Friday, 18 July 2014

Disruptive day dreaming: Why Don Draper should embrace the Sterling Cooper IBM 360

During yesterdays "Disruptive Lunch" at Sydney finance house BBY I found my mind straying to the HBO series Mad Men. In Series 7 advertising house Sterling, Cooper acquires an IBM 360 through which fictional Managing Partner Jim Cutler hopes to transform the firm of creatives into a firm of marketing consultants.

While my mind wandered in the direction of Don Draper and his heavy drinking crew of mad men (and women) Emma Lo Russo, the CEO of Digivizer was presenting to the room and doing a damn good job of making us feel like digital neanderthals in the nicest possible way. You see Digivizer in a way is what "Jim Cutler" had envisaged back in 1969 when he leased the ultimate corporate status symbol of the day.

Digivizer is about extracting actionable marketing data from social media. According to Emma (and I agree with this) social media is the number two most trusted resources for "advice" that consumers go to on a periodic basis. The theory is that if people are bothering to write it down for their network then they like to get it right, meaning it's likely that they stand by what they write. Now obviously this doesn't mean that they don't exaggerate or embellish. It's Digivizer that extracts our interactions with social applications and attempts to transform them into actionable leads for sales and marketing. Chances are they if you're on any of the big platforms (twitter, Facebook, Instagram . . .) then Digivizer has at some time "mined" your public tweets, musings and pictures for discernible trends, then cross matched them with whatever else you have out there that tells them if you're part of a potentially targetable demographic. It's all there waiting for the right mix of algorithms and correlated matchings to say that you're the next buyer of a car, appliance, vacation or service that a Digivizer client has to sell.

When I worked in London I sat all of 5 metres from my bank's first high frequency trading team. The two leaders of that team were a predictably "geeky" pair of PhD's in astrophysics who'd spent much of their early academic careers more interested in the particles thrown off by stars than whether the next tick in British Petroleum shares was more likely to be up than down. In fact I can remember them showing me their news reader app version 1.0 that cross correlated news articles on Reuters with reactions in the stock market. The first example they ever gave me of how this worked was the following:

I hate Volvos
I hate red Volvos
I hate not owning a Volvo

The idea at this early stage was to formulate an algorithm that looked at this three statements and made sense of them via what action happened in conjunction with them. See imagine the same thing in a Reuters report and the results of (say) Barclays Bank. What did the stock do? At the time it was all very new and the guys were just happy to be left alone with their ever increasing number of PC's that they networked together to process about 40 years of stock tick data. I became good friends with them and can still remember the first time they made GBP100,000 in a day. That doesn't seem like much until you realise that they told me that they could keep that up everyday +/-2% for as long as the bank liked . . . and they were only just beginning. They were mad men of a fashion.

So Digivizer to me is the logical outcome in marketing that high frequency trading was in financial markets. Open API and for that matter the huge array of public data we all give away for nothing allows Emma and her team to target consumers far more effectively than sales people could have ever imagined. Better than:

The progress from Neanderthal marketing to digital targeting has been like evolution on steroids, think about it . . .
  1. Here's a phone book. Start dialling.
  2. Here's a list of members of my golf club. Start dialling.
  3. Here's a list of people who flew business class on Qantas last month. Start dialling
  4. Here's a list of members of a golf club who flew business class to attend the US Open and then tweeted about the hotel they slept in, the meal they ate, the most impressive people they liked, the credit card they used and the pictures they took, etc. Oh, Start dialling the following 4 people . . . we think they'll buy what we're offering.
I hope that does justice to what Emma was offering . . . I'm sure its way too basic of a synopsis, but I'm confident in my own clumsy way that I'm at least facing in the right direction. And I promise that next time I won't let my mind wander to the IBM 360 in the old creative meeting room in Mad Men.

I'm not sure about the barriers to entry for potential competitors to Digivizer because part of my view as an investor since I got back to Australia is the way the markets geography has always insulated it from quick counter-punches. Think about the way the UK always seems to be the second place North American business rolls out it's plans for sector domination. We've seen it over and over again. Australia on the other hand is well down the list as the market, while affluent is at 25million quite small. Also it's a long way to come if you have to get on a plane . . . Oh, and besides that the "Aussies" can find us themselves without investing extra start-up capital.

Emma Lo Russa was a hard act for Andrew Galack of start-up travel company Local Fixer to follow. Good confident speaker with a focused, if more embryonic offering than some of what we've seen at BBY lately. Basically Local Fixer is trying to be the next derivative of the movement to experience cities like a real local as first epitomised by the AirBnB phenomenon. So what exactly does that mean? Well it's kind of like sourcing your information by the most active social commentators in the city you're intending to visit. It's not supposed to be like a guide book or just a booking service, it's intended to link you with people who want to interact with you.

The revenue model for local fixer still is about taking a clip from these interactions, whether that be renting a room, a bike, a pair of skis or practically anything else you can think of. I'm not sure that Andrew and the team have it completely worked out yet as I'd like to have a close look at their apps to decide how they add value. I think perhaps its all a bit Gen Y for a middle aged man like me, though I think I get where they're coming from. Perhaps Local Fixer wants it to work like this . . .

Traveller is going to Geneva and as an "outdoorsy" type is looking to find people to show him (or her) around. Now it's not winter, but thats OK they heard there's a lake and you're in the Alps in 20mins on a bike. So where can I rent a bike and if I do where do I go on it? This is where I think I come in with my network. The traveller and I are on Strava, so we're pretty serious bike riders. My digital profile says not only that I lived in Geneva but I've got a network of friends still living their. Better still one of my friends own a bike shop and plays in a jazz band. He's a potential Local Fixer because he has a friend who rents a room and also rides a bike and is in another band. Even better they're all active on social media so we can get even more information about how they interact with visitors. This is where I kind of lost track of how it works . . . that final connection. How does Local Fixer make use of "Velo Shop Jean Brun" and jazz playing hip bike rider Jean-Philippe Brun and his group of born and raised Genevois mates?

Jean Philippe has been trying to get me to come over during the summer, but after seeing his latest petite sortie I think I'll need to lose 5kgs or so to make it back into town for his bands gig. Whatever the case I'll be keeping an eye on Local Fixer.



  1. "Velo Shop Jean Brun": been there. Another interesting post; keep 'em coming.

  2. Michael thanks for sharing your thoughts - I'm so proud to be working with Emma Lo Russo and the team at DIGIVIZER. Being a big fan of Mad Men myself I think your comparing what we're doing with what was envisaged by the IBM 360 back in the day is spot on. By applying technology to the challenge of understanding our "digital footprints" we're able to help businesses make sense of the social web, and improve their sales and marketing programmes. Glad you enjoyed Emma's talk.

    Tony Hollingsworth
    Head of Community - DIGIVIZER