On December 18th, 2012, OLC attended New York Enterprise Technology Meetup's December event featuring Union Square Venture's Fred Wilson. There were three presenters: Tracx—a SaaS-based (Software as a Service) unified social intelligence platform, JouleX—a leading innovator in sustainable energy management for the enterprise and SoMoLend—a web-based lending platform that connects small business borrowers with individual lenders. The presentations were followed by keynote speaker, Fred Wilson of Union Square Ventures, who gave a short talk about network effects in enterprise technology.
JouleX is about "managing energy at a massive scale. They are an app-based software company and the team is all from the information security world. A question they had was if there is a way to optimize energy use. Considering the exponential growth of data centers, causing a major drain on the grid. Data centers use a lot of energy and engineers are interested in controlling energy waste and optimizing consumption. JouleX helps manage energy consumption by connecting to everything on the network (Asset Connectors). In doing so, energy consumption can be controlled and set using policies. A dashboard allows users to be agile and can easily show which are the heat spots. The dashboard is customizable and can be configured with widgets. There is a tab to view floor plans, where a heat map is created to show rack density for energy efficiency.
JouleX policies are effective and uses a granular engine that allows to provide energy management information and implement energy-saving policies. Through a distributed office, the end-user can apply policies to their offices to save energy. It also provides analytics for policies and recommends policies that would save money and energy. There is no agent involved—all data is pulled from the network. Companies that are concerned about sustainability and profitability can profit from using JouleX.
TracX is a "360º social media management profile" that specializes in big data. It works to deliver real-time social content to the user at once. The user can analyze data that streams in, which is presented on a simple and elegant dashboard. The collected data is indexed, "sliced and diced," segmented by location and demographic and maintains a full view of the audience by capturing and transforming data into something more readable, coherent and relevant.
TracX is a unified social intelligence platform that enables enterprises to identify actionable insights on big data. "Social media is big and chaotic," Eran Gilad, CEO of Tracx said. "Tracx helps manage social media into something manageable and scalable." It can analyze specific social media—outside of "owned media" and can filter search to define specific data, as in where and whom the content is coming from. TracX goes beyond search for data-filled queries. The dashboard itself is user-friendly and can be customized to the user's needs. "Everything is fully drillable to enter into data," Eric Berkowitz said. "You can assign team members to handle problems and data. You can also tag team members to relevant data."
There are also heat maps—a geospatial realm that can define where "hot spots" are. "You can drill down into the street level to get coordinates of where the data is coming from. This way, you can provide extra care to these customers and future customers," Berkowitz said. Based on what people are saying, TracX can determine who are just talking about brands versus who has intent to purchase the brand item. It can also use the heat map to determine where to assign promotions in certain parts of the country. "We're taking social media to a new level to add revenue," Gilad said.
SoMoLend, a social, mobile, local lending platform spearheaded by Candace Klein, CEO and founder, addresses crowdfunding for small businesses. "Twenty million businesses need financing, but they don't have access to capital," Klein said. "This new way of crowdfunding is going to help."
SoMoLend uses a patent-pending, debt-based commercial funding platform and has been live since early 2012. It has currently raised around $5 million through social media—primarily through Facebook. The user interface is simple and clean and the steps to create an account are quick and easy. "When you do create your account," Klein said, "make a video to go along with it—you are 114% more successful in raising capital in crowdfunding." The platform also provides loan applications, which are like bank loans.
On the lender's perspective, the lender needs to be verified for suitability analysis. They take a five-minute survey to see which space they would like to invest in. After the lenders choose their preferred industry, they are taken to borrowers that the lenders might be interested in. The final step is taking a short quiz, to make sure that the lender has read the borrower's business proposal. The money is transferred by escrow.
Fred Wilson spoke about networks in enterprise. He said, "To invest in companies that can be worth more than $50 million, $100 milion, even up to over $1 billion, you have to be willing to take on a lot of risks. A third of what we've invested in will be worth nothing—they will have completely been wiped out. A third of will be successful, but not to overly so. The last third will achieve what we want."
He then gave a short story about the software space: "Think of this story as a morality play. An entrepreneur comes up with a new category. He takes this new idea, runs with it, develops a platform, turns out to be an expensive project, but he manages to build it and dominates the market. The company goes public, but two kids in a garage say, 'Hey, why don't we enter and make something of it too?' and they develop a product, similar to the dominant company, but they sell it at a lower price. The company would have to lower their price to be competitive with the ankle-biters. Suddenly, people start releasing open-source and that ruins the financial end for the company. This happens in software space and affects the financial market." Wilson added, "We want to look at network effects and there are two types: networks of people that come with software and data that comes by virtue of using software. It's very difficult for competitors to create ankle-biting software when you have major software players on your side."
The definition of a network effect is, "every new enterprise that joins the network creates a new network. The more successful the market, the harder it becomes to penetrate by the new players."
Wilson briefly talked about Pollenware, a collaborative cash flow optimization platform. "Customers pay you, that's what working capital is. It's difficult for entrepreneurs to manage capital or get capital. Pollenware allows companies to optimize their capital positions through a bid/ask environment. Manufacturers have their own suppliers and capital can cascade the system.... Enterprise software made this happen, but really, a place where network effects play out."
"Open-source businesses are also network effect," Wilson said. "10gen builds products and services, but also contributes to open-source. A developer network is created this way. It's an easy way to build up a network of developers. The technology gets better, developers are more likely to adopt it, and end-user contributions may help progress open-source because they've built features to benefit themselves, but it ends up benefiting everyone."
He also touched on data networks: "Contributing data (return path) with many others brings more senders and receivers, creating a more powerful data network, allowing them to build a large database. We can determine which sender is good or bad, what type of email works the best, and so on."
Wilson suggested that enterprise developers think about network effect on both the developer and the user side.