DAY 1. Takeaways from SXSW 2017 Day 1. Takeaways from Day 1 Fashion and Apparel. March 13, 2017
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1 Takeaways from SXSW 2017 Day 1 DAY 1 1) The Fung Global Retail & Technology team is attending the SXSW Conference in Austin, Texas, this week. 2) SXSW runs March and comprises conference tracks in the areas of Interactive, Film and Music. 3) The Interactive track covers content in brands and marketing, design, health, intelligent future, style, the tech industry, virtual and augmented reality (VR/AR), and many more. 4) On day one of the event, we attended presentations and panel discussions focusing on fashion and apparel, media, technology, and health and beauty. Summaries of these events follow. 5) The Fung Global Retail & Technology Team will continue to report on key points and information during the rest of the conference. Takeaways from Day 1 Fashion and Apparel Protein-Based Textiles Might Inspire the Next Wave of Fashion Innovation Dan Widmaier, the CEO and Cofounder of Bolt Threads, is looking to disrupt the synthetics-dominant textile industry by making protein-based fabrics that are derived from spider silk. Bolt Threads has developed the world s first scalable spider-silk fabrics. According to Widmaier, fabrics made using spider silk are naturally durable and stretchable. Furthermore, the fabrics are highly malleable and various technologies can be applied to them to create performancewear. Bolt Threads first product is a spidersilk tie selling at $314. The company has set up a spinning facility in California. 1
2 Widmaier sees nature-derived textiles as the future of the fashion industry, as their use could drastically reduce waste and pollution. While the technology behind spider-silk textiles is still a work in progress, he is optimistic about these fabrics scalability and adjustability for mass adoption. This could be a major technological disruption in the textile industry. Innovation in textiles has stagnated and there have not been any real breakthroughs in new textiles since the 1970s. About two-thirds of the world s textiles today are made from synthetic materials derived from petroleum. The majority of these synthetics biodegrade only after a very long period of time, which poses a significant challenge to the environment. Fashion s New Frontier: Inclusive Design for Those with Disabilities There is a movement in the fashion industry to provide functionally practical yet fashionable clothing for individuals who are disabled. These consumers are largely underserved: about 51 million Americans, or one-fifth of the US population, has some kind of disability, but the selection of clothing that specifically serves their needs is limited. To meet these consumers clothing needs, Canadian designer Izzy Camilleri created IZ Collection in 2009 as a fashion line with items designed for individuals with disabilities. The line includes a bomber jacket that features zippers along the inside of the sleeves for easy accessibility and other items that are designed to not bunch or pinch when the wearer is sitting in a wheelchair. Data Alone Cannot Decode the Fashion Industry A session focused on the use of data in the fashion industry included panelists from Stitch Fix, a retailer which sends customers a curated box of clothing items, and Poshmark, which enables members to sell items from their own closets. Poshmark uses data to help management understand the business, to help shoppers find the goods they seek and to help Poshmark suppliers make good business decisions. The company collects data from two sources: explicit data consist of the information customers 2
3 provide about themselves, while implicit data are derived from customers clicks and puchases. Customer data are extremely valuable, but offer diminishing returns, as additional data are often less valuable than initial data. Poshmark has had some success creating Frankenstyles, which are based on the company s analysis of prior sales data on features such as sleeve type, neck style and pattern. Poshmark has used that information to develop completely new clothing styles. Still, one panelist emphasized that luck plays a huge role in whether or not a particular design succeeds, due to the difficulty in predicting fashion trends. Media Videos Are the Future of Brand Building on Social Media; There Is Still Plenty of White Space in Livestreaming Sara Dietschy, a New York based creative vlogger with more than 160,000 subscribers on YouTube, shared her insights on the role of video in brand marketing on different social media platforms. She stressed that videos have become a primary way for people to consume content. As a result, social media platforms such as YouTube, Facebook, Snapchat and Instagram have strengthened their engagement using videos. For example, Facebook has introduced a livestreaming feature and Instagram has created a story feature; both allow users to share moments in the form of videos. Dietschy summed up the trend by saying, Videos are not the future. They are now. In an effort to maximize engagement, Dietschy thinks it is important to customize content for each different social media channel, as opposed to blasting the same piece of marketing material to every social media outlet. Livestreaming has emerged as a new form of video that holds significant potential. Dietschy said that there is plenty of white space in livestreaming: many livestreaming apps are being created, but no single app has yet captured a dominant market share, she said. There are also challenges in popularizing livestreaming as a way of branding, as viewers often want to view content on their own terms rather than on someone else s terms. 3
4 Technology A Framework for Actionable Gamification Gamification brings elements from video games into nongame contexts, with the aim of activating human motivations and feelings. Yukai Chou, who has been pioneering gamification since 2003 and has authored several books on the subject, spoke at one session on gamification. Chou also created the Octalysis framework, a model that distills the eight drives of gamification: meaning, accomplishment, empowerment, ownership, social influence, scarcity, unpredictability and avoidance. Chou explained that the search for meaning, for example, causes users to share their location and traffic data to the Waze app in order to contribute to the social good (Waze is a free, community-based mapping and navigation app). Drives can also be classified as white hat or black hat, he said, meaning they can be driven by our positive or negative instincts. In addition, drives can resonate with the right (artistic) or left (analytical) sides of the brain. Are Biometrics the New Face of Surveillance? Facial-recognition technology has made huge advances recently, and one startup company featured on a panel at the conference, Kairos, has created software that can make a positive identification within one second, identifying race, gender and ethnicity, as well as recognize the subject s emotions. The technology is now so advanced that it can also identify the race of mixed-race people, and can be used for geneaological research. Current users of facial-recognition technology include the movie industry, which uses it to measure audiences emotional reponses over the course of a movie; entertainment operators, which use it to identify the subjects of photos for purchase; and advertising kiosks, which use it to vary ad messages based on the viewer s demographic profile. These applications raise a multitude of privacy questions. The US Federal Bureau of Investigation currently uses facial recognition purely to verify identity i.e., to estabish whether a subject is or is not a particular person. Copying Is Good In one talk focused on the issue of copying in the tech sector, the speaker provided a history of copying in China, noting that Chinese schoolchildren copy written Chinese characters in order to learn them. Copying is learning, the speaker said. He used the term Copying 1.0 to describe the blatant copying of Western companies and trademarks, and cited the half-dozen copycats of Starbucks cafes as an example. Copying 2.0 is a mash-up, he said, such as the WeChat app, which combines the functionality of WhatsApp, Facebook, Instagram and Tinder. The platform has become a sort of Swiss Army knife enabling a large number of online activities. The next iteration of copying is the transformation, when Chinese companies add new functionality to products already available, such as Xiaomi turning the Segway scooter (which it purchased) into a smaller, much cheaper product. Finally, there is Method Stealing, he said, in which Chinese companies have adopted leading-edge technology faster than 4
5 industry leaders such as Apple, thereby leapfrogging those leaders. The speaker sees copying as a tribute to the original inventor, who should be credited with his or her invention. Machine Learning: Explore Versus Exploit In a talk focused on machine learning, a speaker from music-streaming service Pandora described the company s large user base and listenership. Pandora selects songs in three ways: by content (based on musicologists ratings on harmony, rhythm and instrumentation), collective intelligence (based on categorizing content) and personalized filtering (based on more than 75 algorithms). The key question is how to balance providing listeners with something familiar (exploiting their listening history) versus taking the risk to offer them something unknown (exploring new music), which they may dislike. Pandora offers Thumbprint Radio, which streams songs based on the listener s thumbs-up and thumbs-down ratings. However, there is a tendency to offer an excessive amount tried-and-true songs and not adequately adapt to a user s changing music taste. Pandora aims to avoid what it calls Freakomendations, song suggestions that are way outside of the listener s taste range. SXSW Create Becomes a Platform for Emerging Makers to Showcase their Innovations SXSW Create, the hardware hacking and maker arm of the conference, showcased the latest innovations from the makers space. A number of products on display focused on making STEM education more fun for kids. StemBox is a monthly subscription box of STEM experiments for children ages Sample subscription boxes include bacteria cultures kits, toolboxes for making rockets and mobile-based microscopes. Ozobot is a smart robot company that created a palm-sized robot that helps young people learn to code. The Robot Group, an Austin-based robotics education organization that has hosted workshops, meetups and events to promote STEM education, also had a booth at SXSW Create. Health and Beauty Aging Reimagined: Better Health Prospects and a Longer Life Span Humans are just beginning to understand the fundamental mechanisms of aging and to develop ways to significantly prolong the human life span and improve quality of life in later years. Some biomedical scientists are reimagnining aging as a flexible and even reversible process. Nathaniel David, cofounder of Unity Biotechnology, suggested that 5
6 aging is triggered by accumulation of senescent cells (cells that have ceased to replicate), and that senescence could be reversed. Matt Kaeberlein, a professor of pathology at the University of Washington, suggested that compounds that could reverse the biological signs of aging exist, but that there are regulatory challenges to treating aging as an illness. There are significant social and economic implications to enabling people to live prolonged healthy lives via preventative measures. Healthcare systems will likely focus more on preventative care, which could help lessen the economic impact of treating certain illnesses. As people begin to live longer, healthier lives, societies are likely to begin to redefine traditional timelines for life events such as college, marriage and retirement. About the Conference The SXSW (South By Southwest) conference was founded in 1987 in Austin as a venue for the interactive, film and music industries to converge. The annual event features sessions, showcases, screenings, exhibitions and a variety of networking opportunities. Total attendance of registrants and artists is expected to hit 72,000 this year, and the event injected more than $325 million into Austin s economy. The conference proves that the most unexpected discoveries happen when diverse topics and people come together. 6
7 Deborah Weinswig, CPA Managing Director Fung Global Retail & Technology New York: Hong Kong: China: John Harmon, CFA Senior Analyst Jing Wang Research Associate Hong Kong: 8th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: London: Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0) New York: 1359 Broadway, 9th Floor New York, NY Tel: FungGlobalRetailTech.com 7
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