Amazon Is The New Apple - The Experience and Ecosystem Matter

People often ask me:

"VC Whisperer, what do you think of the new Amazon tablets and e-readers (and the tablet market in general)?"

Amazon's announcement is now a few weeks old. The tablets are interesting but not ground-breaking. The Kindle Touch is a nice evolution of the Kindle readers that we've all come to know and love. The Kindle Fire looks like a very solid Android-based tablet, with good specs and an even better price-point.

At face value, the Amazon Fire doesn't seem that much different from the sea of Android tablets on the market today. However, if you dig deeper, I think Amazon is starting to get it. And many others (Samsung, Motorola, etc) just don't.

It's All About The Ecosystem
So far, only Apple has understood the key to tablet success. It's about the ecosystem. Apple understands the power of tying their hardware to music, movies, apps, and many of their other products (eg. via Airplay). Amazon also understands the ecosystem. And they have a huge library of content to support it. With the Kindle Fire, they have a decide that can tie the ecosystem together and give consumers a very slick entry-point to the Amazon world. For this reason, Amazon will likely be the only real tablet competition for Apple in the near future.

Android is Killing Tablets
While the lack of a substantial ecosystem is hindering most of the other tablet manufacturers, Android is also  a problem. How can you differentiate from one tablet to the next when Android is washing them all down with the exact same features and functionality? No wonder Apple is kicking ass, as they've got the only differentiated experience in the market. For this reason, Amazon is downplaying the fact that the Fire is Android-based. In fact, it's mentioned nowhere on the product page. And the user interface is definitely quite a bit different from a stock Android implementation. For this reason, Amazon will be able to compete as a differentiated experience with Apple, where most of the other manufacturers will see their margins dwindle (assuming they sell any substantial quantities in the first place) as the experience is completely homogeneous.

Connectivity is The Killer App
Finally, I believe Amazon is on to something big with Whispersync. Apple understood that connectivity and cloud-based storage (later) was an integral part of their tablet experience. With Whispersync, the Fire gives every user connectivity and access to their media, as well as the Amazon ecosystem. This is an important differentiator from the other non-Apple tablets on the market today.


I have been an iPad user since day one. Because of the strength of the Apple ecosystem, that will likely not change for the foreseeable future. However, I will likely pick up a Kindle Fire. Amazon is starting to understand what Apple has been doing right all this time. They have the ecosystem, and they're not just trying to duplicate the iPad and Android tablets out there. They understand that producing a nice piece of hardware just isn't enough anymore. It has to be part of an experience. It will be interesting to see how this space plays out over the next 12-18 months, but those who understand the end-to-end experience are the ones who will be successful.

Startups Fueling Corporate Growth - IBM Banks On Small Start-Ups For Big Growth

People often ask me:

"VC Whisperer, what can big companies do to grow sales? Where can they find growth?"

I saw this article on the Wall Street Journal a few weeks ago. It discusses how IBM was looking to startups to fuel sales growth:

IBM Banks On Small Start-Ups For Big Growth

The reality is that this is IBM paying lip service to the startup community, and getting some good press. There is very little entrepreneurial that goes on at a company like IBM (or any other big company - not meaning to single out IBM). However, I think the idea is a good one. Big companies (like IBM) need to not only look at startups as potential growth engines, but rely on startups to fuel future growth. Many of these big companies have stagnated, and only with fresh ideas will they be able to find new revenue.

It's a major shift in thinking and a major shift in behavior that's required. Big companies need to partner with more startups. Big companies need to acquire more startups. Big companies need to allow more of their employees and business units to be entrepreneurial and operate outside of standard processes. Only by doing all of these things will they avoid the inevitability of stagnating revenues that plagues so many corporate giants.

Too Many Old People Running Companies - Canadian Businesses Slow To Act On Social, Study Finds

People often ask me:

"VC Whisperer, why don't big (Canadian) companies understand social media?"

The following study is worrisome. And the problem is likely not uniquely Canadian (but definitely worse in Canada).

Canadian businesses slow to act on social, study finds

The problem is two-fold.

1. Most companies just aren't acting or taking advantage of social media. 
2. And the ones that are, just aren't engaging sufficiently or correctly to make it effective. 

The first problem is an issue with many big companies. They usually don't act or take advantage of social media out of fear. Social media is "new" to these companies and they fear anything that's new. They fear the impact on their brand, and they fear loss of control.

The second problem is also a common issue. The root cause of this ineffectiveness is usually process. Big companies just aren't set up to allow for new ideas or new processes. Everything has to be done according to a long-established process. A month to approve a newspaper story might be acceptable, but requiring that same time to approve a blog post or a tweet would be debilitating.

The solution in both cases is to get rid of the old people. This doesn't necessarily mean the people who have been around 20 years (although it might). It means get rid of the people who have old thinking. Get rid of old processes. Start thinking young, start thinking new.

If Canadian companies (and all big companies) don't get younger, they will die, or become irrelevant. 

The 5 Steps to Making Successful Comebacks - Listen Up RIM

People often ask me:

"VC Whisperer, are comebacks possible?"

The short answer is yes, but not without quite a bit of effort. That question and the following article on Engadget got me thinking about comebacks:

Shareholder calls for RIM to sell itself or its patents, in critical open letter -- Engadget

RIM shareholders are furious, and demanding change. They want to believe in comeback potential for the business, but many are losing hope. Startups are notoriously good at re-inventing themselves and big companies like RIM could learn a thing or two. Only then will they have a chance at making a comeback. Here are the VC Whisperer's 5 steps to making a comeback (and advice that RIM is surely hearing many times over from its shareholders):

1. Vision. Comebacks often require companies to change direction. And they always require everyone to be moving in the same direction. None of that is possible without a compelling vision being communicated from the top. 
2. Focus. It's hard to be good at everything. Paring down projects, focusing on strengths, getting scrappy. These are all important to staging a comeback. Focus not only on the high level, but on the nuts and bolts as well. 
3. Fresh Ideas. Clearly the status quo is not working. That means you need to bring in people with fresh thinking. Or encourage it from your existing employees. Stop worrying about process or "how things are done" here. Throw everything you knew about your business out the window and start with a fresh slate and fresh perspective. Hire MBAs from top tier schools who have crazy ideas and the energy to make them happen. 
4. Risk-taking. Comebacks often require swinging for the fences, and that's not without risk. It's the homerun plays that will turn a company around. Risk-taking also means sometimes sacrificing a profitable (but declining) business in the short term, to ensure long term success. For publicly traded companies, this is especially difficult, when analysts only care about your next quarter. 
5. Listen. To what people are saying about your failing business. They might have good ideas. And listen to your customers. They're the ones who are going to fund the comeback. 

What's most interesting to me is these happen to be all the things startups are really good at. Take note RIM, telcos, traditional media, and any other company/industry under fire: Companies in turnaround or comeback situations would be well served to learn from the startup world.