Monthly Archives

June 2010

Augmented reality – Layar emerging as a successful platform

By | Advertising | 3 Comments

I’ve been interested in augmented reality for a while, I had Layar’s old app on my iPhone before they pulled it from the App Store for being too buggy, and then in February I blogged about their VC round (and an interesting person recogniser app), so when I saw on Techmeme this morning that The Rolling Stones are running a marketing campaign based on Layar I clicked straight through to find out more.

And the news turned out to be pretty interesting on a couple of levels.

Firstly the Rolling Stones campaign is pretty clever.  It is a promotional tool for their recently re-released album Exile On Your Street:

Using their phones, people with the app will be able to ‘stick’ virtual posters to the places they pass. Attached to the posters they can add a comment, one of 28 tracks from the double album and a short video clip of the band. Friends or passers-by with the app will be able to look through their phone screens and see all the posters left by other users within a 2km radius. They can then listen to the tracks stuck to the posters, watch the video, comment on other people’s posters and leave their own.

It is very early days for augmented reality marketing campaigns and at this stage brands will benefit as much from pundits talking about what they are doing (as I am) as they will from people actually using the app, but there are some nice aspects to what they are doing.  Firstly the idea of leaving posters taps into fans desire to publicly associate themselves with the band, and secondly because songs and comments are tied to each poster there is the potential for some viral spread.  That said, you have to be using the Layar app which is only available on the iPhone and Android, and you also have to have the Rolling Stones layer open which limits the audience size somewhat.  Playing with the app from my hotel room here in San Francisco I think I could see four posters that had been left (if that is the right term) in the nearby area.

Secondly, and probably more importantly, Layar is starting to emerge as a successful platform.  I say that because there are now lots of users and lots of developers creating lots of content that runs within their augmented reality browser (from Stuart Dredge on Mobile Ent):

Augmented reality startup Layar has an active user base of more than 716,000 people, with 1.6 million having used its app at least once in the last six months …. Layar says it now has more than 1,000 published layers for its app from developers, with 3,000 more in testing. Its platform has 4,000 active developers

That is a pretty decent level of activity for a startup that is just one year old and which operates in a novel and unproven area, and playing around with the app you can see why people are interested.  I’ve just been having fun with the TweetPhoto layer which shows photos posted to Twitter near where I am, and the Foursquare layer which you can use to quickly scan nearby places to see who has checked in.

Updated: The relationship between exit value, money invested and how well the founders make out

By | Uncategorized | 16 Comments

The following stats show exit values as a multiple of the amount of venture capital invested.  I got the data from Andrew Romans of the Founders Club.

Due to liquidation preferences you can expect that if the exit is less than or equal to the amount of capital invested the founders won’t have made much money.  It is common practice in these downside scenarios to do a deal which incentivises management to execute on a low value exit, so the founders will typically get something, but it will certainly be below early expectations.  Clearly the VC hasn’t done very well here either.

If the exit is in the 1-4x capital invested range then the founders can expect to receive cash in the neighbourhood of the paper value of their shares when the VC invested.  This follows from the very rough rule of thumb that in a typical VC round the investor gets one third of the company for her money.  In this scenario the VC has probably made a small profit, but not enough to get excited by.

Then when the exits get to be 4x+ the money invested the founders start to do very nicely.

The upshot of all this is that with the benefit of hindsight we can see that in 2007 of the deals that exited the decision to raise venture capital was a good one 41% of the time and in 2008 the figure was 45%61% of the time and in 2008 that figure dropped to 40% (updated, first time round I erroneously added the numbers of deals instead of the percentages).

If you take the standard venture capital model which looks for one third of the portfolio to be winners and you factor in the fact that a good portion of companies never really exit this figure feels about right.  If it was much higher it would suggest that VCs weren’t taking enough risk, and if it was much lower there would be legitimate questions as to whether the venture capital industry was delivering any benefit to entrepreneurs, and we probably wouldn’t be making acceptable returns for our investors.

New European startup accelerator – Startupbootcamp

By | Startup general interest | 6 Comments

Startup accelerators are becoming an important part of the ecosystem and it is great to welcome Denmark based Startupbootcamp to join Seedcamp in the European scene. The leading accelerators in the US are Y-Combinator and Techstars and one of the things that makes Startupbootcamp exciting is a tie up with Techstars.

The startup accelerator model is to make a small investment (typically tens of thousands of dollars/euros) for a smallish yet significant stake (rarely much more than 10%) and provide mentoring services, usually over an intensive three month period that follows investment. For very early stage startups with say 2-3 people these programmes can be a great way to get a few months cashflow, raise their profile and get help from a bunch of people they would otherwise have struggled to reach. Applications are open to all and applicants go through a structured evaluation process which allows the accelerator to properly review the large numbers of companies that apply.

Startupbootcamp will invest in the ten best companies that apply and work with them over a three month programme from August to October.

Applications close in a couple of days on June 30th, making me rather late with this post. I was waiting on some information from the founder Alex Facet and I missed it in my email when it arrived last week, so my bad. You can apply here.

I’m pretty excited about the power of the accelerator model and Startupbootcamp have set themselves up to do well. Ultimately an awful lot comes down to the people involved and Startupbootcamp have pulled together an impressive list.

This is how Alex described the programme to me in an email recently:

What is it

Startupbootcamp is a startup accelerator. We’re not only modelled after TechStars (have had a casual

relationship for a while) but recently became their first Global Affiliate.

Affiliates are independent entities but get to tap into the TechStars know how

and, more importantly, community. We’re located in Copenhagen, cover

northern Europe and so far have applicants from all over Europe.

How it works

We take up to 10 teams, to whom we provide some micro capital – or

“excuse-removing cash” as we like to call it – free office space and

access to our 50+ mentors who are all hands on entrepreneurs or gurus in their

respective fields. We finish with big bang on Investor Day where we

showcase our startups to a room full of investors (mostly angels and likely

some VC’s as well).

What we focus on

We’re not tech obsessed, we think there are lots of great businesses which

are tech-enabled. But we do expect startups working on areas where

significant progress can be made in three months with very limited

capital. So far many of our applicants are pitching web-based ideas, but

in wide range of industries (i.e. not only B2C). Many applicants are at

idea stage but several have running products and early customers.

How to get in

It’s 99% about the people. We’re very focused on potential, integrity

and chemistry. We don’t care about nationality, experience level or

education. We want to be seen as co-founders though we don’t ask for

preferred shares or board seats. Only when we’re satisfied with the

people do we look at the idea. The idea will change during the program


Who’s behind it

I am the co-founder with Rainmaking – a partnership of 4 very bright entrepreneurs

who have started 12 companies in the last 3 years (some of which have failed,

two of which they’ve sold). I have a corporate background and started

doing what I love 3 years ago when my son got sick and I took a year off to

take care of him. Rainmaking brings some capital and know how, I bring my

sweat, passion and skills set (people and business development, networking,

business acumen)


Applications close end June

Apply here

Runs from mid-August to mid-November

Investor Day is on November 16th

New host for TheEquityKicker – pages should load faster now

By | Blogging | 2 Comments

Some of you will have caught the Tweet I sent on Friday asking for suggestions of new hosting companies for TheEquityKicker.  Regular readers will know I think speed is important for websites and primarily for this reason I have been meaning to move away from Bluehost (my old hosting company) for a little while and was kicked into action last week after a couple of emails and comments talking about the slow load times everyone has been experiencing and then on Friday I experienced a 12s load time on a decent connection.  Bluehost were pretty fast when I started with them a couple of years ago but they have got much worse recently, a development that I suspect might be the result of their shift to an unlimited storage offer and the difficulties with planning server capacity that resulted.

A number of you were kind enough to offer suggestions on Twitter and I ended up going with TSOHost – a smallish UK host recommended to me by Paul Miller.  I chose them because:
  • The largest part of this community is based in the UK and a UK based host should give them slightly faster page load times
  • I liked the idea of local customer service
  • Their package seemed about right for a blog of this size (150-200k page views per month)
  • When I called them up to ask whether they would help me move to them from Bluehost they set out a very simple and easy process – download a full back up from Bluehost, upload it to the TSOHost servers, let them know and they would rebuild the blog out of the backup
I kicked off that process on Friday night but had a few problems uploading the 433MB file to their servers.  I finally got it uploaded on Saturday morning and sent a message to TSOHost support.  They were incredibly responsive and helpful, giving me some options for dealing with a couple of changes I wanted to make, fetching a new copy of the backup from Bluehost directly when it emerged the copy I uploaded was corrupted, and helping me view the site on a temporary URL before switching the nameserver over.
In summary, so far my experience with TSOHost has been second to none.  Hopefully their server performance going forward will hit the same high standards.
Next on my agenda is a new theme.  I am thinking that a three column layout with the posts on the left and two narrow columns of widgets on the right, and with an image across the top which suggests London (as the current picture of the London Eye is intended to do).  Let me know if you have any thoughts/suggestions/ideas.

Twitter Weekly Updates for 2010-06-27

By | Weekly Twitter digest | No Comments

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Facebook making forays into search

By | Facebook, Google, Search | 4 Comments

Over on All Facebook they have been writing a lot this week about Facebook’s moves into search.  Their thesis is that the ‘like’ is replacing the ‘link’ as a measure of authority and that Facebook has all the data to deliver the best search service.  A couple of days ago they wrote about how SEO might work on Facebook and then today they trumped that with Facebook unleashes open graph search engine, declares war on Google.

Together these two posts explain how Facebook will begin surfacing objects from their Open Graph index in Facebook search results and these objects could be pages from your site, or any other.  Take a look at the screen shot below to see how this might work.

imageAccording to All Facebook, Facebook will use the number of times a page is liked to determine relevancy and hence positioning in the search results.  As they point out this will lead to ‘like baiting’ which is equivalent to the ‘link baiting’ publishers practice to get good positioning on Google.

Right now much of this is speculation.  All Facebook say they managed to replicate the result shown in this screenshot (which I assume was issued by Facebook) but when I tried it the Trip Advisor result didn’t show up.  I also tried a bunch of other searches and didn’t get anything very interesting back.

That said, for certain types of searches Facebook could be very powerful.  The Ajax on Facebook’s search is greasy quick and if you are on Facebook already and want to quickly know something more about a hotel using their search function could easily become a quicker then going over to Google.  It will only work for a subset of queries though, and the size of that subset will depend on how good their algorithm is.

The other interesting thing here is whether and how Facebook will directly monetise their search feature.  If they do they will have to choose between promoting partners’ sites and adopting a more transparent system like Adwords.  This decision parallels the one being taken at Apple right now about ads running within their platform.  A couple of weeks ago I posted about how the web landscape is changing and we are heading towards a world where success for startups is getting much more dependent on having the right partnerships rather than having great product and web promotion skills – I don’t necessarily think that this is a good development, and the way Facebook and Apple approach the next period in their development will determine how quickly we move in that direction.

You might by now be wondering whether Facebook search is yet making a dent in Google from a market share perspective.  The answer is yes, but only a small one – according to Comscore data from April (reported here on GigaOM) their share is around 2.7%.  That said, my understanding is that their query volume is growing very fast.

We could all use some competition for Google, maybe this will be it.

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Mary Meeker internet trends – the mobile opportunity will eclipse what we have seen before

By | Advertising, Mobile, Startup general interest | One Comment

Take a look at Mary Meeker’s latest update of her Internet Trends slides.  There is a tonne of good stuff in here indicating that mobile will be HUGE and that we are at or nearing an inflection point, not least:

  • Smartphones will be more numerous than PCs by 2012
  • Smartphone will outnumber feature phones by 2011
  • Mobile app usage and mobile search are both forecast to be up 2x over the current year

For those in the online advertising world slides 25-31 are particularly worth a look, showing the $50bn open opportunity in online advertising calculated from disparities between where media is consumed and advertising dollars are spent, and explaining how existing inventory is under monetised.  We need some innovation in this space.  Maybe the iPad will do it.

We should of course keep ourselves grounded, and, as Alan Patrick points out, it is worth remembering that Ms Meeker got herself into a bit of trouble during the dotcom boom on account of her optimism on the prospects for internet growth.  The trick here, as ever, is picking the right specific business opportunity and getting the timing right.

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UI research – speed matters and 10s+ page load is a killer

By | Startup general interest | 7 Comments

Earlier this week usability expert Jakob Nielsen (famous for his eyetracker studies) published the results of some research into the importance of page response times to user experience and perceptions of brand.  In his words “users really care about speed”.

In Jakob’s assessment speed matters for two reasons:

  • human limitations, espescially in the areas of memory and limitation
  • human aspirations – fast interfaces make us feel like we control the computer (a feeling we like) whilst slow interfaces make us feel like it is the computer that is controlling us (not so good…)

In interviews Jakob has found that slow site speed is something which sticks in the minds of users when thinking about services they have used in the past.  It can even become one of the brand values associated with a site.

Jakob proposes three response time limits:

0.1 seconds gives the feeling of instantaneous response — that is, the outcome feels like it was caused by the user, not the computer. This level of responsiveness is essential to support the feeling of direct manipulation (direct manipulation is one of the key GUI techniques to increase user engagement and control — for more about it, see our Principles of Interface Design seminar).

1 second keeps the user’s flow of thought seamless. Users can sense a delay, and thus know the computer is generating the outcome, but they still feel in control of the overall experience and that they’re moving freely rather than waiting on the computer. This degree of responsiveness is needed for good navigation.

10 seconds keeps the user’s attention. From 1–10 seconds, users definitely feel at the mercy of the computer and wish it was faster, but they can handle it. After 10 seconds, they start thinking about other things, making it harder to get their brains back on track once the computer finally does respond.

And he goes on to say that a 10 second delay will often make a user leave a site immediately and even a few seconds delay is enough to create an unpleasant user experience.

Speed is important for web services, period, and I’m returning to a theme I blogged about earlier this year.  In the post I just linked to you will find a list of the most successful web services and the top ones are very fast.  Additionally the sites whose fortunes are waning are the slower ones.  I think speed is becoming more important, not least because Google started including response times in their search algorithm earlier this year.

To close – Jakob notes that the primary cause of slow page load times has shifted from big images to slow loading widgets.

Thanks to UX consultant Ian Collingwood for pointing me to this post.  As he notes I’m not practising what I preach here – theequitykicker is slow to load, something I will work on as soon as I find the time.

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Nokia’s declining fortunes show the weakness of closed systems

By | Apple, Mobile | 5 Comments


Nokia warned last week that its second quarter results would come in below guidance and as the FT reported their shares fell 10% as a result.  Many analysts are saying that Nokia’s disappointing results are here to stay.

Their problem is that they are losing market share in the smartphone market which is both the highest growth and highest margin part of the mobile phone business.  They are of course losing out to the iPhone and to Android.

I would posit that Nokia is losing the smartphone battle because it operates a very closed system and seeks to mine too much value from every part of the ecosystem they touch.  As a result they have stifled innovation both internally and amongst their partners.  Two examples, firstly Symbian hasn’t delivered on its potential as a mobile operating system and secondly Ovi is a fraction of the App stores on the iPhone or Android. 

In a small example of their failure to innovate, despite spending $8bn to buy global mapping giant Navteq in 2007 they still don’t have a decent maps app on their smartphones.  My wife recently bought a Nokia E52 and finds it easier to use Google Maps on her phone than the native maps app (Blackberry suffers from a similar problem btw).

Whilst I often take potshots at Apple for their anti-ecosystem behaviour their app store is an awful lot more open than Nokia and so far they are reaping the benefits.  Whether they will continue to reap the benefits down the line or whether history repeats itself and just as Apple took share from Nokia by making the ecosystem more open Android or another platform will do the same to them is of course the big question here.

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Europe has become a more fertile place for tech companies

By | Exits, Startup general interest, Venture Capital | One Comment

An Economist article from last week opened with the sentence I’ve chosen for the title of this post, and it goes on to give a good account of where the European startup ecosystem has gotten to over the ten to fifteen years it has been in existence, both positive and negative.

On the plus side they note the following:

In recent years, a lively environment for young companies has emerged in Europe, complete with serial entrepreneurs, experienced venture capitalists and the necessary supporting infrastructure, such as law firms and PR agencies. And it is most visible where Europe has been considered weakest: the internet and other parts of the information-technology industry.

The article goes on to do a good job of describing the things that make business for startups in Europe more difficult than in the US, including the old favourites a ‘lack of an entrepreneurial culture’ and our ‘fragmented market’.  The silver lining here is that our situation is improving in all these areas.

When it comes to looking forward to the future, probably the most important point made is that success breeds success, and it looks like the next 12-24 months will be a period when we see more good news than we have in the last say five years.  The article begins by describing four European tech companies that everybody is talking about in Silicon Valley (Spotify, Playfish, Vente Privee and Skype).  Hopefully these companies and others will produce more good exits cycling cash back into the earlier stages of the ecosystem and providing roll models and case studies for the next generation of entrepreneurs.  I hope also that some of these companies will remain independent and European.

As we know, building an ecosystem takes time.  I think we can be pretty pleased with the progress we are making.