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Driving and being driven by smart data

When I wrote our last e-newsletter in Autumn 2016 I didn’t think we would be voting again so soon at a General Election in June 2017. That was a surprise for sure but perhaps more of a surprise was the fact that I have come to realise that elections and referendums are now likely to be won and lost by the use of smart data and software. How many of you are aware that during the Brexit campaign the Vote Leave team spent most of their budget on employing data scientists and developing a new software platform from scratch called VICS (Voter Intention Collection System)? VICS used predictive technologies to allow the Vote Leave campaign to know which streets to target throughout the UK (and those to avoid) and also to co-ordinate their online marketing machine which delivered no less than one billion targeted adverts using social media sites such as Facebook. It is pretty amazing when you think about it, and entrepreneurial, regardless of your political persuasion! The software code for VICS has been published online so who knows when it might come into use next.

Smart use of data is where it is all going and I am constantly impressed with companies we are working with who refine their business model to commercialise user data in a way which was never anticipated at the outset. I have recently also seen a movement by some companies away from ‘SaaS’ to ‘Freemium’ to ensure that a user base can be quickly grown to then harvest the user data. Many seasoned investors might groan when they read this and clearly this is a high risk strategy which flies in the face of traditional models which focus on cash generation from customers. Ultimately it is all about working out who your customers are and whether there is a sustainable market need. At one investment pitch that I recently attended I was impressed to hear that one of our clients had anticipated that all revenues would be derived from their app as part of click through transaction commissions. This model now equates to less than 10% of its income and the company now harvests the data from its million users a day to help large retail institutions to better manage their stock, reduce discounting, and predict what the next trends are. Did you know that if you buy trainers in London they are likely to be grey, they will be red or blue in Manchester and grey in Scotland?!

An economist at Stanford University has just published some really interesting predictions that all vehicles across the globe will be electric by 2025 on account of the fact that electric vehicle (EV) technology will improve greatly over the next few years such that it will be ten times cheaper to run an EV car from your current fossil fuel car. If this sounds crazy then do bear in mind that Ford has recently announced as part of a $1bn investment in artificial intelligence that it will be mass producing driverless cars in less than five years’ time. Maybe the economist knows something because Toyota is also working with Stanford University as part of its own $1bn investment into these technologies. Car ownership is likely to become a thing of the past, there will be a collapse in oils prices and smart use of data is going to get really interesting. If you don’t believe me then read his report (“Rethinking Transportation 2020 – 2030”). One of the first companies to pitch on Dragons’ Den focussed on installing advertising screens in taxi cabs and making profits from advertising revenues. The Dragons completely shot down the idea in flames (which made great viewing unless you were the company’s founder or me, the company lawyer) and I can’t help wonder that they may soon take a completely different view of ‘in car advertising’ given that car journeys will soon be more like rail journeys except with a greater opportunity for advertising to a private captive audience.

Whatever you think of these various strands and thoughts, smart use of data is only going to continue and data driven businesses are going to be the ones to capitalise on our increasingly digital world.

Stuart Hendry

Senior Partner and Founder

Email: stuart.hendry@mbmcommercial.co.uk

Tel: 0131 226 8203 & 0203 096 0113

Summer newsletter 2017 - Welcome
Edinburgh Commercial property market overview

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