ExxonMobil has made a bid estimated at around $2.2bn for InterOil Corp, an independent oil and gas company headquartered in, and principally focused on, Papua New Guinea. Earlier in the year, however, Total and Oil Search also made an offer for a two-part deal for the same sum, thus instigating what could turn into a multi-billion dollar bidding war.
In May, Oil Search made the bid for InterOil with the backing of French giant Total. The latter agreed to purchase a majority of the assets from Oil Search, which includes a stake in the Elk-Antelope gas field, for an upfront fee of $1.2bn.
Given the shares in question, the latest offer is superior to that made in May. As such, ExxonMobil’s offer includes $45 of its shares for each InterOil share, in addition to $7.07 per share for each trillion cubic feet found at Elk-Antelope that exceeds 6.2, but does not surpass 10 trillion cubic feet. Oil Search, on the other hand, offered 8.05 of its shares for every InterOil share, plus $0.77 per million cubic feet for resources over 6.2 trillion cubic feet at the gas field.
With one of Asia’s biggest undeveloped gas fields to play for, and a global market wherein LNG is becoming increasingly popular, there is a great deal to play for
According to Reuters, should Oil Search want to stay in the race, it now has until July 21 to revise its bid.
Despite being one of the poorest ranked countries in the Asian region, Papua New Guinea is seen as many as one of the most promising due to its vast gas resources. According to BP’s Statistical Review of World Energy 2016, at the end of 2015 the small nation had five trillion cubic feet in total proved gas reserves. The Elk-Antelope site specifically is believed to be particularly lucrative, given estimates that it holds well over 6.2 trillion cubic feet of gas.
Furthermore, labour costs and taxes are a fraction of those in competing markets, such as Australia. The country also produces light crude oil, a product in high demand that offers companies operating there a second stream of revenue aside from LNG.
With one of Asia’s biggest undeveloped gas fields to play for, and a global market wherein LNG is becoming increasingly popular, there is a great deal to play for. Should Total revise its offer, and a bidding war ensue, the winner will be the player that can throw the most weight around – a challenging feat at present, given the continued plunge in oil prices worldwide.
In 2014, the International Energy Agency stated the Sun could be the world’s largest source of electricity by 2050. Renewable energy start-ups have taken advantage of this gap in the market, launching innovative platforms for solar energy.
Any innovation in the renewable sector is a win-win: companies generate revenue, consumers can buy into a cheaper source of energy, and clean energy continues to grow – supporting the green movement.
The following ideas will support a wider market of consumers – especially those in less developed countries who could benefit the most from solar energy, but do not have access to the installation process or equipment needed. Countries such as India, which has recently invested heavily in the solar power sector, could take advantage of these innovations and lead a worldwide trend.
Rollable solar UK company Renovagen has launched ‘rollable solar’, which takes the form of a long mat of solar panels that can be easily deployed in a variety of locations. The company initially designed a rollable solar farm, and then with power cabling and support structure decided to launch the ‘solar mat’.
The mat is an 18KW unit that can be deployed via a trailer in around two minutes, and a larger system of up to 300KW can be deployed in less than an hour.
The idea was designed as a technological aid for disaster relief, humanitarian response and the military. Renovagen’s CEO and founder, John Hingley, told CNBC: “The end goal for me is the day that I see our product save a life. It will all be worthwhile, regardless of what else happens.”
SolaRoads SolaRoads consist of hundreds of solar panels installed along roads and bike paths – so that vehicles drive on the same roads that provide them with energy. The project produces a large-scale generation of renewable energy, through sunlight that falls on road surfaces every day.
SolaRoads consist of hundreds of solar panels installed along roads and bike paths
The solar panels are made from pre-fabricated concrete slabs, 2.5 x 3.5 metres in size, coated with a translucent layer of tempered glass – roughly one centimetre thick. SolaRoad said the top layer has been designed to be dirt repellent, skin resistant and durable.
The project was developed by a combination of companies including Dutch research institute TNO, the Province of Noord-Holland and road construction firm Ooms Civiel, among others.
Solar balloons Through a combination of solar photovoltaic panels, hydrogen production and fuel cells, solar balloons are being deployed above the clouds to generate energy 24 hours a day.
Currently a prototype, a team of researchers at NextPV – a lab that operates in collaboration with the French National Centre for Scientific Research and the University of Tokyo, is working towards launching the unique solar energy solution.
Solar balloons could overcome some of the limitations of standard ground-based solar panels, and will guarantee energy production both day and night. The system combines direct solar electricity production during the day with the production of hydrogen, which serves as an energy storage medium for producing electricity in a fuel cell. Researchers claim solar energy from the balloons could produce three times as much electricity as ground-based solar systems.
India has recently signed an agreement with the World Bank to borrow over $1bn, with a view to developing the country’s burgeoning solar power sector. Already, it has ambitions to install 100GW by 2022 – despite the fact that the currently installed figure stands at only 7GW. Nevertheless, India has already proven its commitment, its capacity up from just 20MW in 2011.
Green dream
The project’s aim reflects Indian Prime Minister Narendra Modi’s statement at COP21: “The world must turn to the sun to power our future. As the developing world lifts billions of people into prosperity, our hope for a sustainable planet rests on a bold, global initiative.”
The country’s ‘green promise’ was to install 175GW of renewable power by 2022 – mostly solar. The figure is highly ambitious considering that in 2014 the worlds entire installed solar capacity was 181GW. Nevertheless, the goal is achievable.
One in four people in India still do not have access to electricity – an issue that stops poorer communities from going to work and receiving an education
Following the UN climate talks, India offered to reduce the intensity of its emissions – the amount of pollution per unit of economic output – by around a third by 2030, as measured against 2005 levels. Doing so through solar means it can address the all-important issue of energy poverty while contributing to economic development at the same time.
One in four people in India still do not have access to electricity – an issue that stops poorer communities from going to work and receiving an education. Of 250 million households, 56m struggle to maintain electricity, the majority of which are located in rural areas. Off-grid solar installations, suitable for single homes or small clusters of buildings, could prove extremely helpful in these areas.
Many students in rural areas are unable to go to school, as they are either not equipped due to lack of technology – even basic needs such as adequate light – or forced into work at a young age. Solar power would not only better the country’s education system, but create thousands of well-paid jobs within the industry itself.
Staring at the sun
Officially the second most populous country in the world, India is the ideal platform from which to generate solar power. An average of 300 sunny days per year means the country can almost guarantee efficient and constant production of solar power. It also leads the Global Solar Alliance, a group of 121 countries which recently signed an agreement with the World Bank to mobilise $1trn in investment by 2030.
The agreement between India and the World Bank is the largest financing round for solar power in any country to date. The international financial institution said it “supports India’s ambitious initiatives to expand solar through investments in solar generation”. Here, it includes rooftop technology, infrastructure for solar parks, innovative solar and hybrid technologies, and transmission lines for solar-rich states.
An estimated $625m will go towards the Grid Connected Rooftop Solar Program. According to the World Bank, the project will finance the installation of at least 400MW of solar photovoltaic installations to provide clean, renewable energy, and reduce greenhouse gas emissions by displacing thermal generation. A further $200m will be used to develop a shared infrastructure for the Solar Parks Project, under a public-private partnership model.
India is in need of energy investment, and it seems solar power is the way forward, due to its location and stage of development. Provided supply and production is distributed evenly across communities, solar power could make a huge difference to the lives of those living in poverty. It also means a potential rise in employment, greater profits for solar companies, and cheaper energy for consumers.
On July 4, Nintendo and Niantic released Pokémon Go, a new augmented reality game for Android and Apple smartphones. In less than a week, the popularity of game, which allows players to ‘catch’ Pokémon as they walk around in the real world, has been nothing short of historic, topping the Apple and Android app stores more quickly than any other game in history.
First rolled out in Australia and New Zealand, followed by the US on July 8, Pokémon Go already has more daily active users than Tinder, and is expected to overtake Twitter imminently as well. According to Business Insider, since its launch over three percent of Android users in the US have been playing the game on a daily basis, just 0.5 percent behind the social media giant.
Last September, Nintendo announced it was finally entering the mobile industry, but had kept most details under wraps
This rapid uptake, however, has resulted in some issues for the app, causing servers to crash in some places. Subsequently, Niantic CEO John Hanke announced the release of the game has been “paused” in Europe, Canada and elsewhere until these issues have been resolved.
The game comes at a crucial point for Nintendo. For years, the Kyoto-headquartered consumer electronics group has been fast falling behind in the gaming world. Despite the ongoing popularity of its biggest hits, such as Super Mario and Zelda, Nintendo’s downward performance, which saw its revenue fall by eight percent ($4.53bn) in the last fiscal year, is attributed to its reluctance to transition to smartphone apps.
Unsurprisingly, albeit long overdue, last September, Nintendo announced that it was finally entering the mobile industry, but had kept most details under wraps.
As the figures show, the launch of its new business model was spectacular; as stated by the Financial Times, Nintendo’s shares rose rapidly by nine percent on July 8. And then, after a very enthusiastic weekend, they surged by 25 percent, while the company’s market capitalisation soared to $7bn following a flurry of investment. As such, if Pokémon Go proves to have staying power with consumers, the game may well mark the turnaround for this much-loved brand, as well as a new era for augmented reality gaming.
Investor confusion [UPDATE July 25]
Following the launch, Nintendo issued a statement which has taken many investors by surprise. Despite the association between the widely popular franchise and the Kyoto-headquartered gaming group, Nintendo pointed out that it does not own or make Pokémon Go. Rather, the game is distributed solely by Niantic, in which both Nintendo and Google have shares.
While the launch of the game in Australia, New Zealand and the US sent Nintendo’s shares soaring to more then double, according to Reuters, on the July 25 shares plummeted by 18 percent, as a direct result of the press release.
Despite the hit, Nintendo still stands in good stead to use its currently publicity and Pokémon Go’s global appeal to enhance earnings.
Coinbase, currently the world’s largest Bitcoin company, announced July 7 that it received $10.5m from Japanese investors to facilitate its international expansion. The investment was awarded by the Bank of Tokyo Mitsubishi UFJ, specifically its Mitsubishi UFJ Capital unit, and Sozo Ventures, in what amounts to an unusually risky move for a major Japanese investor.
Founded in 2012, Coinbase is a bitcoin wallet and platform for both merchants and consumers. To date, the San Francisco-based company has a user base of four million and a market capitalisation of approximately $6.5bn. Granted the currency itself has strayed from the headlines recently after reaching fever pitch back in late 2013 early 2014, when prices spiked at $1,000. However, now that the dust has settled following the downfall of Mt Gox and Silk Road, some analysts are of the opinion that the currency is well placed to enter the mainstream.
Bitcoin’s image in Japan was left wanting after the Tokyo-based platform Mt Gox filed for bankruptcy in 2014 and lost hundreds of millions of dollars in the process
The investment builds on a budding Japanese appetite for financial technology, now that the more traditional lending sector has been hit by low interest rates and a slump in business confidence. Partnering with leading financial institutions is important for Coinbase, in that it not only helps cement the currency’s legitimacy, but builds on its renown in new locations.
“BTMU will be a strong partner for us, both in Asia and globally”, said Sam Rosenblum, Head of International Expansion at Coinbase, speaking in a phone interview with Reuters. “Japan will certainly be an important market for us, and one that is pretty critical for the development of digital currencies.”
The company is currently operational in 32 countries, Singapore being the only one in Asia. Unfortunately, Bitcoin’s image in Japan was left wanting after the Tokyo-based platform Mt Gox filed for bankruptcy in 2014 and lost hundreds of millions of dollars in the process. For Coinbase to do business in Japan, it must first gain regulatory approval from the country’s Financial Services Agency, but financial backing from such a major bank bodes well for the company’s prospects.
There was a time when BlackBerry’s Classic mobile phone was everywhere. The device was the primary tool for working on the move and keeping on top of emails at all times. Perhaps the most unique quality of the BlackBerry Classic was its QWERTY keyboard system, which was hailed as a huge advantage for those using their phones to draft emails and documents while on the road. Following the launch of the first BlackBerry device back in 1999, the company rapidly grew to become the leader for the entire smartphone market worldwide. Indeed, at its peak in 2008, the company’s stock market value was $55bn.
BlackBerry only commanded 0.2 percent of the global smartphone market in the first quarter of 2016, despite the Android platform, which BlackBerry now uses, accounting for 84 percent of all sales
Although the Ontario-based firm was once a trendsetter, particularly with features such as its instant messaging service, BlackBerry has failed to match the strides of competitors in the industry over the past decade. Times have changed – and drastically at that. Mobile phones are now capable of doing incredible things; consumers can effortlessly and intuitively navigate through social media platforms, e-commerce sites, news, and even their personal finances instantly. While the likes of Samsung, Apple and LG have pushed forward to create this level of connectivity through recurrent developments, upgrades and amalgamations of the latest technology, BlackBerry has long fallen behind.
According to figures given by Gartner, an IT research company, BlackBerry only commanded 0.2 percent of the global smartphone market in the first quarter of 2016, despite the Android platform, which BlackBerry now uses, accounting for 84 percent of all sales.
And so, as expected for quite some time, BlackBerry is bidding farewell to its Classic smartphone. According to a press release published by the company on July 7, the decision was finally made in order to advance the company’s product portfolio “with state of the art devices”. The author of the post, Ralph Pini, BlackBerry’s COO and GM for Devices, admitted that the Classic “has long surpassed the average lifespan for a smartphone in today’s market”.
Nevertheless, as shown by comments on social media following the announcement, there are still fans of the Blackberry Classic out there. Were the company to invest in a model that combines the best-loved features of its magnum opus with the latest mobile technology, perhaps a revival among corporate consumers could transpire.
Major advances in information technology are giving key global industries reason to reconsider legacy-operating models and review their strategic priorities, in keeping with changing consumer demands. Global travel and aviation is no exception: the industry has been forced to confront radical and wide-reaching changes over the last decade, with companies fighting to survive in what remains a hyper competitive marketplace.
Information Systems Associates FZE (ISA) has been in the business of providing high-performance technology to the global travel and airlines business since 2005. ACCELaero, the company’s core Passenger Service System (PSS), has processed more than 138 million bookings with a high availability of hosting service that boasts a record-breaking performance of 99.999 percent up time, exceeding the industry average of 99.95 percent.
Having picked up the Business Destinations Travel Award for the Best PSS for LCC and Hybrid Airlines Global 2016, along with the award for Best Emerging PSS Provider for the Airline Industry Global 2016, ISA is fast gaining a reputation as a pioneer in the global travel and aviation industry. The company’s CEO, Nader A Shukralla, told Business Destinations: “It is a prestigious honour that serves to recognise the best of the best within our ranks, as the nominations were given to companies globally whose products and services represent a superlative offering to the travel industry.”
Unique among travel accolades, as the nominees were selected not only by an elite panel of judges, but by a vast and diverse cross-section of primary users and purchasers of corporate travel, the recipients of the Business Destinations Travel Awards offer an insight into the best that the industry has to offer. “Winning the Best PSS provider for LCC and Hybrid and Best Emerging PSS provider will reaffirm our position as global leader in the set domain and will put ISA and its flagship ACCELaero on the world map for many years to come”, said Shukralla.
An extensive portfolio
ISA uses the latest, cutting-edge open source and licensed technologies in the correct mix, in order to provide maximum value for money, as well as robust and uninterrupted services to its clients. A mobile-first design approach and the micro-service application architecture have paved the way for the company’s innovative cloud platform, which provides vertical and horizontal scalability. Headed by an experienced design team of highly skilled UI/UX professionals, with a proven track record on a local and international scale, ISA utilises modern day practices and the latest technology to craft the perfect user experience and optimise usability and cross-browser/platform capabilities.
Being an IT solutions provider for the aviation sector, ISA is quick to understand and adapt to an ever-changing landscape. ISA’s research and development team are always on the lookout for market changes, and regularly develop action plans that will enable the firm to adopt and react to otherwise unforeseen circumstances.
At the company’s research and development centre in Colombo, Sri Lanka, ISA has assembled a crack team of 100 innovators in a bid to regularly deliver advanced new technologies like ACCELaero. The solution in question is a portfolio of three product suites, each distinct and geared towards specific business objectives: retail, operational fulfilment and business productivity. Consisting of core PSS solutions and distribution connectivity options, aeroMART provides consistent operational and service delivery fulfilment, while aeroLINE is a set of business-focused solutions meant to hone productivity and revenue. This ACCELaero portfolio allows airlines to deliver unique customer experiences, increase revenue, lower cost and manage risk effectively.
ACCELaero represents a deep portfolio of powerful technologies and integrated solutions. And while the technology evolves on a daily basis to address the many and multifaceted business problems of today, it is agile enough to respond to the problems of tomorrow. Built using the latest technologies and open architecture, ACCELaero is a future-proof solution set that brings together data from all quarters and a portfolio of innovations to help transform business in the long term.
ISA’s research and development team are always on the lookout for market changes, and regularly develop action plans that will enable the firm to adopt and react to otherwise unforeseen circumstances
Another of ISA’s solutions, aeroPORT, is a suite of products with a similarly rich graphical user interface and optimised performance, which helps to manage passengers and aircraft before departure. With aeroPORT FLY (ISA’s departure control solution) and aeroPORT TRIM (the next generation weight and balance solution), the company is no stranger to the latest advances in airline technology.
Perhaps ISA’s most valuable system, aeroPORT FLY is a check-in and departure control solution for airlines and airports that enables airport staff to serve and process passengers and baggage quickly, securely and efficiently through an easy to use interface and logical business flows. Check-in and boarding processes are also made to feel simple and user-friendly, which again reduces the time taken to assist passengers.
Getting better with age
With a wide range of products on offer that are specifically catered to the airline, airport, travel and tourism sectors, ISA takes great pride in the remarkable progress it has made since its inception, having reached many milestones along the way.
Shukralla told Business Destinations: “Our quality assurance (QA) team ensures that software released to market meets end-user needs, is scalable, stable, secure, and high performing. The team of QA specialists at ISA undertake thorough analysis to identify and locate issues or bugs across the whole software life cycle (design, implementation and deployment) using both an automated and manual testing approach to assure the quality.”
Over the course of its 11 years in the aviation industry, the company has maintained standards above and beyond the industry benchmark. Furthermore, ISA’s research and development team not only watch, but thoroughly analyse key changes within the market and create responsive action plans to suit any situation that might arise.
Asked about the company’s plans for the future, ISA’S CEO replied that winning the World’s Leading PSS Provider award at the World Travel Awards 2015 helped to accelerate its global expansion: “Never before have we been this focused on our international foray. We see Europe, Australia and the Americas as new, interesting and untapped markets, so much so that we are now ready for a rapid business expansion as part of our global
expansion programme.”
As far as business growth is concerned, the Middle East – and particularly the UAE, where ISA is based – is very much the aviation centre of today. As such, the company has recently seen exponential organic growth, as well as rapid inorganic growth.
ISA has focused primarily on the market in the MENA region for some time; a strategy that has most certainly served the company well over the last 11 years. However, the past two years have seen ISA expand more widely, especially within Southeast Asia, and from this year on, the company’s focus will fall on further global expansion. Already ISA is in advanced negotiations with several airlines in different regions.
According to the CEO, this is an incredibly exciting phase in the company’s history and it is well positioned to bring increased choice to the marketplace. “Through ACCELaero, we are offering a deep portfolio of solutions that are sufficiently broad, in order to reach almost every aspect of the airlines business.”
Provided companies like ISA continue to innovate and keep tabs on the latest advances in IT solutions, the aviation and airlines business looks set to continue developing far into the future.
At the end of last year, it was revealed that certain bacteria had developed a resistance to colistin, an antibiotic that is only used as a last resort due to the damage it causes to the kidneys. Despite having been around since the 1950s, limited use has seen bacterial resistance to colistin develop considerably more slowly than with other antibiotics. The wider significance of the news, however, is that many bacteria are now becoming pan-resistant to all available antibiotics.
According to the Review on Antimicrobial Resistance (AMR), around 700,000 people a year worldwide die as a result of bacterial drug resistance. “If not tackled, by 2050 drug-resistant infections could be claiming 10 million lives each year around the world, at a cumulative cost to global output of $100trn”, said Lord Jim O’Neill, Chairman of the AMR.
“The language used by the World Health Organisation speaks volumes”, said Abigail Herron, Head of Responsible Investment Engagement at Aviva. “They warn that we are approaching a ‘post-antibiotic era’, where routine operations will no longer be possible and many diseases and infections no longer treatable. The Chief Medical Officer in the UK recently spoke of an ‘apocalyptic scenario’ in the near future, where people going for simple operations die of routine infections ‘because we have run out of effective antibiotics’. As investors in the pharma sector, as well as providers of health and life insurance, this is very concerning.”
Reckless abandon
In terms of what is causing the problem, there are a number of contributing factors. “A major contributor in my opinion is the overuse of potent broad-spectrum antibiotics that we used to reserve for very serious infections, but are now being used routinely in hospitals because of increasing resistance”, said Dr Justin O’Grady, Lecturer in Medical Microbiology at the University of East Anglia.
Under the current system, developing new antibiotics and producing them in smaller volumes is simply not profitable. Instead, pharmaceutical companies tend to focus on specialised medicines with a far higher mark-up, or antibiotics that can be mass produced
Furthermore, it is becoming increasingly difficult and expensive to create new classes of drugs that work differently to those already in existence, i.e. drugs for which bacteria have not yet developed a resistance. Making such breakthroughs requires new methods, a great deal of investment and a lot of time.
Increased investment and new methods, however, are only two parts of the puzzle – broad-spectrum antibiotics are, in themselves, a major issue. “Ideally, you should use more targeted or narrow-spectrum antibiotics, which are specific to certain pathogens”, said O’Grady. “However, they cannot be used unless you have got the appropriate diagnostics – a doctor’s clinical diagnosis of a condition is not sufficiently specific to tell you what pathogen is causing the problem.” Without an accurate diagnosis, broad-spectrum antibiotics must be prescribed in the interim, which further exacerbates resistance. Unless better and more rapid diagnostics become available, the vicious cycle will continue. This leads us to the next issue: the supplier side of the equation.
According to O’Neill, antibiotic resistance is ultimately a “classic market failure problem”. Under the current system, developing new antibiotics and producing them in smaller volumes is simply not profitable. Instead, pharmaceutical companies tend to focus on specialised medicines with a far higher mark-up, or antibiotics that can be mass produced. With few firms devoting the substantial resources needed to develop and produce small volumes of new antibiotics, the consequences for treating everything, from fatal infections to routine procedures and cancer, could become impossible in the not-too-distant future.
“Healthcare as we know it today would be severely undermined as infections increasingly become untreatable and routine operations, such as hip or knee replacements, become too risky to undertake without effective antibiotics to stave off infections”, O’Neill added.
Finally, it would be remiss not to mention the elephant in the room. “The majority of all antibiotics produced are given to livestock – nearly half of all antibiotics in the UK, two-thirds in the EU and 80 percent in the US”, said Herron. “The overuse of antibiotics in livestock is now linked to increasing bacterial resistance in both animals and humans.”
A vestige of hope
At present, microbiological cultures are the most common means by which to diagnose infections and detect resistances, but they take 48 hours to complete – a long time in terms of serious bacterial infections. On the other side, some recently developed polymerase chain reaction (PCR) tests offer a much more rapid result, but they are by no means sufficient for an accurate diagnosis. This is due to the fact that PCR tests cannot identify many rare bacteria or many of the numerous varieties of resistance genes. “PCR tests are good because they are fast, but they are not comprehensive enough and, therefore, they are used in conjunction with culture, not as a replacement”, said O’Grady.
To combat this predicament, O’Grady and Oxford Nanopore Technologies are working on a new type of test in which accuracy does not have to be compromised for speed, nor vice versa. “What we’re trying to do is develop a test that is as rapid as PCR and as comprehensive as culture, and so is capable of replacing culture in the future.” The ultimate goal of this project is to provide a tool for healthcare professionals to prescribe targeted antibiotics as a first port of call, in place of overused and incorrectly prescribed broad-spectrum agents.
On the financial side, the AMR argues pharmaceutical companies should receive monetary incentives for investing in new antibiotics, while those that do not should be penalised. “Approaching this as an economist, it is clear to me that we need to tackle issues not just on the supply side, but on the demand side too. We need to take steps to reinvigorate the supply of new antibiotics and other products useful to fighting drug resistance by correcting the failed market for antibiotics at a global level, and we need to address demand-side issues by dramatically reducing our often wasteful and unnecessary consumption of antibiotics”, said O’Neill.
To complete the solution, the agricultural use of antibiotics must also be addressed, and with great urgency. “Antibiotics prop up systems where animals live in unnatural, cramped and unhygienic conditions, where disease spreads much more easily”, said Herron. “Low animal welfare and high antibiotic use and reliance go hand in hand; what we are saving by producing cheap meat and dairy, we are spending on lives lost.”
It is indeed peculiar that a problem this big, one that has such dire consequences to us as individuals, as well as collectively, is not being tackled with much greater urgency. It is almost as though the issue is being swept under the carpet outside the scientific and medical communities – perhaps a result of the aforementioned market failure in terms of making targeted antibiotics profitable for a wider range of producers. But, even though pharmaceutical companies stand to lose a lot if they commit to developing new antibiotics, they will definitely lose even more if the apocalyptic vision that many prophesise does actually come to pass. In fact, we all stand to lose – every company, every investor, every person – unless change starts now.
Before there was Google and all its globe-spanning offerings, before social media was so deeply integrated into our lives, and before there were thousands upon thousands of apps and start-ups vying for moments of our very limited time, there was Yahoo. Despite its long-anticipated fall from grace, there was once a time when Yahoo seemed unmatched and unstoppable. “They were one of the frontrunners and one of the most successful businesses of the first internet boom”, observed Aija Leiponen, Associate Professor at Cornell University.
Yahoo, the first great internet brand, will always have an indelible place in history. However, in the years that followed the company’s success, mistake after mistake conspired to cause its inevitable decline. And so, as expected, in April bids for the company by the likes of Verizon and Yellow Pages began, marking the end of Yahoo’s turnaround attempts and, essentially, the end of an era.
Precocious pair
The story of Yahoo begins, as with so many famous tech firms, at an Ivy League university in the US. It was 1994, and two PhD students at Stanford, Jerry Yang and David Filo, were working on design automation software. Despite their deeply contrasting personalities, Yang being sociable and outgoing and Filo being the quiet type, the pair had struck up a close bond during a teaching stint together in Japan.
They worked side by side in a portable trailer on campus that they had to themselves, thanks to an absent supervisor on sabbatical. As Yang and Filo were free to do as they pleased, work often turned into play and their makeshift office took on the appearance of a home. Inevitably, this left little time for their dissertations, which only grew worse with their new obsession: the world wide web, as it was then known.
Filo had discovered Mosaic, the platform credited with being the world’s first web browser and instigator of the internet’s popularisation. Back then, there were very few websites and, while new ones appeared every day, it was still possible to visit them all. Instead of spending their days researching, the two pored over any new sites that had appeared overnight and began a catalogue of them all, which included ‘hotlists’ of their favourites in competition with one another.
As their computers were linked up to the university’s public internet connection, fellow students had access to the growing list, which was then called ‘Jerry’s Guide to the World Wide Web’. As the list’s popularity and size grew, the pair introduced a hierarchical directory and even created their own software in order to source new websites. Even without an algorithm or automation in place, expansion was fast because of the countless hours that Yang and Filo spent manually entering data.
Within a few months, the directory contained around 2,000 entries and Jerry’s Guide was attracting 50,000 hits a day. It was at this point the two decided a new name was in order; they agreed upon Yahoo, an acronym for ‘Yet Another Hierarchical Officious Oracle’, with an added exclamation mark they described as “pure marketing hype”.
“When we started the business, our VCs said we absolutely need to keep the name. It’d be lying to say we knew what branding meant in 1994. David and I were tech people, but we knew [that] creating » something that’s easy to remember, that’s easy to use – that’s the key ingredient to a brand”, Yang said in an interview with ZDTV’s Big Thinkers technology show, according to Karen Angel’s book Inside Yahoo!: Reinvention and the Road Ahead.
Yahoo founders (L to R) David Filo, Terry Semel and Jerry Yang
Limitless potential
A pivotal moment then came when Netscape, a browser that helped shape the internet in its early days, made Yahoo its default directory. Those early users who first surfed the web through Netscape were automatically introduced to Yahoo, causing interest to burgeon. “Yahoo got started early in the first internet wave and gained popularity as a sort of a directory of ‘cool’ websites”, Leiponen said. “It then enjoyed first-mover advantages in becoming well known.”
By the end of 1994, Yahoo had achieved one million hits in a single day. Naturally, Stanford’s servers, which the pair had been fortunate enough to use free of charge, began to struggle under the mounting pressure, and they were asked to find an alternative.
The PhD students had a difficult decision on their hands: to continue their education or step into the big bad world of business and drive Yahoo forward full-time. Despite their uncertainty about how to capitalise on what they had achieved, Yang and Filo knew the potential of Yahoo was huge. And they were not alone: the most formidable players of the tech world and beyond had begun meeting with the youngsters – from Microsoft to CNET and Reuters – to discuss potential partnerships.
“We were in a unique situation in the summer of 1994 to be able to experience that kind of grassroots growth, fuelled by a lot of interest that was not our doing, and then just sitting back to watch the access logs go up. I don’t think that could happen today”, said Yang, according to Angel.
Although investment firms came calling, no one was quite sure how money could actually be made from Yahoo. The company wasn’t offering a software package or a tangible product; essentially, it was just a directory that could be mimicked by anyone, not least the big tech players of the day. Convincing venture capitalists became an almost impossible task, particularly as Yang and Filo were adamant the service should remain free – an argument that was not helped by their lack of business experience.
Yahoo’s failure to stay one step ahead of the competition in a rapidly evolving tech world coincided with the burst of the dotcom bubble
What did help, however, was making the comparison between Yahoo and TV Guide, once the most circulated and read magazine in the US. While both radio and television could be tuned into for free, listings and directories for them were sought after services that consumers were happy to pay for. This was the revenue model Yahoo would find success in: advertising to mass audiences through media platforms. California-based venture capital firm Sequoia Capital understood this link and took a chance by investing $1m in April 1995 in return for a quarter of the recently incorporated start-up.
What goes up must come down
Sequoia Capital’s gamble quickly paid off; within just four years, the initial investment had exploded in value and was worth an incredible $8bn. During the dotcom boom of the 1990s, practically all start-ups were advertising through Yahoo and, by January 2000, its stock value had increased to an incredible $237.50 per share, while its market cap was $128bn, according to Bloomberg.
Despite such achievements – the very peak of the company in fact – things then began unravelling very quickly for the internet giant. The first sign of trouble came when Yang, CEO Timothy Koogle and President Jeffrey Mallett were faced with the decision of whether to stick to their existing strategy of providing a platform for the content and media of other outlets, or acquire a big media company, as AOL had just done with Time Warner. They picked the former, and the mistake had dire consequences, soon followed by a host of others.
Yahoo’s failure to stay one step ahead of the competition in a rapidly evolving tech world coincided with the burst of the dotcom bubble. With many key customers declaring bankruptcy, Yahoo’s advertising revenue fell rapidly. Within just a year, its value had plummeted to $4.7bn.
In that same year, Yahoo began leasing out searches to other companies, one of which was Google, failing to comprehend the fortune that could be made through search engines. After a botched attempt to buy its up-and-coming rival for $3bn in 2002, Yahoo attempted to reclaim the market just two years later via sponsored links on its own search engine – but it was too little too late.
“Google’s rise meant [Yahoo’s] decline. Google had a better search engine, and that invention was very successful in attracting traffic. Once they had huge traffic, figuring out the advertising business was relatively easy”, Leiponen explained. “Yahoo lost its spot as the essential website to visit for search, so they began to innovate dozens, even hundreds, of ‘content’ services, from news to finance to videos and social networks. Many of these were very successful, many more were not.”
Marissa Mayer, current CEO of Yahoo. At just 37, she was the youngest woman ever to run a Fortune 500 company
Salvage operations
Terry Semel, former CEO of Warner Bros, had been brought on board in 2001 to rescue the sinking ship and restructure the company. Using his business nous, he managed to steer two deals that have enabled Yahoo to survive up to now: the Yahoo Japan venture and the acquisition of a 40 percent stake in Alibaba in 2005. Although these moves helped the stock price rise to $28 and saw the company’s value increase to $7bn by 2007, Semel’s lack of tech know-how, together with Yahoo’s growing reputation for failing to complete deals, weighed heavily. The sorriest example of all – a missed opportunity that could have made Yahoo an entirely different beast to what it is today – was Facebook. Although Semel had agreed to pay $1bn for the social media heavyweight, he inexplicably dropped the offer to $850m at the last minute, causing the already dubious Mark Zuckerberg to walk away for good.
While billions were spent on promising firms, none thrived under Yahoo’s watch. It became known as a grim reaper in the start- up world
While billions were spent on other promising firms, none of them thrived under Yahoo’s watch. In fact, the company became known as something of a grim reaper in the start-up world. Semel’s time was up in June 2007, leaving a void for co-founder Yang to step into. Yang was a Silicon Valley legend, but lacked the business prowess needed to make difficult decisions. It was during these days that Yang declined Microsoft’s takeover offer for $31 per share, yet shortly after struck a deal to lease Bing from Microsoft to replace Yahoo’s proprietary technology, giving up the very thing that had made Yahoo in the first place – its search engine.
Another day, another CEO – this time it was the turn of former Autodesk CEO Carol Bartz. Though Yahoo rose 57 percent on the NASDAQ during her tenure, the revenue earned by the firm’s core business declined, M&A activity was practically non-existent and the stock price flatlined. After two years and nine months, Bartz was famously fired over the phone.
By this point, it was no secret the business was suffering; stories of internal friction, mismanagement and bureaucratic barriers left the company scarred. Bartz’s successor, Scott Thompson, lasted just 130 days, thanks to the manoeuvres of David Loeb of Third Point Capital, Yahoo’s largest external shareholder.
Mayor Mayer
Despite hesitation from the rest of the board and interim CEO Ross Levinsohn, Loeb took it upon himself to call in Stanford-educated Marissa Mayer, then very much the face of Google. At just 37, she was the youngest woman to ever run a Fortune 500 company. A Silicon Valley star, many saw Mayer as the desperately needed trailblazer who could drive the company back to greatness. When she arrived on the scene, Yahoo still had an impressive following of around 700 million consumers for its email, content, search and stock services; nonetheless, the company hadn’t launched anything successful in years.
Mayer’s first year was commendable. Yahoo’s stock doubled to around $31 per share, while existing products, including Yahoo News, Flickr and the company’s homepage, underwent a much-needed renovation. In 2013, a newly launched weather app quickly steamed ahead to become one of Apple’s 10 most popular apps, Yahoo’s relaunch of its fantasy football service received rave reviews, and the transition to mobile was finally taking place. The new strategy increased Yahoo’s total number of monthly users by 20 percent to 800 million, half of which came through mobile platforms.
Mayer made a positive impact on the culture of the company as well, bringing it in line with other Silicon Valley start-ups by replacing BlackBerrys with Androids and iPhones, providing free food for employees, introducing a complaints mechanism, and setting up Friday afternoon sessions where staff could ask anything they wanted. Mayer also removed the stock price from the web platform in order to eradicate the company’s short-term focus, while her first hire was a PR professional from Google.
Although things had started to perk up, Yahoo still failed to attract the human capital it needed to begin steering the market once more. “Even though the company was, for a long time, a highly desirable workplace, by 2012 it had definitely become less ‘cool’ for top talent, so recruitment and retention became a problem. For these reasons, morale was also low and people were not feeling enthusiastic and creative about their jobs”, said Leiponen.
Mayer’s next big move, in 2013, was to persuade David Karp, founder of microblogging and photo-sharing platform Tumblr to sell up, with the promise that Tumblr would continue working independently. In what was then seen as an unprecedented deal for a company with practically no revenue or profit, Mayer paid a whopping $1.1bn. The acquisition has since become known as one of Yahoo’s worst decisions.
To mitigate the losses, Loeb convinced Mayer to sell part of Yahoo’s Alibaba stake back, which freed up $7.1bn in capital, giving the CEO a lot more freedom to manoeuvre and regrow the core business. Mayer spent $4bn buying back shares in Yahoo and a considerable sum on an acquisition frenzy of over 20 companies.
Some of Mayer’s managerial techniques go against basic principles of innovation management
“I think many of the initiatives and investments Mayer has tried made a lot of sense, and Yahoo has been good about trying many ideas and then cutting them if they don’t work out”, Leiponen said. “In digital, innovation happens through experimentation. Firms need to develop interesting services and features, and allow users to try them and see if they like them or if they can be evolved. If not, they need to be pulled. If one looks at Google, that’s exactly how their new products and features come about. There are many more unsuccessful experiments than there are huge hits, but the few major successes make up for the failures many times over.”
“What Marissa Mayer has been trying to do, but without great success, is to grow new businesses inside Yahoo that would replace or supplant the businesses that she had now”, said Richard Kramer, Senior Analyst at Arete Research. “She’s had a few successes, but largely either changed course too often or picked the wrong managers to work with, or made some unfortunate bets that mean that they haven’t had found a lot of success.”
To rub salt in the wound, rumours of Mayer’s enigmatic personality and insufficient leadership skills remain rife. “Some of Mayer’s managerial techniques of trying to create a competitive rather than cooperative workplace go against basic principles of innovation management”, said Leiponen. “Emphasising internal competition rather than cooperation makes people suspicious of each other, and not trust or share information or ideas. Innovation and creativity don’t really thrive in that type of organisation.”
End of an era
“The perception in the market has been that Yahoo is in some sort of turnaround – and I don’t believe that”, said Kramer. This perception, however, was understandable; with millions of people still using Yahoo’s services, together with the company’s global reach, a foundation for great success already existed – a foundation many tech firms could only dream of.
It was hoped Mayer could engineer this turnaround. Yet it would seem her abilities were overestimated, as the final nail in Yahoo’s coffin has been that of mismanagement. What the company needed was a visionary. It was in need of a pioneer with the ability to create an environment that stimulated talented people. That task was too great for an inexperienced CEO.
Of course, Yahoo’s unravelling was not Mayer’s sole doing; it began long before she stepped onto the scene. Arguably, it started when the company peaked in 2000; it did not stop stumbling after that point, unable to cement its position at the top.
“Most of the problems we’ve seen with Yahoo and other companies in the sector have been management execution ones, so I think a lot of importance should be placed on learning how to run these businesses efficiently as opposed to just chasing visions or dreams”, Kramer said. “I think the main lesson is that this is a very new space; there are very thin management teams on the ground and there is not a lot of experience or management talent.”
While the importance of management is one key lesson to be learnt from the story of Yahoo, the harsh reality of a rapidly evolving tech world is the other. In order to maintain a leadership position, a company must set trends, inspire and disrupt. This explains Google’s success, which shows no signs of abating. Google gets things wrong, of course, but it continues innovating, propelled by excellent management that nurtures talent, so that when it gets it right, it really gets it right. Ultimately, Yahoo’s legacy will be that it was the first great brand to dominate the internet space – somewhat fittingly, then, it is the first great brand to leave it as well.
Following the 2011 revolution in Benghazi, Libya has experienced five years of chaos and political turbulence. Divided and damaged, the country is still a long way from the ultimate dream of democracy.
However, optimism continues to shine through the conflict zone. Research and development organisations are launching and funding projects to help the country’s pioneering and talented students develop infrastructure, technology and businesses. The idea is that organisations can fund Libya’s brightest students to study overseas, at some of the world’s best universities, where they learn about new technologies. The students are then equipped to utilise what they’ve learned once they return.
Libya has the potential to be a wealthy country on the back of its abundant natural resources, but currently sectors such as hydrocarbons only employ two percent of the population. This sector is one area which bright young students can take advantage of, encouraging the creation of more jobs. However, higher education within the country is under huge pressure from Libya’s government to prepare the next generation of graduates with the relevant skills to encourage innovation and economic growth.
Bright minds
The country’s universities are functioning in very difficult circumstances and, therefore, need help from international universities to provide students with a safe learning environment. Many Libya-based companies have funded students to study overseas. Tatweer Research, owned by the Libyan Local Investment Development Fund, nurtures the brightest young minds in Libya, incubating the ideas of ambitious entrepreneurs and attracting international talent and investment.
In 2014, Tatweer funded 23 Libyan technology graduates to study abroad for a year at the University of Cambridge. The ambitious project aimed at providing the students with the skills to rebuild their country.
While studying in the UK, the students explored a range of academic fields, in order to collectively improve Libya’s prospects. Some students learned about technology, while others focused on medicine in order to treat victims of the war.
Two of the students who studied in Cambridge created Libya’s first advanced prosthetics project, providing artificial limbs for Libyan amputees. Engineers in the UK introduced them to ITAP – a method of treating amputees with metal. This enabled the students to gain a better understanding of the technologies available, and apply the work to the situation in Libya.
Abdulgader Melouda, a 23-year-old from Misrata, was awarded a scholarship funded by the Libyan Ministry of Defence to study naval studies for three years in the UK. “I gained an enormous amount of experience while living in the UK – including learning the language”, he said.
The country’s universities are functioning in very difficult circumstances and, therefore, need help from international universities to provide students with a safe learning environment
“The projects are great. I can see many civilian products have been brought back to Libya from all over the world and the training from overseas has been applied to our country. For example, one project, which has had a great turn out, is the launch of using your debit card instead of cash in shops. It’s a really successful development for Libya.”
Funding from companies such as Tatweer is vital in Libya, as the companies involved are working with students and young people who could essentially reshape the country’s technology sector and help diversify Libya’s economy.
Tatweer is one of the few successful companies still efficiently operating in Libya, as the country struggles to drive state and foreign investment for businesses.
Sweeping changes
Ahmed Ebhaire, a business developer based in Libya, believes the reason it is difficult to launch business in the country is due to bureaucracy, corruption and political instability.
“I decided to begin helping foreign investors develop their businesses in Libya in 2012. I thought the country’s corruption would be eliminated after the revolution, and the government would be more transparent – therefore I believed it was a fair opportunity for businesses to begin earning again”, he said.
“Although my country has a lot of resources, I soon realised it is not equipped to build the business sector due to lack of sufficient governance, which has led to insufficient infrastructure, weak executive authorities, public sector control over the economy, and a lack of skilled labourers.”
Ebhaire personally volunteers with programmes that rebuild and develop Benghazi’s financial plans. He believes the programmes prove how the war has affected the country’s economy and infrastructure, and aims to overcome obstacles – in turn establishing new cities to solve issues such as the housing crisis.
“In my opinion, innovation is an important element in development. Most of the developed countries rate high in innovation, and you need innovation to survive as a business. With the current quality of Libya’s education system, and the continuities of war, the amount of young people contributing to changing the future of Libya remains minimal, as they continue to fight for the military instead”, he added.
Ebhaire believes the goals that need to be achieved in order to develop Libya include national reconciliation, appropriate legislation, financial development outside of the public sector, diversification of income sources, improvement of communication and transportation infrastructure and the elimination of corruption.
Situated between Africa, Europe and the Middle East, Libya has the potential to become an international hub across a variety of sectors. However, the country is too big a risk for foreign investment, and needs to focus on providing opportunities for Libyans in order to secure stability, before expanding internationally.
The country relies on research organisations such as Tatweer to fund students with the potential to discover new technologies and opportunities for infrastructure. These young entrepreneurial minds offer a chance of a brighter future, and Libya could one day see a boost in employment, foreign investment, and, most importantly, a decrease in corruption.
In February, Unicef announced a $9m Innovation Fund, aimed at encouraging innovation among local tech start-ups and focused on improving the lives of vulnerable children in poor communities. Unicef will choose 60 start-ups from emerging markets (assessed on criteria including strength of team, relevance to children, and potential value in open-source intellectual property created) and give them approximately $50,000 each.
For the early-stage start-ups to be funded, they must fulfil one of three roles: create products for those under 25 years old to help learning and participation; provide real-time information for decision-making; or create infrastructure to increase connectivity, power, finance and support. Focusing the investment fund on youth products simultaneously boosts entrepreneurship in the tech industry and solicits benefaction to young people by providing proper education and other basic needs. Unicef Innovation fund manager Sunita Grote said: “We have seen that the products and services tech start-ups develop can increase access to information, opportunity, and choice for children and young people, including the most marginalised.”
Unlike conventional investments, the Innovation Fund will not take an equity stake in any of the start-ups; the UN said the ‘value’ will be in the projects’ ability to help others. Unicef Innovation Fund’s co-leader Christopher Fabian told Quartz: “We’ve created a hybrid between the world of venture capital and the world of international development, so what we do take is the intellectual property that’s developed by the companies that we’re funding and put it into the public domain.”
The need for innovative aid
Governments and NGOs have, in the past, been keen to provide disaster-response aid for short-term relief. Although their intentions are good, it’s becoming increasingly apparent that doing so doesn’t have any lasting economic impact. Rather, it can weaken governments and disable self-sufficiency within communities, making both state and communities dependent on aid. Over the past 60 years, at least $1trn of development-related aid has been transferred from rich countries to sub-Saharan Africa. And yet, real per-capita GDP is now less than it was in 1974, having declined over 11 percent. More than 50 percent of the population (over 350 million people) live on less than a dollar a day – a figure that has nearly doubled in two decades.
Start-ups largely have a positive impact on their local communities; not only do they reduce unemployment, but they can also (especially tech start-ups) increase skill levels and innovation
The emergence of development aid has largely focused on sector-specific projects, such as health, education and infrastructure, in an attempt to improve aid efficiency. It’s successful in supporting and sustaining specific areas of distress, but it doesn’t entirely overcome the problems of aid distorting markets, curbing entrepreneurialism and limiting self-sufficiency among beneficiaries.
Grote said: “As part of larger programmes built according to our Innovation Principles, technology can increase access to lifesaving information and services, and contribute to poverty alleviation. Investments in strong tech start-ups in developing countries help us build a community of developers and entrepreneurs who can build new solutions in the future.”
Unicef’s methods of combining venture capital investment and developmental aid may set a precedent for a new form of international aid. Entrepreneurialism and start-ups are not usually thought of as a form of aid, but analysing the socioeconomic ripple effect they have within communities and on economic growth suggests they should be.
Start-ups largely have a positive impact on their local communities; not only do they reduce unemployment, but they can also (especially tech start-ups) increase skill levels and innovation. These companies may not become the next tech giants, but SMEs tend to collectively make up a large majority of employment (globally, about 67 percent) and have a bigger impact on communities than large corporations. At the macro level, entrepreneurial activity stimulates economic growth. New innovation increases consumption, intensifies competition, and may even increase productivity through technological change, which translates into high levels of economic growth.
Start-ups have the potential to turn around lagging economies and even alleviate poverty in the most vulnerable regions. And yet, developing countries experience less entrepreneurship and start-ups than wealthier ones – not because they lack innovation, but because they lack capital. Unicef has recognised the ineffectiveness of aid, and the potential start-ups can hold for developing communities and economies. Investing in these regions as a form of aid can create opportunities, restore dignity to the receiver, and build long-term independence. Providing capital allows innovators to create ‘real’ value for their economies.
Philanthropic investors
This idea of ‘impact investing’ is not new. Companies and investors have become increasingly attracted to it; the ability to generate financial returns while making a positive difference to young entrepreneurs and their communities fulfils both commercial and moral desires. Ritchie MacDonald, Marketing Director at Truestone Impact Investment Management, said: “There are great opportunities in these markets as they are often fast-growing, but it is crucial to be selective, get to know the market in depth, and carry out the due diligence.”
Silicon Valley is shifting from its old methods of philanthropy and increasingly seeks to fund enterprise and innovation for social good. Pierre Omidyar, founder of eBay, was one of the first to adopt the entrepreneurial philanthropist approach, having deployed over $1bn of his fortune with the ambition of improving the world. Mark Zuckerberg, founder of Facebook, and his wife Priscilla Chan have committed 99 percent of their $45bn wealth to philanthropy through impact investing.
Recognising the promise in sub-Saharan Africa’s growing tech sectors, Silicon Valley has been funnelling its money into ventures from South Africa to Nigeria. Venture capital funding has rapidly expanded, rising from $40m in 2012 to $414m in 2014, and is projected to grow to $608m in 2018. Last year, start-ups raised $185.7m in Africa. Parallel to the boost in venture capital funding, sub-Saharan Africa’s economy has grown by 51 percent since 2005 – more than twice the growth rate of the global economy (23 percent) and four times that of the US (13 percent).
Many international aid organisations have made commitments to innovation, exploring new ways of alleviating extreme poverty and contributing to economic growth. Identifying a more dignified method of supporting developing countries and communities over traditional approaches is proving far more effective in cultivating sustainable and resilient development. MacDonald said: “Giving has an important role to play in many situations, however we believe that business generally offers a more sustainable means of creating change and transforming lives.”
Focusing on investing in new and inspired tech innovators could mean traditional aid will be surpassed by impact investing in the coming years. Aid in the form of investments will build fair, safe and equitable societies in the developing world. The combination of venture capital investment and developmental aid may set a precedent for foreign aid in the future.
Competition across the food delivery market is intensifying following the success of start-ups such as Deliveroo, the growth of delivery websites such as JustEat, and the recent launch of UberEats.
More and more, restaurants are working alongside tech companies to increase their customer base, and, more specifically, make the purchase and delivery of food both more accessible and efficient.
Global tech giant Uber introduced UberEats to London earlier this month, following its successful launch in Paris. CEO Travis Kalanick sees food delivery as a natural extension for the network of drivers already on the road.
Eat, drink and be merry
UberEats is currently only available in central London, but the company has plans to expand its customer and restaurant network in the coming weeks. By offering no minimum spend and free delivery for the first month, Uber is hoping to outperform the competition.
Alex Czarnecki, General Manager of UberEats in London, believes the launch will thrive in one of the food capitals of the world. “The UberEats app has been a huge success in every city we’re launched in, and we think Londoners will love it too”, he said. The launch will not only see a boost to the company’s revenue, but a surge in sales for the restaurants that team up with the initiative.
The success behind Deliveroo lies in the fact that it welcomes opportunities for restaurants to increase trade at times that have traditionally been quiet for the industry
The reason UberEats is likely to succeed lies in both its expansive customer base and its technology. It already has access to mapping software, satnavs and its CoreLocation framework. The company only needs to invest a little in its delivery business, as it is already a transportation service and therefore has the ideal platform for launch.
Uber has also fostered an enviable reputation and identity through its many successes, and is an attractive brand partner for any restaurant. Libby Andrews, Head of Marketing at Pho, said: “Uber has nearly two million users in London alone, so we’re excited to be partnering with them for UberEats. Their launch will benefit customers who want to enjoy food at home or at their office by pressing a few buttons on their phone.”
The on-demand economy, of which Uber is a major part, is constantly expanding, and attracts more than 22.4 million users annually and $57.6bn in spending, according to Harvard Business Review. The largest category of all is online marketplaces with 16.3 million monthly consumers, followed by transportation with 7.3 million monthly consumers, and food/grocery delivery at 5.5 million monthly consumers.
Valued at a staggering $62.5bn, Uber joins a crowded food market, competing against growing businesses such as Deliveroo, which has been available in London since 2012. With an estimated 3,000 riders cycling around London delivering food, Deliveroo is expected to hit revenues of £130m this year.
Success and failure
Dan Warne, Deliveroo’s Managing Director for the UK and Ireland, believes the surge in food delivery is due to the hectic lives of customers, who have readily adapted to the on-demand economy.
“We have learnt a great deal about the market in the last three years, innovating to suit customer and restaurant needs through multiple initiatives”, he said.
“We have also seen strong support from the restaurant community. Partnering restaurants see our service as a means to leverage their excess kitchen capacity and existing locations to generate average revenue increases of more than 30 percent.”
The success behind Deliveroo lies in the fact that it welcomes opportunities for restaurants to increase trade at times that have traditionally been quiet for the industry, such as Sunday evenings – one of the busiest times for Deliveroo.
“We want to bring our food delivery experience to as many people as possible across the globe. Right now we are working on expanding our service to new cities, creating more delivery zones and continuing to welcome well-loved restaurants to our platform”, he added.
However, many smaller on-demand companies are struggling, as venture capital investors start to shy away from the delivery sector. Spoonrocket, a US-based food delivery service, was among the first victims of the market battle, and shut down earlier this year after failing to generate substantial revenue.
It seems the food delivery business is a great investment if you already have a strong customer network, but could be too much of a financial risk for start-up businesses.
It is apparent the market will continue to expand, as it is a safe bet for bigger corporations; food delivery is unlikely to suddenly drop in business. However, it is essential that companies entering the market have an existing loyal customer network in order to drive sales and generate profit.
