Monthly Archives

October 2015

Developments in discovery on mobile

By | Uncategorized | One Comment

In August I wrote posts about the gap between browsing and purchasing on mobile and solutions for closing the gap. The problem is that filling out forms on mobile web sites is too painful for most people and that apps aren’t good for occasional purchases because people forget they have downloaded them.

Two recent developments may be changing the game.

First, announced today, the latest version of Chrome for iOS has a form auto-fill feature which, if implemented well, might get people checking out on mobile much more. Admittedly this feature has been available on Chrome for Android for some time.

The second is deep linking into apps. Spotlight searches will now show results from apps on the device. The picture below is from an investor update our shoe-commerce portfolio company Stylect sent around earlier this week. It shows how a search for Laboutin on Spotlight returns a result from inside the Stylect app. That brings the customer back to the Stylect app without them having to remember to look there.


One of these developments favours the mobile web, whilst the other favours the app economy. That’s the Google vs Apple battle playing out right there.

eSports – not much happening in the UK – yet

By | Startup general interest | No Comments


Sometimes a picture tells a thousand words and this one shows how eSports have exploded in the US over the last four years.

For those that don’t know, eSports are sporting events where the protagonists play video games against each other in front of paying audiences. In many ways this is becoming like traditional sports, with the athletes training multiple hours per day and big prize pools. Much more detail here.

If you prefer to see these things in graphs, then the one below shows that the growth in tournaments is exponential.


And, of course, Amazon’s $1bn acquisition of Twitch last year shows the value of the audiences watching eSports.

But there doesn’t seem to be much activity in the UK yet. If you go to Google you will find a UK eSports Association which doesn’t appear to be doing much and an article from February this year announcing the first UK eSports arena.

Surely the market here will follow the same path as it did in the US?

Every founder and startup investor should be contrarian

By | Forward Partners, Venture Capital | 2 Comments

It follows that the average investor will make average returns. In the world of startups and venture capital all the money is concentrated in a small number of winners and average returns are probably below zero. Certainly they aren’t sufficient to compensate for the high risk and long lock up inherent in startup investing. The venture industry is highly secretive and I don’t have good stats, but I do know that only a very small percentage of VC funds make carry and that investors in VC funds know that only the 25% of funds are worth investing in.

Being an average investor in startups is therefore a waste of time. It’s actually a surefire recipe for losing money.

Doing better than average requires what Howard Marks of Oaktree Capital called ‘different and better’ thinking in a recent memo to his investors. He put it like this:

Remember your goal in investing isn’t to earn average returns; you want to do better than average. Thus your thinking has to be better than that of others – both more powerful and at a higher level. Since others may be smart, well-informed and highly computerized, you must find an edge they don’t have. You must think of something they haven’t thought of, see they miss, or bring insight they don’t possess. You have to react differently and behave differently. In short, being right may be a necessary condition for investment success, but it won’t be sufficient. You must be more right that others … which by definition means your thinking has to be different.

Peter Thiel is getting at this same point with his now famous interview question: what do you believe to be true that nearly nobody else agrees with you on?

Of course, being contrarian and wrong is no use. That’s just the same as being wrong. Being contrarian and right is the only place to be, as Howard says later in his memo.

This logic applies to startup founders as well as their investors. If around 10% of startups go on to be successful then to be an average founder is to fail. So like investors, founders need to be contrarian and have an edge which allows them to see things that others don’t. That usually comes from deep experience within an industry or real passion for a problem area.

We work hard to have an edge at Forward Partners. The most visible manifestation of that is our startup and growth team which helps founders execute better and faster by temporarily plugging skill gaps in their team, but we also like to think our understanding of markets, our experience with recognising great entrepreneurs and the reach of our networks give us insights that others might not have.

Email is still king

By | Startup general interest | No Comments

Email has become a drag on everyone’s lives, and it’s no surprise that people have jumped to Slack as an alternative (although I wonder what stops Slack becoming overloaded just like email), but the numbers show that email is still a great way to reach new customers.

Arguably the best way.

A recent McKinsey report found that email is 40x as effective as Facebook and Twitter combined, and featured this chart:


Growth channels are best for startups because where there’s growth there’s space for innovation and staying ahead of big company CMOs with large budgets. Email offers the best combination of growth and scale.

The difficulty with email, of course, is that you need to get the addresses in the first place. That’s why most startups start with other channels. This chart is a reminder that it’s good to get email into the marketing plan as early as possible.

Musings on Twitter, networks, and mission driven businesses

By | Google, Twitter | No Comments

I read a very interesting and typically well written post from Umair Haque over the weekend titled Why Twitter’s Dying (And What You Can Learn From It). Everyone seems to be writing about Twitter at the moment, but this piece doesn’t mention Jack Dorsey or Twitter’s product challenges per se.

Umair goes deeper.

As he sees it Twitter’s challenge is that low level abuse and snarkiness is undermining the experience for most users and they are walking away.

He put it like this:

…let me be clear what I mean by abuse. I don’t just mean the obvious: violent threats. I also mean the endless bickering, the predictable snark, the general atmosphere of little violences that permeate the social web…and the fact that the average person can’t do anything about it.

We once glorified Twitter as a great global town square, a shining agora where everyone could come together to converse. But I’ve never been to a town square where people can shove, push, taunt, bully, shout, harass, threaten, stalk, creep, and mob you…for eavesdropping on a conversation that they weren’t a part of…to alleviate their own existential rage…at their shattered dreams…and you can’t even call a cop. … Twitter could have been a town square. But now it’s more like a drunken, heaving mosh pit.

These are strong words, and I think they over-state the extent of unpleasantness that exists on Twitter, but there’s a basic truth in the observation.

But these problems are not unique to Twitter.

In fact they are faced by every growing community.

Let’s take a step back and think about what makes communities work. I wrote this back in 2007:

People hang out in communities (online and offline) because they are pleasant places to be. You choose the communities you like in large part because the other people there are polite and behave in the way that you like to behave. There are unwritten rules which determine what is acceptable and what isn’t and the community is policed by its members. Think rural village or social network – it is the same for both.

When these rules work well the community thrives, and if they stop working the community can fall apart.

The challenge for Twitter and others is that rules which work well when the company is one size stop working as it grows. New rules are needed, usually to cope with rising challenges of signal vs noise, spam, and abuse.

Facebook is the best example of a company that has done a great job of evolving the rules to keep the company relevant. They constantly tinker with the algorithm which determines what shows up in the Newsfeed and offer users new features to filter stuff out and have managed to keep the balance right. Often they drive their users mad because they can’t understand the why’s and wherefore’s of what shows up, but they understand they need to disappoint some people in the short term to keep the company relevant in the long term.

Maybe Twitter’s problem is that they haven’t evolved their rules. They have done bits and pieces with lists, trends, recommended Tweets, and now Twitter Moments but for most people the experience is still looking at everything from all the people they follow in their main feed.

Towards the end of his post Umair notes that the history of revolutions is not great:

We dreamed that we created a revolution. But we did not heed the great lesson of revolution. Today’s revolutionary is tomorrow’s little tyrant. The French Revolution started as a glorious paean to people power. And it climaxed in a tidal wave of terror and bloodshed. So, too, goes every revolution too arrogant to history — including the digital revolution. Cross the line, and the inquisitors will come your way. Better then, to stay silent, than to dare the fury of the revolution itself.

Umair’s advice to Twitter, and indeed to the whole of web media, is to focus on the quality of social interaction. If the quality of social interaction is high, people will enjoy Twitter and come back to the network.

I think he’s right, but I think Twitter confused their end goal with the best way to get there.

This is Twitter’s mission statement:

Our mission: To give everyone the power to create and share ideas and information instantly, without barriers.

Independent of context this doesn’t say anything. There’s no ‘so what’. However, back in 2006 when the company was founded most people still didn’t have a voice and the idea of lowering the barriers to publish would bring more people into the conversation was hugely exciting.

But, and this is the key point, it was exciting because we all thought that with more voices the quality of the conversation would improve, democracy would improve and the world would be a better place.

I think that happened for a bit, but to Umair’s point the quality of the conversation has declined recently. If Twitter’s mission statement had been to ‘improve the quality of online conversation’ then they would have caught this early. However, because they see their role as making it easy for people to speak introducing rules to manage the quality of the conversation is somewhat awkward for them.

Extending this point to all businesses, companies with a durable mission at least stand a chance of enduring, but to be enduring the mission should talk to an enduring customer benefit. Google’s mission to “organise the world’s information and make it universally accessible and useful” is one that should stand the test of time – whether they can execute on it as the world’s information moves into silos they can’t access is a different question.

Companies without an enduring mission are in danger of being co-opted by shareholders or blindsided by technology change to the detriment of customers, and that only ends one way. Moreover, these days customers are so alive to this risk that they seek out businesses with durable and authentic missions from the get go.


VCs want to blow you up, in one sense of the phrase or the other

By | Venture Capital | 3 Comments

I love this from Paul Graham:

Plus founders who’ve just raised money are often encouraged to overhire by the VCs who funded them. Kill-or-cure strategies are optimal for VCs because they’re protected by the portfolio effect. VCs want to blow you up, in one sense of the phrase or the other. But as a founder your incentives are different. You want above all to survive.

Emphasis mine.

I’ve written ad nauseum about the dangers of raising too much money and premature scaling but I’m doing it again because it’s so common. It’s important also to recognise the misalignment between founder and VC interests. It’s tragic when good companies blow up in a bad way due to investor pressure, although at the end of the day the buck stops with the CEO.

Frugality is a virtue

By | Uncategorized | 2 Comments

Sam Altman of YC posted a long tweetstorm yesterday on the theme of frugality in startups. In short he thinks it’s a virtue we’re in danger of losing. That’s more true in the US than over here where there’s still less money in the market, but it’s a point worth repeating.


The positives of frugality are that working with the constraint of limited capital forces creativity and sets the culture right for the long term. Investors love companies that have achieved a lot with a little.

The negative of anti-frugality (if that’s a word) is that even with the best of intentions it can quickly lead to premature scaling, which is one of the biggest causes of startup failure. I like to describe premature scaling as growing functions before they are working. The result is that the inevitable mistakes are more costly and slower to fix. The classic version of this mistake is launching in multiple geographies before the first one is working well enough and repeating mistakes simultaneously in more than one place. Another is growing the team quickly when the jobs that need doing are still evolving rapidly.

The challenge, of course, is balancing ambition and a desire for rapid progress with prudence. For every business at every phase there is an optimum speed. The trick is to find the optimum, and not just go all out.

For most businesses that optimum speed should be at least partially independent of the amount of money that can be raised (assuming sufficient capital is available). Doubling the amount of cash in the bank doesn’t mean the company should grow twice as fast. It’s rare that doing twice as much of anything results in twice as much output – doubling marketing spend won’t double sales, doubling the tech team won’t halve development times etc. Rather, growing fast requires experimentation and experiments take time.

I agree that if investors are offering money it generally makes sense to take it rather than risk not being able to raise cash when you need it. The trade off (and there is a trade off for everything) is that it takes extra discipline to remain frugal. Best to go into this trade off with eyes open.

Key tweets from Sam’s tweetstorm below.

Will device and OS proliferation break the app economy?

By | Apple, Google, Mobile | No Comments

Jerry Bowerman wrote an interesting article on Techcrunch yesterday arguing that device and OS proliferation is driving the cost of supporting apps up to unsustainable levels.

The evidence cited is that corporate departments spend $40bn per year on apps, more than twice consumer spend, and that they are reaching aggressively for “create once, run anywhere” solutions.

If apps aren’t the future, you might be wondering, what’s the alternative?

Jerry says:

a future where something like “on-demand apps,” as I call them, work on every device and can be centrally managed by the corporation without going through a proprietary app store


My issue with this argument is that the problem statement is much stronger than the solution. I see our companies struggling with the costs of maintaining Android and iOS apps, a problem made worse by the app store gatekeepers demanding platform specific functionality or design in return for featuring, so I buy into that. I also crave a world in which distribution is more meritocratic, as it was on the open web, so I would love to see Apple’s AppsStore and Google Play lose their duopoloy. Finally – app based shopping isn’t great, in general, for ecommerce and marketplace startups and a resurgence of the mobile web would help the startup ecosystem.

But identifying problems only gets us so far. The app economy is only going to break if there’s something better to replace it. Jeremy points to corporations using HTML5 and thin native app wrappers when they need direct access to a hardware sensor, but we’ve been talking about that for years and I see no sign of HTML5 apps making inroads into the consumer space. In fact I think the trend is the other way.

Perhaps where apps are going next, and this is certainly what Apple and Google hope, is to disappear into the OS. That’s what’s going on with Google Now On Tap and Apple’s swipe left from the home screen (see this post from Benedict Evans for more details). However, whilst these developments are exciting from a consumer convenience point of view I’m not sure that they will help app developers reduce their overheads or address the discover problems I list.

I remain hopeful that open standards will triumph in the end, but I’m no longer sure that they will.

As an aside, whilst half of Jeremy’s post is about open standards on mobile, the other half is about what it takes to be a visionary. I love his comment on timing:

Both men [George Lucas and Ken Williams] are wicked smart and naturally curious, two characteristics often attributed to visionaries. What people often miss, however, is that they are both brilliant businessmen. They understand you can have too much vision, seeing a far-off future that won’t come true within the right time frame. As an entrepreneur, the challenge is funding from where you are today until enough customers agree with your vision that they pay for your expenses. You need to know where you are on the vision timeline.

What to do when growth stops

By | Startup general interest | No Comments

Jeff Jordan, partner at Andreessen Horowitz published an article recently on Recode advising CEOs on how to respond when growth slows.

His first point is to take it seriously. Very seriously. At most times and in most cycles investors value growth above all else because rapid growth delivers rapid increases in valuation, and without rapid growth a startup isn’t going to break out and become a star. That’s true of the growth stage startups that Jeff wrote about, and doubly true for the pre Series A companies that we back. When a company is tiny the only way it is going to get to an exit of any significance is if there are a few years of 3x+ growth.

Then he goes on to how to deal with it. He describes two types of CEO response ,’zen it out’ and ‘panic mode’, advocating the latter. For me, a CEO should stay with the management style that suits them best and make sure they are doing everything they can to get back to growth. Trying to hide the problem from staff is definitely a bad idea. Much better to enlist their help.

Going to the next level of detail, the most important thing to do is understand why growth has stopped. Something must have changed. There is no other explanation. Too often I see founders noting that something has stopped working and providing a simple first level explanation – e.g. Google Adwords is no longer working for us because CPCs have gone up. This doesn’t get to why the CPCs have gone up which might yield a solution – e.g. the problem might be regional or only with some keywords. The five whys interrogation technique can be powerful here.

Getting this right can be a time consuming and difficult process, but without it getting back to rapid growth will be tough. And without rapid growth the best case is that a startup will be ‘ok’.

Another way of thinking about this is that the best companies make growth a habit, and like every good habit it sometimes takes hard work to stick with it.

One brain scan may be enough to predict a person’s success

By | Startup general interest | 4 Comments

Scientists from the Human Connectome Project have just published results of a brain scan study which maps pathways in the brain and relates them to personality and behaviour (preview of article here, write up here, SingularityHub write up here). They were surprised by what they found. From SingularityHub:

The result was stark and stunning: the brain connectivity patterns could be aligned in a single axis, where one end was associated with positive traits — such as more education, better memory and physical performance — whereas the other with negative ones, such as rule-breaking and poor sleep quality.

The upshot, in the words of Marcus Raichle, a neuroscientist at Washington University in St Louis, Missouri, is that with one scan (from

You can distinguish people with successful traits and successful lives versus those who are not so successful

A quick caveat is appropriate now. Whilst the research looks solid it is early days in this field and the sample size is in the mid-hundreds. Lots of other studies are underway which will generate a lot more data in the coming years. The new data may or may not support these conclusions. The best guess at this stage though, is that it will.

Moreover, the relationships observed are correlations between patterns of neural connectivity and positive and negative behaviours. It’s not clear yet whether there is a causal relationship such that one causes the other, and if there is which way it goes. It could be the brain patterns cause the behaviour or that the behaviour comes first and the brain patterns emerge later,.

This research interests me because it raises the possibility of uncomfortable Minority Report scenarios where individual’s future potential is determined from a brain scan and life possibilities are opened up or denied to them according to how they score. This hits right at the heart of difficult questions about free will vs determinism and nature vs nurture.

On the other hand, if the causal relationship turns out to be that the behaviour comes first then this technology opens up the possibility of measuring progress as we seek to ditch negative behaviours and adopt positive ones. That could help parents choosing which school is most appropriate for their children or individuals in selecting careers where they will thrive and be happy.


As with all new technologies these brain scans have the potential for good and the potential for bad. Our opportunity (responsibility really) is to evaluate them objectively and encourage the positive side. That encouragement will mostly take the form of education and government policy. A knee jerk reaction of trying to put the genie back in the bottle is unlikely to be effective and misses the opportunity to focus on making the best of what’s coming.