimed. “Their approach is bound to backfire,” says Mr Etzioni. “A more responsible approach is to be upfront about what a system can and can’t do, rather than surround it with a cloud of hype.” Nothing that IBM has done in the past five years shows it has succeeded in using the core technology behind the original Watson demonstration to crack real-world problems, he says.

https://www.youtube.com/watch?v=_Xcmh1LQB9I

The debate over Watson’s capabilities is more than just an academic exercise. With much of IBM’s traditional IT business shrinking as customers move to newer cloud technologies, Watson has come to play an outsized role in the company’s efforts to prove that it is still relevant in the modern business world. That has made it key to the survival of Ginni Rometty, the chief executive who, four years after taking over, is struggling to turn round the company.

Watson’s renown is still closely tied to its success on Jeopardy! “It’s something everybody thought was ridiculously impossible,” says Kris Hammond, a computer science professor at Northwestern University. “What it’s doing is counter to what we think of as machines. It’s doing something that’s remarkably human.”

IBM’s initial plan was to apply Watson to extremely hard problems, announcing in early press releases “moonshot” projects to “end cancer” and accelerate the development of Africa. Some of the promises evaporated almost as soon as the ink on the press releases had dried. For instance, a far-reaching partnership with Citibank to explore using Watson across a wide range of the bank’s activities, quickly came to nothing.

https://www.youtube.com/watch?v=ZPXCF5e1_HI

Since adapting in 2014, IBM now sells some services under the Watson brand. Available through APIs, or programming “hooks” that make them available as individual computing components, they include sentiment analysis — trawling information like a collection of tweets to assess mood — and personality tracking, which measures a person’s online output using 52 different characteristics to come up with a verdict.

At the back of their minds, most customers still have some ambitious “moonshot” project they hope that the full power of Watson will one day be able to solve, says Mr Kelly; but they are motivated in the short term by making improvements to their business, which he says can still be significant.

This more pragmatic formula, which puts off solving the really big problems to another day, is starting to pay dividends for IBM. Companies like Australian energy group Woodside are using Watson’s language capabilities as a form of advanced search engine to trawl their internal “knowledge bases”. After feeding more than 20,000 documents from 30 years of projects into the system, the company’s engineers can now use it to draw on past expertise, like calculating the maximum pressure that can be used in a particular pipeline.

https://www.youtube.com/watch?v=ymUFadN_MO4

To critics in the AI world, the new, componentised Watson has little to do with the original breakthrough and waters down the technology. “It feels like they’re putting a lot of things under the Watson brand name — but it isn’t Watson,” says Mr Hammond.

Mr Etzioni goes further, claiming that IBM has done nothing to show that its original Jeopardy!-playing breakthrough can yield results in the real world. “We have no evidence that IBM is able to take that narrow success and replicate it in broader settings,” he says. Of the box of tricks that is now sold under the Watson name, he adds: “I’m not aware of a single, super-exciting app.”

To IBM, though, such complaints are beside the point. “Everything we brand Watson analytics is very high-end AI,” says Mr Kelly, involving “machine learning and high-speed unstructured data”. Five years after Jeopardy! the system has evolved far beyond its original set of tricks, adding capabilities such as image recognition to expand greatly the range of real-world information it can consume and process.

With its purchase of the Weather Company’s digital assets for a reported $2 billion in 2015, IBM took another big step in that direction, acquiring an enormous arsenal of local data about weather conditions. The information, which was already being used by companies in the airplane, insurance, and agricultural industries, could be put through IBM’s Watson system to produce new understandings of weather patterns and more accurate forecasts. Using Watson for such real-world, consumer-centric applications could help IBM gain a reputation as a data company, not a computer company, and might be good for business, too: It says that $500 billion worth of annual commerce is dependent on weather.

The brand name comes from the 1960s cycling team Rapha, famous for its love of drinking St Raphaël after a long ride, whilst the logo is inspired by that of Citroën’s H Van. Founder by Simon Mottram, a Chartered Accountant who got creative at Interbrand, and Luke Scheybeler, a digital designer with Sapient who preferred to design fashion, Rapha makes luxury cycling clothing fusing high tech fabrics with sporting nostalgia.

Walk into a Rapha Cycle Clubs – in London or New York, Sydney or Osaka, and you can see, smell and touch a love of cycling. The business has grown rapidly, building a direct relationship with consumers, through events and online community, as well as its coffee-shop stores. There are also line extensions into luggage, skincare, books and travel. Tour de France and Olympic champion Bradley Wiggins, and his Team Sky wear Rapha, whilst there is a co-branded range with designer and cycling enthusiast Paul Smith.

Rapha is a brand that polarises opinion. For some it has created the ultimate in high performance equipment, dedicated to a sport that breeds passion and perspiration. For others, it is over-priced and over-designed vanity wear for middle-aged men who have taken up weekend cycling in recent years. Whichever your view, it gets talked about. Especially items such as the $450 pair of yak-leather cycling shoes, or the $150 pro-glide coffee tamper, to flatten your coffee like the best baristas after your run.

Inside Rapha: Is it just branding?

Extract from Cycling Weekly

Why do cyclists love or hate Rapha?

Extract from article in The Guardian

When it comes to cycle clothing, one brand polarises cyclists like no other: Rapha. The very word will leave some purring at the thought of their next visit to its Soho store, while others will twitch involuntarily at the very mention of the name.

Forums see these two entrenched camps trading blows, which often fall below the waistline. Rapha occupies a position in the high-end sector of the market and there’s no denying that its clothing is expensive, but premium fabrics and construction deliver performance and longevity. I rate their kit highly, but it is not infallible.

Earlier this month, Rapha unveiled its new Shadow collection and even the staunchest supporters of the brand were taken aback by the £480 price tag for the jersey and shorts. Critics came out in force on social media ridiculing the price, pointing out that the jersey cost twice the price of its obvious rival. “Two hundred and sixty pounds for a pair of shorts is a grotesque amount of money!,”said one. “For £260 I could buy 32 and a half pairs of Decathlon’s finest!,” screamed another.

I’ve always been puzzled as to why Rapha in particular is the focus of such ire from a substantial section of the cycling community. And it’s not just the brand itself that seems to raise their shackles. Anyone who wears their kit is deemed guilty by association.

Shouldn’t we be celebrating such a globally successful and innovative British brand? Do we ridicule someone who chooses to wear designer jeans over a pair from Primark? And if so, how many of us would own up to the fact that a little bit of envy lurks behind our sneers? Conversely, roll up for your pre-ride espresso flaunting a new set of aero wheels and your cycling friends will whistle in admiration.

A common accusation levelled at Rapha is that it is a brand that is all about style, but would Sir David Brailsford with his mantra of ‘marginal gains’ have teamed up with a kit supplier that was concerned solely with image?

Simon Mottram always envisaged its clothing would offer superlative performance and the Team Sky sponsorship gave impetus to this objective. It was a symbiotic relationship: Rapha found a wider, global audience, while the clothing it supplied to the Sky squad helped to secure two Tour de France victories and a smattering of Classics. The partnership, Mottram noted when announcing that they were parting company at the end of this season, had provided success “beyond expectations”.

The Shadow range is one of the final manifestations of their relationship, but can Rapha justify that hefty price tag? It claims that the bespoke yarn, comprehensively tested, represents the pinnacle of its technology and delivers unrivalled wind and rain protection. “It has a fantastic range of movement and fit and, that crucial difference, amazing breathability,” claims Graeme Raeburn, Rapha’s lead designer.

Sales already suggest that many are prepared to pay a premium for extensive R&D. The innovation will trickle down to the mid-market manufactures in due time. Where Rapha go, many follow.

Rapha celebrates road cycling and though that does not make it unique in the industry, few can match its commitment. Its website regularly posts inspirational essays, videos and photography; Rapha sponsors events, invests in grassroots and women’s cycling and its Super Cross series continues to grow in popularity. Mottram even resurrected the Bordeaux-Paris endurance race, once a staple of the pro calendar, raising £200,000 for an autism charity in the process. Sure, this all helps to promote the brand, but its heart is in the right place.

Despite playing a significant role in the invigoration of the UK cycling scene, Rapha remains a ‘marmite’ brand, though Mottram is comfortable with that: “What we wanted to create was a brand for a certain type of person that was absolutely for that person. So it was everything to some people and nothing to some people. I didn’t want to be something to everyone.”

It’s no surprise, therefore, that a principal perception of Rapha is that it is too aspirational and only for the wealthy.

Mark Bourgeois, 47, is executive director of a London-based listed property company, who only started road cycling two years ago. Those credentials alone suggest he is the classic Rapha customer, but he describes himself as a ‘cycling chameleon’. During the week he trains with Rapha CC, but every weekend he heads home to Yorkshire, a traditional cycling hotbed, where he rides (and races at Cat 3 level) with Ilkley CC.

“Rapha clothing”, he observes “is far less ubiquitous in Yorkshire than it is in London. You rarely see packs of Mamils riding in head-to-toe Rapha, like you do around London.”

He admits to being quite self-conscious when wearing Rapha clothing up north and has identified a breed of anti-Rapha cyclist in Yorkshire: “They tend to be those who have been riding to a high standard since their teens. It’s possible they feel a certain resentment that Rapha has sort of stolen their sport and made it their own,” he suggests.

From the outset, Mottram made no secret of the fact that he wanted to ally his fledgling brand with the sometimes tough nature of cycling: “The suffering is the most appealing thing for me,” he told Cyclist magazine in 2013, “I passionately believe that this is why cycling is the greatest sport in the world – it’s the human experience.”

The company’s marketing features black and white images of Rapha-clad models toiling up iconic climbs, faces contorted in pain. “It’s what matters most to customers – the fact that cycling is bloody hard. It’s about application and commitment,” he said

Many critics of Rapha have a less romantic connection with their sport, rooted more in the heritage of the domestic cycling scene. To them, it’s all about how you cycle.

Henrie Westlake is 42 and has been road cycling all his adult life, but would never contemplate wearing Rapha’s clothing. His choice is not down to the cost, nor the quality. “It has become the uniform of a certain sector of ‘new’ cyclists,” he contends, “and by that I refer to the stereotypical cliché of ‘all the gear, no idea’.

There are sections of the cycling community who are dismissive of those who spend more time talking about kit in the cafe than actually riding a bike. “I’ve frequently heard cyclists say that you rarely see a good amateur cyclist in Rapha.” In his opinion, “the best way to look good on a bike is to drop everyone on a climb.”

The unwritten rule of road cycling is to always acknowledge another rider on the road. It’s the recognition of a kindred spirit and a shared passion. Hopefully the day will come when the two parties on either side of the Rapha divide lay down their cycling caps and accept that we are all cut from a similar cloth.

Sonae is a leading retail group, founded in 1959, by Afonso Pinto de Maglhaes, in Maia Portugal, initially focused on decorative wood laminates, although de Maglhaes himself also founded a bank.  During its first two decades, Sonae stayed small, focused on wood derivatives.

During the 1980s the company began a period of rapid growth, which coincided with Portugal’s entry in the EU and in 1985, Sonae Investimentos SGPS, S.A was created on the stock market. At this point Sonae began to diversify its business, through the acquisition and creation of new enterprises: the opening of the first hypermarket in Portugal (Continente), hotels development (with Sharaton), the purchase of Star (a travel company) and the opening of the two shopping centres (in Portimao and Albufeira). In the 1990s this was followed by expansion into IT, entertainment and tourism, plus taking many of the businesses into new international markets.

Today the business portfolio is structured as follows

Core Businesses

• Sonae MC – Portuguese leader in the area of food retail, with a set of different formats: Continente (hypermarkets), Continente Modelo (supermarkets), Continente Bom Dia (convenience stores), Continente Ice (specialised in deep frozen food), Meu Super (franchising format of close-by stores), Bom Bocado (restaurant services), Book.it (bookshop) and Well’s (drugstores).
• Sonae SR – Responsible for Sonae’s non-food related retail area, particularly sports, clothing and electronics, through the brands SportZone (sports), MO (textile), Zippy (Kids clothing and accessories), Worten(household appliances, consumer electronics and entertainment), Worten Mobile (mobile telecommunications), Pets&Plants (garden supplies and articles for pets).

Core Partnerships

• Sonae Sierra – International specialist in shopping centres. Founded in Portugal in 1989, it is owned by Sonae in 50% of the shares. The remaining 50% are owned by Grosvenor
• Sonaecom – Partnership in the areas of telecommunications, software, information systems and media, which develops an active role in the integrated management of the business units. The universe of companies that are connected to this area is formed by: NOS (telecommunications), Biztech (commercialization of multi-brand IT solutions), WeDo Technologies (supplier of software solutions) and Saphety (simplified solutions and processes automation). In the media area, Sonaecom also owns Publico, a reference daily newspaper.

Retail innovation

Sonae has investment in innovation, research and development, with an average annual growth of 14.5% since 2005. Ten years later, this investment has reached 110 million euros, involving over 150 partners from 25 countries across the world.

In 2015, Sonae carried on its strategic investment in innovation, generating and implementing hundreds of innovations which contributed to sustain leadership positions for its retail businesses in Portugal and to strengthen their global presence. 

According to the data presented in the “Retail Book of Innovation 2015”, a pioneer report in the international business sector which has been consecutively published for the past seven years, Sonae’s investment in research, innovation and development rose from 22 million euros in 2005 to 96 million euros in 2014, translating an average annual growth of 14.5%. 

This evolution surfaces as the teams dedicated to innovation tasks were duly strengthened, with the direct involvement of about 4,400 employees over this past year. Innovation processes also benefitted from the collaboration of employees from Sonae’s retail areas, helping to generate ideas and implement innovations. 

Nuno Lopes Gama, Head of Innovation and Future Tech at Sonae, states: “Innovation is strategic for Sonae, for which every year we insist on a strong financial and human investment so as to guarantee we remain on the path towards becoming even stronger and faster in fulfilling or customers’ needs and preferences, while also aiming higher in our performance. This investment allows us to generate hundreds of innovations every year, which contribute to our leadership positions and to establish Sonae as a benchmark multinational company, with interests in over 80 countries. The Retail Book of Innovation is a central piece of our investment, as it not only reports the balance between the activity developed and the results obtained, but  also recognizes and celebrates the collective determination of our people and partners in producing Innovation that has a positive impact in the performance of our businesses and in our customers’ shopping experience and quality of life as well.” 

The “Retail Book of Innovation 2015” presents a selection of 75 innovations developed and implemented by Sonae’s retail brands, where one can find the Deeply Zipperless Suit, that already represents 70% of its range sales; the Shopview, that allows to automatically monitor shelves in Continente, reducing time spent on the task by 90%; and the Sales Assistant, which allows Worten employees to begin, carry out and conclude the selling process via tablet or web page, reducing time spent in the process by 63%. 

Examples of innovation also include Zippy’s new children’s fashion store concept that improves the shopping experience for both parents and kids, with over 80% satisfied customers; the new Ice Transporting System in the fish centre; Worten’s new pricing system; the store model for Continente Bom Dia, that is more efficient in terms of costs and operation; Continente’s new packaging for sliced smoked ham; or the new range of backpacks by Note! with built-in LEDs, speakers and GPS. 

Open innovation involves over 150 partners from 25 countries 

Sonae invests in an open innovation strategy, working in a growing collaborative ecosystem that acts as a propeller of innovation. This network includes universities, R&D centres, technology transfer units, startups, incubators and accelerators, business partners and companies from the most varied sectors of business, including other retailers. 

Nowadays, Sonae’s retail businesses work towards innovation with more than 150 partners around the world, involving institutions from 25 countries, in four continents. This is how Sonae intends to foster the sharing of knowledge and the development of initiatives through collaborative networks.

Download your copy of Sonae’s Retail Book of Innovation

Self-driving cars have been much talked about, but for most of us it still seemed like science fiction. Distracted by the sleek electric vision of Tesla, self-driving seemed like a step beyond in terms of industry change, but has now suddenly become a reality.

The world’s first self-driving taxis were launched in Singapore in August 2016 … not by Google, Tesla or Uber … but by nuTonomy. The US-based start-up is a developer of software for self-driving cars, founded in 2013 by two world-renowned experts in robotics and intelligent vehicle technology, Drs. Karl Iagnemma and Emilio Frazzoli of MIT, and based in Cambridge MA.  Earlier this year, nuTonomy was the first company to get permission from the Singapore government to test self-driving cars, in a small area of the town. It’s now progressed to taking passengers.

Whilst many people looked to the conventional car manufacturer brands to shape the future, it was always more likely that those with adjacent capabilities (like software, or charging, or marketing – Google, Better Place, or Uber) would “change the game” – redefine customer aspirations, business models, and the way the industry works.

nuTonomy is not a car manufacturer, so don’t expect sic-fi-looking cars to start navigating that Orchard Road traffic today. Instead a range of Renault and Mitsubishi electric vehicles have been equipped with the company’s complex system of cameras and lasers that operate like a radar to monitor the car’s surrounding. Which is certainly a step up from autonomy’s initial trial vehicles, which were electric golf carts.

The taxis will run in a limited 4 sq km area in the west of Singapore, with designated pick-up and drop-off spots so you can’t yet get on or off wherever you prefer.

The choice Singapore as a start-up location is important. It is already a taxi heaven. Owning your own car is mind-bogglingly expensive and many people take taxis on a regular basis. Cab rides are cheap and there’s a very high demand. Add the rather disciplined and organised approach to traffic. When Singaporeans talks about a traffic jam, all they mean are a few cars more than usual at a traffic light!

nuTonomy’s goal is to expand it to a fully self-driving taxi fleet in Singapore by 2018.

Of course nuTonomy is not only company with a self-driving vision. Uber seeks to launch its own service on the streets of Pittsburgh USA over the next few weeks. Google was one of the first to openly declare its vision, and seeks to have been testing driverless cars at its GoogleX Moonshot Factory for years now. Tesla too, has a bold vision. Not just of driverless cars, but driverless car sharing was a corner stone of Elon Musk’s new strategy launched last month.

Press release, 25 August 2016

nuTonomy, the leading developer of state-of-the art software for self-driving cars, today launched the first-ever public trial of a robo-taxi service. The trial, which will continue on an on-going basis, is being held within Singapore’s one-north business district, where nuTonomy has been conducting daily autonomous vehicle (AV) testing since April.

Beginning today, select Singapore residents will be invited to use nuTonomy’s ride-hailing smartphone app to book a no-cost ride in a nuTonomy self-driving car that employs the company’s sophisticated software, which has been integrated with high-performance sensing and computing components. The rides will be provided in a Renault Zoe or Mitsubishi i-MiEV electric vehicle that nuTonomy has specially configured for autonomous driving. An engineer from nuTonomy will ride in the vehicle to observe system performance and assume control if needed to ensure passenger comfort and safety.

Throughout the trial, nuTonomy will collect and evaluate valuable data related to software system performance, vehicle routing efficiency, the vehicle booking process, and the overall passenger experience. This data will enable nuTonomy to refine its software in preparation for the launch of a widely-available commercial robo-taxi service in Singapore in 2018.

Earlier this month, nuTonomy was selected by the Singapore Land Transport Authority (LTA) as an R&D partner, to support the development of a commercial AV service in Singapore. This trial represents the first, rapid result of this partnership. nuTonomy is the first, and to date only, private enterprise approved by the Singapore government to test AVs on public roads.

CEO and co-founder of nuTonomy, Karl Iagnemma, said, “nuTonomy’s first-in-the-world public trial is a direct reflection of the level of maturity that we have achieved with our AV software system. The trial represents an extraordinary opportunity to collect feedback from