Tech x Fashion: Google Glass x Diane von Furstenberg

Fashion, News and commentaries, Technology

Fashion collaborations especially between mass retailers and premium designers (eg. H&M x Lanvin) are a way for either party to reach a new audience/market. In that same spirit, Google Glass announces today the new DVF | Made for Glass collection  which will be available for purchase starting June 23 on Net-a-Porter and Google. Diane von Furstenberg will debut the collaboration today on the runway for DVF’s 2015 Resort collection.

Ms. Furstenberg who is well-known for the iconic wrap dress was one of the first in fashion to embrace Glass during the spring 2013 runway show when her models wore Glass. The footage taken during the show was later condensed into a short film entitled “DVF through Glass.” It then seems fitting that the brand would also be the first to design Glass for the fashion set, despite past rumors of a Glass and Warby Parker collaboration.

Glass has been getting a lot bad rep, with industry insiders coining the term “glasshole”. This collaboration and a future collaboration with Luxxotica (for Ray-Ban and Oakley frames) are moves to overcome the insensitive-tech-geek persona associated with it. It certainly is a great move for glass and perhaps a sign of things to come under Glass’ new leadership, former retail veteran, Ivy Ross.

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Are we in a tech bubble?

News and commentaries, Technology

Google now has an Instagram account. Some people might argue against me but I think that this signifies the encompassing relevance of Instagram these days. I remember when Facebook acquired Instagram for $1B (the amount was actually $730M due to Facebook’s stock price decrease of $31/share to $19/share when the deal was completed) and some naysayers thought that this was crazy and pointed to a tech bubble.

Consider the following:

  • Instagram had zero revenues.
  • It was only 551 days old.
  • There were 30M users which made the acquisition at ~$33/user.
  • The company had only 13 employees.

Fast forward to today and the service now has 200M monthly active users with an average of 60M photos shared per day. Since November 2013, some brands are advertising to this audience and they are supposed to be effective. Searching through Facebook’s 2013 annual report does not say how much revenue the company makes from Instagram but big-profile deals such as the one with Omnicom is valued at $40M. And Instagram is just starting. Luxury and mass-market brands use it to engage with Instagram users. It would be interesting to see how much money they will make once users can click to buy within the app.

But Instagram might be an exception rather than the rule and with recent multibillion dollar acquisitions (rumored or realized) and sky-high valuations, those people talking of a bubble must be frothing at their mouths by now.

Recent billion/multibillion dollar acquisitions:

Recent multimillion fundings:

So are we in a tech bubble? Some argue that the dotcom bubble in 2000 was caused by a bunch of companies that IPOed without a revenue stream, a business model and pushing products to a limited audience – only 51M households/51% penetration. This time, companies have some form of revenue and operating in an environment with 279M users/87% penetration in the US alone and 2.9B users worldwide. It’s for this reason that I’m in the camp of saying there is not tech bubble just yet.

Which camp are you? I’ll leave you with a June 2011 Economist Debates: Tech Bubble for a great discussion on this issue.

Op-Ed: Why I write about technology and fashion

Fashion, News and commentaries, Technology

This blog is about technology and fashion. With software eating the world, we are no longer simply at the intersection of fashion and technology; or retail and technology. Companies with the best technology will win and that is no longer limited to Silicon valley. The same holds true for Milan, Paris and New York.

It is hard to think of fashion without thinking of e-retail

In order for people to consume fashion, the act of retailing or selling it must be involved. With the advent of e-commerce enabling retailers to sell items of fashion, the stage was set for retail and technology to not only intersect but to intertwine; thus putting fashion in the mix as well.

Even as old fashion houses like Chanel and Dior continue to eschew e-commerce for their ready-to-wear and accessories, Chanel published its prices online for the first time in early 2014 – a price transparency that is anathema to luxury fashion. In fairness, the main reason for these brands are two-fold: preserving the in-store shopping experience and capitalizing on cross-selling. Online shopping was considered to be “too common” to apply to luxury items and that consumers of such luxury would much prefer the experience of being waited hand and foot in store. Net-a-porter, the pioneer in selling luxury fashion, has proven that luxury consumers put a high value in convenience as well; posting £434M in revenue in March 2013 with 6M unique users each month.

Fashion must utilize technology to be successful

The landscape has changed not only for the way that people perceive luxury fashion – branding and marketing – but also for the process of designing and producing it. For decades, the creative and design side especially in luxury fashion, seemed separate from the nitty gritty aspect of sourcing and distribution/selling. This is especially true for an old fashion house like Hermès whose success relies on artisan craftsmanship; limiting its 37 worldwide manufacturing facilities to 200 people per facility.

But Hermès is an exception rather than the rule. For most brands, dealing with consumers’ fickle tastes means that they have to operate at a large and global scale efficiently in order to arm themselves against the fast fashion industry such as Zara and H&M. To do so, they must rely heavily on technology to handle such scale. Burberry is one of those success stories; investing in the overhaul of its SAP infrastructure over the course of 5 years, starting in 2005. Called Project Atlas, it cost the company £50M and is largely attributed as one of the reasons for its continuing success.

“..substantial investment in core information systems has improved Burberry’s fundamental operating capability and enabled rapid growth in recent years..” Angela Ahrendts, former Burberry CEO

Burberry has also managed to maintain its brand identity while leveraging the digital space with a full e-commerce site and active social media engagement. Its Facebook page has 17M likes and consumers further engage with the brand on www.artofthetrench.com by uploading pictures of themselves wearing the iconic trench coat.

As companies like Burberry navigate this digital sphere, fashion start-ups such as Moda Operandi and Tinker Tailor continue to disrupt the industry with concepts such as pre-tail (ordering items at concept stage) and mass customization. Mass customization is not new but the elements have changed in the way brands can communicate with the consumer in this digital age. Old stalwarts must continue to innovate in order to stay relevant and some have done so: Nike’s iD shoes and Burberry’s Bespoke.

We are starting to wear technology itself

In Fall 2012 during New York Fashion Week, Diane von Furstenberg, the designer behind the iconic wrap dresses, put Google Glass on her models as they walked down the runway. Those were the early days of Glass, which has since been a topic of privacy discussions and has become the symbol of the economic divide brewing in Silicon Valley. Beyond the social ramifications, it is undeniable that tech companies are looking at wearables as their next stage of innovation. The ever-secretive Apple has been rumored to come out with either a smart-watch or a fitness tracker but neither has been realized. However, it behooves Apple to enter the wearable market especially if it wants to continue to dominate mobile hardware where competitors like Samsung is going big on wearables with Samsung Gear. In fact, its rumored acquisition of headphone maker Beats might just be a step in that direction.

Attitudes are changing in the fashion and tech ecosystem

Attitudes surrounding fashion in general are changing and tech venture capitalists are also incorporating fashion startups into their portfolio. Even old school Y Combinator accepted 3 fashion startups in its Winter 2013 class, a record for the pioneer in tech incubators. New York Fashion Tech Lab, a new accelerator program founded in April 2014 is capitalizing on the intersection of technology, retail and fashion. The program for fashion tech startups will offer mentorship from retailers such as Kate Spade, Ralph Lauren, J. Crew, Macy’s and Estee Lauder.

We can probably credit Apple for introducing a strong aesthetic in technology devices where before, most devices were clunky, black, plastic items. The company has proven that consumers will pay a large premium for designs as sleek as its retail stores. In a move that further highlights the relationship between fashion and technology, the company hired former Burberry CEO Angela Ahrendts as Senior Vice President of Retail in Spring 2014.

Finally, I will leave you with the story of Vanessa Friedman, former and the first fashion editor of the Financial Times (she is taking over Cathy Horyn’s post at the New York Times) on how attitudes have changed towards fashion in general. She recounts telling an investment banker what she does and he laughed so hard, disbelieving that FT would have a fashion editor. Since then, business can no longer deny that fashion is huge – $252B according to Bain and Co. As to the question of why fashion matters? Vanessa Friedman has this to say:

“The world is not run by naked people.”

And those fully-clothed people also happen to carry some nifty gadgets.

Instacart’s entry into US grocery delivery market

News and commentaries, Technology

Grocery warsOn April 17, Techcrunch reported that Instacart, the Y Combinator alum and grocery startup, could potentially raise a big round of financing that would value the two-year old company at $400M. Instacart, which has raised $10.8M to date, is a web and mobile app for grocery deliveries. With the use of “Personal Shoppers”, customers can order grocery items from local stores as well as big grocery chains such as Whole Foods and Costco. The company operates independently with no requisite affiliation with the stores. Instacart makes money through delivery fees of $3.99/order and by marking up grocery items by as much as 30%. “Personal Shoppers” are considered independent contractors and paid per delivery. It is currently serving San Francisco Bay Area, Los Angeles, New York City, Chicago, Boston, Washington, D.C. and Philadelphia.

My personal experience with grocery deliveries
I first heard of Instacart in March 2013 while living in Palo Alto with a startup, Kalibrr. We used it once because of a discount code; not knowing that grocery items were marked up and despite the company’s promise of delivering within the hour, that was not necessarily the case. We have not used Instacart again after that.

However, I am a big fan of grocery delivery services in general since I dislike grocery shopping and have mostly been car-less while living in metropolitan cities. In New York City, most grocery stores deliver but they still require for you to show up and pick up the items yourselves. Still, it was a convenient way to shop without having to lug the bags around the city. In Boston, I had a great experience with the Peapod grocery service. My only complaint was that I was limited to picking items from Stop & Shop – not exactly my favorite grocery store.

Whether it’s Instacart in Palo Alto, Peapod in Boston or Whole Foods in NYC, the reasons I would use a grocery delivery service are similar across the board:

  • Convenience. Without a car, carrying groceries from the store is a pain. Also, grocery stores in big cities are relatively small which makes grocery shopping stressful and time consuming (due to the volume of shoppers).
  • Time constraints. There are times when there is simply no time to go to the store and buy the essentials. This can only happen if you have the sudden urge to invite a bunch of friends for a dinner – I’ve been know to do that (at least before motherhood).
  • Ease of use. If using the service gives the same amount of headache as simply showing up at the store then it’s not worth it. The headache can come from the time window for the grocery, the in-app user experience, and the quality of the grocery items especially for fruits and vegetables. Except for the time window, I’ve mostly had positive experiences with the services I’ve used.

I actually did not consider pricing, having the belief that the differences were too minimal. That is, until Instacart which I perceived to be too high of a markup for it to be worth the money.

Who are the players in grocery delivery?
With this recent news of Instacart’s impending round of financing, it got me interested in the grocery delivery landscape in the US. Most of us know of Amazon’s determination to dominate the market with Amazon Fresh but it is less well-known that Google is also testing the service. Apart from Instacart, here are the major players so far:

  • Amazon Fresh. Initially started in Seattle, WA, it has since expanded to Los Angeles and San Francisco. In order to access the service, customers have to subscribe to Amazon Prime Fresh for $299/year and includes all the benefits of Amazon Prime. Notable features within the subscription includes Dash, a device that allows customers to add items to the grocery list by saying or scanning grocery items. Another feature called Prime Pantry was recently added for heavy and bulky items, though this is also available to Amazon Prime members.
  • Google Shopping Express. The same-day delivery service was first introduced in San Francisco and the San Jose peninsula area on March 2013. Customers can shop from big retailers such as Target, Costco, and Whole Foods for $4.99/order after a free 6-month trial. It has recently expanded to Los Angeles but still limited to Google employees.
  • Peapod. The company is the oldest of the bunch, which was started in 1989 in Illinois. The company claims to be the world’s first e-commerce only company and has since been acquired by a Dutch company Royal Ahold in 2001. Groceries are from Ahold USA companies: Stop & Shop and Giant Food Stores. The service is available in: Chicagoland; Milwaukee; southeast Wisconsin; Indianapolis, IN; Connecticut; Massachusetts; southern New Hampshire; New York; New Jersey; Maryland, VA; Washington, DC; Philadelphia, PA and southeast Pennsylvania. Customers are charged a per delivery charge which varies on the delivery time window that the customer chooses; averaging around $8/order.
  • FreshDirect. First introduced to New York in 2002, the company differentiates itself by delivering organic and locally grown produce as well as freshly prepared meals. It has since expanded to Philadelphia in October 2012. FreshDirect charges $5/delivery.
  • Walmart To Go. The service for same-day delivery of general merchandise was launched in October 2012 in Northern Virginia, Philadelphia, Minneapolis and San Jose/San Francisco. It has since included grocery deliveries for Denver, CO and San Francisco. Starting at a minimum order of $30, it charges customers $5-$7/order.

What is the play for Instacart
With the entry of massive companies like Amazon and Walmart, it is difficult to envision the profitability of Instacart. While big companies can leverage their logistics and play with razor thin margins, Instacart has to mark up grocery items to remain profitable; a move that might scare away price-sensitive customers. Scalability becomes a problem as well since the company relies on contractual foot-runners to do the deliveries. Complaints regarding delivery times can only increase as they expand and acquire more customers. These are definitely top of mind for the founder and CEO, Apoorva Mehta, who used to work in Amazon’s fulfillment optimization engine.

There’s also a question on the lack of affiliation with grocery companies. At the moment, the startup is still under the radar but would Whole Foods eventually catch on and crack down on the Personal Shoppers and Instacart’s pricing? If the grocery chains enforce a revenue affiliation program with Instacart, that could further cut into the company’s profits.

With these questions in mind vis-a-vis Instacart’s potential valuation, investors might be gearing Instacart as an acquisition target rather than as a viable business model. A company like Amazon with ambitions of dominating the $500B grocery industry can certainly leverage the company’s rapid expansion in major cities (7 cities in 2 years), growing customer base, and its last-mile delivery system with their Personal Shoppers. It doesn’t hurt that the CEO/Founder is a former Amazon exec.

May 9, 2014 update: Instacart is now in Seattle; Google is out of beta in LA; and Amazon Fresh is also now in LA.

A Supreme Court decision could change the way you watch TV

News and commentaries, Technology

 

abc_vs_aereo

On Tuesday, April 22, the Supreme Court  heard the oral arguments about Aereo, a two-year old NY based startup. At stake is the revenue model of broadcast networks that rely on cable companies to compensate them for the content . Aereo and several broadcast networks (NBC, ABC, CBS, Fox) have been locked in a legal battle for two years and the Supreme Court decision, expected to be handed down in June, will end that.

What is Aereo?
Aereo uses thousands of miniature antennas that it then rents out to subscribers for $8/month. These antennas scoop TV signals over the air, stores the content in the cloud and streams them to subscribers on their compatible devices, on demand. Aereo is limited to these signals from broadcast networks and does not stream content from cable channels.

Why are broadcast networks suing Aereo?
Traditionally, cable and satellite companies (Comcast, Time Warner Cable) pay broadcast networks (CBS, ABC, Fox) re-transmission fees to include content from these networks into their cable bundles. Examples of content are live sports and local news. Aereo does not pay any re-transmission fees to broadcast networks.

More than advertising revenues, retransmission fees are the bread and butter of broadcast networks. According to the Federal Communications Commission, the cable industry paid $2.5B to broadcasters and this figure is forecasted to increase to $7.9B by 2019.

Broadcast networks’ argument
TV content is copyrighted and under the Copyright Act, cannot be distributed in a “public performance.” Individuals are free to scoop airwaves with their rabbit antennas because that is considered “private performance.” The networks argue that Aereo is “publicly performing” content by re-transmitting it over the Internet.

Aereo’s defense
Aereo argues that it is simply acting as an equipment provider. Aereo provides subscribers the antenna and stores the content; similar to storing TV content to a DVR for later viewing. Since subscribers don’t re-distribute the content, there is no copyright infringement involved. This is ensured because each antenna is dedicated to a single subscriber and content can’t be re-distributed to another account.

What are the implications?
If the Supreme Court decides in favor of broadcasters, Aereo will most likely shut down. If the decision is in favor of Aereo, the consumer ultimately wins. It will also shake up the broadcaster’s revenue model and could also mean less leverage against the cable industry as they negotiate those re-transmission fees.

On the part of the Supreme Court, the justices are facing difficulties on the decision not only because of the fine line that Aereo is skirting in terms of copyright infringement but also because of the far-reaching implications for cloud computing in general. The justices are concerned that if Aereo is treated as a content provider and is a “public performer” then online storage providers such as Dropbox and Box may also be considered in a similar way; thus violating the Copyright Act.

So far, the justices have not given a clear indication of how they will decide. It seemed that they are still struggling to understand Aereo’s business model and seem loath to act as technology regulators. Based on their questioning, the court is also concerned of side effects/externalities not only for TV but for cloud computing in general. One thing that is guaranteed, if Aereo wins, they would most likely acquire legions of subscribers just from all these free publicity.

Sources:

Update: On June 25, 2014, the Supreme Court has ruled that Aereo violates copyright law. In order to avoid regulating a slew of other technological innovations (files and music in the cloud), the ruling states: “And we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content.

What you can do about Internet’s massive security flaw

News and commentaries, Technology

heartbleed_wp

On Monday, April 7, security researchers from Google’s security team and Codenomicon reported a security flaw, dubbed “Heartbleed”, in OpenSSL, the web’s popular data-encryption standard. You might be affected either directly or indirectly since OpenSSL is the most popular standard being used to encrypt traffic over the Internet. Web servers such as Apache and nginx use OpenSSL and the combined market share of these two was over 66%.

Codenomicon has set up Heartbleed.com to address/explain the issue in detail as well as to release any news specific to the Heartbleed bug. I’ve listed the gist below from the website as well as other news sources:

  • OpenSSL is used for email servers (POP, SMTP, IMAP), chat servers (XMPP), virtual private networks (VPN) which means that: your email service whether on your browser or mobile could be affected; instant messaging services could also be compromised and even your company’s servers
  • OpenSSL has released and emergency patch on Monday, April 7, 2014. Websites that use OpenSSL are advised to immediately upgrade to this patch, OpenSSL 1.0.1g.
  • Unfortunately, the bug leaves no traces so there is no way to detect if you were directly affected.
  • A developer, Filippo Valsorda has published a tool that can let you check a website’s vulnerability here.
  • According to Valsorda’s site, Google, Facebook, Twitter and Dropbox are not compromised.
  • Notable sites affected are: Yahoo, Tumblr, Imgur, Flickr, OKCupid, Eventbrite, Stackexchange. You can find a compilation here.
  • The bug is called heartbleed because:

“Bug is in the OpenSSL’s implementation of the TLS/DTLS (transport layer security protocols) heartbeat extension (RFC6520). When it is exploited it leads to the leak of memory contents from the server to the client and from the client to the server.” (Heartbleed.com)

What you can do

Unless you’re the system administrator, there’s not much you can do. However, once the website has updated the OpenSSL version to the emergency patch, which Yahoo has done, immediately change your password for that service just in case you were affected. Mashable compiled a list of websites where you need to update your passwords ASAP.

Update: Added link to Mashable for list of websites.