Monthly Archives

November 2009

Online ad market stabilises – next period will be interesting

By | Advertising | 4 Comments

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This chart showing US online advertising spend offers a glimmer of hope for internet businesses everywhere, but it is too early to call this a trend.

There are some good reasons to be positive right now, alongside the continuing good news on the macro economy I keep hearing stories about the effectiveness of Facebook’s new targeting system and the continued growth in ecommerce can only bode well.

These good news vibes are offset by the following:

  • The overall market is still below Q4 2007 numbers and we have only seen one quarter of improvement
  • We could be on the cusp of a significant shift from paid media to earned media – i.e. away from buying ads to facilitating engagement that results in consumer advocacy

I’m starting to get excited about the potential for startups in this second area.  The next couple of quarters will be interesting both for that and for the market overall.

Twitter Weekly Updates for 2009-11-29

By | Weekly Twitter digest | No Comments
  • Published a new post: Twitter Weekly Updates for 2009-11-22 http://cli.gs/0jaqD #
  • Roku launches Roku TV alongside its set top box and Boxee plans a CE device in January – no hardware would be nice! http://bit.ly/81VhJt #
  • Published a new post: Apple defends app store approval process and Forrester forecasts strong growth for Android http://cli.gs/qAmEu #
  • Published a new post: Companies that add value to their ecosystems are more sustainable http://cli.gs/tj3e0 #
  • Google doesn't like vertical search – Foundem case study from The Register http://bit.ly/2gy6r1 #
  • Ministry of Sound Best Dance Tracks of All Time – Disc Track No. Artist Track Name Sample 01 1 The Chemical… http://tumblr.com/xdv48afw1 #
  • Useful Companies House guide to the formal requirements for UK private companies – http://bit.ly/6CXgGl #
  • Published a new post: What would you like to know about venture capital? http://cli.gs/M8d8P #
  • Published a new post: Staying focused on the hard stuff http://cli.gs/sPWDu #
  • Published a new post: Business creativity is fuelling UK growth http://cli.gs/gt5GN #
  • Published a new post: Understanding Venture Capital – slides for my Cass Business School talk http://cli.gs/X5jW3 #
  • Mcommerce on the march – just saw a cobweb and bought a £4.95 feather duster via Amazon iPhone app in 2mins #

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Twitter Weekly Updates for 2009-11-29

By | Weekly Twitter digest | 3 Comments
  • Published a new post: Twitter Weekly Updates for 2009-11-22 http://cli.gs/0jaqD #
  • Roku launches Roku TV alongside its set top box and Boxee plans a CE device in January – no hardware would be nice! http://bit.ly/81VhJt #
  • Published a new post: Apple defends app store approval process and Forrester forecasts strong growth for Android http://cli.gs/qAmEu #
  • Published a new post: Companies that add value to their ecosystems are more sustainable http://cli.gs/tj3e0 #
  • Google doesn't like vertical search – Foundem case study from The Register http://bit.ly/2gy6r1 #
  • Ministry of Sound Best Dance Tracks of All Time – Disc Track No. Artist Track Name Sample 01 1 The Chemical… http://tumblr.com/xdv48afw1 #
  • Useful Companies House guide to the formal requirements for UK private companies – http://bit.ly/6CXgGl #
  • Published a new post: What would you like to know about venture capital? http://cli.gs/M8d8P #
  • Published a new post: Staying focused on the hard stuff http://cli.gs/sPWDu #
  • Published a new post: Business creativity is fuelling UK growth http://cli.gs/gt5GN #
  • Published a new post: Understanding Venture Capital – slides for my Cass Business School talk http://cli.gs/X5jW3 #
  • Mcommerce on the march – just saw a cobweb and bought a £4.95 feather duster via Amazon iPhone app in 2mins #

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Understanding Venture Capital – slides for my Cass Business School talk

By | Venice Project | 9 Comments

Thanks everyone who chipped in with suggestions for the talk I’m giving to a CASS Business School MBA class in a couple of hours.  One of the reasons I write this blog is to help shed some light on the often murky world of venture capital and it has been helpful to hear which areas are the murkiest.

I’ve embedded the slides below and they will hopefully answer most of the questions raised, although as ever there will be more in the voice over than the Powerpoint.  There are a couple of points that bear repeating in the body text of this post, although they won’t be surprising to many of you:

  • Taking money from a VC usually locks a company into shooting for a big exit, and rules out the possibility of a lucrative low level exit or running a lifestyle business
  • Venture capital is rarely for starting companies, but rather for accelerating the success of those that have gotten off to a good start

Finally – Ben Holmes, if you are reading I have copied a couple of slides from your Glasshouse presentation.  Thanks and I hope you don’t mind!

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Business creativity is fuelling UK growth

By | Startup general interest | One Comment

NESTA launched its Innovation Index yesterday, which shows that creativity in UK businesses, a lot of which will come from entrepreneurs, is driving UK productivity to increase faster than in other countries.  Along with bringing more labour into the market productivity growth is the underlying driver of long term economic growth.

This study brings welcome recognition to entrepreneurs around the country.  Increasingly innovation happens in small firms and without that innovation the prospects of the UK would be diminished.  The last year or so has been hard work for a lot of startups and it is important to note that whilst many entrepreneurs are not putting the money in the bank as fast as they would like to right now they are making an important contribution to the country.

I also hope the index will spur additional investment in innovation to underpin this country’s long term prospects, particularly as it will make it obvious if our efforts to be creative diminish.

You can read more about the study in the FT.

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Staying focused on the hard stuff

By | Apple, Startup general interest | 4 Comments

This quote is from Mike Scott, President of Apple Inc in the late 1970s when the company was still tiny.  He was reflecting on how they all worked together in those early years.

When you’re working on the big topics which you don’t know all the answers to, it’s easy to switch to something else really teeny that everyone can get their teeth into.

Too right.  Realising when you are indulging in a bit of displacement activity and switching back to the most important tasks is one of the keys to being personally effective.

I got this quote from Mike Morritz’s history of Apple, Return to the Little Kingdom, which also tells us that Steve Job’s personal cure for relieving fatigue was to massage his feet in the flush of a toilet bowl!

What would you like to know about venture capital?

By | Venture Capital | 11 Comments

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I’m giving a talk on venture capital to a class of MBA students at the Cass Business School on Friday.  I suspect some of them will be there to learn about venture capital as a career option and some of them will be there because they are (or plan to be) entrepreneurs.  That is a pretty good match with how I think about the readers of TheEquityKicker, so I thought I you might have some good ideas about what I should cover.

I’m currently planning to structure my talk as follows:

  • Introduction – 5 minutes
  • Limited partners and the venture capital value chain – 5 minutes
  • Making investments – 20 minutes
    • Approaches to finding new deals
    • Deciding to make an investment
    • Investment execution
  • Exiting investments (aka portfolio management) – 10 minutes
    • Helping companies to succeed
    • Making the fund a success
  • How a VC fund manages itself – 5 minutes

Please respond in the comments with any ideas.  E.g. things you would have loved to know before you started, things you would love to know now, common misconceptions I should dispel, things that irritate you about venture capital, things that you love, in fact anything!

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Companies that add value to their ecosystems are more sustainable

By | Startup general interest, Venture Capital | 6 Comments

image I recently met with a company that got me thinking about the link between the value a company adds to its ecosystem and its long term share price potential.  This may sound trite but in a nutshell it seems to me that the best startups either create value by making something possible for the first time or by radically changing the price/quality dynamic in an existing market.

One example of each from our portfolio:

  • graze (in which we invested earlier this year) created a new fresh food delivery service through some patented packaging innovations, creation of a sophisticated production line and a novel business model
  • Buy.at (which took investment from us in 2006 and was acquired by AOL last year) drove a cart and horses through the affiliate network market by increasing product quality (zero tolerance for spyware and adware, and high good customer service) and driving price down

Looking more widely it becomes clear that all the best web companies fall into these categories – Google makes the web more searchable, ebay makes it possible to sell things that otherwise remained unused in our lofts, Skype made phone calls free, etc. etc.

I guess the most important part of this post is to list a some types of company and business model that don’t add value in this sense and therefore may not make sense as venture capital investments.  (Which isn’t to say that there is anything wrong with them and they won’t make profits and money for their owners.  In fact some of the types of businesses listed below can be very fast growing and require little cash to get started.)

  • Companies relying on price arbitrage generally evoke the concern that over time the value of that arbitrage will trend downwards, usually to near £0
  • Business models based on customers not fully understanding how the company makes profits or what they are getting for their money – one has to assume that over time transparency will arrive, and these days that it will arrive sooner rather than later
  • Simple re-sellers of third party products

If you can think of any more examples please let me know.

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Apple defends app store approval process and Forrester forecasts strong growth for Android

By | Apple, Google, Mobile | 4 Comments

There are two related posts up on Business Week this morning.  The first reports on an interview with Apple SVP Phil Schiller where he strongly defends the app store approval process.

"We’ve built a store for the most part that people can trust," he says. "You and your family and friends can download applications from the store, and for the most part they do what you’d expect, and they get onto your phone, and you get billed appropriately, and it all just works."

and

"Whatever your favorite retailer is, of course they care about the quality of products they offer,"

These arguments are philosophical in nature and I think they are key to the way Apple sees its role and relationship with its customers, and whilst a paternal, controlling approach might have been appropriate to get the market started it won’t scale and I can’t see them abandoning their philosophy and changing their approach any time soon.  (One piece of evidence which supports this view is that it is that Apple could today allow developers to publish to an un-approved list whilst maintaining their approval process and app store as it is, but they have decided not to.)

Arik Hesseldahl, author of the Business Week piece, put it this way:

The software market for personal computing has existed in this way for nearly three decades, and while there have certainly been some problems along the way, I’d argue that overall we’re better off without Microsoft or Apple or some other organization approving software applications before they’re released to the market. PC users have learned to be careful about what they put on their computers through unhappy trial and error.

Mobiles are of course different to PCs.  They are more personal and always with us which raises new possibilities for criminal practice – e.g. an app which surreptitiously records everything you say, or broadcasts your GPS position without your consent, but these are problems which good anti-virus software can (and will) take care of.  In fact over time I expect the distinction between mobile and PC to become increasingly blurred.  Rather we will want to access our services across a range of devices, networks and form factors from desk-top PCs, through wall mounted tablets, to large laptops, small netbooks, and mobile devices.

Coming back to smartphones, right now Apple has the market to themselves but that will change, which brings me to the second Business Week post.  Gartner are predicting that by 2012 Android will be the second most popular smartphone OS after Symbian, and we can expect Symbian to have gotten their act together a bit by then as well and as a result we will all have many more good non-Apple options than we have today.  I fully expect that once mobile becomes more mature and there are a range of good choices for both developers and consumers, Apple’s app approval process will become a serious competitive dis-advantage.

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Twitter Weekly Updates for 2009-11-22

By | Weekly Twitter digest | No Comments

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