Mass connectivity creates massive opportunity

by on September 5, 2013

The next billion people will join the Internet in less than 5 years, at which time fully half the planet’s population will be connected.

Thanks to mobile devices, more people and devices than ever are “always online” — and this is changing the way humans think about interacting with each other. This core transformative trend underlies all of iNovia’s investments. It has enabled a massive shift of the media world to all-digital; a space in which we continue to successfully build our portfolio of companies. And lessons learned in media are becoming relevant to the transitions getting underway in other large industries. We believe all major industries will be reinvented with the same kind of turmoil we’ve seen in media, creating opportunities for startups to disrupt incumbents.

Innovating on how we communicate has proven to be an incredibly powerful source of new value, and indeed it has driven a substantial portion of historical venture capital returns. Twitter, blogging, Facebook, Skype and texting are all, at their core, variations on how we communicate with one another. Email displaced written communications because of its immediacy. Skype allows us to see (and ask!) whether another party is available before initiating an intrusive ring. Twitter’s democratization of broadcasting allows us to build a custom channel of information in an increasingly noisy world. Pinterest extends this curation with rapid visual scanning. Yammer tightens a broadcasting audience to conveniently pre-defined workgroups. And so on…

While communication is a visceral consumer desire, it is also core to myriad business processes. Enterprise use of IT is now following consumer innovation, rather than leading as it did in the early days of email and instant messaging. Core business processes can be profoundly improved when information flow is re-invented on top of these horizontal communications platforms. Every industry is unique in the way information flows, yet we’re seeing that in most there are opportunities to create significant value when those flows are rethought in today’s always-connected, mobile context. This is reminiscent of the way that broad availability of inexpensive, reliable electricity reinvograted industry a century ago on the east coast. is a perfect example of our investment thesis at work; that large existing industries — in this case transportation — can derive radical benefit from new services leveraging the now ubiquitous mobile Internet.

CEO Brian Heath and his team have built a successful business over the past decade providing transportation & law enforcement agency systems, including the IT back end that’s used at weigh scales. Now truckers hate to stop at a weigh scale, proven by the fact that most carry clunky, expensive 1980s technology “transponders” that negotiate with over-the-highway sensors to seek “bypass approval”. The genius of Drivewyze is recognizing that an existing mobile phone can implement invisible “geofences” to do the job better, sidestepping hundreds of millions in infrastructure. Think about it — the cellular networks are in place and truckers already carry a smart phone — so with zero incremental cost, valuable weigh scale bypass services can now be offered at every location in the country. A massive legacy infrastructure is made obsolete overnight — this is true Christensen-esque disruptive innovation (@claychristensen).

Education is a massive industry which is in many respects stuck in a pre-Internet age. Professors still use primarily the same classroom and textbook modes of communication with students as a century ago. Enter which, like Drivewyze, is using a SaaS business model on existing smartphones and connectivity to disrupt a large existing industry. Top Hat is about making professors lives easier by harnessing smartphones to increase in-class engagement — embracing them rather than competing with their distraction. Over 200,000 students and growing are using Top Hat to answer questions in class and indicate when they don’t fully grok a new concept. Professors enjoy real-time feedback on where their class is at. It’s a simple and compelling idea that is taking off like wildfire.

I’m frequently asked, “what does iNovia invest in?” Every investor is looking for great management teams and big ideas. While these things are no less true at iNovia, my hope is that the above examples will give better colour to what we think of as, “big ideas”.