Monthly Archives

September 2012

Moblie and social news consumption has crossed the chasm and is well into the mainstream

By | News | No Comments

Research out from Pew Internet shows just how far the use of mobile and social to access news has penetrated into the mainstream. As you can see from the chart above radio and newspapers have been the losers so far. TV has held up OK so far but the writing is on the wall. Around a quarter under 30s regularly watching news on TV, down from over a third six years ago, and less than half the average figure for all Americans. Unless these kids radically change their behaviour as they age TV is going to decline rapidly.

Other interesting tidbits from the survey include:

  • Mobile news access has doubled since 2010, with smartphone users leading the charge. This will continue to grow as smartphones improve (welcome to the blindingly fast iPhone5) and smartphone penetration increases from its current 48%.
  • Around half of those who regularly read heavy weight newspapers like the NYT and Washington Post now do so from their mobiles
  • Social media news access is up 3x in two years. 20% of respondents regularly go there for news.
  • Twitter is on the up, but is still surprisingly insignificant as a channel for news. Only 3% of respondents regularly going their for news (up from 2% in 2010).

Mobile and social are big trends in many industries now, but news is in the vanguard.

Bringing interview best practice to VC pitches

By | Venture Capital | 3 Comments

Pitching a VC has a lot in common with interviewing for a job. It’s a conversation where the entrepreneur is trying to convince the VC that he or she will perform excellently in their roll as CEO of their company and the VC is trying to convince the entrepreneur that they will be great to work with. There are some big differences as well, most notably that as well as selling him or herself the entrepreneur is also pitching the idea behind their business, but the similarities are enough that learning from interview best practice will improve the pitches of most entrepreneurs.

This topic is on my mind because I’ve just read Most of what you know about interviews is wrong on Geeklist.

It’s a long list of points to remember when interviewing with good explanations of why each is important. There is nothing terribly revolutionary but it is comprehensive and worth a read if you are interviewing. Some of the list is relevant for VC pitches (slightly adapted):

  • Go to as many pitches as possible – pitch early and pitch often. Good VCs like to meet companies before their ideas are well formed and are skilled at spotting diamonds in the rough, so don’t be afraid of pitching early in the life of a company. I am often surprised at how much better entrepreneurs get at pitching their companies after a bit of practice.
  • Giving the correct answers to questions will get you funded: WRONG! – as in an interview VCs will be making subconscious judgements based on body language, tone of voice, facial expression and tone and pitch of voice. Most people can’t fake these, so the only option is to be genuine. We sometimes see entrepreneurs who look and sound tired whilst telling us they are excited to be taking over the world. They don’t get funded.
  • Deflecting a question by asking a question back will deflect the VC: WRONG! – this serves as a red flag that there is a subject the entrepreneur doesn’t want to talk about. Listen carefully and be careful of doing this accidentally.
  • Appearing cool and hiding your emotions will get you funded: WRONG! – VCs want to see and feel confidence and excitement from the entrepreneurs.
  • Being humble will get you funded: WRONG! – you need to sell yourself, focusing on what you’ve actually done and achieved particularly when that demonstrates entrepreneurial qualities like resilience, flair and ingenuity
  • Getting prepared for the questions will make you sound rehearsed: WRONG! – practice makes perfect.
  • A pitch is a formal meeting that takes place in the VCs office: WRONG! – VCs will form their assessment based on every contact they have with you
  • Calling the VC back will show that I’m desparate: WRONG! – unless you are one of a lucky few you will need to hustle your way to the top of your VCs priority list. That said, understand when silence means ‘no’. (I always try to say ‘no’ but many VCs simply stop returning calls.)
  • Once you make a mistake you die: WRONG! – there is no prefect pitch, and recovering well from a setback will impress

Kernel column: Falling costs enable regional startup hubs

By | Uncategorized | 4 Comments

My latest column for the Kernel. It was published last Thursday.


Nic Brisbourne explains how the falling cost of doing business in tech is making space for thriving regional ecosystems, calling for better local funds in these new emerging hubs.

As we all know, the last ten years has seen a near-total collapse of the innovation cost curve, thanks to the perfect storm of open-source, cloud infrastructure, and “free” global distribution via search, social and app stores. At the same time we have seen the start-up ecosystems in New York, London and Berlin emerge as meaningful competitors to Silicon Valley.

It’s no coincidence that these two developments have come together. The former enables the latter. Ten years ago, it took a million or two to get a business to any scale. That meant going to VCs at the plan or early prototype stage. Those VCs were nearly all situated in Silicon Valley and most companies couldn’t get very far without going to them.

So those VCs didn’t have to worry that they were missing out by only investing in companies they could drive to. (Don’t interpret this as a sign of laziness: many VCs work very hard. But they choose to invest in local businesses because they will make better investment decisions when they know the entrepreneurs, their friends and advisors, and where they can have more frequent face to face contact post-investment.)

In other words, the geographic concentration of capital in Silicon Valley caused a similar geographic concentration of innovation. This was the situation for 30 to 40 years, during which time this natural logic of innovation clustering around capital was re-enforced by the success of companies like Intel, Apple, Cisco and Yahoo!.

The wealth and experience created in these companies propelled Silicon Valley further ahead of its global competitors as the easiest place to found a startup, and Boston, the only meaningful competing start-up centre, fell by the wayside.

When the cost to start a company fell dramatically things started to change. Many entrepreneurs still moved to Silicon Valley to start their companies, but staying nearer home became an option for those who were motivated to do so, usually for reasons of family or geographic loyalty.

These entrepreneurs, at companies like Skype, Etsy, and Tumblr, were able to prove a lot with a little and Silicon Valley had to sit up and take notice. In an anomalous, parallel development, the 1999-2000 bubble spawned local funds who were able to support these companies to a point, and to introduce them to their Californian counterparts.

(Draper Fisher Jurvetson (DFJ) were one of the first Valley funds to respond to the globalisation of innovation when they started building the DFJ network of funds around the world, which my partnership, DFJ Esprit, joined in 2007.)

Fast forward to 2012, and we have increasingly vibrant tech ecosystems in many locations supported by increasingly competent local venture capitalists. Additionally, the proliferation of high quality tech blogs is giving entrepreneurs all around the world access to much of the advice that was previously only accessible through personal networks in Silicon Valley.

But most of the local funds are small and the local ecosystems sub-scale. They are unable to provide for the needs of some companies as they grow. Some companies are able to raise all the finance they need locally, while others are able to raise money from Silicon Valley funds investing outside their home turf – an increasingly common occurrence. Sometimes the companies simply struggle and grow as best they can with inadequate financing.

This lack of late-stage capital is now throttling the geographic dispersion of innovation just as it was getting started. Unfortunately, the US venture market is in a period of contraction at the moment, which will exacerbate the problem by reducing the appetite for deals far from home.

The best solution to this problem is to have more and larger local funds in each ecosystem. Governments worldwide understand this now and are supporting their venture industries with tax breaks and direct investment, but the real shift will come when the existing local funds show through good returns that venture capital outside of Silicon Valley is a profitable endeavour.

Only then will innovation be truly dispersed, and only then will we be able to focus on what we’re doing here without always having half an eye on what is going on “over there”. That means it’s on us, the current crop of VCs and the entrepreneurs we’ve backed, to demonstrate that our local ecosystems work.

Solar power–a case study in exponential growth

By | Startup general interest | 6 Comments

BP recently released a report showing that global solar generating capacity grew 73.3% in 2011, and at 63.4 gigawatts ended 2011 ten times greater than its level of five years previously (graphic below).

73% in one year implies that solar capacity is more than doubling every two years, a growth rate that has been maintained for twenty years now, and shows no signs of slowing, according to futurist Ray Kurzweil.

The Singularity Hub does a good job of analysing what all this means.

Most of all, it’s very exciting. If the trend continues for another two decades then solar will be more than providing for all our energy needs. Once there is a limitless supply of energy process like water desalination and hydroponic farming become affordable and other major issues like food and water shortages become tractable. Humanity’s energy requirements could be satisfied by just 1/10,000 of the sunlight falling on the Earth’s surface harvested by solar panels on an area equal to a few percent of the world’s unused deserts.

There are of course some caveats. Most importantly, solar power has been heavily subsidised, particularly in Europe where much of the growth has come, making it difficult to know what the growth would have been with no market distortions, or will be in the future when the subsidies inevitably disappear. Additionally, as any startup CEO or investor knows, high percentage growth rates come more easily when the numbers are small, and solar power is still in its infancy, at around 0.5% of total capacity in 2011.

However, photovoltaic devices are coming down in cost and increasing in efficiency – technology improvements that should underpin continued growth in the industry, particularly in the face of high fossil fuel costs. The point everyone is aiming for is ‘grid parity’ when solar becomes cost competitive with other energy sources, which is forecast to happen for over 100m Americans in urban centres in the next 6-7 years.

Let’s revisit that for a second – solar grid parity for 100m+ Americans in 6-7 years and free abundant energy for the whole world in twenty years. The first sounds plausible, great, but plausible. The second less so. That is how exponential increases always seem – sensible in the short term, but fantastical over the long term, after the knee of the curve kicks in. But exponential increases do continue over the long term to penetrate markets near 100%. The best recent example is mobile phone penetration where analysts have been scrambling to increase their estimates of device sales has penetration has accelerated towards 100% on a global basis. I could also have picked internet penetration, social media usage or tablet sales as examples.

These changes are coming faster and faster making it more and more important to spot what is coming early and get involved, which is pretty much my job description :).

Measuring ad effectiveness by linking to offline sales

By | Advertising, Facebook, Privacy | 2 Comments

On Friday I wrote about how privacy advocates will welcome Facebook’s release of their Shared Activity plugin which makes it easier for users to control how their actions on Facebook-connected third party site show up in their Facebook feed. Today’s news points in the other direction. This morning I read of Facebook’s project with Datalogix to measure ad effectiveness by tracking whether people bought a product in a store after seeing a Facebook ad. They are using loyalty card data to make the link.

Predictably, privacy advocates are arguing that if Facebook is to go down this route they should only do it for consumers who explicitly opt-in.

These opt-in vs opt-out arguments are happening all the time now, and in some ways they are a bit of a charade. Very few people change their default settings and so rather than being about personal choice, deciding to make something opt-in is to effectively kill the project – i.e. to regulate so that something is opt-in is to regulate it out of existence, most times at least.

For me the advantages of linking online ads to offline sales far outweigh any risks. Better tracking leads to better targeting, allowing publishers to charge higher rates and show us fewer ads and/or offer us more stuff for free. Additionally, the ads we do see are more likely to be for something we want, and therefore less annoying.

There is a lot to be gained from this type of tracking, which is why Facebook’s advertising customers are pushing them down this route.

And I can’t see that there is much risk. Datalogix anonymises the data it buys from retailers so there is no way that Facebook can tell which of their users are actually buying what. For me, real privacy risks come when people can work out how to access my money or work out where I live, not from high level concerns that if the data is in existence something bad might happen. I’d love for someone to explain if there are any real concerns in this case.

Facebook makes privacy controls much simpler

By | Facebook, Privacy | One Comment

Last night Facebook launched their Shared Activity plugin makes it much easier to control which of your activities on Facebook-connected third party sites show up in your Facebook feed. It’s a one click process that runs on the third party site so you don’t have to go back to Facebook at all. Venturebeat has this description of how it works:

Imagine you’re browsing around your favorite news site, You’ve previously logged into the site using your Facebook profile, because once you’re logged in, you get to play social games with Justin Bieber themes, and how fun is that? But you’re not sure you want everyone on your Facebook friends list to see your activity, so you check the site’s Shared Activity plug-in, which is already hovering in the bottom left corner of the screen, nice and obvious, and you click “No one” on the drop-down menu of groups to share with.

As regular readers will know, I’m a big fan of social media in general and Facebook in particular. Aside from their bungled IPO I think they’ve had a very positive influence on the world. By giving everyone a voice they’ve increased transparency and accountability right across society making values like integrity and commitment to quality more important and reducing the value of spin.

It hasn’t been all roses though, and the number one criticism of Facebook as a product that it doesn’t adequately address people’s privacy concerns. The main thing people are worried about is other people seeing what they’ve been doing online and this plugin addresses that concern head on.

If you’ve been watching Facebook over the years you might well be noting that this is the first time they’ve deliberately made it easy for people to restrict the amount of information they share. One explanation for the change is that this move makes it more difficult for potential competitors who would need to match Facebook for privacy, which would mean less sharing and hence a harder time getting to critical mass. Getting to scale and then changing the rules of the game so others can’t copy you is a smart play. Another explanation is that they think the PR benefits from being privacy friendly will outweigh the negative of reduced traffic that will inevitably follow reduced sharing. The final explanation is that they have done this because they think their users want it. This would be nice to believe, but runs counter to behaviour we’ve seen from Zuck and co in the past.

The order of things–Google pulls away from Facebook

By | Uncategorized | No Comments

Net US Digital Display Ad Revenue Share at Major Digital Ad-Selling Companies, 2010-2014 (% of total digital display ad revenues) Net US Digital Display Ad Revenues at Major Digital Ad-Selling Companies, 2010-2014 (billions)

As you can see from the tables above, eMarketer is predicting that Google will be bigger than Facebook in display advertising this year, and grow faster going forward. This is a reversal from 2011 when Facebook was in the ascendancy, having overtaken Google and Yahoo for the first time to become the market leader.

Google’s success comes from growth in Youtube and the advertising they sell on third party websites, including mobile. Facebook’s display ad business is growing, but more slowly than before as they are reaching saturation point in their core markets.

None of this means mean that Facebook isn’t an amazing company, it is. Zuckerberg and co. have transformed our lives in a way that few others have, arguably including Google. However, this data does tell us that in terms of impact on the advertising ecosystem Facebook is not in the same league as Google. Display advertising is everything for Facebook and only 10-15% of Google’s business, and yet Google is still beating them hands down. The markets know this and have priced their shares accordingly. At $237bn Google’s market cap is 4.7x Facebook’s $50bn valuation.

Apple and Amazon are the two companies playing in the same league as Google, but assessing which of them has more momentum is difficult because they have radically different mixes of business. Looking again at market caps, Apple leads the three at $658bn, Google is second with its $237bn, and Amazon holds the third slot with $118bn. Interestingly all three of these have had a bumpy ride with Wall Street due to management focusing almost exclusively on the long term, but for what it’s worth Apple has the best share price performance over the last twelve months (up 70%), Google is second (up 35%) and Amazon is, once again, third (up 12%).

Analysing the success of the iPhone 5

By | Apple | 2 Comments

The launch of the iPhone5 has been a big success. First day sales are higher than for previous versions of the device and Apple’s share price is up, and forecast to go much higher. People are saying that Apple has ‘perfected the iPhone‘.

And, to be fair, it is a very solid device and Apple’s launch process has been immaculate. To launch in 100 countries by the year end is amazing.

But there are two important factors which make me think the current success is qualitatively different to the success of previous iPhones (particularly the 3 and 4);


  • the iPhone 5 is only an incremental improvement over the 4S
  • people who have bought the new iPhone already mostly decided to do so before details of the device were released – i.e. their decision was based more on Apple’s brand than their product


These facts leave me wonding if Apple’s brand is now getting ahead of it’s products. When that sort of divergence arises it doesn’t persist for long, especially these days. I remember being taught early in my career that a ‘good brand is a good promise delivered’, and part of Apple’s brand promise has been revolutionary new products. We haven’t seen one of those for a while now – probably since the iPhone4 (2010) or the iPad2 (2011),



The importance of being disciplined

By | Startup general interest | 8 Comments

Personal discipline is one of my hallmarks. I have thought a lot about how and why I do what I do so that I can get a lot of important stuff done. Doing stuff inefficiently or spending time on unimportant stuff sends me round the twist a little. Staying disciplined is an ongoing process of self improvement and I’m always looking for new tricks and tactics, so when I saw a link to Achieving top mental performance for software developers I clicked straight through, and to my delight I found a great post.

The diagram below captures the central point brilliantly. The pictures convey the difference between a chaotic mind that performs poorly and a more organised mind that performs at the top of it’s game, but it is the words around the pictures that I want to draw attention to, particularly the notion that being focused, working with a small number of ideas, managing time well, getting immersed into the task and monitoring yourself are the keys to achieving top performance for developers. I would lump these together under the general heading of ‘being disciplined’ and I would add in other things like having clear goals, good prioritisation, communicating well with team members, and staying on top of email (but not drowing in it). Together these elements are the start of a list of the characteristics of effective people across all walks of life, not just software developers.

For me, the important thing is being committed to being disciplined. The importance of each item on the list waxes and wains depending on what’s going on, but taking the time to think about what you are doing and why, and then to organise yourself is a big help in life if you are one of the many people these days who suffers from what I like to call the ‘hours in the day problem’ – i.e. that there are never enough. Every VC and entrepreneur should know what I’m talking about.

The next step after being disciplined about the way you conduct yourself is thinking the same way about the teams that you work with – in my case that’s boards of companies I sit on and my partners at DFJ Esprit. Over the years I’ve found this can be challenging. One of the answers is to invest time to ensure objectives are truly aligned, including onthe benefits of being disciplined in the first place. Another answer is to try and make sure you are working with other people who are dedicated to performing at the top of their game.

The importance of understanding ‘why’

By | Startup general interest | No Comments

The importance of thinking about ‘why’ in addition to ‘how’ and ‘what’ has been coming up a lot for me over the last couple of months, most recently in this fabulous quote from Ralph Waldo Emerson 

Without ambition one starts nothing. Without work one finishes nothing. The prize will not be sent to you. You have to win it. The man who knows how will always have a job. The man who also knows why will always be his boss. As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.

This is brilliant on many levels, but I especially love the brutal simplicity of ‘the man who knows why will always be his boss’. As we know, no plan survives contact with the enemy, and understanding ‘why’ allows us to adjust methods and goals in response to market feedback and other information. If we don’t understand ‘why’ then we are reduced to cycling through methods and tactics in the hope that one of them will work.

In today’s data rich world we know so much about what our customers are doing it can be easy to forget to ask why they are doing it. This is the point that UX consultant Whitney Hess makes in her post Why guess? A familiar screenplay in which she describes a scene she sees played out regularly where clients make inferences from data about customer behaviour without understanding the motivations behind that behaviour. In summary, the client sees from the data that one of their features is very popular and decides to move to an earlier point in the user experience so it will get used more. The logic here is clear, but as Whitney points out the idea that this change will go well rests on three assumptions 1)everyone can benefit from the feature, 2) those who aren’t using it must not be seeing it, and 3) the feature will still be valuable earlier in the process. Talking to some customers to understand why they are or are not using the feature would remove the need to make assumptions. (It is possible to simply run an A/B test to see whether the change improves your metrics, but even then understanding why customers behave as they do should result in smarter experiments and faster progress.)

If you are into UX then Whitney’s blog is worth diving into. It was also her who put me onto the Ralph Waldo Emerson quote above.

Another area where understanding the ‘why’ is important is in explaining what a company is about and building brand. That’s a whole other post, but in summary telling the world why the company exists can be much more inspiring and memorable than saying what it does. The same is true when we tell our own personal stories as well.