Monthly Archives

May 2014

Welcoming Matt Buckland to Forward Partners – our new Head of Talent

By | Uncategorized | No Comments

Screen Shot 2014-05-30 at 09.15.55

I’m very pleased to let you know that Matt joined us this week as Head of Talent. We like to think of ourselves as a catalyst for startup success and a key part of that is helping our portfolio companies build out great teams. That means helping them find great people – from co-founders through to first hires and early team members – and then (possibly more importantly) helping them to become great at hiring in their own right. This help with hiring is one of a suite of tools and services our companies can choose to take advantage of.

Matt has built out teams and hiring strategies for a range of great companies, including Facebook, SecretSales and Criteo. In short he has been out there in the field and will help our companies execute and learn recruitment, including identifying job requirements, hiring efficiently, interviewing well and developing talent plans.

And on top of that he’s a magician. For real.

 

The next wave of mobile startups

By | Mobile | 2 Comments

Mary Meeker has just published her excellent annual roundup of Internet Trends. As always there’s lots of good stuff in there. My biggest takeaway is best explained by this slide:

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Across the whole world mobile data usage continues to grow and take share, yet in the developed world smart phone penetration is approaching saturation levels and growth in device sales has slowed. The opportunity space is shifting from exploiting people have phones and we know where they are, to leveraging newer developments to increase usage.

The first wave of mobile startups mostly took advantage of the fact that people had computers in their pockets to offer them services that are only useful when you are on the move. Uber/Hailo, Foursquare and Waze are good examples. My hunch is that we are largely through this phase now. Enough people have had enough smartphones for long enough that most of the good ideas will have been done already.

However, as we can see from the chart above we are all using our phones more and more, and where there is a change in behaviour like this there is opportunity. From a commerce perspective I’m excited about opportunities that fall into these two buckets:

  • companies that push the boundaries of UX design to make commerce entertaining  – people turn to their smartphones to fill idle moments and compelling product discovery experiences can profit from that. Mary Meeker cites Houzz as an example of a company in this space. Stylect from our portfolio is another.
  • companies that leverage the rising number of sensors in phones and connected to phones to build exciting new products – Fitbit and our portfolio company Big Health fall into this category

Cars with no steering wheels and real time translation

By | Innovation | No Comments

My news feeds were buzzing this morning with talk of two product demos at codecon yesterday. Interestingly they were both from large, established companies, not startups:

  • Google co-founder Sergey Brin demonstrated a ‘built From scratch to be driverless’ car with no steering wheel, pedals or mirrors
  • Microsoft’s new CEO Saya Nadella demonstrated real time speech-to-speech translation on Skype (which he brilliantly described as fulfilling a dream that humanity has had for thousands of years)

Also of note is that both were by people in the top 1 or 2 slots at their companies. Big and bold innovation is a central plank for any decent tech company these days.

The final thing of interest here is that Brin said Google likes to work on only eight projects ‘moonshot’ projects at a time. Even a company as big as Google and as skilled at innovation as Google can’t run with more than eight projects and do them well. There are more than eight areas within the ambit of Google that are ripe for innovation and there is space for startup competitors in the areas on which they choose not to focus. Some of those areas will turn out to be big opportunities too. Social is a good example of something that Google chose not to focus on during the critical period of the market and that has gone on to take significant share internet advertising, Google’s core business.

Quick reminder: What to look for in job candidates

By | Startup general interest | No Comments

The Havard Business Review recently wrote about ‘five testable qualities that determine a candidate’s potential’ that their research has unearthed:

  • The right kind of motivation: a determination to excel in the pursuit of unselfish goals (often evidenced by humility)
  • Curiosity: a penchant for new experiences and openness to feedback, learning and change
  • Insight: the ability to gather information and suggest new possibilities
  • Engagement: a knack for using emotion and logic to connect with people
  • Determination: the wherewithal to fight for difficult goals in the face of challenge, and to bounce back from adversity

It’s a good list, but it leaves unanswered the issue of how to assess experience and pre-existing knowledge. The first thing to do is to figure out how important experience is to the role. Taking the time to write a good job description is perhaps the best way to do that (my Partner David Norris explains how).

Having established the extent to which experience is important it’s time to work out whether the candidate has the relevant knowledge or, perhaps more importantly, will be able to build it. Asking candidates to complete case studies or think through domain specific problems is a better way to make this judgement than going through past achievements from the CV. Good candidates will use their achievements as examples anyway. Case studies are also a good way to assess insight and curiosity.

Hat tip to the excellent A Founders Notebook for pointing me to the HBR article.

Business models for ecommerce 2.0

By | Forward Partners | 2 Comments

Andy Dunn from Bonobos wrote yesterday about the dominance of Amazon in what he calls ecommerce 1.0 and ‘scale ecommerce’ – that is selling third party brands and taking stock, and identifies four strategies for ecommerce ‘David’s’ who want to take on the ‘Goliath’:

  • Proprietary pricing – e.g. flash sales companies like Zulily and One Kings Lane
  • Proprietary selection (aka curation) – e.g. companies that build their brand and community around their product selection like Nastygal and Modcloth
  • Proprietary experience – e.g. companies that offer amazing discovery experiences like RenttheRunway, Shoedazzle and Birchbox
  • Proprietary merchandise – e.g. vertically integrated retailers like Bonobos and WarbyParker

This is a good framework to think about whether a startup will be able to compete with Amazon. Without a sustainable advantage along at least one of these dimensions it will be tough to compete with the price competition that will come shortly after initial success.

Capital efficiency is important to us here at Forward Partners and that pushes us towards proprietary experience and proprietary merchandise companies which more often either have low stock requirements or high margins. Most important though is that the product or service is amazing at some level. Key to success is building a great brand and that is much easier the product is good enough to talk for itself.

There is overlap between the categories, but it’s most correct to think of our portfolio companies Thread, Stylect, Top10, and Hubbub as offering proprietary experiences; Big Health, Wool and the Gang, Zopa, Unbound and Hailo as proprietary merchandise companies; and SnapTrip is the one company we have which I would classify as proprietary pricing.

Forward Partners new website

By | Forward Partners | 2 Comments

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The screen grab above is a picture of our new website. The team here has worked incredibly hard to push this live and we’re all proud of what they’ve achieved. We wanted something which showcased our belief in the importance of good design and which explained what makes Forward Partners unique and hopefully this does that in spades.

Here are the key differences to our previous website:

  • Much greater prominence for the operational team, now on the home page and with more detailed bios on the team page – we are our people and more than anything they are what makes us different from other investors
  • Higher standard of design – check out the video background on the home page header and the team page
  • Explanation of how we help – on the How we help tab we’ve explained our approach to helping entrepreneurs along the road to glory

We aren’t done with this yet though. We launched this a little earlier than feels comfortable and will iron out bugs and iterate the content and design as we develop our thinking. If you have any thoughts or feedback we are all ears.

The Android vs iOS paradox facing startups

By | Apple, Mobile | 4 Comments

Benedict Evans wrote an interesting yesterday about Android fragmentation (tl:dr 75% of devices that hit the Play Store run Android 4.x meaning Google has reduced the impact of fragmentation, additionally they’ve sidestepped the issue for their own services by moving them out of the OS and into a software layer that can be updated over the air). However, the point I want to bring out is his list of the issues startups should consider as they choose whether to develop first for iOS or for Android:

  • Apple’s homogeneity means things behave in predictable ways reducing development costs
  • Android has a much larger addressable market – people who can afford $50 devices up to $600 rather than just $600
  • Anything on the bleeding edge won’t work predictably on many Android devices
  • There are more early adopters on Android than iOS

As Benedict notes, this leaves developers facing the paradox that the open platform is harder to hack and forces startup CEOs to make the trade off between keeping dev costs and time to market down on the one hand and reaching more early adopters and a larger market on the other.

Most startups we see opt to go iPhone first because that allows them to maximise the speed and efficiency of learning.

I love my Android phone and I’ve always thought that as Android gains market share over iOS more startups would start to develop first for Android and I would stop having to wait months for new apps to come my way. I’m now thinking my wait will continue.

Was Keynes really wrong about the economic possibilities for our grandchildren?

By | Startup general interest, Uncategorized | No Comments

In his 1929 essay “Economic possibilities for our grandchildren” Keynes wrote that technology would create an age of abundance and that by 2028 we would be working three hour days. Reading that just now in a New Yorker essay I was struck by the fact that I feel the same about our grandchildren.

Keynes, however was wrong. We’ve had the technology progress in spades, but we haven’t got any more leisure time. If anything we are working harder.

So why was Keynes wrong?

I think Keynes got it wrong because he misunderstood human nature. He erroneously thought that once people have achieved a certain level of life quality they would choose to work less and stay at that level, when in fact we have all chosen to work as hard or harder in a never ending quest for greater satisfaction. Put differently, we continue to work to our full capacity so that we can afford things like laptops, Xboxes, and True Religion jeans that we never knew we needed. The irony of course is that once we’ve had these things for a short time we stop deriving satisfaction from them and start craving the next new thing all the while never feeling we are any happier. This cycle of demand creation and fulfilment is at the engine of the capitalist system.

Will it be the same again in the next hundred years?

Predicting the future is of course a dangerous business, but I think that in the next hundred years Keynes’ prediction will come true. The main reason it will be different this time round is that in robotics and artificial intelligence we will have labour replacement technologies. The other reason it will be different this time is that the technological changes are coming through much faster this time round and I doubt our desire to consumer new things will accelerate at the same pace.

The path to reduced working will not be smooth though. For many it may be enforced rather than chosen as 45% of jobs are at risk from automation in the next twenty years. Already we are facing problems due to rising wealth inequality and the problem will get worse before it gets better. We need a strong response from government to address societal perceptions of unfairness and increase social mobility or I fear we will start to see great swathes of society taking to the streets in protest.

However, whilst I am nervous about the short to medium term I’m optimistic about the long term. Improvements in technology will bail us out in the end.

 

 

Waitrose invests to make offline shopping more convenient

By | Ecommerce | 3 Comments

Huge range and the convenience of shopping delivered to your door are the main axes on which ecommerce businesses have sought to compete with their offline counterparts. Waitrose is now fighting back by improving the convenience of their in-store experience.

They already have a system called Quick Check which allows shoppers to scan their food as they take it off the shelves and then pack it straight into the bags they will take home. Payment can then be made at the end without the going through the usual unpack-pay cashier-repack process. Then last week they announced plans to use Apple’s iBeacon system to send shoppers personalised content and promotions relevant to their specific location in-store. On top of that they have various apps in the works to help people shop better and smarter.

Shopping better and smarter takes the axis of competition higher up Maslow’s hierarchy of needs towards self-actualisation. E.g. Waitrose’ wine and recipes apps will help people learn, feel more comfortable about their knowledge, and look better in front of their guest.

The bigger point here though is where this is all heading. I remain convinced that ecommerce will grow to take a far greater share of the pie than it’s current 9% (US figure), but I stop short of thinking that software will eat the entire High Street, at least not any time soon. As Marc Andreessen said last year when he predicted the death of traditional retail, it comes down to the quality of the shopping experience. With Waitrose and others working just as hard to improve the offline experience as startups from the ecommerce world are working to improve the online experience I can’t see either camp offering something that is better enough for all types of shoppers to make a decisive difference. Rather I think we will see the line between online and offline fade away as traditional retailers employ more tech in store, and continue to grow their click and collect and online businesses, and ecommerce vendors will make greater use of physical presences to build their brands and drive sales.

Introducing the concept of ‘vanity conversations’

By | Startup general interest | 2 Comments

Metrics such as cumulative registered users and total number of downloads are often called vanity metrics because they can make you feel good even when your startup is going south. Eric Reis coined the term back in 2009 to make the point that collecting metrics per se can be worse than useless and actionable metrics are the only ones worth collecting.

These days just about every startup collects metrics, but back then metrics were a bit the ‘new thing’ and Eric Reis was writing to help companies that were jumping on the metrics band wagon, but not doing it in the right way.

Today customer development is a bit the ‘new thing’, and lots of companies are once again jumping on the band wagon but not doing it in the right way. Following the advice of Steve Blank more and more entrepreneurs are getting out of the office and having conversations with potential customers to inform their product roadmap. However, too many are having what I’m calling ‘vanity conversations’ which feel good because the potential customer says nice things, but are misleading because they are either trying to protect the entrepreneur’s feelings or saying things about what they will do in the future that won’t turn out to be true. Even people with the best intentions are terrible at predicting what they will do.

I’ve written before about how easy it is to ask bad questions when talking with potential customers and about how The Mom Test is a great guide to asking good questions. The key point is that mentioning your startup and asking people to predict their future behaviours is a mistake because people will give you answers designed to protect your feelings and avoid conflict. These platitudes can give you false confidence in your business. Asking people about how they have done things related to your product in the past is a much better way to go because then you will get facts rather than dangerous guesses. Check out the links above for more on these points.

The thought for the weekend then is to avoid vanity conversations and concentrate on getting facts.