Monthly Archives

January 2010

Twitter Weekly Updates for 2010-01-31

By | Weekly Twitter digest | No Comments

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The ‘Play big playbook’

By | Startup general interest | 3 Comments

Bill Warner, founder of Avid Technology (NASDAQ: AVID) is a Boston based entrepreneur and I guess angel.  He is passionate about building the Boston startup ecosystem back to its old status as a rival to Silicon Valley.  To that end he posted the following ‘Company Playbook’ which applies just as well over here.  It is a brilliantly succinct set of guidelines for success that every company would do well to follow.  I particularly like items 1. and 2.

Company Playbook

1. Start Small

– Playing big doesn’t mean huge capital early on or huge teams.

– Make things that work and test them quickly.

– Be curious, try things.

2. Hire Tough

-too often we hire our friends, people we know.

-we have to be WAY tougher.

– Not to be confused with "demand amazing background and experience."

– Rather, hire those who are ready to rise to new heights. Demand that.

3. Lead Here

– Stay here and lead here.

– Build a global company from here.

– We can’t build our ecosystem by being an outsource shop for distant companies.

4. Buy Smart

– Do acquisitions, but do them right.

– Avoid the big swinging "industry changing" acquisitions that usually go so wrong. 

   (and have hurt many of our local companies)

– Know how you’ll integrate, and move fast and aggressively

I also buy into Bill’s assertion that to have a strong ecosystem you need strong local companies.  As he says, being an outsource development shop for distant corporations is much less exciting than being in the headquarters.  More European champions would help us all.

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The social network juggernaut rolls on

By | Facebook, MySpace, Social networks, Twitter | 3 Comments

For all the talk about Facebook’s value, the decline of Myspace and Bebo, and Twitter’s flattening website traffic you could be forgiven for thinking that social networking was yesterday’s story.  In fact, as the Nielsen charts below show, the truth is very different, and they actually grew faster in 2009 than they did in 2008 – both in terms of unique visitors and time spent on site.  (Hat tip to my friend Ian Delaney for the pointer).

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Facebook is of course the grand-daddy of them all.  Its 206m unique visitors in December is 67% of total social media users, although there are of course many people who use more than one site.

As Ian points out on his TwoPointOuch blog the other interesting thing about this data is that five hours per month on a social network isn’t very long.  American’s apparently watch 4 hours of TV every day, on average.

Convergence in action – Yahoo compares itself to TV

By | TV | One Comment

image Yahoo CEO Carol Bartz used her fourth quarter earnings call to say that her ‘”competition is television”.  She meant this on two levels – firstly Yahoo’s display advertising business competes with television for advertisers budgets and secondly Yahoo’s video products compete with television for audience – read more on GigaOM.

On the audience side they are having at least some success as well, with their primetime recap show Primetime in No Time achieving a high of 12 million daily streams in November, which was larger than the “24” season premiere on television.  Yahoo is looking for more content as well, having recently done a deal with IAC’s new programming venture, Electus and previously announcing they were looking to acquire video companies with audience, content and community.

So Yahoo is an internet portal redefining itself as a television company, at least in part.

This is perhaps unsurprising given that television companies around the world are re-inventing themselves as internet portals, at least in part.  The most prominent and successful examples are perhaps Hulu in the US and the BBC’s iPlayer here in the UK, but there are legions of others, including one from each of the other large TV channels here in the UK.

With internet enabled TVs finally starting to hit the market it won’t be long before the internet companies are competing head on with TV companies the world over to be the gateway to video content.  When that happens the TV advertising budgets will start to flow rapidly to the web unleashing a raft of adtech opportunities in delivery and management.

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The reaction to Chinese hackers

By | Startup general interest | No Comments

Hackers has been very much in the news recently (and I mean ‘hacker in the old fashioned bad way….):

  • Google’s decision to pull out of China – (the latest news suggests they will pull search out of China but are in negotiations about retaining other services)
  • The news yesterday that China based online attacks of Google and other companies targeted social network accounts of employees’ friends as a way in
  • Reports in the FT this morning that CIOs are stepping up efforts to defend themselves against hacker attacks, for the first time including state sponsored attacks
  • Techcrunch.com was down this morning – a report here

So the trick here, I think, is to avoid hysteria and focus on what we should actually be afraid of, i.e. where real damage can be done, and then assess protection options in light of the actual threat.  For companies it seems to me the two things to worry about are having their business disrupted and having proprietary data and intellectual property stolen.

Business disruption is typically very costly – e.g. for Techcrunch whilst their site is down revenues stop, but all their costs continue, and for businesses large enough to be at risk the right course of action is usually to take all reasonable measures to protect themselves.

The theft of data is a little bit different though, in my experience the threat of data getting stolen and the potential consequential loss is often simply assumed to be large when for most companies the risk is pretty much limited to a competitor getting hold of a strategy or pricing documents.  Most competitors would not stoop to illegal activity to gain this sort of information (which they probably have a rough idea of anyway) and of those that would, few will have the resources or know how.  For most companies it isn’t worth the cash cost or productivity impairment that comes with worrying too much about data security.  (Companies that hold credit card data on behalf of their customers or similarly sensitive information are a clear exception here.)

I hope that CIOs don’t over react to the threat of Chinese hackers and burden their customers and employees with security that is disproportionate to the real risks involved.  Unfortunately there are people in this world who have a vested interest in promote security for security’s sake.

Only 7% of the message is in the words

By | Startup general interest | 4 Comments

image I’ve always believed that success in business comes in large part from your personal style or ‘soft skills’ and I find reading books on the subject a good way to observe and reflect on my own style and effectiveness, and hopefully to improve it.  When I find a good book it generally helps me to better understand the things that I already do well and illuminate for the first time some areas where I need to think about things differently.

As you can see from the Visual Bookshelf widget in the right sidebar I’m currently reading The art of persuasion by Juliet Erickson – I’m only 25% of the way through and already I’ve found examples of both the re-enforcement and enlightenment benefits I mention above.  It is one of the re-enforcement benefits I want to bring out here.

When I was growing up the words ‘you shouldn’t judge a book by its cover’ were frequently heard around our house because we didn’t want to judge people on how they look – and I believe that is the right way to approach the world.  That said, it is a fact of life that we are psychologically programmed to make judgements based on surface appearances and visual cues and often we lack the time to penetrate beneath the surface and are forced to rely on snap judgements.  So, regrettable as it may be, to be effective we need to think about how we are perceived as well as what we are trying to say and do.

The following excerpt from The art of persuasion below in which Erickson cites a 1981 study by Albert Mehrabian is an exceptionally crisp statement of both the importance of how a message is presented and delivered, and the qualities of an effective delivery.

What Mehrabian found was that:

  • 53% of the impression you make on another person comes from your behaviour and body language
    The way you act, move, gesture and express yourself; the tone and inflection of your voice.  Whether you appear confident, organised, interested.  Whether you fumble around, are nervous or distracted.  Whether the meaning and point of your message is clear or muddled.
  • 40% of the impression comes from who you are
    This means your credibility and competence.  Are you likeable, funny, interesting?  Are you who you say you are?  Do they like you?
  • 7% of the impression you make comes from the actual words you say
    This includes the content of what you are saying, as well as your choice of words

At the end of the day the content is always the most important thing – if there is no substance there is no business.  So getting your pitch straight is still job number one, but once that is done, and done well, presentation and delivery deserve almost equal consideration.  They are not quick fix items though – the qualities that Erickson lists take time to cultivate.

Update: As truthflux points out in the comments Mehrabian’s conclusions were different to those reported above.  The sentiment is correct and I stand by the conclusion that many people would benefit from paying more attention to the non-verbal elements of their communication, but the percentages are a nonsense.  Thinking this through some more, perhaps the biggest takeaway is that if your words are saying one thing and your body language another then people won’t be convinced, and therefore it is important to believe in your pitch.  When asking for investment it is critical to exude confidence as well as claim it.

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Twitter Weekly Updates for 2010-01-24

By | Weekly Twitter digest | No Comments

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Top artists’ concert revenues typically 2-3x their album sales

By | Music | 9 Comments

The Vancouver Sun recently posted a list of the top ten music earners of the last decade.  Aside from being shocked at how few newish stars made the list I was interested to see that nearly all of them made more money from concert ticket sales than album sales.  It would be interesting to know if the same ratio holds for smaller artists.  Here are a couple of excerpts from the list:

Position in list Album sales Concert sales
Celine Dion 1 $256m $522m
U2 5 $219m $391m
Bruce Springsteen 7 $144m $443m
Britney Spears 10 $299m $196m

I included Britney to make the point that there are outliers, and Eminem is another, he sold more albums than anyone else, but he doesn’t tour much and so didn’t make the top ten.

The bigger point though, is that for most of the top stars live performances are where the action is at – which is important for the whole piracy and artist revenues from internet music services debate.  Specifically, I wonder how many of those concert tickets were bought by fans who got to like the artist after listening to tracks downloaded from bittorrent.  Maybe piracy is helping the artists to make money.  Going forward the same could be said about Spotify – even if artists feel they are not making enough money directly from the service it may be a strong driver of concert ticket sales.

UK Ireland Tech Tour applications open

By | Announcement | 3 Comments

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For those of you that don’t know it, the European Tech Tour Association has been organising two or three day ‘tours’ for as long as I have been in venture capital.  These can be either country or sector specific, and the best startups in a country/sector are selected to present to a group of predominantly VCs and corporates who are looking for a window into innovation, and to find some deals.

The Tech Tour last came to the UK in 2007 and I’m pleased that they are coming back this year.  The UK Ireland TechTour 2010 will run from 27-29 April, and we will be one of the sponsors (although I guess we haven’t paid yet as I don’t see us on the website).

More importantly the selection process has begun and startups can apply here until February 15.  It is a good way for startups to build profile in the European venture scene and to meet investors.

The 25-30 best companies will be selected by a group of experienced investors and professionals (and me).

Atlas are leaving, but there is money in Europe

By | Venture Capital | 6 Comments

Many of you will have seen yesterday’s news that Atlas Ventures is, in the words of Techcrunch, ‘upping sticks and moving to Boston’.  Atlas has been a mainstay of the European venture scene since it really began in the mid-1990s and we have co-invested with them on a number of occasions.  They will be missed.  The truth of the matter is that the venture capital industry in Europe lacks critical mass and their departure doesn’t help.

There is, however, still money coming into the market.  We recently announced the first close of DFJ Esprit III, and other venture funds who have recently raised include Fidelity Europe and Doughty Hanson (I believe, although I can’t find a press release).  Moreover, prior to the Lehmans collapse in autumn 2008 there were post bubble record inflows into the European venture industry.

Active funds in this region with a bit of scale now include DFJ Esprit, Index, Accel, Balderton, Eden Ventures, Fidelity, Doughty Hanson, Wellington, ProFounders, Kennet, Highland, GIMV, Sofinnova, Wheb, Frog Capital, Target, Endeavour, Northzone, Iris, SEP, Amadeus and Advent.  (Apologies for any I’ve missed, please correct me in the comments.)

So, whilst it would be great for everyone if there was more money in the market, cash is being deployed and companies are getting funded.  I would characterise this as a difficult period rather than a crisis.  Remember also that the European startup scene is still young, and that building an ecosystem takes a long time.  And it takes patience.

It is also worth remembering that the building blocks for success in Europe are in place – strong technology, a growing entrepreneurial culture, a rudimentary financial infrastructure and a strong tailwind in favour of small companies as the pace of innovation increases.

Finally, a quick note on scaling VC funds.  As Fred notes in his post Moving to Boston venture teams work best when they are all in one location.  We share that philosophy at DFJ Esprit, and seek to marry it with strong ties and networks in Silicon Valley and around the world.  Like all of the sixteen funds around the world in the DFJ network, we raise our own separate funds which we manage as an independent partnership, but on top of that we operate as part of the DFJ global network of partners.  We all get together regularly in person, on the phone and via web and email groups, and as an added incentive to help each other a portion of all our economics are pooled and shared.  Via this model of affiliated funds we have global scale (over 600 portfolio companies, over $6bn under management, partners in over 30 cities) combined with the power and speed of locally managed partnerships.

Update: As Will Cardwell points out in the comments Eqvitec, Nexit, Creandum, Prime, Early Bird, Via, and Sunstone are also important and active contributors to the European venture industry

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