Monthly Archives

December 2009

Twitter Weekly Updates for 2009-12-27

By | Weekly Twitter digest | One Comment

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Thank you and Happy Christmas

By | Announcement, DFJ Esprit | 6 Comments

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2009 has turned out to be a good year for us at DFJ Esprit and I hope it has for you too.

After a difficult start I think the operating environment for most startups stabilised over the summer and turned mildly positive towards the end of the year.  Whilst life is obviously easier when the economy is growing fast I always think the most important thing for startups is that the economy isn’t going backwards.  If we are headed for an extended period of anaemic growth then so long as you have done a good job of picking a fast growing/fast changing sector or niche then you will be ok.  Arguably a period of low growth might even be good for startups as larger companies will invest less themselves and need to look to partner or acquire startups to get their top lines moving forward as fast as they would like them to.

At DFJ Esprit a lot of good things happened in the second half, most notably our acquisition of the 3i tech venture portfolio, the first close on our new primary fund, DFJ Esprit III, and our investment in Graze.  The last twelve months haven’t turned out to be a time when it felt right to exit any of our companies but the sixty odd companies in our portfolio are in decent shape and I fully expect that next year the market will allow some of our companies to realise what we regard as their true value.  There are one or two that could happen as early as next month.

I’ve also particularly enjoyed writing this blog and conversing with all of you during this past year.  I write at least one post every working day (usually exactly one) and in different periods I get into writing about different sorts of things.  A couple of months back I got into predicting how the future might look in various areas of social media and mobile during which time I felt that the process of writing what I thought and then getting your critique was invaluable in moving my thinking forward.  More recently I have been writing a series of venture capital related posts when your comments have helped me to better understand how entrepreneurs look on us at DFJ Esprit and our colleagues at other funds, something I hope will help me to better help you build some of the worlds best companies going forward.

Which brings me to the main point of this post, which is to say THANK YOU FOR READING AND COMMENTING.  Without your help this blog wouldn’t amount to a hill of beans.  An especially large thank you goes to 2009’s top commenters Henry Yates, Nicholas Lovell and David Semeria.

Happy Christmas to you all and looking forward to 2010.

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Stealth mode, schmealth mode

By | Startup general interest | 14 Comments

image I’ve never really understood why some entrepreneurs decide to put their companies in ‘stealth mode’ and so when I saw Vivek Wadwha’s Techcrunch post Stealth Startups, Get Over Yourselves: Nobody Cares About Your Secrets I was on it in a flash.

When I meet entrepreneurs with stealth mode startups I always ask why they are in stealth mode and we usually end up having a conversation where I repeat my conviction that the greatest risk for most startups is obscurity rather than having their idea stolen or missing the opportunity for a big bang launch moment.  The second thing I say is that keeping an idea within a close group of people limits the amount of feedback you can get and stops people from being able to help you.

With regard to VCs in particular, being stealthy stops them from letting you know if they have seen many other startups in your space and the extent to which your plan might or might not need to morph to become an attractive investment.

These are the main points that Vivek makes in his post.  Unless you are extremely lucky or extremely brilliant your product won’t be a great match for your customer’s needs until you have spoken to them about it and iterated a bunch of times.  As he says, you can’t do that in stealth mode.

He goes on to say that in most cases worrying about competitors stealing ideas is beside the point.  Firstly great execution is your main weapon, and secondly either your idea is pretty complicated and hard to copy or it is very simple in which case you are in trouble anyway.

Further – the big PR moment that goes with a Techcrunch launch is a fleeting thing.  To build lasting buzz you need relationships with a bunch of journos and analysts, relationships which take time to build and require you to be talking about your company.

OnStartups has a post that dates back to 2006 on this topic which is still on the money – so on the money in fact that I ‘borrowed’ their title (hope that is ok guys).  Their point is that most startups in stealth mode are doing it because they haven’t yet got their act together and saying they are in stealth is a way of avoiding making that obvious.  He lists four common ways that startups don’t have their act together – lack of direction, lack of focus, lack of commitment, and lack of a solution.  I guess if a startup consciously does this for a short period of time it might be beneficial, but it takes the pressure off.  Speaking personally, having to repeatedly pitch or explain something forces me to do the work and get my story straight, and if necessary change it.

OnStartups makes the additional point that recruitment is prohibitively hard for most companies that can’t talk about what they do.

There are of course a small number of startups with a legitimate secret that could be ripped off, or who have celebrities involved in a way that makes it easier to stay out of the limelight altogether, but these are the minority.

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Carrier decks losing share rapidly

By | Mobile | 7 Comments

We’ve seen this movie before, but on the wired web.  Ten years ago BT and other ISPs had portal aspirations which they ultimately abandoned.  Now as devices improve and mobile internet usage gets more sophisticated wireless carriers are seeing their market share erode.  How long before one of them does a deal with Yahoo! or Google to match the BT-Yahoo deal from earlier this decade?

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This slide comes from one of the Mary Meeker/Morgan Stanley presentations published last week.  Their key message is that mobile is coming faster than most people think and it will be bigger than most people think.

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Twitter Weekly Updates for 2009-12-20

By | Weekly Twitter digest | No Comments
  • Published a new post: Twitter Weekly Updates for 2009-12-13 http://cli.gs/BzN2R #
  • Published a new post: Internet T’s & C’s – do we have a problem? http://cli.gs/ysqeP #
  • Published a new post: The best companies are analytical http://cli.gs/6hULQ #
  • Published a new post: Your help with a new strapline for DFJ Esprit http://cli.gs/mBeX6 #
  • Thanks everyone for all the input to DFJ Esprit's new strapline – I will post a digest soon #
  • Great post from Brad Feld (@bfeld) – Beware The Hockey Stick In Your Budget: http://bit.ly/7FCI5Y #
  • Published a new post: Simon Fuller showing us the future of TV http://cli.gs/SPN5E #
  • Google rumoured to be in for Yelp for $500m+ – 10x 2010 revenues, nice deal for Yelp if it comes off RT TechCrucnch http://bit.ly/8C2aGK #
  • Micro/mini boogging wars, Tumblr is growing fast and winning, Posterous has gone flat – some Compete data: http://bit.ly/8c2TT9 #
  • Published a new post: Progress towards the mobile web and away from apps http://cli.gs/BEJWD #
  • I've worked through all the Star Trek Next Generation Q Episodes, now starting the Borg episodes #
  • RT @tribeofnoise: Bad News For Spotify: No Illegal Download Drop – http://ow.ly/NvIC #

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Progress towards the mobile web and away from apps

By | Mobile | 23 Comments

Regular readers will know I see the iPhone/app store as a passing phase in mobile, a step on the way to a web paradigm equivalent to what we have on the PC.  One of the big questions is how long this current phase lasts and with the momentum of the iPhone and the rush by all sorts of mobile players to open app stores one has to say it is still in the growth phase.  That said, two pieces of news today point to the true mobile web not being too far away.

Firstly Firefox has announced a new mobile browser which they claim will:

  • be very fast
  • support plugins
  • sync with your PC, including bookmarks and open tabs
  • allow developers to have apps running on multiple devices from a single code base

The fourth bullet is a big deal, and Firefox sees this as the beginning of the end for app stores.  Jay Sullivan, vice president of mobile at Mozilla put it like this:

As developers get more frustrated with quality assurance, the amount of handsets they have to buy, whether their security updates will get past the iPhone approval process… I think they’ll move to the web.

and like this:

In the interim period, apps will be very successful. Over time, the web will win because it always does.

Rollout of the Firefox Mobile browser looks a little slow though, with the initial launch only on Nokia and Android and Windows Mobile versions not coming until the New Year.

The other piece of news is that Android, which is much more ‘true web’ than its mobile OS competitors is fast gaining share.  This post on Comscore has a list of ‘Android gaining momentum’ facts, perhaps the most telling of which is that a survey of American consumers found that of those in the market for a smartphone 17% were considering an Android device versus 20% for an iPhone.  The overall Android market share remains small at 3.5% though.

In related news the iPhone has finally overtaken Windows Mobile for OS market share in the US, and the proliferation of Android platforms is starting to cause headaches for developers.

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Simon Fuller showing us the future of TV

By | Content, TV | 6 Comments

image Simon Fuller, the creator of the most watched show in the US for the past eight years American Idol, will premiere his new show on Hulu.  It is then expected to air on a traditional television network several months later.

This is a departure from the traditional MO for US networks where they produce one or two pilots of a show to test the market before deciding to commit to a full series.  This is an expensive business with the cost of pilots for blockbuster series’ like 24 running to seven figures.  Jason Kilar, CEO of Hulu, expects “we’re going to see a lot of experimentation going on where content creators use Julu to mitigate the risk of the pilot process”.

The new show from Fuller’s 19 Entertainment Group is called If I Can Dream and follows the the efforts of five people to break into the entertainment industry.  Starting life on Hulu will give them more control over the pilot process, including the opportunity to experiment to improve the new format if it isn’t perfect out of the box, and it will give them functionality that isn’t available via broadcast networks including video messaging interaction and integration with social networks.  These functionality differences are sufficient for Hulu to be describing If I Can Dream as “the first of a new generation of post reality entertainment”.

The one thing which Hulu doesn’t (yet?) have is the audience of CBS or Fox, although they did achieve 42m uniques in October.

For me this is a thin end of the wedge event which might herald a significant shift in the way the TV world works.  Firstly people who start watching on Hulu may well stay there even if the show moves to a traditional network.  Secondly, some of the people who go to Hulu for the first time because they want to see If I Can Dream will stay there to watch other shows.  Thirdly, it shifts the balance of power in favour of the content originator and away from the networks, a shift that will gain momentum if the experiment works and others copy it.  I blogged recently that the the world of TV is definitely changing but that it does so only slowly.  This type of event has the potential to become a watershed event that brings the acceleration of change that we are all hoping for.

Thinking about the online media landscape overall, as PaidContent points out it is significant that 19 has chosen to launch this show on Hulu rather than a social network like Myspace which has been home to a lot of original reality content recently – e.g. Get Married on Myspace from Endemol.

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Your help with a new strapline for DFJ Esprit

By | DFJ Esprit | 26 Comments

Here at DFJ Esprit we have been working on a new strapline.  We are looking for something pithy which captures the essence of what makes us different and unique and explains why you should want to work with us.

After some soul searching we came up with three key messages that we want to get across:

  • As individuals the partners at DFJ Esprit are great people to have as investor directors.
  • We are very experienced at helping build companies.
  • We are uniquely well placed to help global businesses

It is looking at the work we’ve done with investments like buy.at and Lovefilm, the way we don’t need to drive companies towards billion dollar exits to make our fund work, what our entrepreneurs say about us, the global nature of our portfolio and our participation in the DFJ Global Network that lies behind this choice of themes.

We’ve been kicking a few ideas around internally, but none of them seem to work that well.  Here are a couple of examples:

  • DFJ Esprit – the people to help you build a global business
  • DFJ Esprit – no-nonsense people building global businesses

I’m writing this partly to get feedback on the themes.  Do they resonate well with you?, are they credible?, are they differentiated from our competition?  Our target audience is firstly entrepreneurs and then advisors, angels, other intermediaries and LPs.

And partly to solicit suggestions for straplines.  If anything great pops into your mind I’d love to hear it.

Thanks for your help.

UPDATE – I removed the repeated tagline above.  Thanks to those of you who pointed out the error.

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The best companies are analytical

By | Startup general interest | 5 Comments

There is a new survey out from IBM which has found:

Top-performing companies were 15 times more likely to apply analytics to strategic decisions than their underperforming peers

and:

In addition, top performers were 22 times more prepared to challenge the status quo in their organizations, rethink current strategies and business processes, and aggressively apply and act on new insights derived from analytics.

The conclusion is nothing new, but I was surprised how stark these results are.

For Internet companies in particular good management is all about analytics, insight and gearing the organisation to a set of metrics.

One of the best people I know in this regard is Will Reeve. In addition to being a venture partner at DFJ Esprit he founded Lovefilm and is chairman of our portfolio company Graze. In those companies customer lifetime value and customer acquisition costs are key metrics. They are tough to estimate, particularly before the business is old enough to have good data on churn and Will is all about dilligence in doing this as well as possible and driving the business based on the results. Similarly when considering the Graze investment we took a lot of comfort from the way Graham Bosher (CEO) talked about his production line KPIs and where he was driving them.

As we all know only too well startups are resource constrained and in this area as with all others there is a balance to be struck between thoroughness on the one side and speed/capital efficiency on the other, and most of the companies in our portfolio aren’t taking the use of data and analytics as far as IBM. That said they are all doing more and more, and this is one of the dimensions where the best entrpreneurs are really pushing the envelope.

I’ve blogged this from an iPhone app I just bought called iBlogger which has limited formatting capabilities, so apologies if this doesn’t look great. I’m not sure I’ll be writing from here that often.

Internet T’s & C’s – do we have a problem?

By | Startup general interest | 8 Comments

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Jason Calacanis’s discussion of Facebook’s recent change of T’s and C’s I was touches on a subject that has been bugging me for some time – whether the T’s and C’s we all accept all the time on the web are going to be enforceable and if not what sort of problems the ensuing legal void will cause.

Calacanis states the problem like this:

When faced with a TOS (Terms of Service) or license the world has been trained to hit the word “agree,” and click, click, click until they get to the actual website or software they were trying to get to in the first place.

As I see it, if no-one reads the T’s and C’s and everyone knows that then sooner of later some judge or politician is going to take the view that enforcing them is unfair, or that someone who suffers damages by virtue of inadvertently agreeing to share some data deserves recompense.

If/when that happens many internet companies will be mired in a sea of uncertainty that will make it them more difficult to invest in, operate, grow, IPO or sell.

Calacanis’s solution is for internet companies to be responsible – I’m obviously in favour of that, but there will always be some rotten apples who can’t or won’t self govern themselves and they will inevitably create problems for everyone else.  The alternatives seem to me to be either regulation or industry codes of condunct which are both detailed and policed.

I’m no lawyer, and I’d very be interested to hear if I’m missing something important here.  I suspect I’m not though, and that this is a new legal issue because people are conducting significant business online and sharing information online for the first time in history. 

Nor is it realistic to expect people to read the T’s and C’s they sign up to.  If it comes to that people will just use fewer services. 

As a case in point I downloaded the new Zemanta LiveWriter plugin before I wrote this post and clicked through the license agreement as Calacanis describes above.  If I wasn’t comfortable doing that (and maybe I shouldn’t be) I would have aborted the install.

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