How AI can affect the sale of your Business… And Country Music!
We’ve talked a lot in previous issues of this magazine about the pressing need for businesses to embrace technology. For some business owners, this requires a complete change of mindset. However, the consequences of not embracing change are even more serious, as serial investor, tech lawyer, author and innovation evangelist, Nick Abrahams explains.
Advances in technology will bring extraordinary opportunity as well as significant peril for business-people in Australia. For Nick Abrahams, it’s a case of ‘do or die’. “Tech is definitely going to impact us all and if the steamroller goes over you, you either become part of the steamroller or part of the road. We all need to be part of the steamroller,” he says.
“I was sitting in my office one day and I got a call which clearly showed the amazing opportunities offered to small and medium businesses by digital disruption.”
The call came from Chris Strode, the founder of a business called Invoice2Go. Strode needed legal help with an investment that valued his business at $100 million.
“The crazy thing about Invoice2Go was that Chris had built this $100 million business at Copacabana Beach on the Central Coast of NSW, a long way from Sydney and light years from tech epicentres like Silicon Valley. Chris built Invoice2Go because he used to own a small business and struggled to find a way to efficiently issue invoices. So, my advice to all business-people looking to harness digital disruption is to find a customer’s friction points and solve them.”
This story also shows how the internet now allows Australian companies to compete in a global market. “There is no geographic constraint on smart business-people. Look at Safety Culture,” says Nick, referring to a remarkable Australian workplace safety app that was founded in Townsville and is now a world leader with a valuation of over half a billion dollars. “Luke Annear, the founder, had a fairly standard safety audit business; he decided to put his audits online and the business has been a rocket ship.”
Making the Most of Opportunity
It’s hard not to get caught up in Nick’s enthusiasm for the opportunities tech brings us. Nick’s main career is as a tech lawyer. He has been a partner at global law firm Norton Rose Fulbright for the last 18 years and is currently the Global Head of Technology & Innovation at the firm. He started his tech journey as a Chief Operating Officer in the Spike Group which listed on the ASX in 2000. He’s had a love of the sector since that time and is an investor in three tech companies. He says of these companies: “Two are still quite early stage but are promising and the other one is more mature and doing well. This feels like a once-in-a-hundred-years opportunity to be witnessing such dramatic change in the world caused by technology.”
Having a Laugh
Nick has an unusual introduction to business. Twenty years ago, while a lawyer during the day, Nick started Japan’s first English language comedy club, The Tokyo Comedy Store. He sold the business when he left Japan. “I am pleased it is still going today; the Comedy Store has made a lot of people laugh over the decades.” Nick utilises his background as a stand-up comic in the keynote speeches and workshops he does on future trends and innovation. He says with a big smile: “I love public speaking and the aim is to make my sessions educational and inspirational – but also funny.”
Technology is impacting every industry. “Look at retail, where the impact of online commerce has been really felt. The past few months have been horrendous with iconic brands like Jeanswest, Australian Geographic, Bardot, EB Games Harris Scarfe and Napoleon Perdis either going into administration or radically restructuring. Media, likewise, has struggled with valuations of newspapers and TV networks dropping dramatically.”
The disruptors are making an impact. “Taxi drivers have had to deal with Uber and restaurants are now concerned about the margin erosion caused to them by the home delivery apps like Menulog.”
Displaced by Robotics
Even professional services are at risk. It is estimated that 40% of basic accounting work will have been displaced by robotics between 2018 and the end of this year and, according to consultancy group, McKinsey, healthcare is one of the top five industries that will be transformed by artificial intelligence. For example, AI is proven to outperform human clinicians in diagnosis of skin cancer with an accuracy of 95% compared to 87% for dermatologists.
“I was recently on a panel with John Chambers and he said he thought AI would have more impact on humanity than the internet and do it in a faster time,” says Nick. “Chambers is a credible commentator having been CEO of Cisco for over two decades, taking their revenue from $70 million to $49 billion.”
So, we have an issue where competitors, powered by tech, are going to impact our businesses. This is exacerbated by the speed of change. These challengers grow as an exponential rate. Exponential growth is where something follows a logarithmic growth trajectory rather than growing linearly. In essence, it is doubling in size every period.
“I have done innovation workshops all over the world and I know there are three kinds of people when it comes to embracing technology – Prayers, Stayers and Players. Prayers are generally over 50 and are praying they get to retirement before the machines take their jobs. Stayers are generally over 30 and they are not doing anything to embrace technology. They live by the mantra, “I have been doing it this way for years and if I continue to do a good job, I won’t get fired”. They couldn’t be more wrong! Players are under 30 and are embracing tech in every aspect of their lives.
Truth is that we all need to be Players.
How to Survive and Prosper
Credible organisations like Oxford University and the World Bank have said that 50% of the jobs in the developed world are at risk from technology, robotics and automation. We know that jobs like telemarketers and truck drivers are not long for this world. But what can people do to survive? The answer comes from research published by McKinsey and others. It is not 50% of jobs that are gone; 5% of jobs are indeed gone but 60% of jobs will be augmented by machines to at least 30% if not more. So, to survive and prosper in the new world, it is critical to embrace technology to make us great at what we do and the services we provide to our customers.
It works! Look at the big four accounting firms; they saw that traditional accounting work was getting disrupted and so they have chosen, very successfully, to become massive consulting businesses. Likewise, with medicine. Radiologists have really embraced AI. Reports show radiologists must interpret one image every 3-4 seconds in an 8-hour workday. AI is used to optimise these workflows, especially in the areas of anomaly detection and reporting.
Nick does not believe that we all need to go out and become software developers. “The tech is coming to us; it is becoming more intuitive. At Norton Rose Fulbright, I am trying to inspire our 7,000 people around the world to innovate and we are making available no-code platforms. These are platforms which allow people to create tech solutions without being coders. For example, I built the world’s first privacy law chatbot with one of my junior lawyers. We didn’t use our IT department. Parker, our bot was a great success and there are now six versions of Parker around the world – all built by our lawyers, not our IT teams. If you have not had a go at building a chatbot, you should, it is remarkable what can be done for virtually no money and without any tech capability.”
Cyber Hacking
Nick has published two books, Digital Disruption in Australia, where he analysed 550 M&A and investment deals in Australian tech and identified key trends in the market. Last year he co-authored the book Big Data, Big Responsibilities: A Guide to Privacy & Data Security for Australian Business. “I am particularly concerned about the impact of cyber hacking on Australian businesses.” Nick recommends all organisations no matter how big or small should take steps to make themselves as secure online as possible and always back up their data. “We have seen a remarkable rise in the instance of ransomware. All organisations should have backups in case their files become encrypted by a ransomware attack.” Another key issue is to ensure that all people in the organisation have been trained to identify social engineering attacks. “Spoof emails which mimic government departments or even your CEO have become far more sophisticated. Employees need to be suspicious of any email from an address they do not know.”
On the subject of building and selling businesses, Nick has a few thoughts gathered from his own businesses but also from having acted as a lawyer for many business owners over the last eighteen years. “Don’t follow the crowd. I learnt this very clearly while doing a hot coals walk at an Anthony Robbins event years ago. Everyone in my group walked across the coals and was hi-fiving saying how it didn’t hurt. I got across and was in agony and said so. While it took a bit of the energy out of the group, it was a good thing I did speak up. A burning red ember had lodged itself in between my toes and was cooking me.
Great Australian businesses, like Paspaley, Cochlear or Canva are all examples of founders who backed themselves and beat their own path.
“You cannot predict the future, but you can make your own future.”
Selling your Business
When selling a business: “There needs to be basic financial hygiene. The numbers must be clean and defensible. There must be honesty. Transactions fall over because buyers lose trust when they find the seller has been loose with the truth. In terms of process, time kills deals. Get the Term Sheet, get the due diligence going and get to signing the documents as fast as you can. This means pushing your advisers (including your lawyers) to move quick.”
On a final note, despite all the doom and gloom of digital disruption, Nick sees an opportunity for humour, “I think AI will even change country and western music. Most country songs have a similar plot line, cowboy loses girl, then his job and finally his dog dies. All that is left is his trusty truck. Now with AI and autonomous vehicles, his truck might leave him as well.”
Once a comic, always a comic, I guess.