Monthly Archives

March 2013

Twitter ad revenues forecast to near $1bn in 2014

By | Twitter | One Comment

I have been wondering lately how Twitter was getting on. Anecdotally people and companies seem to be getting more and more out of the site and its data but the chat I’ve heard about the efficacy of its advertising products has largely been negative. Well it turns out the business is doing very well. As you can see from the chart above revenues have now reached a reasonable scale and continue to grow very fast. 100% year-on-year growth for a business of this scale is impressive.

Moreover, their star is rising, according to Forbes a year ago eMarketer was forecasting Twitter’s 2014 revenues at $540m, 43% less than the $950m they are now forecasting. Over half of ad revenues are on mobile and an IPO could come next year.

The real disruption in education is taking kids out of the classroom

By | Innovation | 6 Comments

The news in the FT this morning (paywall, sorry) is that Amol Bhave, a 17-year-old from Jabalpur, India has been accepted into MIT based on his results in online courses offered by edX, a non-profit online education venture founded by Harvard and MIT. Amol said the following about his decision to take online courses rather than go to a local school:

I really felt that the quality of education online was far, far better than [my] school. It opened doors to me for getting into colleges such as MIT which I could never even have dreamt of getting into from my town.

I think the same will increasingly be true for kids in the developed world. Established educational establishments and curricula were designed in and for a bygone age and the pace of change is so fast now that they are unlikely to catch up.

The alternative of parents and children taking charge of their educations has many cultural and legal barriers to overcome but I think some of the best and brightest will start to go down this route so they can get the best education and the best start in life. Making it work will take real commitment from both parent and child though, at least in the early years, so what is effectively home schooling won’t be for everyone. I still have a few years to work it out, but I’m starting to think about whether it might make sense for our kids.

30 quad-copters create Star Trek logo over London

By | London | No Comments

This is one for any Trekkies out there. As hype is building for the upcoming Star Trek movie Star Trek into Darkness Paramount Pictures decided to hang a huge, glowing Star Trek logo over London last night (picture above).

The logo comprised of 30 LED-carrying quadcopter drones was approx 308 feet tall with the highest point some 426 feet above ground. The two min video below combines a trailer for the film with the story of how the logo was made.

Star Trek, a great PR stunt and quadcopter drone geekiness all rolled into one. I’m smiling from ear to ear.

Some evidence of the UKs growing stature as a centre for technology and entrepreneurialism

By | London | 2 Comments

It’s Friday and I’m going to indulge myself in one of my favourite passtimes – talking up the success of London and the UK as centres for technology and entrepreneurs. You may have seen the following data in the Standard earlier this week:

  • The internet contributes 8% to the UK’s GDP, higher than that of any other G20 nation
  • We spend more online than other nations too – projected to be 25% of retail sales by 2016, 2x the level of Germany, our nearest competitor
  • London is a magnet for talent – over a third of the population here was born outside of the UK. The thriving art, fashion and media scenes make London an attractive place to live for many entrepreneurs and developers.
  • Major US internet companies are growing the size fo their London dev teams – Facebook, Google and Amazon have all taken new spaces so they can grow their teams here
  • There is strong government support for startups in the UK – ranging from world leading tax schemes like EIS to the entrepreneur’s via to strong support for the east London tech cluster
  • Number of east London tech startups has grown from 200 to 1,300 in the last three years [note: this stat looks dubious to me, but I’m sure it is directionally correct]
  • 61,300 new businesses launched in London in 2011, up from 51,000 in 2009

In short, London and the UK are great venues for technology startups and an increasing number of entrepreneurs are taking advantage of what we have to offer. Happy days.

Three lessons that Guy Kawasaki learned from Steve Jobs

By | Startup general interest | 3 Comments

I normally take the London Underground to get around between meetings, but that doesn’t work with my crutches and knee brace so I’ve been taking a lot of taxis recently. Doing email in cars always makes me feel iffy so to fill the time I’ve been watching videos that I stack up on YouTube.

Yesterday I watched Guy Kawasaki’s 12 lessons I learned from Steve Jobs. It’s a long video and wouldn’t necessarily recommend watching the whole thing (although Kawasaki’s speaking style is something to behold), but the first three lessons are well worth repeating.

  1. Experts are clueless – I apologise to all the experts out there for what is a sweeping generalisation and for the record I do think that many of you add value, but Guy makes an important point here. He is talking about market experts and journalists and whether entrepreneurs should rely on them as they think of ideas for their businesses. I agree that they should not. Read their articles, certainly, and if you disagree be clear on why, but if you are going to disrupt a market you should get to know it first hand and form your own view. You want to be leading the analysts, not following them. I particulaly liked Guy’s closer on this point – “Experts are clueless, especially people who declare themselves experts..”. Expertise shines through and doesn’t need to be declared.
  2. Customers cannot tell you what they need – they can give you great insight into how to make your product 10% better which is important at the right time, but it isn’t enough for the foundation of a startup. You should be aiming for a product that is 10 times better, like the iPhone to the BlackBerry. An important sub-point here is that focus groups are next to useless as validation for new products.
  3. The biggest challenges beget the best work – Steve Jobs got great people to perform extraordinary feats by giving them huge challenges. Many of them produced the best work of their careers as a result, and they loved Steve for it, despite the other difficulties of working with him. This is a great lesson for all startups – hire great people, give them direction and then step back. Don’t micromanage.

Response to the budget and some thoughts on what government can do for startups

By | Uncategorized | One Comment

I think I’m right in saying that this is the first guest post we’ve ever had on The Equity Kicker and it’s from my partner Simon Cook who has a few things to say about the budget. If you think the government should be supporting startups and want to know more about how they should go about it then read on.

 

Simon Cook, CEO of DFJ Esprit on the 2013 UK Budget.

 

We knew this was going to be a tough budget. With little money in the pot and pressure from all sides, Mr Osborne can’t get off the spend/cut treadmill just yet. We need to boost confidence in the UK and reduce debt (which grew by another £100k just yesterday). Growth remains the fundamental issue with the UK economy. We must support the small businesses in emerging industries (like tech) to help give us the boost we so very much need need.

 

While infrastructure projects will undoubtedly help create short-term jobs, this must be balanced with longer-term sustainable job growth and rebalancing to manufacturing and exports.

 

Show (S)ME the money

It’s widely acknowledged that many SMEs lack access to finance. Even the highest growth, most successful job-creating technology businesses are unable to access bank lending for routine day to day working capital needs. The UK needs to ensure these so called “gazelles” reach their full potential which means supporting their growth.

 

The business angel community remains the backbone of growth equity financing in UK and should continue to be supported by the world leading Enterprise Investment Scheme (EIS).  Business angels, whilst very keen to invest in UK Growth, remain constrained by the time they each have to find individual deals.  Larger angel networks and funds should be empowered through the use of better EIS funds, which the current legislation does not enable easily. The Seed EIS (SEIS) CGT holiday extension for another year is great to boost again a scheme which is just getting going, but we need more growth incentives as well as more great start-ups.

 

We need a banking body that understands technology and the innovation leaders of the future. This body should also lend to businesses backed by intellectual property and patents, rather than physical assets.

 

The government should also continue to look for structural solutions to SME and venture lending, such as offering loans at the venture fund level rather than the company level, as they do with their ground breaking Enterprise Capital Funds (ECFs).

 

A reduction on stamp duty on AIM shares and their allowance into ISA’s will also help kickstart growth finance through IPOs for our fastest growing companies.

 

UK vs. rest of the world

The gap between the UK and Silicon Valley in terms of technology investing is only about £2bn a year.  With the right framework of government, angels, fund managers, institutions and entrepreneurial innovators working together this is a bridgeable gap; the Olympics have proven that with the right investment, the UK can compete at the global level, and dominate.

 

 

The Queen Elizabeth Prize for Engineering

By | Innovation | No Comments

Yesterday saw the first awards for the new Queen Elizabeth Prize for Engineering. The £1m prize was split between Tim Berners-Lee, Bob Kahn, Vint Cerf, Louis Pouzin and Marc Andreessen – five of the key guys responsible for creating the standards and software that run the web.

This prize will now be awarded every year to one to three individuals “responsible for ground-breaking innovation in engineering that has been of global benefit to humanity” and presented by the Queen. This is one of the paragraphs from their website:

During the search for a winner, the Queen Elizabeth Prize for Engineering will discover and celebrate stories of engineering success, raise the international public profile of engineering and inspire new generations of engineers to take up the challenges of the future.

I think that’s great. Celebrating engineers in the hope of inspiring future generations is exactly what we should be doing. The great challenges ahead of us are increasingly engineering challenges rather than science challenges yet fewer and fewer people are choosing to study engineering (I recently heard that computer science applications to Cambridge University have fallen by 50% over the last ten years). Apparently the organisers want the Queen Elizabeth Prize to become as important and well regarded as the Nobel Prize – I have to believe that would encourage a few more smart people to pursue careers in engineering.

Finally, kudos to the companies that have funded the prize: BAE Systems, BG Group, BP, GSK, Jaguar Land Rover, National Grid, Shell UK, Siemens UK, Sony, Tata Consultancy Services, Tata Steel, and Toshiba.

The coming legislative, political and philosophical challenges

By | Innovation, Startup general interest | 3 Comments

There is an interesting article by Om Malik on GigamOM today about disgruntled Uber drivers and how they represent the thin end of the wedge of a change in labour relations. It seems these Uber drivers were dropped from Uber because they weren’t highly rated. It is easy to say that good service should be valued and hence this is fair enough, and I think that is the dominant narrative here, but the employment regime has shifted for these drivers reducing their job security and making them vulnerable to user feedback in a way that they weren’t before.

Om’s point is that there are an increasing number of Uber-like companies with on demand workforces that could also get disgruntled and that as a society we need to figure out what constitutes acceptable practice in this new world.

The same point can be made about the current battle raging between privacy advocates and big online advertising companies like Google and Facebook. As a society we need to figure out what constitutes acceptable practice for the harvesting and use of personal data for advertising purposes.

In both these debates there is much to be gained from getting it right and much to lost by getting it wrong. Regarding on demand workforces, on the one hand the promise of better utilisation of assets held out by Uber and other similar companies offers big productivity gains, but on the other hand we risk a wave of labour unrest. Regarding privacy, on the one hand using data to make advertising more effective can reduce waste freeing up money to spend on producing better content, whilst on the other abusing privacy risks undermining consumer trust and destroying long term value.

All of this leads me to the killer quote from the GigaOM article:

the challenges of the connected future are less technical and more legislative, political and philosophical

The article doesn’t offer any solutions, and I can sympathise with that. There is no answer that is ‘right’ in any fundamental sense, so all we have are ideas about what will be ‘best’, but best for me might not be best for you – e.g. if you are an Uber shareholder and I am an Uber cab driver. However, I think we might be able use the lens of efficiency or productivity improvement to judge which of these ideas of ‘best’ might in fact be best for society overall. These are complex questions and solutions will necessarily be both piecemeal and complex, but if we navigate towards solutions that unlock value then there should be many more winners than losers overall.

One of the reasons all of this is difficult is that technology is moving very fast whilst political and philosophical norms emerge slowly and legislation is best characterised as being a slow moving and blunt instrument.

For startups to be successful over the long term in this environment they need to win in the court of public opinion as well as in the market place. The best way to do that is to build products that people love and to try and act in the interests of all of your stakeholders, be they customers, employees, or an on-demand workforce. There is a bit of a tendency at the moment to treat on-demand workers as a flexible resource to be used and abused at will. I’m now wondering how sustainable that will be.

Conveying that you have a great team

By | 50 Questions | One Comment

As I’ve written before and you will have probably have seen on many other blogs the key elements of a good investment and therefore a good pitch are great market, great product and great team. For the last couple of years I have been adding a fourth item to the list, and that is momentum. Most obviously that can be momentum in sales and/or user activity, but momentum in other areas really helps too – e.g. the market opportunity, PR, or development of the team.

It is the team part that I want to focus on today. Entrepreneurs often ask me where in their decks they shoud put the team slide and I’m always slightly at a loss to answer because even though team is a critcial part of the investment, and I do want to hear if the team has relevant experience the team slide always bores me a little. I’ve been helping people with their pitch decks a lot over the last few weeks and as I’ve thought it through I’ve come to believe that the key to convincing investors you have a great team is to show them that you are executing well, and you do that in the way you present the other elements of the company.

Two examples:

  • Good pitches for consumer internet companies often achieve this when they talk about their metrics – at one level they are showing the progress and momentum of the company, but at another level they are showing that they are really on top of the metrics in their business. This goes beyond simply measuring and reporting to deep thought about what should be measured and what it means. Many of the best consumer internet entrepreneurs are geekily passionate about the data they collect and how they use it to improve their product.
  • Good SaaS companies often demonstrate their execution ability by talking about sales and marketing. At one level they show how reveneus and marketing buzz are increasing, but at another level they are showing that they have a deep understanding of what their customers want, how to sell it to them, and how to manage a sales team.

Google Reader closing on July 1st

By | Uncategorized | 8 Comments

Google announced yesterday that it is shuttering eight more products, which makes it 70 they’ve closed down since they started their cull in 2011. I’m sure this is the right decision for them, and I applaud their focus and desire to do a small number of things well but Google Reader was part of the list this time and I worry about what this closure means for bloggers and power blog readers.

There are any number of signs our there that the blogosphere is in decline. Google saying it closed Reader because user numbers were declining is and the rumoured acquisition of Pulse by LinkedIn for ‘over’ $50m are two from this week, and very few developers are updating their tools for bloggers anymore.

The closure of Google Reader, and the knock on effect on businesses like our portfolio company Taptu that rely upon the Google Reader infrastructure will on the one hand make it harder for people to read blogs like this one, and on the other hand make it harder for news hounds like myself to stay on top of multple sources. I understand that this is happening because we are small in number and that we don’t like to pay much for our tools, but it is still hard to see how it is a good thing.

I think two developments have combined to reduce expectations of the size of the blogger/news hound market. Firstly, Twitter, Tumblr and alternative lower effort blogging platforms which combine creation and conumption have taken a large slice of the market, and secondly I think that early estimates of the number of potential power users of platforms like Google Reader were overdone in the first place.

People are trying to save Google Reader, and one way to do that would be for Google to open source the code. I hope that they succeed.