How do you future-proof your business?
In this latest episode of Tech First Draft we have a role reversal. Instead of me interviewing someone else, Sean Moffit from FutureproofingNext is interviewing me. (Check out the whole interview, with other people as well.)
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Full transcript: Future proofing, digital transformation, and more …
(Be aware, this is a lightly-edited version of an automatic transcription technology. There may be some errors.)
John Koetsier: Welcome to Tech First Draft. My name is John Koetsier and this is a different kind of Tech First Draft than I’ve ever done before. Usually I interview somebody else. In this case, I was actually being interviewed by somebody, Sean Moffitt, who runs FutureproofingNext, and we were talking about future-proofing brands.
How do you do that? What does digital transformation look like? Lots of questions like that. I grabbed the audio from his YouTube video and I’m presenting to you now as part of Tech First Draft.
Sean Moffit: So right off the top, I am going to pass it to John. I’m curious, let’s start broad … but why is technology so important for the next decade of business?
John Koetsier: Well, we’re pretty certain that every company is a technology company, right? How people consume information, how they find out about the world, how they experience the world is moderated, is mediated by technology. That’s the case since the desktop, that’s the case especially since a small computer in our hand, and that’s going to be increasingly the case as we put the computer on our face and we’ve got smart glasses, and we actually perceive the world through filters of alternate realities that help us to focus on certain things and avoid other things. So as we look at technology, every company is a technology company because that’s how you’re addressing and meeting the needs of your customers.
So one of the things of course there that people are seeing a lot of, and that’s been a big thing in business for the past number of years but increasingly this year, is digital transformation. Which by the way, if you’re on LinkedIn and you try and do a digital transformation hashtag you find out that nobody can spell that phrase. There’s like four spellings of that on LinkedIn.
How I define that is digital transformation is doing business in the modern era as if you were a small general store from a hundred years ago. You know your customer, your customer knows you, you know what your customer loves and needs, and your customer loves dealing with you.
And so you learn a lot about your customer, your customer learns a lot about you. It’s been really interesting this past year, you mentioned that I’m a generalist. So I mostly focus on the fourth industrial revolution type technologies, robotics, AI, other things like that, consumer electronics to some degree.
But I had the pleasure and privilege this past year of interviewing the chief technical officer and the chief technology officer and the chief digital officer of State Farm. And State Farm if you’re an American you know State Farm, probably globally they’re pretty well known as well. I mean 80,000 employees, the biggest insurance company in the U S. And they tried to digitally transform for years and failed. And the CTO was real upfront about it and said ‘Hey you know, we tried, we tried and we failed.’ And they brought this new chief digital officer on it and they actually, they had a burning platform for change and to connect all the dots and make it all fit, make it so that information flowed.
And they could tell who was visiting them, what they needed and how to deal with them, and how to understand who they were on whatever platform those people came to deal with them. So that was really, really neat. Then I also had the pleasure of interviewing the chief digital officer of NASCAR. I didn’t know NASCAR had a chief digital officer. I mean when I think NASCAR, and I’m a little outside the demographic, and you know if we’re talking to business and technology people, probably most of us are a little bit outside the demographic. I’m going out on a limb there, so, but probably most of us are a little outside the demo there. But they have a chief digital officer and it’s super interesting what they’re doing. What I learned by interviewing him is that some of the drivers who currently drive in NASCAR, the actual physical cars that drive around the track, started their career in NASCAR’s games, e-sports games. And so these drivers started out driving like this and now they’re driving a real car like that.
That’s pretty cool. And what NASCAR is doing in terms of bringing in new fans and engaging new fans in the e-sports areas. But also in terms of AI and bringing in predictions so you can draft a fantasy team. I don’t do it, but maybe you play fantasy football or you play fantasy hockey and you draft your team and the team with the most points and the most goals and assists does really well.
You can do that in NASCAR as well. And they did some work with AI so you can actually see results in the middle of a race and redraft. I think this guy’s going to do better, the AI’s person he’s going to do well, his car’s looking good, that sort of thing. So super, super interesting here.
Why this matters. This is the battle for the future, right? Startups have an advantage here because they can build from the ground up. It’s like what we used to call developing economies can skip generations of old technology and go straight to the future, which we saw China do very, very successfully over the past decade in terms of going mobile first across the board with WeChat and mobile payments and everything like that.
But big businesses still have the customers. And so here’s the race. Can the startups steal customers faster than the dinosaurs rewire themselves? So I picked a couple of companies to chat about Sean, I don’t know if you want me to dive right into those, or if you have some comments here as well.
Sean Moffit: Well, I keep on writing notes during these discussions, it’s horrible. I wrote down NASCAR and State Farm. So you’ve got two more companies on top of this. You are over-delivering already, which is great. So I’m not interpreting those as your two nominees yet. You’ve got two other ones?
John Koetsier: You got it. We’re on the same page.
Sean Moffit: All right, I’ll ask one thing. I’m not going to play contrarian ‘cause you know, I’m probably more on your side of the fence about technology, but we did have an interesting observation in our last webcast that I’d love for you to address. A really smart guy, Mark, had mentioned you know what, technology, yes, is a defining trait of business in the future, but it’s quite commoditized. Everybody’s working on a blockchain thing if you’re in FinTech, and everybody’s working or at least surrounding themselves in AI, and maybe it’s trying to build a better mouse trap, but his observation was ‘yeah, you know what, generally over the last 20 years it wasn’t the first person in tech to be the ruler of that industry or whatever, it was somebody that came along a little bit later that actually did something with the tech.’ Do you have a thought on that?
John Koetsier: I absolutely do. I mean you know I’m a journalist, right? So I write stuff and we have an old phrase in journalism “If it bleeds, it leads.” We can reverse that in business technology, if it leads, it bleeds. So, absolutely, I agree. First mover advantage does have some benefit if you get it right. The problem is there’s so many ways to get it wrong.
And the technology, some can say maybe it’s commoditized. The problem is not accessing the technology, the problem is getting the right pieces of technology in place at the right time and integrating those well into your process and into who your company is. One of the key things that State Farm did is they rediscovered what made them State Farm before they went out and bought a lot of technology, and that was ‘hey, we are your neighbor, neighborly insurance dealer.’
I don’t deal with them. I’m not promoting them in any way, shape or form, I’m Canadian… but that’s how they present, that’s their brand. And they found a way to make that, replicate that in an app, on the phone, in other ways like that. And so that was really cool. It’s rediscovering who you are and empowering that with technology to be that at scale.
So I agree largely with what the person was saying, but I have a little different twist on it.
Sean Moffit: Nice. Well, that may pivot into the two… you could have chosen thousands of different companies on this one given what you cover, you’ve decided to choose two, don’t let me wait any further. Tell me what the two are that you’re going to profile for us.
John Koetsier: Awesome. I picked two vastly different companies in vastly different spaces. One is an entertainment company and it’s TikTok. So I’m assuming everybody here knows of TikTok, has heard of TikTok, essentially TikTok is digital crack cocaine, right? It doesn’t pretend to be anything other than pure entertainment in 10 to 20 second packages and it delivers on that. And I like be cutting edge, but I’m a latecomer here. I downloaded TikTok probably a couple months ago because guess what? I was doing a report on it. I needed to understand what I was talking about as I was using some of the data. So I spent some time in there and you can lose five hours in TikTok and wake up on the other side with a beard and wonder ‘Hey, am I Rip Van Winkle?’ or something like that. But this is interesting. They had 614 million new app installs in 2019. We have not seen that kind of scale and that kind of explosive growth since Pokémon Go a number of years ago. That is literally earth shaking, it’s groundbreaking, it’s amazing. One of the companies that I consult with, which is Singular and I’m VP Insights there, we measure and monitor and analyze ad spend for companies, over $10 billion annually for customers like Twitter and Lyft and others like that. Ad spend on TikTok grew 75x from May to November of this year. So what’s interesting here, TikTok doesn’t pretend to be anything other than pure entertainment. You get it, it’s interesting, it’s fun, it’s kind of crazy.
This is a huge threat to a number of different companies. There’s the obvious, right? The obvious is it’s a threat to Facebook. The obvious is it’s a threat to Snapchat. A somewhat less obvious it’s a threat to YouTube. Somewhat less obvious it’s a threat to gaming. In fact, it’s a threat to any entertainment or media company that wants your time, your attention, your engagement. And especially traditional media. As far as those appeal to youth anyways, right? We have an explosion of entertainment these days. I tweeted something the other day which is that Netflix released more shows last year than the entire TV industry did in 2005. More new shows and movies than the entire TV industry in 2005. Amazing, incredible! Tens of billions of dollars are being poured into content for Netflix, for Disney+, for Apple TV+, for HBO, Hulu, all of these companies that are out there competing for our time and our attention.
And guess what? Here’s something where there’s a platform, very, very simple platform. Kids are jumping on it, they’re creating videos, some older people are as well, and they are stealing massive amounts of time and attention. Average time in the app is over 50 minutes a day and probably about 500 million active daily users today. So that’s the first company that I picked.
Sean Moffit: Wow, I have a number of followups, but I don’t have time in this discussion. So we’ll do like a full TikTok at some point. You said your second company though was going to be something completely different. So give me the gamut, what’s the other one?
John Koetsier: The second one is a direct to consumer company. Of course, we’ve seen a ton of direct to consumer companies in the retail space over the past year or so. And the one I’m going to talk about is Allbirds. And so we know that direct to consumer is a pretty significant revolution in retail, right? It’s an excellent example of knowing your customer, being close to your customer, walking with your customer, and selling directly to your customer.
And we’ve seen billion dollar exits here, Dollar Shave Club, that sort of thing. The reason I picked Allbirds is that we live in an era of platforms and every company, no matter what you do or where you do, has to deal with, use, work around, and somehow succeed in this era of platforms. So if you’re in retail, whether you’re direct consumer or not, you’ve got to deal with Amazon which is the world’s largest platform, or the Western world’s largest platform for retail , shouldn’t include China in that characterization. Amazon has this interesting thing, they see what’s going on in the world and they copy stuff and they release their own version of it. They’ve released their own version of the Instant Pot.
They blatantly copied the Allbirds shoes… the look, the material, in some sense, not all senses. And then they started selling it for about $35, undercutting by about $75 what the Allbirds cost. So what made me pick Allbirds is Allbird’s response to this. You could just go and complain about it. You could just go and publicize it. You could just go and hire a lawyer or triangle up against Amazon in the court of law you’d probably be tied up for five years. What the founder and CEO did is wrote a Medium post about it. So it did publicize it, did complain about it a little bit, but the pure genius here is that he offered Allbird’s open source technology for making its shoes sustainably to Amazon. So most shoes and Amazon’s shoes use petroleum to make their foam, the stuff that makes them squishy and stuff that makes them comfortable as you’re walking, running around. Allbirds uses the waste stream from sugarcane, a product using sugarcane and production to create sugar, that sort of thing. So they’re using a waste product to make something that you can put on your feet. It’s much more eco-friendly, you’re not having to drill for oil.
You’re not having to use a perfectly good substance. You’re using something that’s “useless” and transforming it into something that’s useful. And they offered Amazon the tech. That’s a massive burn but it’s totally in line with its brand. And they made a massive marketing move that resonates with its market and deals with the reality of a small company in a world of large platforms. So that’s why I pick them second.
Sean Moffit: Wow. So it’s almost like what Linux did to the tech universe in making it open source. They are trying to do it themselves, I guess…
John Koetsier: In some sense yes.
Sean Moffit: Wow. All right. And just quickly before we move on to Lars and our customer engagements discussion. What’s the one thing, given your two examples, is there any common link or something that says for people that look to reapply these things, here’s some forces or tips of where that’s all going and how you might want to reapply these success models?
John Koetsier: Well, when I think about Allbirds, they did the unexpected. You have a retail company, they make and ship these shoes, they open sourced their trade secret. They open sourced how they actually make their product. That’s not typical, that’s not normal, that’s business not as usual. And that’s leading to a lot of success for them.
So that’s really, really cool. And then for TikTok, I mean make something that’s fun, give it away for free and somehow catch on with the youth market, and you have the opportunity to grow, grow, grow.
Sean Moffit: Interesting. I find social media fascinating ‘cause forever it used to be every three years your favorite social media site changed. And then for a decade it stopped. We all just, Facebook kept on gobbling up stuff. So TikTok may be the new Trojan horse perhaps. All right, we’re going to come back to you later, but I do want to move to our next three topics as well.
John Koetsier: Okay. I think I’ll leave it there. We do talk on for another 40 minutes or so, and others join the conversation as well, but you can check out Sean’s show for the rest of that and there’s a link on my website, JohnKoetsier.com … so check it out right there. In any case, I hope you enjoyed this episode of tech first draft and as always like it, share it.
Review it, rate it, and spread it around. Thank you so much. My name is John Koetsier.