It’s been said that we are always sceptical about things invented after we are 35. That contrasts with things invented when we are 15-35 which we embrace and sometimes make a career out of, and things invented before we are 15 which are so normal so as to be unremarkable. So the internet feels dangerous to my parents, was a career opportunity for me, and is so normal for my kids that their first words might have been “Ask Google”.
The result of this truism is that people are starting feeling isolated, out of date and old before their time. A number of my 41 year old school and university friends have side-stepped social media altogether and it is likely they will now never feel at home in online public forums. Most of them will live for another forty years, missing out. Moreover, as the pace of change comes faster and faster more and more of the best things in life will have been invented in the last ten or twenty years. If this goes on these ‘best things’ will be lost to the older half of the population who will end up having almost nothing to talk about with their younger counterparts.
Part of the reason over 35s don’t adopt new technologies is that they romanticise their pasts. I’m writing this today having just read a brilliant essay by Andrew O’Hagan titled In defense of technology.
He begins by lampooning himself in an imaginary conversation with his daughter which illustrates the point that new technologies have made our lives better:
My daughter rolls her eyes whenever I begin my stories of woe. “Here he goes,” she says. “Tell the one about how you used to walk to school alone. And the other one, about how you had to remember people’s phone numbers! And: Watch this. Dad, tell the one about how you used to swim outside, like in a pond or something. With frogs in it!”
“You know, darling. It wasn’t so long ago. And it wasn’t such a hardship either. There was actually something quite pleasant about, say, getting lost as you walked in a city, without immediately resorting to Google Maps.”
Then he goes on to make the point that believing in a better future is also to admit the possibility that the past wasn’t that great – and with that comes much mental unpleasantness. It is your past and my past that we are talking about, the pasts that we created. If those pasts weren’t great then then maybe we weren’t great either. Much easier to romanticise the past than to allow that thought to roam around our minds. And to romanticise the past we must discount the future.
New technologies are hard to adopt. Social media creates all sorts of new ways to make embarrassing social gaffs and silly mistakes as you climb the learning curve, a learning curve that you may never conquer. Couple that with an over-rosy recollection of the good old days and it’s easy to see why people get sceptical and refuse to adopt. Then, once they are on the outside, the scepticism hardens.
Not a good thing.
I don’t have any answers beyond a recommendation to stay open minded and a personal commitment to staying objective about the pros and cons of changes as they emerge (and there are always pros AND cons). I am genuinely worried for some of my contemporaries though, as without change this problem is set to get worse, not better.
If you’ve got this far do go and read O’Hagan’s essay. It is beautifully written and laugh out loud funny.
One of our core beliefs is that at the heart of every great business there’s a great entrepreneur. It says so on our homepage and it underpins our strategy at Forward Partners – we have set ourselves up to be attractive to the best entrepreneurs. That manifests itself throughout our business. We try to run quick and transparent investment processes, we try hard to add value through due diligence, our terms are fair and simple (we will release them soon as standard docs for anybody to use), and, most importantly, in addition to money we bring heaps of ingenuity and ecommerce startup experience to our partners. We want smart people with smart ideas to choose Forward Partners because drawing on our resources will give them the best chance of success.
I’m writing this now because I’ve just read a great article on Wired about Startup Factories. First up, I think factories is a bad word here. Startups don’t come off production lines, they are hand crafted works of art. Moreover, they are fashioned from within, not shaped by the building in which they are housed.
With that off my chest I will say that the article does a good job of explaining the different models out there, and to be fair it does say at the end that ‘You can’t manufacture magic’. It breaks startup factories down into two categories:
Vehicles for parallel entrepreneurship – e.g. Max Levchin’s HVF – the idea here is to allow entrepreneurs to work on more than one company at a time
Studios which create, invest in and acquire companies, usually round a theme – e.g. Science and Betaworks – the idea here is to create a constant stream of companies
The biggest difference between the two is the number of companies they work with, with studios working on many more.
As I’ve said it’s a useful article for understanding the space, but I think the narrative overplays the role of process and underplays the importance of the people who found and run the businesses. The implication is that with the right meta structure it doesn’t matter that much who is running the underlying companies, or at least it’s easy to find people who are good enough. I’m just not sure that’s true. If we are right that at the heart of every great business there’s a great entrepreneur then if you want to be involved with multiple great startups it makes sense to make sure they have great entrepreneurs from day one.
It’s been troubling me recently that at first glance the trend towards mobile and the trend within mobile towards apps mitigates against startup ecommerce companies. Amazon is one of the first apps I download whenever I change phone, but it’s the only ecommerce app that I have, and that’s because Amazon is the only place I shop frequently enough to be bothered to download an app. I’m not the best example customer because I don’t shop much, but generalising the problem I think there aren’t many categories of ecommerce where the interaction is frequent enough to merit an app. Grocery shopping is a weekly event for most people and that merits an app, and shopping for shoes is a monthly endeavour for many people, hopefully frequent enough for our portfolio company Stylect to prosper, but most shopping isn’t like that.
So it was interesting to read a great post from Intercom.io this morning about the End of apps as we know them. It’s one of the bests posts I’ve read in a while, largely because I think they may well have mapped out how mobile services will be designed in the future. The quick summary is that they believe engagement and interaction will shift from within apps to within interactive cards in a notification or ‘Google Now like’ stream. It’s a long post, but if you are involved with apps or mobile design you should definitely go read it (I linked to it twice to make it easy for you).
The idea that we will stop opening apps and live within a stream of cards requires quite a headshift, but it makes a lot of sense to me. Having pages of apps is highly inefficient and reminds me of browsing the web in Yahoo or AOL days – there has to be something better and a highly personalised and contextual stream of interactive cards sounds like a good answer.
Ecommerce discovery would then be through the cards of other services. As an example, maybe you find out about Stylect from within a Twitter card and then agree to receive regular cards direct from Stylect – that could be by downloading an app which sits in the background barely seen. Search will still play a role, but maybe a greater percentage of stuff we want is finding us rather than the other way around.
Getting discovered then requires getting a presence in cards, and to me that feels like social media advertising rather than search advertising. Perhaps unsurprisingly this muted shift from web to cards might be bad news for Google and good news for Facebook, Twitter, and whoever’s next.
Finally, for all this to work the personalisation and contextual targeting needs to be great. The cards need to be good enough that we want to read them. That’s different from some of the irritating notifications I get today.
The pitch deck guide below is one of the best I’ve seen. Thanks to my friend @alexhoye for sharing.
It’s a great guideline for content – both everything that should be in a deck and a slide by slide guide – that’s hugely valuable, but the other thing that’s important is to sell a story. One simple and highly recommended way to do that is to cultivate a sense of inevitability, another is to make it exciting by following standard story telling arcs – e.g. crisis, struggle, resolution or the hero’s journey. These latter techniques reside more in the voice over than the pitch, but they should be reflected in the deck.
Slide 8 shows an overview of what should be in deck. If you only have 30s go straight there.
It’s a pretty common for futurists to lament that public perceptions of the future are generally dystopian. Hollywood often gets much of the blame for providing us with Terminator, The Matrix and many other nightmare visions of the future, but our evolutionary history is perhaps more responsible. Simply put, we are built to be pessimistic. The best way to stay safe on the African savannah was to be super sensitive to anything that might represent a threat, so our brains evolved to be good at predicting danger to the extent that we are drawn to bad news and scary movies. Maybe Hollywood is just giving us what we want…
Either way, it isn’t helpful to society for us all to have a negative perception of the future. The next generation of scientists and entrepreneurs need to be inspired by something, just as many of the current generation were inspired by Star Trek which, particularly in the Next Generation Series’, presents a very positive view of where we might be headed.
I’m writing about this today because Kevin Kelly has done something about this problem. For those who don’t know Kelly or his work I would describe him as ‘the futurist’s futurist’. He doesn’t have the public profile of a Ray Kurzweil or Chris Anderson, but he has done an amazing amount of great thinking and writing about technology and where we are headed, for which he is hugely respected, particularly by those with an interest in the field. And he was the founding editor of Wired Magazine.
The thing Kelly did was send out a request to the internets asking for “100 word descriptions of a plausible future 100 years from now that he would like to live in”. He said he would give $100 to the best one he received.
First off, notice the way he constructed the request – the key words are “plausible”, “100 years” and “would like to live in”. The answers needed to be realistic, looking an awfully long way out (take a second to picture the world as it was in 1914), and positive. As he notes, wrapping that into 100 words is tough.
He wrote up the results here. In summary, he received 23 replies which contained three broad themes:
we will have abundant clean energy from solar or fusion
the physical and digital will be further merged into a ‘holistic internet of everything’
artificial intelligence and robotics will have transformed our economy into one of plentitude and creative work/play
Kelly lists all the replies in the summary, but cited this one from John Hanacek as his favourite:
Physical and virtual realities are meshed together with no distinction. Ideas are given sovereignty with their creators rewarded fairly and directly. The world itself does the drudgery of assembling itself across all sectors that information science has been applied, which is limited only by the quantum information underpinnings of the universe. Humans have taken up their primary purpose of creativity and now work with other intelligences of any kind to ask questions and achieve answers, with an eye toward more questions. “Human” has taken on flourishing new meanings. Imagination has been unleashed upon the world in a literal sense.
And this was what Kelly came up with himself:
2121: Population 4 billion; 85% urban.Cities boom, empty suburbs struggle. Agriculture acreage reduced with GMOs. Nature monitored quantitatively; green lands expand with genetic engineering. Solar, fusion, mini nukes generate cheap power. Climate change adapted. Creative middle class the new majority, globally mobile. Computer pilots make travel common internationally. Eco and heritage tourism primary income for poorest. Robots takeover remaining blue-collar jobs in Asia and Africa. Internet of everything physical continued. Universal library, and universal lifelong education for free. All humans always on the net anywhere. Brain interface, wearables. Co-veillent tracking ubiquitous. Quantified self for personalized medicine. Techno-literacy (managing) skills mandatory.
These are both inspiring visions of the future. For me the best bit is that cheap energy coupled with artificial intelligence and robotics will have freed us to focus on creative work. Also important is that we have cracked the science behind food production sufficiently well to feed the world, which I expect to still have a much greater population than 4bn (we are at 7bn today).
There’s plenty there for young scientists and entrepreneurs to aim at.
Check out this brilliant video from the TGIF restaurant in Manchester where they hung mistletoe from a drone to get their customers kissing. The ‘Kisscam’ at 0.55 is my favourite moment. That’s quite put me in the mood for Christmas, and it’s not even December yet
It’s pretty well recognised now that a strong company culture helps bring success to a business, but what’s new is that a company’s culture is starting to matter to consumers. Moreover, whilst shareholders may judge a company’s culture on how much it contributes to good execution, customers judge it on ethical grounds.
Hence, for the second year running Amazon Anonymous are running a boycott Amazon campaign this Christmas which they claim has so far diverted £1.3m of spend (many of my north London neighbours will be pleased…) and a rangeofpeople are urging us to boycott Uber. I think we will see more and more of this sort of thing. People are increasingly concerned that the companies they shop with match their values. This plays out positively for companies with a strong ethical profile and negatively for those with unpopular practices.
Interestingly, some of the elements of company culture which have historically been great for shareholder value are the ones that are now undermining brands. Taking the examples above, Amazon’s famously frugal culture has landed them in trouble for low wages and Uber’s all out aggression has led them to many actions that most people view as unacceptable, most recently threatening journalists with smear campaigns.
I think we are heading towards a better world where unsavoury behaviour is tolerated less, but it is also a more complicated world for managers.
Sherry Coutu’s much anticipated Scale Up Report has now been released with the clear argument that job creation comes from fast growing companies, or ‘scale-ups’ rather than all startups, and hence that’s where we should focus our policies. The report goes on to make a set of practical recommendations for government to help the UK’s scale-ups and hence improve job creation and GVA. The Scale Up Report’s recommendations are designed to produce better data so scale-ups and the effectiveness of scale-up policies can be tracked, to reallocate resources from start-ups generally to scale-ups specifically, and to make individuals, including a Minister, responsible for increasing the number of scale-ups we have in the UK.
I’m interested in the impact that a venture capital fund like Forward Partners can have on job creation and GVA. On page 106 of the report there’s a table showing the number of scale-ups by region. This year there are 8,923 scale-ups in the UK, with 2,264 of those based in London. Thames Valley Berkshire is the next biggest region with 562 scale-ups. (Scale-ups are defined as companies with 20% growth p.a. in turnover or employees for three years and with more than 10 employees at the start of the period.
Like many venture funds Forward Partners has a target portfolio of around 30 companies which we will invest in over a three year period. If all of our partner companies were to become scale-ups that would be 0.3% of the UK total and 1.3% of the London total. Research cited in the report predicts that scale-ups will create 238,000 new jobs over three years and contribute £38bn to GVA. If we have invested in 0.3% of the scale-ups then we will have had a hand in the creation of 714 jobs and £114m of GVA (which curiously enough isn’t far away from the amount we project our share of our partner companies will be worth).
That’s a nice target to aim at and a result that would make us proud.
Snapchat just launched their Snapcash service in the US which you to send money to friends by sending them a message (details here in Techcrunch). Many entrepreneurs have gone after the P2P payments market, but no-one has so far succeeded. I think Snapcash might be different for the following reasons:
It piggy-backs on a large existing network
It is simple to use – just start a message with a dollar sign
The service is based on Square and requires the sender and receiver to enter their debit card info, which makes it a small step from here to being able to pay retailers as well as consumers. As well as increasing engagement with their users the benefit it Snapchat is that it will have real names for participating users, useful for ad targeting.
I wonder if Facebook will do something similar to Snapcash with Whatsapp.
The ever excellent CBInsights just released new data on the time between rounds. As you can see from the chart above year to date in 2014 the median time between seed and Series A has been 349 days and that’s been reasonably consistent over the last couple of years. If the median time is just under a year then in the spirit of planning for the worst and hoping for the best this data suggests that reckoning on making your seed round last 12-18 months is the way to go.
Thinking about our portfolio and other companies I have seen recently in the UK I would estimate that over here the median time from Seed to Series A is slightly longer than this, maybe just over a year. That would make sense given that the volume of capital in the market is lower and the competition between investors is less intense. (The good news is that the a number of new funds have come to market recently, including Google Ventures and Mosaic Ventures.)
For UK companies then, I would advise reckoning on 12 months as a minimum. Some companies do better than that, but that takes luck and it isn’t wise to plan on being lucky.
All that said, within reason more runway is better and if you can get extra cash at an acceptable dilution it’s usually worth doing. Important caveat: if you do raise a large seed round don’t ramp the burn too much before you’ve found a repeatable business model.
On a side note, in a bubble times between rounds usually drops, but we’re not seeing that in the chart above, or in times between later rounds.