During the last couple of decades, we have been introduced to technological innovations and tools that help us deal with daily activities much more easily and effectively. The way we shop and communicate with each other, consume information, travel, and pay bills has changed dramatically since the introduction of the Internet. Notwithstanding these innovations, when it comes to political elections we are stuck with the old-fashioned paper ballot system.

Internet voting would have eliminated problems related to distance and accessibility, allowing every eligible citizen to vote, regardless of their location at the moment. It would have also eliminated long queues and save time at polling stations, which eventually would have caused a meaningful increase in voter turnout. Moreover, Internet voting would have drastically reduced election expenses, which governments could direct toward education or investments in healthcare.

If we look at election procedures through the perspective of the younger generation, the entire process that involves physical voting ballots in school buildings looks unattractive and outdated. How can we expect the youth to show up at voting centers, stay in line for some time, and mark the name of certain politicians or political parties if they do almost everything with the involvement of digital tools?

So, after thinking about the aforementioned positive effects, it is quite logical to ask, “If we trust the Internet when we do money transactions, then what stops us from implementing voting over the Internet?” The answer is pretty obvious when we think deeper about online business and the philosophy of elections.

First, online transactions are not as safe as we think. Well, it is notably safer for consumers, but for merchants and financial institutions that are involved in e-commerce, it is quite risky and they lose billions of dollars every year. The reason why we have the perception that it is safe to spend money online is that these institutions never held consumers responsible for loses, and reimburse clients if losses occur.

Secondly, even though it sounds rational to compare e-commerce with the online voting, the procedures and requirements are significantly different, mainly in issues related to security, anonymity and verifiability.

Security. Losses from online transaction fraud could be acceptable for merchants, if they compare it with their overall profits. It is okay for them to have a few cases of theft amid thousands of transactions. However, it is not an acceptable ratio for elections, given how often candidates win with tiny margins.

Anonymity. It is a vital part of all political elections. Voting should be done anonymously, which prevents voters from being pressured and influenced before, during and after the elections. It turns out that nowadays, it is very difficult to build a system that will satisfy both the security and anonymity requirements of elections. Basically the more secure the system is, the easier it is to figure out who voted for whom.

Verifiability. Although the paper ballots look outdated, they are being used as physical proof that indicates that a “certain number of people in certain district voted for a certain political party or a candidate.” Is there any other way to verify votes after online voting, given that we also need to maintain anonymity of each voter? Experts say, “None so far.”

Essentially, online voting requires technology and security measures that we do not currently possess. But hopefully in the near future innovations that are being developed by businesses will respond to the security, anonymity and verifiability requirements of political elections, which will eventually help democratize the democracy.

Note: There are several countries, including the U.S. and U.K. that have been conducting experiments with online election at the local level. However, so far Estonia (the country where the Skype was built) is the only country that is conducting online voting countrywide. Unfortunately, the experts group that monitors online elections in Estonia found serious problems that basically question the legitimacy of online voting. 


1. De Castella, Tom. “Election 2015: How feasible would it be to introduce online voting?” BBC. April 27, 2015
2. Gross, Doug. “Why can’t Americans vote online?” CNN. November 8, 2011
3. Cameron, Dell. “Online voting is many years away, thanks to widespread security concerns.” The Daily Dot. Jul 13, 2015
4. Duncan, Geoff. “It’s the 21st century! Why aren’t we voting online yet?” Digital Trends. November 5, 2012
5. Charlton, Alistair. “Election 2015: Why can’t we vote online?” International Business Times. April 17, 2015
6. Talbot, David. “Why You Can’t Vote Online. Fundamental security problems aren’t solved, computing experts warn.” MIT Technology Review. November 5, 2012
7. Arthur, Charles. “Estonian e-voting shouldn’t be used in European elections, say security experts.” The Guardian. May 12, 2014
8. Kobie, Nicole. “Why electronic voting isn’t secure – but may be safe enough.” The Guardian. March 30, 2015
9. Jefferson, David. “If I Can Shop and Bank Online, Why Can’t I Vote Online?” Verified Voting.

By: Vugar Salamli

read more

Can innovation truly be democratized and how?

Quirky was launched in 2009 by Ben Kaufman to democratize innovation – anybody with a good idea could bring a product to market with Quirky’s support. Quirky was backed by VC powerhouses  such as Andreessen Horowitz and Kleiner Perkins Caufield & Byers as well as GE, and raised over $185 million. However, on September 22, 2015, the company filed for Chapter 11 bankruptcy as it ran out money. I’d like to take a look at what caused the demise of such a promising and innovative startup and offer suggestions for version 2.0.

How did Quirky work?

It was simple:

1.       You submit a hardware idea; it could be developed independently, or jointly with Quirky community members with various expertise who would later share in the product revenue

2.       Community members and Quirky employees would then discuss and vote weekly at a live product evaluation session called Eval

3.       Quirky would then pitch winning products to their brand partners like GE,  Mattel, Harman, Poppy or manufacture the products themselves

4.       Quirky then sold the products to big box retailers and online

5.       The innovator earned commission on each item sold

At the time of the bankruptcy, Quirky had over 1 million community members, was receiving 4,000 ideas a week, had developed more than 400 products and was in 50,000 retail stores.

So what went wrong?

A pseudo multi-sided platform that was overly concentrated on one stakeholder: Quirky’s platform comprised of 3 main groups – community members, brand partners and big box retailers. Quirky did a great job creating a large community of innovators and innovation influencers – 1 .15 million strong! However, it failed on the brand partner and retail side. Quirky had only a handful of large brand partners who picked some (likely a minority!) of innovations to manufacture. Quirky therefore had to bear the high cost of manufacturing and distributing several products with its own capital. It also failed in its selection of retail partners. It targeted only big box chain retailers who had strong buying power/leverage and so offered very low margins (retailers wanted 60-70% margin) and required large volumes to stock all their brick and mortar stores. Therefore, Quirky was unable to test concepts in stores in small volumes. It is also worth noting that some large retailers, like Walmart, are able to return unsold inventory to manufacturers, which could prove costly for failed Quirky products.

No strategic focus/market segmentation: Quirky manufactured everything – from a smart air conditioner selling for $350 to a $3.00 citrus spritzer.  It was focused on bringing any and all good ideas to market at light speed. As a result, there was no strong brand identity. This negatively impacted high value items as customers were not willing to pay the price for an unknown brand. Quirky attempted to create several sub-brands, but failed in getting buy in from consumers.  Furthermore, Quirky was so focused on volume that it did not spend time iterating and improving on products once launched.

Improvements for version 2.0

Earlier this year, Quirky tried to pivot by a) focusing more on internet connected devices for the home, anchored to its Wink app; and b) positioning itself as a supplier of ideas to large companies like GE and Harman, who will do the manufacturing and distribution. The products will carry the big company brands and the tag line ‘Powered by Quirky’.

However, investors had lost faith in the company and were unwilling to pour in more cash. Wink is now up for sale, with Flextronics as the leading potential buyer. The Quirky brand and community is being sold separately.

I would like to offer the following considerations to anyone who decides to pick up from where Quirky left off.

·       Redefine mission and become an asset lite company: Quirky should serve only as the Uber for ideas; its purpose should be to continue to filter ideas through Eval and then connect stakeholders in the value chain to figure out manufacturing and distribution. In order to ensure quality, manufacturers and retailers should also be rated by users on the platform to facilitate the selection process by innovators.

·       Refine selection of stakeholders and create a true marketplace: Quirky should look to sign up all sizes (small, medium, large) of OEMs/contract manufactures to bid for innovations it promotes. These manufacturers will have the option to purchase the IP outright and/or offer royalty to the innovator while bearing the full cost of manufacturing. However, if an innovator can bear the cost of manufacturing, he can still source a manufacturer on the platform.  On the distribution front, small, medium and big box retailers can then purchase from manufacturers or innovators on the platform. Big box retailers can have the option to bid to manufacture the products themselves or with a manufacturer on the platform as private label at their own cost.

·       Focus on simple, functional, low value items: High value items require significant investment in product development, manufacturing and marketing. It’s best left to companies like Bolt (https://www.bolt.io/) who can be more hands on, iterate and achieve better product market fit and provide financing. Being just a supplier of ideas to large companies is also a weak position to be in. GE, Harman could easily create their own platforms to source ideas for high value items. The next iteration should rather focus on low value items like the Quirky flexible power strip (http://www.amazon.com/Quirky-PPVPP-BK01-Pivot-Power-POP/dp/B002YWIHB6/ref=sr_1_1?ie=UTF8&qid=1446060574&sr=8-1&keywords=flexible+power+strip). Very little branding/marketing is required for such products and they could easily be sold online only to reduce distribution cost.






By: Alice Agyiri

read more

What A Nobel Prize Winning Economist Got Wrong

Nobel Prize Winning Economist Robert Schiller aptly points out humans’ most basic needs: food, shelter, safety. Today’s modern economy, he argues has addressed many of these needs, except, perhaps, shelter. Specifically, in Western countries, the risk of losing one’s home, and a huge portion of financial wealth in the process, has not been addressed to the same extent as the risks of dying from hunger or being a victim of homicide have been addressed.

The first attempt to reduce the risk of home loss occurred when the first home insurance company was formed after The Great Fire of London in 1666, although home insurance didn’t proceed to be common place until several centuries later. Today, because of  home insurance, most Americans do not risk losing the majority of their savings from a fire or natural disaster. They do, however, still risk losing their home, and the majority of their wealth, from a drastic decline in home prices that puts them “underwater” in a less literal sense, meaning their mortgage is worth more than the home they are in, and their home equity, which comprises the majority of residents’ net worth, is wiped out.

Yale University Professor Robert Schiller set out to address the risk home owners faced of a sudden decline in housing prices by creating a company eventually called MacroMarkets in 2006. He created a platform for “up” and “down” shares, in which anyone could bet on home prices going up or down. When home prices, as defined by the Schiller Index, went up, MacroMarkets shifted money to the up accounts, when they went down, the company shifted money to the down accounts. Homeowners could hedge their large residential real estate exposure by buying the down shares. On the other side of the transaction, banks and investors could gain exposure to residential real estate by buying the up shares.

MacroMarkets didn’t work. The Company shut down. Professor Schiller attended a discussion at HBS on October 6, 2015 and asked students, including myself: what went wrong? How else could one protect consumers and their unbalanced portfolios from falling home prices?

I decided to take some inspiration from the stories of PayTrust, Uber, and Microsoft, which had the challenge of not only developing radically new ideas, but successfully executing on the new ideas.

The main flaw that MarcoMarkets found was that home owners didn’t end up buying the down shares, instead hedge funds did. So, the consumer was still tied up with most of his net worth in one local real estate asset, his home, which was susceptible to a sudden fall in price. Modern financial theory tells us that the consumer should have a diversified portfolio of global equities, bonds, commodities, and real estate.

The expected change in behavior of buying a stock to hedge a real estate exposure went against  the typical financial behavior of a normal homeowner. The concept of backwards compatibility in technology refers to make a new product compatible with old features so consumers are more accepting of the new offering. For example, when first introduced, DVD players still played CDs. MacroMarkets would have done well to have their innovation within the realm of the existing home buying flow. Specifically, instead of  “up” and “down” shares, MacroMarkets should have offered a product, where MacroMarkets offers to pay a portion of the down payment on the home and a portion of the home mortgage in return for owning 50% of the home equity. When the consumer applies for a mortgage, he could also apply to have MacroMarkets buy half the home equity. The forms for both mortgage and home equity could look nearly identical. This approach would reduce the amount of local real estate exposure homeowners had.

This new vision of MacroMarkets, call it MacroMarkets Improved,  does not want to necessarily hold all the residential real estate risk, but wants to pass it along to others. It needs to influence other firms to buy the residential home equity. For example, by bundling the home equity and selling it to institutional investors, it could provide a compliment to institutional investors- a financial instrument with low correlation to other asset classes. But how does MacroMarkets Improved get in the door with institutions without having large bundles of home equity and an existing track record? How can it inspire safety and confidence? Professor Schiller shared with us that many institutional investors were not interested.

Perhaps a stand-alone value added product such as a software package that allows investors to play with the famous Schiller home prices data set could get MacroMarkets Improved in the door with major endowments and institutional investors. After building trust and confidence, the same institutional investors may be willing to overlook the novelty of the idea and become willing buyers. Also, there may be certain financial firms that are more interested in residential versus commercial real estate exposure, which they could get through a REIT. Could there be an irregular network topology that attracts a certain type of investment firms to the bundled home equity MacroMarkets Improved is selling?

Assuring the participants on both sides of safety and security is incredibly important. MarcoMarkets failure to do so, led to liquidity problems that eventually shut the company down. I believe that if MacroMarkets had partnered with the Consumer Financial Protection Bureau or other government organizations it could have been more successful. Specifically, a former Project Manager for Innovation at the CFPB explained to me that a concern has is home owners buying homes with leverage (often 80-90% funded by a mortgage). If instead, initial leverage could be brought down to 75%, since the remaining equity investment would be half funded by the resident and half by MacroMarkets Improved, the residential real estate economy could be more robust and less prone to the crisis of being over-levered. Having the CFPB as a partner or sponsor of MacroMarkets Improved could build credibility and address safety concerns of both home owners and institutional investors looking to diversify their portfolio but concerned about a product that includes bundling home securities. Finally, the CFPB and MacroMarkets Improved could team up to provide home owners with more complimentary solutions, such as software that helped manage home insurance, expenses, and mortgage payments. The software could have the added benefit of helping to advise homeowners not to sell their homes in down markets.

Professor Schilling took on a very noble cause in the creation of MacroMarkets, but he would have done well to consider strategies such as backwards compatibility, network effects, compliments, and creating trust/safety more closely. Many of the modern tech breakthroughs from online payments to on-demand apps succeeded not just via having  innovative concepts but also from effective implementation strategies.

By: Marc Bhargava

read more

Online apartment rental search – plenty room for breakthrough innovation?

As I look to moving to a new city and apartment next year, I dread the task of finding a suitable place that I will be happy to stay in for more than 2 years or so. My average moving frequency has been ~1/year for the past 7 years so I am pretty comfortable with the kluge of a process called “apartment hunting”, while hopeful that someday someone will find a better way.  Let’s quickly revisit the options available when looking to find a long-term rental (I am leaving craigslist out of this list, as I assume everyone is fairly aware of the pros and cons of it).

1.     Classifieds such as Apartments.com, Rent.com

These portals act as classified listing from the renters or broker agencies. Fairly straightforward user interface that lets you filter by geography, price, number of beds/bath. Unfortunately, I did not find any way to filter for pets and amenities. The filtered listings are shown on a map as well as a list and one can start browsing from there on. Some new features I noticed were a section for reviews (seems like recently added as I did not find any reviews at all, plus, I assume its only dissatisfies customers who will be writing complains regarding their apartments so not sure how helpful the review system will be), along with nearby schools and public transport available. I think latter would both be useful to the hunters.


The thing I most dislike is the information dump regarding the apartment (see below, ugh!). Additionally, I need to independently send availability request for each of the apartments I am interested in (why cant I select a bunch of interested properties and send a mass message?)


2. RentHop aka marginally smarter aggregators

RentHop claims to have an improved listing mechanism compared to other solutions that list just based on price or the advertisement money paid by the lister. However, one still needs to browse the apartments one by one hoping to find that needle in the haystack. Additionally, RentHop also lists a HopScore, which I do not understand how it is calculated, but higher the HopScore worser is the apartment (really! – this is so not intuitive and threw me off for a minute, look below). This score may be useful, but since it is so opaque I have no clue what goes into calculating it and how much weight should I put on this score.



3. Wide aggregators such as RentJungle and PadMapper

 Look at the jungle of apartments available below (at this point I am already exhausted and I don’t even want to start sifting through the “jungle”).


However, PadMapper does have a somewhat better solution listing the walkability score and street view (data taken directly from google and other apps).











 On an aside, seems like hunters are not the only one frustrated by the multitude but equally poor solutions available. Brokerage firms and renters are also dealing with the challenge of advertising through multiple platforms. Enter rentlinx that lets these parties post to multiple websites leading in same details listed across multiple websites.







Coming back to the solutions available to the hunters, I think a common thread can be drawn amongst these. The existing solutions are far from ideal for someone looking for a place in a new city and in some way or the other catered more towards serving the broker/renter/agency than the consumer.  I would hazard a guess that there is a lot of pressure to monetize the platform as soon as feasible rather than focus on investing in a platform focused on serving the consumer needs. So as soon as a company builds a decent sized database they start thinking about using the data to serve the renters leading to a shift in focus from serving the consumer in best possible way to creating a suboptimal solution that only partially meets the consumer needs (and, thereby, the needs of the other side of the platform as well). Having said that, I do commend the effort and money that the founders and investors of the above companies have put in so far. But can we think of a better platform to serve the consumers? Thinking back on my apartment search experiences, the best ones were wherein an intermediary took detailed notes of my needs, including, but not limited to neighborhood, walkability, commute, shopping options available nearby, amenities and suggested a bucket of 5-8 candidate apartments that I could do a deeper research on my own. Perhaps, it will be useful to build a platform that can go beyond data crunching and has better intelligence built in to suggest a pool of suitable apartments. I can imagine a website taking detailed info in form of a questionnaire to understand the rentee needs based on more softer type of questions such as “Do you care more about the price or the neighborhood walkability”, “Are you flexible on the rent if we can find you apartments with all amenities”, etc. Essentially, a platform that will understand the pros/cons of various options available and help the costumer winnow down to few options beyond just the geography/price/# of bedrooms. 3rd party advisors have been doing this for a while and I am sure consumers will not mind paying for a legit online service that can do this job well.  The only question is how hard will it be to build an “intelligent” system like this? A possible solution could be a hybrid model, wherein, a company trains the advisors to use the data available online to curate suitable apartment options for customers at an affordable price. In any case, rental marketplace has plenty of room for disruption and innovation.

By: Isha Ghai

read more

In his January 2014 NY Times article, Marc Andreessen, co-founder of VC firm Andreessen-Horowitz and widely recognized as a key figure in Silicon Valley, stated that “Bitcoin offers a sweeping vista of opportunity to reimagine how the financial system can and should work in the Internet era, and a catalyst to reshape that system in ways that are more powerful for individuals and business alike”1. Andreessen backed his vision by making substantial investments (~$50 million) in Bitcoin related startups2.

Despite strong support by Industry experts like Andreessen and an almost linear growth in number of Bitcoins in circulation (~13.5m in November 2014)3, Bitcoin environment is struggling to overcome negative media and consumer perception, and has been unable to reach consumer and merchant adoption levels many expected when Satoshi Nakamoto published a  paper laying the underlying framework for Bitcoin infrastructure over 6 years ago.

So is Bitcoin just a fad, or is it truly the most exciting technical innovation since the Internet? I would argue it’s the latter, and my reasoning is based on the following overarching principles:

1. Greenfield technology adoption is never smooth

Technology adoption often involves a similar, repetitive pattern. A mysterious new technology emerges, seemingly out of nowhere. Early adopters and tech enthusiasts who see potential in it become completely obsessed and start painting a vision of a new world order where things are done differently. Establishment elites like media, government regulators, and incumbent players who are threatened by this potential disruption heap contempt and scorn on the technology.  Gradually, the technology evolves beyond its intended use case and starts to gain mainstream adoption. Eventually, it permeates into our day to day lives and we wonder why this wonderful potential wasn’t completely obvious from the start.

This cycle happened with Personal Computer in the 1970s, Internet in 1990s, digital content distribution in 2000s, and now Bitcoin in 2014. Remember the first time you logged into the Internet – did you truly envision the profound effect it would have in your life, or did you dismiss it as just another novel technology? Or the first time you sent an email – did you predict that the technology would fundamentally change the way people work and communicate all around the world?

For majority of the folks the answer is no – a revolutionary technology faces major barriers to adoption at the onset from consumers unwilling to change instilled behavior, and from incumbent companies with deep-rooted business models. Bitcoin is fighting the same uphill battle right now, but I compare this to users using dial-up for the first time who were not able to unravel Internet’s true potential.

2. New technology tends to emerge as an improved replacement, but what about the unknown use cases?

Thinking back to the early days of the Internet, the most common use cases were just replicating what happened in the offline world. For example, early Internet startups like Craigslist took the newspaper classified model and put it on online. It took a while for companies like Wikipedia to emerge, that enabled distributed collaboration – a use case made possible only by the Internet.

Similarly with Bitcoin, initial use-cases just involve using it as a replacement of existing currency, for example, enabling Bitcoin holders to buy products on Overstock.com using Bitcoins instead of dollars. However, the true revolution will come when innovative companies start exploiting Bitcoin to serve use cases previously impossible. Here’s a brief list of potential use cases of Bitcoin that go beyond what traditional infrastructure can do:

a.Micropayments: Allow vendors to charge micropayments to the 8th decimal point without any transaction cost. For example, an online publication can charge users 0.5 cents to read an article, instead of having to leave money on the table by having the cheapest subscription model be around $20/month, as enabled by the existing credit card infrastructure.

b. Verification: the major innovation Satoshi Nakamoto contributed to was the public distributed ledger (also known as the block chain) – not a virtual currency. In addition to currency exchange, the block chain can be used to implement online verification systems. Imagine having your passport be stored online4, or being able to vote online using your unique blockchain ID – now that’s truly a game changer.

c. B2B transactions: Businesses all across the world transfer huge sums on money to other businesses using existing banking infrastructure, and have to take on exchange rate risk and pay transaction fees. For a company operating in a low margin business, the positive ramifications on the bottom-line of saving on the 1-2% transaction fees are massive!

3. Strong network effects

Bitcoin is a classic example of an ecosystem with extremely strong network effects. The more consumers and merchants start using Bitcoin, the more attractive it is for a new user to join the system. The same property also extends to Bitcoin miners and entrepreneurs building add-on services for the ecosystem, further consolidating its position as the premier online, distributed currency system.

In fact, I would argue that the lead and market share that Bitcoin has gained over its competitors in the past 6 years makes it extremely tough for a new competitor to displace it. The strong network effects can easily carry Bitcoin to dominating the online P2P cryptocurrency exchange space.

4. Reduction in transaction costs

Going back to the comparison to Internet – before widespread adoption of the Internet, there was a huge cost of publishing data or information to a user; and there were large incumbent gatekeepers like newspaper, radio stations, TV channels etc. Advent of Internet brought this cost down by order of magnitudes, and democratized information publishing to the point that anyone could publish information instantaneously at almost no cost. Bitcoin is doing exactly the same to the world of payments – whereas before large proprietary payments network charged fees to move currency around, now there are thousands of Bitcoin startups that can move payments for no additional fees.

Only time will tell if Bitcoin will get uniquely integrated in our society and have the same profound effect on our lives that Personal Computers and Internet have previously had. I truly believe that all the signs are pointing in the right direction!


1 – http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/?_r=0

2 – http://www.coindesk.com/andreessen-horowitz-2-8-million-funding-tradeblock/

3 – https://blockchain.info/charts/total-bitcoins

4 – http://techcrunch.com/2014/10/31/your-next-passport-could-be-on-the-blockchain/


read more