Monthly Archives

April 2011

Taptu’s new iPad app

By | Portfolio | 2 Comments


Our portfolio company Taptu has recently pivoted from a mobile search proposition to the social magazine space.  They have had iPhone and Android apps out for a few months now but I have been waiting on their iPad app which came out a few days ago.

Reading news on my iPad is part of my morning routine and I have been a pretty happy user of Pulse up to this point, which I have preferred over Flipboard primarily because of its speed.  My only gripes with Pulse are the that you can only fit so many feeds onto a page and the limits on the content available.

Taptu solves both those problems.

The technology that powered the Taptu search offering has now been tuned so that any content source can be brought into a stream on Taptu and they can combine multiple sources into a single stream.  That means you can mix sources to create customised streams and have everything you need in the streams you can see on a single page (4 streams in portrait view, 3 streams in landscape).

I’ve set mine up to with dedicated streams for Facebook and Twitter and then a mixed stream for VC news and a mixed stream for premiership football news.

One of the neat things about they’ve done is allow people to share their curated feeds, or in Taptu parlance become ‘news DJs’.  The VC news feed I’ve got is one that was created by Scott Sage, an Associate here at DFJ Esprit, and the premiership football stream is one that Taptu curates.

The team at Taptu are going to help me curate my own stream with my favourite blogs, sites and Twitters.  I will let you know when it goes live.

The app has a few nice UI touches as well, in particular I like that you can view the full history of a stream and see how old each item is.  That helps you know how up to date you are and whether you have too many or too few sources curated into the feed.

My only substantial gripe is that there is no Instapaper support, which I’m told has been a common feature request since the iPad app went live and will be coming soon.  For now the ‘read later’ options are to email stories or bookmark them inside Taptu which creates a stream of saved stories.

Check it out.  Let me know what you think.

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I’m starting to think network operators should be allowed to charge content owners for carriage

By | Startup general interest | 11 Comments

Neelie Kroes, the European Commissioner responsible for the ‘digital agenda’ which includes broadband targets is considering allowing network operators to charge content owners to transmit content over their networks.  This would be an abandonment of the principles of net neutrality that have served us all well over the last 15-20 years, but I am starting to think it might give us the best chance of getting improved broadband speeds going forward, which is probably more important than anything else.  That said, it is also critically important that charges are regulated and we don’t end up with a two speed internet where wealthy companies are able to buy fast transit and cash strapped startups struggle.

Here are the facts as they look to me at the moment:

  • Faster broadband speeds are the over-riding objective
  • Significant investment in networks will be required to maintain and improve speeds
  • That investment needs to be funded somehow
  • Broadband providers aren’t able to charge consumers more
  • Therefore content owners are the next best place to turn

The best solution would be if the fourth bullet above was incorrect and broadband providers were able to charge consumers more for higher speed connections and fund their network capex that way, but I just don’t see it happening and time soon.  Part of the problem may be a failure of local competition (which is what proponents of net neutrality argue) but I think the bigger problem is that no-one has been able to explain clearly to consumers why they should pay up for extra bandwidth.  If there was an easy fix for these issues that would be the best way forward, but I haven’t heard of one.

The other important point here is that the net neutrality regime is already creaking at the edges as network operators shape traffic to limit services that are bandwidth hungry and/or compete with their other services – e.g. Skype over mobile.  It may be better to get it all into the open.

Finally, as I hinted in the first paragraph any charging regime would have to be regulated to avoid a two speed internet.  I don’t think the regulation needs to be complicated as charges could be directly linked to bandwidth, but the price per megabyte should be the same for everyone.  That wouldn’t be a problem for most startups as their traffic requirements are limited until they have proven success.

These are very much emerging thoughts, and the simple act of writing them down has been helpful, but I would love to hear other views.  Here is one counter view.

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If you read one book about negotiating…

By | Startup general interest | 11 Comments

image I just finished reading The Secrets of Power Negotiating by Roger Dawson and as Tim Ferriss says in Four Hour Working Week “if you only read one book about negotiating, make it this one”.

The first reason I like this book is Roger’s solution driven approach to negotiations.  Most deals are complicated and there are many elements that can be traded off against each other if the negotiators are skilled enough to listen and find out what is important to the other side.  As Roger notes repeatedly throughout the book there may be concessions you can make which cost you little or nothing but are meaningful for the other side.  In-experienced negotiators, however, are more prone to getting focused on a single issue (often price) which leads to conflict and occasionally deadlock and lost deals.

In the context of venture capital deals the valuation of the company is always important, but there are a number of other elements which are material and where there is often more room for each side to make easy concessions.  The most common of these are liquidation preference, anti-dilution rights, size of the option pool, good leaver/bad leaver, and provisions determining the balance of control between investor and the company post transaction.

When a VC invests in a company/entrepreneur it is often likened to a marriage and it is very important that the relationship doesn’t get off to a bad start with acrimonious negotiations over deal terms.  It is thus more important than in most negotiations that both sides work hard to find the white spaces that form the basis of a happy agreement rather than approach discussions as a zero sum game.

As an aside, one of the small things that Roger advocates is always leaving the other side happy, and he offers a number of tips for doing so.

The second reason I like Roger’s book is that it is full of actionable recommendations for getting the best deal available whilst maximising the chances of the negotiations reaching a harmonious conclusion.  They are too numerous to list here in full but in they group into:

  • Ways to maintain flexibility in your position and avoid deadlock – e.g. NEVER go too quickly to your best offer as problems will follow if the other side then tries to negotiate you down further.  A common mistake is to take the approach of cutting straight to a ‘fair’ position which leaves little room for manoeuvre if the other side has a different idea of what ‘fair’ is.  Better to start with a more extreme position and then get to know how your opposite number thinks.
  • Tools to help you better understand the other side (and yourself) – these range from questions to ask (e.g. always ask for more), to descriptions of different national negotiating styles and analysis of the different types of power negotiators can hold (e.g. power to reward).

Finally, the book is extremely well written.  It is an easy read, key concepts are referred back to multiple times as the book progresses, making them easy to remember, and it is often humorous.

Discussions between experienced negotiators are a bit like a game of chess.  The two sides enjoy pitting their wits against each other and understanding and countering the tricks and tools that the other side employs and if there is space for an agreement then the two sides will find it.  It isn’t easy for most people to become experienced negotiators though, they don’t get that many chances to practice and when they do the situation is often loaded with too much significance for it to be a good learning experience.  This book can help anyone to get up the learning curve more quickly and reduce the chances of a deal that could have been great getting ruined by poorly conducted negotiations.

I have had two negotiations in the last six months that were a real pleasure, one over a compensation package and one over deal terms.  Each time both sides pushed hard and discussions were occasionally tense and we ended up with a fair deal that everyone was happy with, and I also finished the discussions with more respect for the other side than when I had started (good negotiating skills are an asset to every business).  I hope that more of my negotiations in the future will be like those.

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Twitter Weekly Updates for 2011-04-24

By | Weekly Twitter digest | No Comments

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Nearly all jobs created in the most successful startups

By | Uncategorized | 5 Comments

I’ve written before about how the UK government has worked out that the majority of jobs created in the UK are created by startups and that as a result they are working hard to make life easier for entrepreneurs.  Perhaps the most visible parts of that policy are tax incentives, support for venture capital funds and support for the east London tech cluster (aka Silicon Roundabout).

New research out from the World Economic Forum supports that policy and throws some light onto which startups should be favoured in order to maximise job creation.  Their research into 380,000 startups across ten countries found:

  • The top 1% of startups created 40% of total jobs and contributed 44% of total revenue (percentages are of total contribution from startups)
  • The top 5% created 67% of total jobs and 72% of total revenue

The implication is that government policy should focus on identifying and supporting the very best startups.

Additionally, they identify eight strategies for early stage companies:

  • creating and riding a new business growth wave
  • new product in a new category
  • new product in an existing category
  • redesign of business value chain
  • research or discovery of knowledge
  • rollup (aggregation) of existing players
  • governmental, regulatory or political change
  • idea transfer or transplant.

The upshot of this is that as well as all the helpful tax incentives the government should also focus on ways to assist the very best startups.  I haven’t seen an analysis of how the top 1% or 5% breaks down between venture backed companies and non-venture backed companies, but I would guess a pretty high proportion of the have taken VC.  It is in my own interest to say this, but the implication being that the government is right to focus on supporting VC funds and VC backed companies as a way of helping the top 1-5% of startups where all the jobs are created.  The other implication is that easing visa applications for entrepreneurs who want to come to the UK and/or talented people who want to come from abroad to work for UK startups as I’m guessing that both of these categories of immigrant will be over-represented in the top group of startups.

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50 Questions: How does a VC evaluate management teams?

By | 50 Questions, Startup general interest, Venture Capital | 8 Comments

Eighteenth in a series of weekly posts by myself and Nicholas Lovell of Gamesbrief which answer the fifty questions you should ask before raising venture capital.  We expect the series to run for a year after which we will collate the posts into a book.  You can find the rationale behind the series here, and the list of questions here.  We welcome your comments on any and every aspect of what we are doing.


image It is a cliche in venture capital that ‘it is all about the team’, particularly with early stage investments.  Some will argue that the market and product are more important, but everyone agrees that having a great team is critical.  To give more weight to this point, I recently heard one of Europe’s more experienced VCs describe how his fund used to make investments in companies that had great products in hot markets, but where they weren’t so sure about the team, but they found that those investments rarely ended well and ‘don’t make that mistake any longer’.

So everyone is agreed that having a great management team is important.  The tricky thing is working out whether any given management team is great or not.

Starting with the CEO, there are some objective characteristics that you can look for and which would raise a flag if they were absent:

  • Strong company vision
  • Passion for the product and opportunity
  • Hard working
  • Deep understanding of the market/customer problem
  • Ability to hire well
  • Good communicator
  • Ability to delegate and manage
  • Strategic thinker
  • Good judgement

Beyond that you get to a bunch of ‘nice to haves’ which would include existing personal relationship, relevant industry experience, previous startup experience (ideally as founder/CEO), blue chip corporate experience, technical skill set, ability to sell, product management capability, financially numerate, leadership ability, good outside interests and so on.

All these are ‘nice to haves’ rather than essentials and many of the best startup CEOs and founders don’t possess, them (e.g. Zuckerberg, Page and Brin, Gates, Ellison).  Or at least they don’t when the company is small.  They may acquire them later.

To make matters more complicated, there are many people who tick all the boxes on the list of essentials and have some great experience from the ‘nice to have’ list who turn out to be awful CEOs.  In fact one of the biggest mistakes a startup can make is making what is disparagingly known as a ‘CV hire’, which means choosing someone solely (or largely) because they have a great name on their CV.

Given the absence of objective measures of the items listed above, most VCs fall back on making a gut feel based assessment.  In addition to the list of essentials they will be looking for a good solid feeling that the CEO in question will work well, and will work well with them.  Psychometric testing is an option, but not one that many VCs I know take advantage of.  I think that is maybe because startup CEOs and founders rarely fit into well into standard categorisations of personality types and the tests wouldn’t reveal enough insight to justify the cost and effort involved.

The CEO is the most important member of the management team in any investment analysis.  A good CEO will fill the gaps around her as the company grows, but if the CEO isn’t at the right level then there will inevitably be difficulties ahead.

That said, we do of course look beyond the CEO to the rest of the management team, and we are looking for the same things as we look for in the CEO, but with the expectation that individuals will be deeper in competence in their area and may not be as rounded overall (i.e. may not have the full list of ‘essentials’).  Beyond that we look to see if the team has complimentary skills and that they work well together, and usually that means they get on well together.

Given the importance of gut feel in the evaluation of management teams the assessment needs to come largely from meetings and less from what can be written on a piece of paper.  I would still say that it is worth putting a slide in the pitch deck about team I wouldn’t go overboard on the detail and wouldn’t spend too long on it during a pitch meeting.  Rather I would focus on showing the passion, knowledge, and commitment of the whole team at various points during the meeting.

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Augmenting our bodies with technology

By | Startup general interest | No Comments

Check out this video for a sign of things to come.  It shows a man who lost his hand 25 years ago getting fitted with an amazingly sophisticated prosthetic hand.  You can see the sensitivity of the control when he picks up a plastic cup without dropping it.  The most incredible piece though was the way he plugs the stump of his arm into the limb on 46s – it clips on in the same way as a blade in a kitchen mixer.

These prosthetics are still expensive ($50-70k) and the first use cases are understandably replacing lost limbs, but before long the price will come down dramatically and the use cases will expand to adding tools to our body we simply haven’t had before.

As an example three of Prof Kevin Warwick students at the University of Reading have implanted magnets into their fingertips which allows them to fit sensors around their fingers which make the magnet vibrate in response to unltrasonic or infrared sensors.  Simply put, their brains can then ‘feel’ the distance or heat of objects.  Youtube video here, look about 4mins in.  

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BuddyMedia report on effective Facebook marketing

By | Facebook, Startup general interest | 2 Comments

Facebook marketing business Buddy Media today released their latest research: Strategies for Effective Facebook Wall Posts: A Statistical Review.

It caught my attention firstly because it is a good example of leveraging data from your business as a sales and marketing tool.  Doing this effectively has a number of advantages:

  • It positions your company as the expert.  The way Buddy Media defines metrics (‘Comment rate’, ‘Like Rate’, and ‘Engagement Rate’) and offers easy sound-bites “brands that posted outside of normal business hours had 20% higher engagement” positions them as the go to authority on Facebook marketing.
  • It helps your customers to quickly do their job better – e.g. by scheduling posts to happen outside of business hours.
  • If you get out first, or have a unique angle/data set then your competitors will struggle to catch up – remember the way everyone used to quote the Admob mobile mobile internet report?
  • Pretty and insightful graphics get posted a lot around the web (see below)
  • The cost is limited to the time of a good analyst

Obviously you need to have enough traction to have a decent volume of data before you can pull this off, but if you are smart, you don’t necessarily need to be the biggest company in your market.  For example our investment WAYN is a social network focused in the travel space that is doing well selling to tourist boards.  Despite the fact that there are bigger social networks out there (e.g. Facebook) they have turbo charged their tourist board business by conducting research that is designed specifically for tourist boards and which is based on data gleaned from activity on WAYN.  The trick is to establish authority – WAYN’s authority comes from their unique access to data from global travellers while Buddy Media shows their research is credible by emphasizing the sample size (200 of their customers) and the fact that the analysis is ‘statistical’.

As well as being an interesting case study in sales and marketing tools the results from the Buddy Media research are interesting in their own right.  Beyond the out of hours posting point I mention above, they found that short posts (less than 80 characters) work best, and show which keywords work best.  More detail in the graphics below.






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Twitter Weekly Updates for 2011-04-17

By | Weekly Twitter digest | No Comments

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The Equity Kicker makes it onto Facebook – please like me…

By | Blogging, Facebook | No Comments

image This morning Thomas Power tweeted out a link to an Inside Facebook post which compares Facebook and Twitter as distribution channels for journalists which prompted me to finally push Facebook integration for this blog to the top of my to-do list.  If you are reading this on the site itself you will be able to see like buttons at the end of each post and a Facebook fan box in the right side bar where the MyBlogLog widget used to be.

To make all this work I’ve set up a Facebook Page for The Equity Kicker and if you hit the ‘Like’ button in the sidebar widget then you will become a fan of The Equity Kicker’s page on Facebook, and your face will picture will show up in my sidebar.  Pretty obviously, this adds a social element to The Equity Kicker and hopefully helps people to more quickly figure out whether my words are worth reading.  The bad news is that my Fan count starts at zero, so if you like what I write please hit the ‘Like’ button in my Sidebar so that the widget fills up with faces.

The Facebook Fan box replaces the MyBlogLog widget which I’ve had up there for years.  I’ve always liked being able to quickly see the pictures who have been on the site, but unfortunately Yahoo! are discontinuing the service in the next couple of weeks.  Another example of corporate road kill.

Facebook is weaving its way through the web via its like button and Facebook Connect and it is past time I hooked up with that goodness.  The benefits for me are the same as for all writers, and indeed owners of other sites.  Seeing that other people, particularly your friends, have Liked something brings credibility and the added reach which comes from turning up in the news feeds of people who hit the Like button is very welcome.  Facebook has 600m users.

Twitter offers easier and more instant distribution via a simple tweet out to my followers, but the endorsement from Retweets isn’t as powerful as Facebook Likes, not least because it doesn’t come with a picture.  Additionally, at 140m users Twitter’s reach is much less than Facebook’s.  That said, I imagine that just about everyone who might be interested in this blog is on Twitter and I might not get that much extra juice out of Facebook.  It will be interesting to see.

For true journalists, or writers targeting an audience outside of the technorati then Facebook is becoming a much more important channel.  As they release more tools to help publishers and enhance their Fan Pages I am wondering if they will start to pull writers away from Twitter.