Buzzword Buster – Venture Capital

In its broadest sense, a lump of cash which is given to a firm in its early days to allow it to grow, in return for a stake in the company. More specifically, people often refer to Venture Capitalists and Venture Capital firms (or VCs). Venture capital firms usually have a particular remit (i.e. fintech firms, health tech firms, early stage, late stage, etc.).
The idea of a stand-alone venture capital firm which makes money by investing in a portfolio of early stage businesses has been around for many years. In principle, these firms invest in a range of businesses on the assumption that while some will fail, enough will succeed to make the overall venture successful.

More recently, venture capital arms of established businesses have become popular (like banks and insurance companies). These firms have a slightly different remit. They are tasked with finding businesses to invest in which will grow and provide a return on their investment, but also will potentially provide new propositions and solutions for the wider group business. These functions sit between true venture capital businesses, and innovation functions which are focussed on partnerships as a way for start-ups to secure funding and support.

Some VC firms have acquired a reputation for going from friendly business buddies to aggressive (and even litigious) combatants in very short order when a company’s growth projections don’t materialise.

Disagree or want to add something? What does Venture Capital mean to you?

Buzzword Buster – API

API stands for Application Programming Interface. It is basically a bit of software which is made to allow two computer systems to talk to each other. For example, if you have a system that holds the customer records in a bank, and a system which lets a customer manage their budgeting, you could write an API to pass messages between these two bits of software.

There are numerous ways of implementing API’s which provide a range of broad functions such as accessing libraries and frameworks, interacting with operating systems and applications within an estate, and interfacing to other applications via web services (covering protocols like REST, WSDL, SOAP).

The term has transcended from the technical world (where it was quite happy minding its own business) to the wider world of business. You’ll frequently find people throwing it around in conjunction with words such as strategy, interoperability and disruption.

Unfortunately, the admission of API into the modern lexicon of business, while justified, can lead to complacency. API’s, especially web services, are undoubtedly the framework connection which will enable the development of our massively interconnected future.

Sadly, a lack of standardisation across companies and industries means the quality of APIs are massively variable. This impacts the ease of physical integration, the ability to understand the data contracts within them and the usefulness of the business logic written into the software.

APIs of today can be everything from a panacea to integration nirvana, to a badly thought out and I’ll structured set of junk code which helps no one in any meaningful way. Sadly they are all too often the latter.

 

Disagree or want to add something? What does API mean to you?

Buzzword Buster – Bootstrapping

Finding its origins in computing, bootstrapping has traditionally been seen as a self-starting and self-contained process or element of software. In the artisan roastery scented innovation language we find ourselves surrounded by, bootstrapping means a self-starting start-up designed to run without capital injection.

Bootstrapping obviously has its benefits, in that founders can maintain a significant equity stake further into the development cycle of the business. The self-contained nature of successful bootstrap businesses is leveraged to drive revenue until the enterprises have enough money to start paying for more staff, increasing marketing spend etc.

While some bemoan the lack of aspiration of bootstrap businesses for not wanting to go after the “big prize” of venture capital funding, for many there is a recognition that VC funding is only a prize if you can ultimately drive a successful business. Boot strapping is a great way of figuring out the core engine room of a business and its viability in the market before too eagerly giving away equity.

N.B. Bootstrap is also a front-end web development framework originally developed at twitter as a framework to encourage consistency across their internal tool development.

 

Disagree or want to add something? What does Bootstrapping mean to you?

Buzzword Buster – Beta Version

A beta (or beta version) is a term used to describe a version of software which is not finished yet. More specifically, it is usually a version which is shared with a small number of users for testing. The idea is that real users will inevitably turn up more issues than any test script will, and thus it is good to test products with a, not insignificant, number of users.

Beta’s are often shared too early and too widely by over enthusiastic founders and evangelists in an attempt to use them as pseudo marketing tools. This can lead to statements such as:

“Yah, I know it is buggy as hell and you can’t sign in and when you press f5 the world sets on fire, but it’s a beta though so that’s all ok. First to market, yo.”

Weirdly, although people bang on about their beta version constantly, they rarely talk about their alpha version. The alpha really is just, the live product that in theory doesn’t make the world explode or make your grandma cry.

 

Disagree or want to add something? What does a beta version mean to you?

Buzzword Buster – Insuretech

A subset of Fintech, InsureTech is a broad term to cover a range of tech start-ups and innovation within the insurance industry. There are a few genuinely innovative ideas in this space which cover some interesting key themes such as the personalisation of pricing, the reestablishment of mutual businesses, peer-to-peer and community initiatives and the use of smart contracts in the claims process.

In addition to these interesting ideas, here are also a huge number of tech firms who are essentially just doing good old fashioned insurance brokerage in a slightly different way to those before them. It is unlikely that many of these players will make a lasting impact on the industry.

 

Disagree or want to add something? What does Insuretech mean to you?

Buzzword Buster – Fintech

An amalgam of finance and technology, fintech does what it says on the tin. It was among the first of a huge range of portmanteaux adopted by start-ups from almost every industry. Healthtech, scitech, traveltech and regtech are other examples. I’m waiting for the advent of techtech to prove we have truly disappeared down the rabbit hole.

Fintech can serve as a useful term to group innovative start-ups working within financial services. Unfortunately the businesses are so diverse (from payments to robo advice, to insurance and trading systems) that the classification becomes so broad as to become all but meaningless.

The phrase has also been repurposed heavily by tech firms who have been operating in the financial services space for many years. For many of them, it is a nice PR friendly buzzword that suggests they are far more progressive and innovative than they actually are.

 

Disagree or want to add something? What does Fintech mean to you?

Buzzword Buster – Disruption

One of the most over used phrases in modern business. At its core, disruption relates to disturbance which interrupts events. In business the word is over used as a glorious proclamation that a certain company, product or idea is going to change the way an industry works. Oft cited examples are Uber and Airbnb.

In The Innovator’s Dilemma, Clay Christiansen breaks disruption into two main types, either addressing a market which couldn’t have been addressed before (new-market disruption), or offering a simpler, cheaper or more convenient alternative to an existing product (low-end disruption).

Innovators and entrepreneurs will often be overheard discussing how they have been disrupting all over the place. Venture capitalists will all too often have a portfolio which is stuffed full of disruptive startups. All too often this is little more than a good PR story to cover the fact that companies are producing slightly improved versions of products that already exist in the market.

Entrepreneurs who fail to be disruptive usually have a hard time making an impact on their markets. While big established (and well capitalised) brands can get away with gradual conservative improvements on existing product lines, tiny firms with no public presence will always struggle.

There is a really great overview on disruption in business, and The Innovator’s Dilemma, here.

 

 

Disagree or want to add something? What does Disruption mean to you?