Nic Brisbourne's view from London on technology and startups

Picasso on the power of just starting

By | Startup general interest | One Comment

To know what you’re going to draw, you have to begin drawing.
–  Pablo Picasso

Picasso was a prolific genius and one of his tricks was to remember that the act of starting to draw got him started on the path of building the vision for his creation.

This trick stands for most any task. The act of getting started is very powerful in beating procrastination and getting things done.

A simple message to take into the weekend.

Customer (product) value trumps brand value – M&A data

By | Startup general interest | No Comments


This chart (which I saw on Broadstuff and was originally published in the Harvard Business Review) is from audited company accounts following mergers and acquisitions:

…we looked at the value of brands and customer relationships as revealed by M&A data covering over 6,000 mergers and acquisitions worldwide between 2003 and 2013. The beauty of M&A for examining valuation trends is that M&As reveal the dollar valuations of all assets at the time of the acquisition. Upon acquiring a business, companies have to value the different assets they acquired for their accounts and balance sheet in accordance with accounting and reporting standards. These valuations include – among other assets – brands (trademarks) and customer relationships.

I read this as affirmation of a trend that we’ve talked about a lot here on The Equity Kicker – the rising importance of product quality (defined to include all customer touchpoints, including customer service) and the corresponding decline in the importance of brand. It’s pretty stark – brand value as a percentage of enterprise value fell by nearly half in the ten years from 2003 to 2013. This chart shows the beneficiary as customer value rather than product value, but product quality drives customer value in two ways:

  • lower customer acquisition costs – great product drives word of mouth marketing (which is why companies now obsess over NPS)
  • higher repeat purchase rates – customers remember great product experiences and want to repeat them

Social media has been the big driver of word of mouth marketing and it’s no coincidence that this chart starts around the time Facebook was founded in 2004.

Jeff Dachis made a similar point on Techcrunch today in a post about the problems with traditional marketing software when he says we are now:

in a world where pre-purchase consideration is no longer driven by reach and frequency, but by excellent consumer experiences, advocacy and amplification across every touchpoint seamlessly


New Mattermark data: late stage investment up 120%

By | Venture Capital | No Comments

Screen Shot 2015-04-14 at 10.16.40

Mattermark just released their report on Q1 2015 venture activity in the US (download here). As you can see activity is up across the board but it is only late stage venture that has seen a massive jump. This picture is consistent with what I’ve been seeing and reading generally – if there is a bubble, and I now think there may well be, then it is confined to late stage investments. Activity is heady in the Seed through to Series C sections of the market but year-on-year growth rates in investment of 19-47% aren’t in bubble territory.

The interesting question is: where do we go from here?

I think we will either see a correction in late stage investment or the mania will spread down to the earlier stages. Or, more accurately, the late stage mania will continue it’s trickle down to the earlier stages until we either get a late stage correction or we are in a cross-stage bubble.

Corrections are typically stimulated by events – the last time we had a late stage bubble troubles at Groupon and Facebook’s poor share price performance immediately post-IPO took the heat out of the market. Following that logic, this time round I think the market will keep getting hotter until we see trouble at 2-3 of the leading unicorns – Uber ($40bn valuation), Snapchat ($15bn), SpaceX ($12bn), Pinterest ($11bn), Airbnb ($10bn),  and Dropbox ($10bn).

Big companies pull back on investment – great news for startups

By | Startup general interest | No Comments

US groups rein in capex

Reading this front page of the Financial Times this morning made me feel great about the future for startups. Innovation is happening faster and faster yet big groups are reining in capex and distributing $1tn to shareholders in the US alone. The only way to read this is as a tacit admission that they can no longer live with the pace of change. Moreover, even when the management of these companies get it they are often hamstrung by shareholders who are overly focused on the short term.

Startups will benefit in two ways:

  • More opportunities to disrupt big groups and build massive new businesses
  • More M&A as companies replace internal innovation with acquisitions – this will run from acqui-hires up to multi-billion dollar deals

Exciting times!

Comparing valuations between rounds

By | Venice Project | 2 Comments

We’ve just been writing an update for investors about the progress our partner companies have been making. A few of them have done good up rounds and the easiest way to describe the magnitude is to talk about the valuation multiple.

From the perspective of existing investors the right way to calculate the valuation multiple is to compare the pre-money valuation of the new round with the post-money valuation of the last round, which is the same as the increase in share price. (As a refresher, the post-money valuation is calculated as the pre-money valuation plus the amount of money invested.)

Investors and entrepreneurs alike want to present the progress in the best light by showing the biggest multiple they can and they often default to comparing the post-money valuation of the new round with the post-money valuation of the last round. At first glance that seems to be a fair representation of how far things have moved forward, but it doesn’t account for the impact of the new money.

This is best explained with a fictitious example.

  • ACME Hot Food co first raises a round of £2m at £6m pre-money and hence £8m post-money
  • Twelve months later the company raises a further £8m at £8m pre-money and hence £16m post-money
  • The share price and valuation of the company hasn’t moved forwards because the new investor valued the company at £8m, the same as the post-money valuation of the previous round – the share price won’t have changed
  • Comparing the pre-money valuation of the new round with post-money valuation of the old round shows this clearly – £8m to £8m – ACME Hot Food co has achieved something in raising more money, but there has been no uplift in valuation
  • However, comparing the post-money of the new round with the post-money of the old round gives the illusion that the valuation has doubled – £8m to £16m

Note: if the option pool has been increased between rounds this will have the effect of reducing the increase in share price and should be factored into the analysis.

Facebook still dominates teen social media

By | Facebook | No Comments


Pew Research do a lot of the best research on internet usage and their latest report on teen social media use is just out. As you can see from the chart above Facebook and Facebook owned Instagram top the charts. Whilst teens are diversifying their social media use it seems that rumours of Facebook’s impending death are greatly exaggerated.

If one subscribes to the view that what teens are using today we adults will use in the future, which I think is a reasonable first order approximation, then the implication for ecommerce companies is clear: Facebook will remain the best place on the internet to find customers outside Google.

The danger for startups is that large companies with big advertising budgets will divert still more budget to Facebook, bidding up advertising rates and crowding out the small companies. We’ve seen this movie before with Google Adwords and I think we are now watching the opening scenes for the Facebook sequel.

Age of companies when they achieve $1bn valuations

By | Startup general interest | 3 Comments


I just saw the above chart in a post about exponential organisations from Salim Ismail of the Singularity University. It seems to me there are two obvious explanations for the dramatic reduction in the time it takes for companies to achive $1bn valuations:

  • The pace of change is increasing allowing new companies to develop and mature faster
  • We are in a bubble – at least for late stage companies

The fact that the trend has been going for some time – Google was founded in 1998 and Tesla and Facebook in 2003 and 2004 respectively – suggests that the bubble explanation can’t be the whole story. If we are in a bubble it hasn’t been going for more than a couple of years. So the primary explanation has to be the increasing rate of change.

That said, I think that froth in the late stage financing market has contributed in the last couple of years.


Romantic quality – from Zen and the Art of Motorcycle Maintenance

By | Startup general interest | One Comment

I remember reading Zen and the Art of Motorcycle Maintenance when I was in my year out between school and university. It’s amazing, yet also amazingly dense. I remember the philosophy as inspiring, but tough.

It’s in my mind now because I just read a great post about the tyranny of the Minimum Viable Product (MVP) which echoes a lot of thinking we have done at Forward Partners. In our experience entrepreneurs often have an idea that is sound but build an MVP which isn’t a strong enough base from which to iterate to success.

In the post Jon Pittman argues that the mistake founders make is to focus too much on the minimum side of the equation and not enough on the viable side of the equation. Minimum is to do with features – what is the minimum feature set that I need to ship for customers to benefit from my core use case? Whilst viability is to do with experience – is the overall experience good enough that customers will repeatedly use the product. Too many MVPs have a feature set that’s interesting enough to attract early adopters but an experience that isn’t good enough to bring people back or get them to tell their friends.

Pittman gives two examples to illustrate his point:

  • A connected thermometer that monitors temperature in his garage – great product, except he has to change the batteries every week. The feature is good, but the product isn’t viable.
  • A video doorbell that connects to his smartphone – simple but great product and it’s easy to use, with simple setup etc. The feature is good and the product is viable.

To help people avoid being the thermometer entrepreneur and be more like the doorbell entrepreneur Pittman turned to definitions of quality from Zen and the Art of Motorcycle Maintenance:

  1. Classic quality — based on rational analysis, decomposition into parts and their relationships, concerned with details, inner workings, and mechanics.
  2. Romantic quality — understanding the overall gestalt or feel, looking at the whole rather than the parts, relating to context, emotion, and being in the moment.

‘Classic Quality’ is the realm of features and the minimum part of an MVP and ‘Romantic Quality’ is the realm of experience and the viable part of an MVP. I love this, and not just because it’s from a great book :)

Helping entrepreneurs to build the right MVP is a big part of what we do at Forward Partners and a large part of the work is dedicated to understanding context and emotion. It’s essential to understand how a product will fit into people’s lives and stir enough passion to drive adoption. We will be talking and writing about how to do this over the coming months.




Ask the questions you should be asking

By | Startup general interest | 4 Comments

I just read the following quote in a post by Jon Parrish a now successful entrepreneur about pitfalls that founders fall into:

Entrepreneurs (myself included) have this incredible ability to ignore reality when it isn’t in line with our goals. We feel threatened by the idea that the answers to the questions we should be asking may prevent us from moving forward, so we don’t ask them. Or worse, we ask the questions but don’t listen to the answers. It’s self-deception in the worst way, and it’s an entrepreneur’s Achilles’ heel. It feels better to move forward blindly than to search out whatever hurdles may be in the way.

But closing your eyes doesn’t make monsters go away. The answers exist, whether you want to face them or not.

We see this all the time, and what’s interesting is that it’s the flip-side of a very positive entrepreneur character trait – belief in a positive outcome.

On Tuesday I had lunch with a friend who had just been to Tony Robbins’ Unleash the power within four day seminar. He described how Tony inspires people by getting them to visualise success. When the mind believes that something will happen we act accordingly and that gives us a much better chance of getting there. We’ve all seen the reverse too – when someone doesn’t really believe that success is possible so they tackle a problem half-heartedly thereby making failure a near certainty.

A lot of entrepreneurs naturally find energy from an unwavering belief that they will succeed (I wrote about this previously as one of the four cognitive biases of successful people). The reason that some of them feel threatened by asking questions is a fear that the answers might undermine that belief.

It’s a tricky one, because the questions need to be asked and the self-belief needs to be maintained. If you are struggling with this, then the answer, I think, is to root the belief in yourself and your ability to overcome challenges, not in any given strategy or view of the world. Otherwise your self-confidence will always be fragile.


Forward Partners new logo

By | Forward Partners | No Comments



I love our new logo! It’s great to finally have an icon, I love the way we’ve shifted the emphasis to the ‘Partners’ in Forward Partners and, last but not least, the process we went through is a great example of how we work. Kudos to Seth, who recently joined our design team, for running a great process and producing a great result.

Seth wrote up the Four key steps to designing a logo here. If you’re thinking of redoing your logo you should go read it. If not save it for later :).

Forward Partners is all about helping our partner companies succeed. One of the ways we get better at that is looking for ways that startups can execute with high quality at startup pace with minimal resources. Seth’s logo process is a good example. Companies with in-house talent can run the process themselves. We’re there to help the others.

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