We’re all living in realtime — we just don’t know it

Our digital lives, of work and play, are increasingly a shared experience. We are attending events, playing games, working collaboratively, getting alerted to things around us and consuming media virtually and together, all in realtime.

Such interactions depend on immediacy. We want to see when someone is typing a message or editing a document, to know when they have unmuted their microphone, or to discover how a game’s leaderboard is changing, in each case quickly and reliably enough that it feels natural. Our ability to communicate and collaborate virtually relies on these digital ‘pushes’ being transmitted seamlessly, creating a shared virtual experience — otherwise the illusion disappears.

Powered by Ably

Meeting that need is Ably, whose platform helps its customers to build applications and products that facilitate reliable, realtime, at-scale interactivity for their users. We’re excited to be participating in its $70 million Series B funding round, and to be welcoming Insight Partners and Dawn Capital to the journey. At MMC we have more than doubled our investment in Ably after leading its Series A two years ago.

Ably provides the complex data architecture needed to power the engagingly simple, synchronised experiences that make the virtual world move. It enables customers to offer their users the closest virtual equivalent of being in the same room together. One example is Hopin, whose virtual events platform has developed well beyond video chat and messaging to offer a rich experience based on the same interactions as a traditional conference: break-out sessions, an exhibition hall and one-on-one video and chat networking. In the process, it has become the fastest-ever European startup to reach a $5bn valuation.

Ably is scaling up rapidly too, to meet the needs of its most demanding customers. We’ve seen its usage soar as remote work and play become ubiquitous: by the start of this year, it was facilitating 400 billion messages per month, thirteen times higher than a year previously. Its cloud platform is used by customers in over 80 markets to build applications and services that perform at scale — with use cases spanning online classrooms, collaboration among distributed teams, richer experiences for fans streaming sports events, super low-latency financial data, and up-to-the-minute pricing and inventory information in ecommerce.

Building the infrastructure for next-gen digital experiences

The world is quietly shifting to realtime data — which will amount to almost a third of the global total by 2025, from a small fraction today. We’re betting on specialists like Ably to underpin this shift, much like we’re backing Tyk to power how modern software products talk to each other and Snowplow to be the single source of truth for how users are interacting with digital products.

That bet is premised on deep technical expertise. CEO Matt O’Riordan is a proven, second-time entrepreneur and CTO Paddy Byers, his co-founder, has been grappling with the challenges of realtime data for 20 years. Since first investing, we have helped the team to add an excellent chairman in the form of Keith Wallington, formerly COO of Mimecast.

Matt and Paddy’s obsessive focus on a singular problem — immersed in the granular detail of realtime’s product requirements, customer problems and emerging use cases — positions them to become the leader in a critical niche, able to provide the full range of functionality that customers will increasingly demand. Unusually for a software platform, Ably was architected right from the start to be bulletproof — designed for global scale, super low latency and ‘zero downtime’.

Our bet on the future of realtime

The beauty of realtime is that its adoption becomes self-fulfilling. As software companies offer increasingly realtime, immersive and collaborative experiences, all of us as users come to expect it — and the companies themselves broaden their perception of what else they could create. This breeds an upward spiral of new products and features, higher user engagement and more users — resulting in exponential growth.

We believe that in the coming years realtime will enter a new stage of maturity — disappearing into infrastructure. We’ll stop talking about it and it’ll become a utility and a default, just like ‘cloud’ and ‘mobile-friendly’.

In realtime, specialist providers like Ably will be critical to getting there. It won’t be good enough for software companies to hack together their own workaround, or rely on a generic solution from one of the cloud giants. Utilities must scale, perform, integrate with other platforms and deal with faults elegantly. That’s why we believe Ably will win: offering the maximum level of control, customisation, analytics and reporting, based on the best infrastructure in the market.

In recent years we’ve seen companies like Twilio go down this path — making a simple need (sending text messages on demand, by API) easy for developers to implement, and building a company with an enterprise value running into tens of billions.

As the need for realtime interactivity grows and grows, we’re thrilled to be doubling down on a company with such a strong vision. Software’s journey to realtime is just getting started, and we’re backing Ably to pave the way forward.

Cloud infrastructure is an area we’re particularly excited about and we’re proud to have backed the likes of Ably, Tyk, Snowplow, MindsDB and Cloudsmith. If you are building something in this space, we’d love to hear from you. Get in touch with a member of the team to see if we can help you accelerate your journey.

Powering our realtime world: Our investment in Ably was originally published in MMC writes on Medium, where people are continuing the conversation by highlighting and responding to this story.

Everybody is in the business of prediction these days. The path of the pandemic, and its impact on health services. The shape of the impending recession, the stock market or the oil price. Unemployment figures or the size of the national debt.

As a venture investor, I can’t predict the future better than anyone else. Instead, I am focused on the long-term trends we can see: how technology is changing our economy, and where the impact of COVID-19 is shifting or accelerating that change.

The UK needs a new wave of transformative tech companies to help drive the recovery. Many of tomorrow’s winners will be built on the back of these trends.

The commute gets spread out

The nose-to-armpit commuting experience many of us are used to just won’t fly in a post-COVID world. More city workers will abandon the ‘9 to 5’, preferring to shift their hours or work from home part-time to avoid that packed 8am train.

Even once things return to normal, employers will struggle to justify why laptop-based workers need to be in the office every day. Working from home and flexible hours, where possible, are here to stay. Tools and services to support this will proliferate.

Along with sparser carriages this will mean a shift in business hours, working habits, city-centre retail and how we get our lunch. Working couples may have an easier time sharing childcare responsibilities, improving gender equality in many career tracks.

We may also see a knock-on effect on property prices, as the outer suburbs start to look more viable for more people.

My device or yours?

We all (used to) touch public technology infrastructure every day: credit card machines in stores, touchscreens for train tickets, keypads on ATMs and release buttons on doors.

Many of those may be phased out. Who will want to mash their fingers on a public touchscreen after a pandemic? I expect to see changes in the retail checkout experience, the way we pay our fares and how we interact with our cities and buildings.

We will see more contactless, less cash, and ‘bring your own device’ — using your phone for payment or access rather than someone else’s kit.

Grandma and grandpa get into ecommerce

The elderly population is proving far more capable of using online services than many younger people had assumed. It turns out they just needed a reason, and a little help from us.

In recent weeks, older people have been amongst the fastest-growing users of everything from grocery delivery services to online dating. Echo Healthcare reported a dramatic increase in over-65s using its online pharmacy service from mid-March. Grandparents have graduated from Whatsapp calls to Zoom groups to Houseparty quizzes.

Older people transacting online like pros will grow markets and open up new ones. Expect a surge in online spending, and new specialist products, services, devices and advertising formats to spring up.

Everything goes cloud, kicking and screaming

Software-as-a-Service (SaaS) is now huge — over $100bn of spend in 2019 — but still represents a minority of the $400bn global enterprise software market.

It’s harder to find statistics on how many companies still run on a server in the cleaner’s cupboard. Whose systems can’t cope with more than a few users logged in at once. Whose finance team had to keep commuting in because everything was only on that one desktop computer. And let’s not get started on paper files.

Belatedly switching to subscription licences for Office or collaboration tools, or buying thousands of emergency Chromebooks, is just the start. Faster SaaS adoption across every team, tool and process is now inevitable.

Security, connectivity and privacy controls will only become more critical as we see this play out.

‘Digital laggards’ get dragged into the 2020s

Sectors like accounting, law, education, healthcare and government are not known for being early adopters. Since March, organisations in those sectors have had to figure out remote working, cloud services and digital customer experiences like everyone else.

In many cases, five or ten years of progress has happened in eight weeks. There is a sudden and unprecedented permission to change things.

These ‘digital laggards’ might be set for faster transformation and stronger productivity gains over the coming years than more leading-edge companies that have banked those gains. This will create new opportunities for innovators serving those markets.

In companies across the country, rising stars in their 20s and 30s are taking the opportunity to lead this change. A new wave of future leaders will manage, collaborate and use technology in different ways to their predecessors.

Video extends into unexpected places

Tragically, many people have now had to attend funerals from home, through Zoom. That would have been unheard of — even decried as insensitive — a few weeks ago.

What else will be video-linked by default from now on? How about weddings, parents’ evenings, nannies at home, exams, political debates, court proceedings, shareholder meetings, fashion buying trips or audit visits to overseas factories?

In healthcare, recent weeks have seen a major shift in ‘telemedicine’ — doctors communicating with patients, and even monitoring vital signs, over the internet. This is helping to free up hospital beds and spot early warning signs of Covid-19 infection as well as other conditions.

Dozens of new category-specific tech companies will spring up to enable these services — Zoom won’t win everywhere. This will widen access, remove barriers and create transparency in all kinds of ways we really can’t predict.

This article was first published on CityAM.

Are you building something off the back of these trends? Get in touch.

Interested in more insights? Subscribe to MMC Writes.

Technology trends in a post-Covid world was originally published in MMC writes on Medium, where people are continuing the conversation by highlighting and responding to this story.

We’re delighted to have announced MMC’s investment in Unmade, together with our friends at Octopus Ventures and Felix Capital.

I wanted to write about our motivation for investing, and why the problem they address is so urgent.

Our dirty little fashion secret

Fashion is one of the UK’s world-leading industries, with the apparel market worth $65 billion and employing millions of people. But the UK is also a centre for the huge waste problem blighting how we shop and dress.

Over 80% of manufactured clothing ultimately ends up in landfill, whether worn by a consumer or not. Much of what is made is never sold or used, because of overproduction and wasteful distribution. Swedish retail giant H&M said last year that it was sitting on $4.3 billion of unsold clothing, while British luxury fashion house Burberry admitted burning £30m of perfectly usable stock the previous year in order to protect its brand.

Globally, the Ellen MacArthur Foundation estimates that the fashion industry loses over $400 billion a year in unsold stock and waste, representing 15% of all products.

Here in London, textiles are the fastest-growing contributor to our landfill problem. But we also export our problem around the world, shipping millions of tons of waste to poorer parts of the world.

As those economies develop, they are pushing back. Countries such as China and Malaysia are banning or reducing the import of plastics and other materials headed for recycling processors, causing a headache for EU countries who ship the majority of collected recyclables abroad for processing.

It’s clear that we’re going to have to tackle the problem properly — at source.

Built for scale — but that’s the problem

The fashion supply chain is set up to mass produce standard designs in big production runs. This mostly relies on forecasting consumer demand 6-12 months in advance, trying to predict which designs, colours and sizes will sell in what volumes and where. Since these predictions are always wrong, brands and retailers figure it’s better to overproduce (risking wastage) rather than underproduce (risking sales revenue).

Fast fashion makes this worse. Seasonal trends pass quickly, and clothing is increasingly considered disposable. Again, the UK is one of the worst offenders — we buy more clothes per person than any other country in Europe.

The industry is slowly waking up to the problem, with prominent figures such as iconic designer Jean Paul Gaultier hitting out at the overproduction of clothes by the industry and describing the destruction of stock as “scandalous”.

A more sustainable approach

Unmade was founded by Hal Watts, Kirsty Emery-Laws and Ben Alun-Jones in 2014 with the ambition to reimagine both the design and manufacturing processes of fashion. They saw a way to organise the industry differently, with brands only making what is sold, and distribution much more responsive to demand.

The Unmade software platform enables clothing brands to create on-demand supply chains. Clothing can be customised using Unmade’s interface, then sent to a factory where Unmade’s Order Management System (OMS) fits it into a production run and takes over control of the actual manufacturing. Unmade’s tech overrides the clunky 1980s control systems that run all the industry-standard knitting, embroidery and printing machines, getting any old factory up and running with a complete end-to-end digital workflow.

How does this reduce waste? By enabling on-demand production of customised items with lead times of less than a week, brands’ merchandising and store teams can use Unmade to stock the right stores and warehouses with the right designs and sizes at the right time, responding to real consumer buying behaviour — no more guessing needed.

With a personal touch

Brave brands can go one step further, and put the same tools in consumers’ hands.

Unmade’s on-demand supply chain is built on customisability — whether by the brand’s internal team or the consumer.

Trend-setting in fashion is changing, with consumers leading the way this time. The industry looks to user-generated content on Instagram and YouTube to spot innovation and see what is working. Uniqueness and personalisation are more important than ever before, and responding to shifting demand quickly is critical for brands. More ‘pull’ and less ‘push’.

At the back end, the Unmade platform seamlessly integrates individual and short-run orders into existing production, meaning individual orders can be manufactured at the same cost and speed as mass-produced items. Surprisingly, the brand’s overall margin can actually increase: they can charge higher prices for customised items, reduce production waste and warehousing costs and avoid discounts and write-offs later on.

This is at the heart of Unmade’s collaboration with sportswear and lifestyle brand Rapha to create Rapha Custom. Sports teams can personalise their designs, choose their colours, upload their own artwork and visualise in real-time how their kit will look in the field, on real models. Unmade is working with Farfetch and several top global fashion brands to power their personalised offerings.

So what’s next?

Ultimately, the fashion industry will need to move towards a fully circular model — designed, sold, and used with longevity and recycling or re-use in mind. This means more recyclable or bio-degradable materials; designs that last longer; production closer to the consumer, in areas with clean energy sources; and a culture shift towards second-hand or other repurposing.

For now, technology like Unmade’s can be used to reduce the need for overproduction — all while offering consumers a more engaging brand experience and protecting retail margins.

We’re proud to be backing Hal, Kirsty, Ben and the rest of the Unmade team, as they build out a world-leading tech platform for brands and do some good for the planet at the same time.

MMC Ventures backed Unmade from the MMC Greater London Fund, in partnership with the Mayor of London. We are particularly proud to be working with the London Waste & Recycling Board, who provided funding and support for this investment.

If you are combining technology with a more sustainable approach, we’d love to hear from you.

Please recycle your clothes! To find out more about clothes recycling in London, check out #LoveNotLandfill here.

Sources include A new textiles economy: Redesigning fashion’s future, The Ellen MacArthur Foundation; UK parliamentary report Fixing fashion: clothing consumption and sustainability; and McKinsey report Is apparel manufacturing coming home?

Fashion has a waste problem (and why we invested in Unmade) was originally published in MMC writes on Medium, where people are continuing the conversation by highlighting and responding to this story.

Modern manufacturing facilities are a technological marvel. It’s impressive (and a little humbling) touring around a state-of-the-art factory with a high degree of automation. Robot arms, smart conveyors, hundreds of machines moving in harmony, computer-controlled and responding to inputs from an array of sensors.

Except when they stop moving. Unplanned downtime is a real productivity killer, especially for ‘just-in-time’ operations with small profit margins. Think of a car assembly plant pumping out a new vehicle every minute — if a critical machine fails for an hour or two, that can cost millions of dollars in lost production and other costs further up the supply chain.

We believe that predictive maintenance will be an important trend in manufacturing over the next decade. Today, 90% of maintenance work is still reactive, often in the middle of a crisis. With more sensors deployed and better availability of data, new diagnostic and prognostic (‘remaining useful life’) capabilities are becoming possible, providing advance warning of an impending failure or degradation. This allows maintenance teams to stay one step ahead, avoiding those expensive scrambles to fix or replace a broken part.

That’s why we’ve backed Senseye, a leader in predictive condition monitoring and prognostics, in their £3.5m Series A (announced here). Having proven that they can make dramatic reductions in downtime in some of the world’s largest manufacturing facilities, they are on a mission to bring predictive analytics into the mainstream. They’re one of the highest scorers against our AI assessment framework, out of more than 250 UK AI companies we have met.

Senseye has developed a unique series of machine learning algorithms that take inputs from sensors — movement, vibration, temperature, current etc.—on each device on the factory line. Their platform builds models of baseline performance and failure modes, and detects small deviations that can be leading indicators of a problem.

But smart data analytics isn’t enough. To succeed in this space requires a deep understanding of the engineering and the factory context. Any successful solution has to consider how the maintenance team work, understand the potential bottlenecks in the line, and differentiate between an impending failure and a change of mode, or some planned maintenance that the team forgot to log.

Senseye’s team has all of this in spades. Co-founder and CTO Robert Russell has spent the past 20 years designing and deploying custom condition monitoring and prognostics solutions for critical machines like aircraft engines. Working in this field with co-founders Dr. Simon Kampa and Alex Hill over many years, the three teamed up with machine learning expert Dr. Daniel Read in 2015 to combine the best parts of the traditional approach with cutting-edge data science. They have created a product that sorts the signals from the noise, surfacing only actionable insights.

Their customers include leading automotive and other manufacturing conglomerates, in the UK, Europe and Asia. It works in the real-world environment of the shop floor, and the maintenance teams love it because it makes them more effective and their jobs less repetitive.

You could say they are selling ‘uptime-as-a-service’.

VCs tend to talk about software and typically don’t give much thought to the multi-trillion-dollar global manufacturing economy that produces physical products (unless they are drones or chips for mining bitcoin). As we at MMC Ventures explore how artificial intelligence is changing different parts of our economy — see our in-depth report, the State of AI 2017 — we believe that many of the highest-impact applications will be in the industrial world.

This isn’t our first investment at the intersection of software, new technologies and heavy industry — Sky-Futures is changing industrial inspections using drones and analytics, and Breathing Buildings (which we successfully exited last year) pioneered new energy-efficient cooling technologies. Don’t expect it to be our last!

Click here for the full press release, or visit mmcventures.com

AI meets heavy industry: Why we invested in Senseye was originally published in MMC writes on Medium, where people are continuing the conversation by highlighting and responding to this story.

Last week, peer-to-peer lending platform Zopa announced Europe’s first securitisation of unsecured consumer loans. Effectively they have bundled up 27,137 loans worth £138 million, which public markets investors can now go and buy. Funding Circle did something similar earlier in the year, rolling £130 million of small business loans into the delightfully-named “SBOLT 2016–1 DAC”.

Why is this interesting? Because it’s the latest step in the ‘re-bundling’ of peer-to-peer finance into the global capital markets.

Over the past decade, the fintech Wild West has matured into a grown-up set of options for consumers looking for alternatives to low-yield bank savings accounts. In addition to personal and SME loans you can fund mortgages through Landbay, back real-estate developments through LendInvest, provide invoice finance through Market Invoice or even make micro-loans to subsistence farmers around the world through Kiva.

These providers are regulated, relatively transparent, can point to a track-record and are much more user-friendly than most online banks and brokers. With interest of up to 7% on offer, it’s no surprise that money has flowed into their platforms — over £7 billion in the UK alone.

The whole sector remains a tiny speck in the scheme of the markets. The big UK high street banks alone have about £500 billion of SME and personal loans outstanding, and there are trillions more in mortgages and Government debt. But with bond yields at historic lows, equity valuations far above historic averages and everything else looking risky, there is a wave of capital out there looking for returns.

During a thunderstorm, a lightning strike is preceded by a leader, a channel of ionised air that snakes slowly down to the ground. At the same time, charged streamers stretch upwards from tall buildings and trees. Once they connect — bam, a billion volts is unleashed. I think that’s what we’re about to see in peer-to-peer finance.

The platforms are reaching upwards, reducing the importance of ‘the crowd’ as they court institutional investors. Several UK players have secured the British Business Bank or a forward-thinking bank or hedge fund to cornerstone their marketplace. Obillex has turned invoice discounting into an exchange-tradeable instrument. Funding Circle has launched the SME Income Fund, a listed investment trust with backers including Invesco and BlackRock. Some of these have attracted credit ratings and analyst coverage.

It’s only a matter of time before the global capital markets connect with fintech platforms in a major way, bringing an effectively unlimited flow of capital on the supply side.

We’ve seen some controversy around this recently. In the US, several lending platforms have been criticised for allowing institutional investors to ‘cherry-pick’ certain loans. Peer-to-peer student loans provider SoFi had to increase the returns on offer when it tried to package up and refinance a tranche of loans earlier this year. There will be experimentation and weaker platforms may fail to scale, but a cash-rich market and increasing demand for peer-to-peer makes this an inevitable trend.

But if it can be bundled up into obscurely-named packages (hopefully not a repeat of pre-financial crisis habits), rated by Moody’s and sold to hundreds of pension funds, is it still peer-to-peer? And does it matter?

This has happened before with other types of online marketplace. eBay famously started as a place for consumers to buy and sell collectables from one another, but these days 80% of items are new and most transactions are B2C. That influx didn’t kill off peer-to-peer, but it did harmonise and bring down prices for most products as competition flooded in.

I expect we’ll see the same in finance. Past a certain level of scale and predictability, there’s little reason to treat online platforms differently. It only takes a few large funds to make small allocations to the peer-to-peer space for those marketplaces to start looking just like any other sort of lending, including the traditional players they are replacing.

With the supply-side fully-funded, the limitation will be on the demand-side (borrowers). This brings its own challenges, especially the temptation to get ‘easy growth’ by lowering standards and making riskier loans. The platforms with the best mix of technology, venture funding and self-control will lead the pack, while no doubt a few will go pop next time there’s a downturn.

As peer-to-peer continues to take market share, yields — and the interest rates available to borrowers — will naturally fall over time, closing the gap with general market returns.

This will play out across more than just financial services. From real estate funds buying flats to let on Airbnb to retail space owners listing shops on Appear Here and hedge funds funding fleets of cars for Uber drivers, we’re seeing an explosion of new, unusual asset classes emerge. Some may turn out to be bubbles, but many will offer exceptional returns for some years until they too become mainstream. There’s a ton of opportunity for managers of capital who are prepared to make some bets on the future.

The quest for yield is coming to peer-to-peer marketplaces, and the re-bundling into the capital markets has begun. If the financial world and the technology world can make the right connection, we’ll end up with lower-cost, more transparent financial products for the mass market. Are they up to the challenge?

A version of this article first appeared on Venturebeat on 28th September.

The re-bundling of peer-to-peer finance was originally published in MMC writes on Medium, where people are continuing the conversation by highlighting and responding to this story.