Monthly Archives

March 2013

New nutrition index pushes food companies to do better

By | Innovation | 2 Comments

Accesss to Nuttrition have just published their inaugral Nutrition Index which ranks food companies according to improving nutrition. It is a thorough piece of work which takes the nutrtional value of companies’ products, the availability the availability of those products, corporate strategy, marketing practices, and product labelling into account.

I think this is great. The index will help consumers to buy more nutritious food and it will put pressure on the food companies to raise their game. I’m particularly enthused by the fact that thirty nine investment organisations managing more than $2.6 trillion in assets have signed a statement in support of the index. Even if companies don’t want to do the right thing for the right reason (i.e. in support of world health) then the pressure from shareholders and consumers should get them moving in the right direction.

Time will tell whether companies that score well in the index perform better on the stock market too, but I think there is a good chance they will. I have seen small scale studies showing that companies who rate highly on corporate social responsibility (CSR) generally have started getting rated more highly by analysts over the last five years, and I think this index is more powerful than bland CSR stats.

The bigger driver of share price will for these companies will, of course, be how well their products fare in the market, and here I think the trends are positive too. To make a very broad generalisation, in food and many other areas the 21st century consumer’s basic needs are sated and she or he is now increasingly looking to buy from companies that go beyond provision of goods and services to help them live a better life. In the case of food that means choosing to buy from brands that show they care about nutrition.

I think this is an important trend for startups to get their heads around. Taking the argument to it’s logical conclusion the successful consumer companies going forward will be the ones that think and care about the well being of their customers above and beyond the basic process of selling them goods and services. ‘Well being’ and ‘a better life’ are very broad statements, and I think the key will be understanding what consumer wants out of life and helping them to get there, across the full range of things that people are interested in. Eating better, getting healthier, sustainable sourcing and having better relationships are four obvious areas, but the full list includes the myriad of niche interests that people pursue. These niche interests might be good places for small companies to get started.

The physical dollars that turned to digital pennies are now becoming mobile pennies10^(-1)

By | Advertising, Innovation | No Comments

With all the press and analyst speculation last year that the transition to mobile might undermine Facebook’s revenues this isn’t new news but reading an FT article this morning titled Digital cinders spark mobile forest fire the penny finally dropped for me that after the transition to digital shrank many industries, the transition to mobile will now shrink them further.

For those unfamiliar with the ‘digital shrinks businesses’ argument my favourite example is encyclopedias which went from a circa £700m book industry dominated by Britannica, to a c£70m CD Rom industry dominated by Encarta, to a £0 industry dominated by Wikipedia. This is the most extreme example I know, but there are many other good ones, particularly from the music and newspaper industries.

The fact that mobile is shrinking industries doesn’t mean that mobile businesses aren’t viable of course, they just have to find another way to make revenues or get by with lower advertising revenues per user. For startups looking to build long term sustainable businesses I think that leaves three broad options – selling stuff, a subscription model, or shooting for massive scale and relying 100% on advertising.

One of the lessons most investors learned from the web2.0 era was that whilst success pays out big really huge scale is required to make social media pay and the odds of any given startup getting there are slim. That’s why investment dollars chase the few that are breaking out so aggressively. That same lesson applies twice over for ad based mobile models.

Mobile adtech businesses like our portfolio StrikeAd are still in good shape though – largely because mobile media consumption and mobile ad spend continue to grow quickly. If CPMs are low these businesses can make the same revenues by simply selling more ads, and the inventory is there.

That said, if somebody could find a mobile ad format that monetises better then the whole ecosystem would be better off. There are a number of companies working on this now, including Loopme in the UK. I hope they succeed.


Playing with the internet of things – my new Twine

By | Innovation | 5 Comments

My Twine arrived today and I’ve spent the last couple of hours trying to set it up to monitor how often our cat Polly goes in and out of the house.

For those that haven’t come across it Twine is a small box that  you can attach sensors to which then monitor things that go on in the real world. It can be temperature, dampness (to detect flooding), vibration, doors opening or closing, any manner of things in fact. The box is programmable via a web interface which lets you set up rules to email, text, or send an HTTP request when the sensor triggers.

Polly seems to be a very lazy cat (sweet, but lazy) and we often wonder how often she goes out, particularly at night. My thought when ordering the Twine was that it would be fun for the kids to plot her movements on a bar chart. The Twine sells itself on being dead easy to set up and do things with, so I thought this might be a reasonable ambition. I still think that might be doable by triggering an HTTP request every time the cat flap opens and then using an analytics service to plot the traffic, but simply getting the Twine working turned out to be quite involved so I decided to downgrade my ambition get started with an IFTTT based rule that creates a tweet on my brisbourne1234 account every time the cat flap opens and I get an email from the Twine.

I almost got it working. I had all the steps in the chain worked individually – the sensor trips when the cat flap moves, Twine sends email when the sensor trips, IFTTT rule sends a Tweet when my gmail gets the email from Twine. But it all fell apart when I was trying to string it together. I was lying on my back by the cat flap trying to Selotape the sensor to the side of the cat flap in a fixed position that would trigger every time, when the Twine lost connection with the dashboard making it impossible for me to see if the sensor was in the right place.

I searched all the forums and tried everything I could think of to get the connection back, changing the batteries, trying AC power, trying to set it up again, and I did come back eventually, but it’s still not updating frequently enough to properly test whether it’s working. I’ve just moved the whole arrangement to the fridge door where it is easier to fix the sensor in a position that looks like it will work and I’m going to cross my fingers call it a day now.

I think that maybe a slower moving target like the fridge door would have been better to have started with and that the cat flap might have been a bit ambitious anyway.

What do I think about all this?

I think I’ve had a glimpse of the future and it was quite fun whilst I was making progress trying to get the Twine to work. But it ended in frustration and I think we are going to have to step up a couple of levels in usability before a gadget like this goes mainstream. Additionally, the fact that monitoring the cat flap is the best thing I can think of to do with it suggests some work on use cases is in order….

Bitcoin – the future of money?

By | Startup general interest | 14 Comments

I’ve been watching the progress of Bitcoin with increasing interest for a year or two now and I’m a bit surprised I haven’t written about it here before. I’m writing today because the number of mainstream use cases of Bitcoin seems to have been growing recently and this morning I got an email from the accelerator saying they were reserving five of 15 slots in their next programme for Bitcoin companies. (Disclosure: is affliated with the Draper family and invested in Bitcoin startup Coinlab last year.)

As this is my first post about Bitcoin I’m going to start with a definition. From Investopedia:

Definition of ‘Bitcoin’

A decentralized digital currency that enables low-cost payments without the need for central authorities and issuers. Bitcoin is a peer-to-peer (P2P) currency system created in open source C++ programming code. Bitcoins can be accessed from anywhere in the world with an internet connection. Once a user has Bitcoins, they are stored in a digital wallet. Bitcoins can then be sent to anyone else who has a Bitcoin address. Bitcoin was developed in 2009 and based on the works of an individual or group of individuals known as Satoshi Nakamoto.

Bitcoin is a massively disruptive innovation. The key is in the first sentence of the definition above – Bitcoin bypasses central authorities and issuers – meaning it replaces governments as the issuers of money. If it becomes widely used it will undermine the power of many of the economic policy instruments governments use today, including setting interest rates and quantitative easing.
By now you are probably wondering how it works. The short answer is that the inventors of Bitcoin developed an algorithm which determines how many Bitcoins are in circulation and put in safeguards to prevent third parties abusing the system by creating fake Bitcoins – there is more detail on Wikipedia.
I’m excited by Bitcoin because it has the potential to massively reduce the cost of transacting. Two examples:
  • fees to buy stuff over the web can be much less than the 2-3% taken by credit cards, and
  • it removes the need for foreign currency exchange altogether.
I think that unnecessary bureaucracy in our financial institutions is a major driver of these costs and Bitcoin could cut them out.
Security has to be good, of course, and we still need to prevent money laundering (the cost of which is the other driver of the fees above), and Bitcoin isn’t there yet. It may never get there, large vested interests (e.g. the US government) will be threatened by Bitcoin and have already been working to shut the fledgling currency down, and there have been problems with hackers, and with currency bubbles, but momentum seems to be building, not faltering:

I’m not ready to predict that Bitcoin will cross the chasm, in fact I still think that is a long odds bet, but if the current momentum continues I’m starting to think that it might become a bet worth taking.

Take action early if you are off plan

By | Uncategorized | One Comment

Brad Feld wrote a post earlier this week titled How is your Q1 going? This is the key paragraph:

If your sales and revenue are not on or ahead of plan, it’s time to take a hard look at what is going on. Q1 is the easiest quarter to make since you just created the annual plan. If you miss Q1, especially in a recurring revenue, services oriented business, or adtech business, there is almost no way you will make it up over Q2 – Q4. Sure – it’s nice to think something magic, special, and happy will happen, but it almost never does.

He then lists out five steps to take to right the ship (six if you count ‘don’t panic…). They can be summarised as cut discretionary spending immediately, do a thorough analysis of why Jan and Feb were missed, and do a new forecast, working hard to get it right this time. If your company is off plan (and many will be) then you should go read the post and follow the prescription in detail.

I suspect that to many people the amount of work suggested here will seem out of kilter with the size of problem – i.e. a small miss this early in the year shouldn’t be regarded as a big deal. Some companies are lucky and get by with that sort of approach, whilst others end up burning too much cash and suffer. Sometimes horribly.

The best companies, however, don’t rely on luck. Instead they take pride in building the best forecast they can and if the plan turns out to be wrong they put in the hard work necessary to get it right. In fact this is one of many examples of where the difference between ‘ok’ or ‘good’ and ‘great’ comes down rigour, discipline and hard work and a strong desire to, as far as possible, control their own destiny.

Chance for UK startups to pitch to New York investors

By | Uncategorized | 2 Comments

Brian Frumberg, My friend and venture partner at our sister fund DFJ Gotham is organising a pitch event for UK startups to meet New York investors. Knowing Brian, it will be a good one. Details below.


  • VentureOutNY is Seeking UK Tech Startups to Pitch NYC Venture Investors
  • Date: April 8, 2013
  • Where: New York, NY
  • Description
    • VentureOutNY, in partnership with the TCIO and UKTI, is seeking British tech startups interested in raising capital and promoting their brand throughout New York City as part of their April 8th “British Tech Invasion” event. VentureOutNY is a NYC-based nonprofit helping international startups accelerate into the New York market. Details about the event and how to apply can be founder at

Stakeholder value vs shareholder value

By | Business models, Innovation, Startup general interest | 2 Comments

Yesterday I wrote some early thoughts on progressive business. I finished the post by wondering whether we are seeing the start of a trend towards doing business in a better way and how far those changes can go.

The change to progressive business is multi-faceted and whilst we can see that if something is to happen, the direction is towards authentic customer value driven organisations which truly value their employees and part of that is a shift to focusing on broad stakeholder value rather than shareholder value.

I started my working life as a management consultant in the mid 1990s and I clearly remember my first manager convincing me that the purpose of companies is to maximise value for their shareholders. Prior to that I had a fuzzy view that companies should have a responsibility to employees and society as well as shareholders. The killer arguments for me were that it was the shareholders who owned the company and as it was their property it should maximise value like they wanted it to, and that the companies who had pursued a simple shareholder value maxim over the previous 10-20 years had outperformed the rest. Besides, when shareholders do well, employees and other stakeholders generally do well to.

What’s interesting now is that those to killer arguments may no longer hold true. It could be that from c1970-2000 a simple focus on shareholder value was the best strategy, but that something broader is required now. This is how the argument runs (largely taken from an article on Forbes by Steve Denning):

  • prior to around 1970 companies were focused on multiple stakeholders resulting in confused priorities and poor decision making
  • a simple unifying focus on shareholder value allowed management to galvanise workforces and improve results
  • but that focus has now distorted business and the improved performance has now come to an end, as evidenced by poor stock market performance over the last ten years

Examples of distortions that come from focus on shareholder value are short term focus on the share price, excessive pay in the C-Suite, and and de-motivated employees. Read the Denning article for more details.

I’ve long thought that an analogy with a pendulum is the best way to understand change in many walks of life is. Change always starts with a move away from an undesirable state of affairs, but then usually swings too far and has to come back towards a desired equilibrium position, which it will usually overshoot, and so on. Changes in direction are generally facillitated by a shift in thinking or ideology and are painful for practitioners who face the choice of changing their heartfelt convictions or losing relevance. In this case the pendulum swung from companies having bad decision making and results because they had too many overlapping objectives to poor results because the focus on a single objective of shareholder value is too narrow, and might now swing back to a broader set of objectives. Or at least so the argument goes.

It isn’t just Denning who is saying this stuff either. In 2009 Jack Welch called maximising shareholder value ‘the dumbest idea in the world’ and CEOs of companies like Unilever, Amazon, Google and Facebook have adopted policies and in some case shareholder structures which are designed to deliver long term value creation in a broad sense and ignore the vagaries of the stock market.

Some thoughts on progressive (or better) business

By | Innovation, Startup general interest | 2 Comments

I’ve been doing a lot of physio since my knee injury which is an annoying time sink, but has the upside that I’ve been doing a lot more reading and thinking than normal. I’ve just finished Culture Shock by Will McInnes (read my review here) and Man’s Search for Meaning by Viktor Frankl (read my review here). One is a business book and the other mixes an autobiographical account of life in four World War II concentration camps with a theory of psychcotherapy, but they share the view that meaning and purpose are central to happiness and success in life. Together they have got me wondering if businesses that pursue meaning and put their purpose before profits, or at least on a par with profits, might be more successful going forward than those that are purely profit focused.

There are a bunch of reasons to think that the current business paradigm could be improved upon, not least high unemployment in the developed world, widespread job dissatisfaction, and growing wealth inequality, but the challenge is coming up with something better. The old cliche about democracy being the best imperfect system for government available could equally be applied to the current business doctrines of shareholder value, hierarchical management and mass marketing.

In Betterness: Economics for Humans Umair Haque makes an analogy between economics and psychology. Up until the turn of the last century psychology had been entirely concerned with curing mental illness, but the work of Havard professor William James turned the discipline on its head by adding the dimension of positive psychology. He shifted the question from ‘how do we fix people with problems?’ to ‘how do we help people realise their full potential?’. Perhaps economic and business theorists have spent the 250 years since the industrial revolution looking to solve problems of business like corruption, trade barriers, and efficiency and we are now at a ‘William James’ moment where the questions addressed can broaden beyond shareholder value to include sustainability and the welfare of other employees, customers and other constituencies. The idea is that business should become more authentic, durable, and fulfilling for employees, rather than the distrusted mess that it is today.

Such a shift sounds great in theory, but may be difficult to execute on in practice without losing profitability. McInnes’ argument in Culture Shock is that we are now getting an understanding of how businesses can make money AND be progressive, and that a heady cocktail of social media, real-time information, trends towards open-ness in society and the expectations of Gen-Y are now making change inevitable. Increasingly people want to work and buy things from progressive companies which have purposes and values that they believe in. And those are values and purposes must be genuine and lived out in practice. Zappos is perhaps the poster child example of a company that fits the bill – they have a famously inspiring culture and grew rapidly before being acquired by Amazon for c$1bn, but Will lists a bunch of other examples that fit the bill, including companies, including his own business Nixon-McInnes.

The interesting questions for me are:

  • whether Zappos, Nixon-McInnes and others are freak examples on the edges of a stable model for business, or whether they amount to a new trend?
  • if it is a new trend, can it fit into the venture capital model (or can the venture model adapt)?
  • how far does it all go?

The third question deserves a bit of elaboration, and is maybe actually precursor to the third. Progressive business in the most minimal sense isn’t really very different to traditional business. Having a mission, a good set of values, treating employees well and maybe indulging in a little employee participation in decision making has been best practice for a while, and simply adding some authenticity and sharing more information doesn’t seem to change that much. However, going the full gamut of fundamentally orienting the business around the needs of employees and customers (hopefully as well as shareholders) requires significant and important changes like employee democracy for important decisions.

I would like to believe that business can be ‘better’ in the way that Haque describes, and there is enough interesting stuff going on, both theoretically and at companies like Zappos to pique my interest. This is definitely an area I’m going to do more work on.

Four data analytics pitfalls

By | Startup general interest | One Comment

In the video embedded below freelance data scientist Marck Vaisman lists out what he describes as common pitfalls for big data projects that he listed in a chapter he wrote for an O’Reilly book published last year called the Bad Data Handbook.  I think the list is better described as prerequisites for success, but either way, it’s a good list.

  • Know the data you’ve got – the data structure, the format, where it lives, how it was generated etc.
  • Be able to get at the data – if production systems need to be tweaked to generate reports everything will be too slow
  • Have a goal, a question you want to answer (even if you expect the project to wander and be exploratory) – don’t do analysis for analysis sake
  • Share knowledge across the organisation

It is only the first three that apply to most startups, but I see them all the time. Varying combinations of not having a good picture of the data available, access to the data being difficult and not being clear on the goals makes the likely benefits from projects less than the costs. Breaking that down a little, it is hard to have clear goals without a good understanding of the data asset, and if it is hard work getting to the data then iteration is painful and you face the difficult challenge of having to design the project right first time.

These days everybody is aware of the huge benefits that accrue to truly data driven companies, but not that many businesses get there. Nearly everyone tries though, and if you are involved in a situation where the results are frustrating, or the data analytics effort is more a collection of rifle shot projects than a deeply embedded capability then the first three items on the list might be a good place to look for improvements. Note that if there are improvements to be made in these areas then you are in for a period of investment that won’t yield short term benefits to the business and will need prioritisation over other items that will – e..g feature releases.