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Friday fun: Tesla insane button and software updates

I saw two fun things about Tesla this morning.

First the ‘Insane button’ video below. The Tesla P85D has a acceleration labelled ‘Insane’ (see here for picture) which initiates maximum acceleration from a standing start. For passengers it’s a hell of a ride, as you can see in the video. Stay with it until 2.45 and to see two kids in the back seat.

And second, they released a software update for the P85D that makes the car faster. Owners will literally get into their cars one morning and be told that acceleration has improved and the 0-60mph time has dropped from 3.2s to 3.1s. They won’t even have to open the bonnet. That is software eating the world taken to the next level.

I’ve never been that interested in cars before. I love gadgets though, and what’s changed is that Tesla have made the car a gadget.

Facebook is a powerful advertising platform

FacebookARPU

You can see from the charts above (originally on Techrunch) that Facebook is getting stronger and stronger as an advertising platform. So long as advertisers are spending rationally, which is a good first order assumption, then if ARPUs are rising then ads are becoming more effective.

Perhaps unsurprisingly, none of this is happening by accident. Facebook has been improving ad measurement, improving app speed, and pushing video to increase time-on-site. And that’s just what I read about today.

We see this amongst our partner companies too, many of which are now finding Facebook a much better platform than Google. That’s particularly true for those selling a novel product or service – people don’t know they want it so they aren’t searching for it, but well targeted ads Facebook can excite demand.

European venture backed IPOs triple

Screen Shot 2015-01-28 at 12.50.09 Screen Shot 2015-01-28 at 12.49.57

These are two great charts!

With IPOs like this European venture funds must be performing better, and that will bring more money into the market.

It has taken us a long time to get over the 1999/2000 bubble and build a sustainable ecosystem. It would be nice if we could expect a recognisable moment when we all know that we have achieved critical mass and crossed over into sustainability, but unfortunately things don’t work that way. The best we can hope for is to be able to look back retrospectively and say 20XX was the year when European venture finally came of age.

As the months go by the positive evidence is accumulating and I’m starting to think that 2014 or 2015 may be that year.

Thoughts on agile management

Steve Denning, one of the leading business thinkers pushing the business world to abandon the outdated idea of maximising shareholder value has published an interesting article on Forbes titled Why do managers hate agile?

That immediately made me think of my first experiences with agile as a board member of software and web startups shifting away from waterfall development to agile to improve productivity. On the one hand I was excited by the prospect of more efficient development and getting away from late delivery and poor quality software that I was used to, but on the other hand I struggled with the lack of predictability and commitment inherent in the agile process. As board members we needed to plan for the next round of fundraising, and that required knowing when product would be released and revenues could be expected to increase.

Reading Denning’s article I see that the trade off between predictability and productivity that I describe above is what companies everywhere are struggling with now agile as a methodology is being adopted across the enterprise and not just in development. Managers have generally been trained to deliver predictability and are generally held accountable for hitting their forecasts, making it hard for them to go down the agile route.

The good news for agile fans is that this battle is only going one way. As the world changes faster and faster the advantages of just-in-time agile methods and customer focus in generating quality output are getting greater and greater. Agile methods are also more attractive to the best employees.

That said, predictability is still important to shareholders and hence for companies looking to raise money to maximise growth. The net effect of this is to make the job of CEO and senior managers more difficult – they have to ‘manage’ self-organising teams and try to predict the output. That takes a high degree of trust and a thick skin to take the flack when things go wrong. Choosing shareholders who understand the trade-offs and can tell the difference between systemic poor performance and a blip will help.

Two great rules for writing …. and life

I just read novelist Neil Gaiman’s Eight rules of writing. Numbers five and eight are priceless.

5. Remember: when people tell you something’s wrong or doesn’t work for them, they are almost always right. When they tell you exactly what they think is wrong and how to fix it, they are almost always wrong.

I love it! Generalising beyond writing, I would say trust what people have to say about feelings, but be careful with their predictions. Diagnoses sit somewhere in middle. We all know our own feelings, and don’t go wrong there very often, but if a subject is of great interest to us, as for example our company or it’s market might be, then most well meaning attempts to help will fall short because the would be helper has less understanding than we do. We must always be ready for people to call us on our blind spots though.

8. The main rule of writing is that if you do it with enough assurance and confidence, you’re allowed to do whatever you like. (That may be a rule for life as well as for writing. But it’s definitely true for writing.) So write your story as it needs to be written. Write it ­honestly, and tell it as best you can. I’m not sure that there are any other rules. Not ones that matter.

This I like because self-confidence is an entrepreneur’s greatest asset. That said I don’t think this applies totally to startups, which have to operate within the limits of commercial feasibility. The penultimate sentence is as important as the first though. Honest confidence is extremely powerful. When dishonesty creeps in confidence can quickly become arrogance.

UK mCommerce penetration higher than the rest of the west

Screen Shot 2015-01-22 at 20.10.27

The chart above is from the ever useful Criteo State of Mobile Commerce report.

It’s good to see UK shoppers turning to their phones to shop more than the rest of the western world because UK companies will innovate faster on mobile as a result. We already produce more than our fair share of ecommerce giants and so long as the UK shopper keeps adopting new technology faster than Europeans and Americans we will most likely keep doing so.

 

eCommerce inflection point coming in 2018: invest now

Screen Shot 2015-01-21 at 11.59.21

I just saw this chart in a Morgan Stanley investor note with the subtitle eCommerce Hits it’s Stride. Firstly it’s good to see that top investment banks continue to see a lot of growth ahead in eCommerce, but more exciting is the notion that an inflection point is coming towards the end of this decade. If that’s true then growth for ecommerce businesses will peak around 2020. Company valuations are highly geared to growth, so we can expect them to peak around the same time. That makes 2015 a great time to be investing in eCommerce startups.

Seed is the new Series A, but who’s supporting founders pre-launch?

Jason Calacanis just published a good post on the changing definitions of Seed, Series A, and Series B investment. I’m going to quote his definitions in full:

2004 definition
— Pre-funding: You talk about your idea & write a business plan.
— Seed Round: You build a prototype of your product.
— A Round: The funding necessary to launch your product.
— B Round: The funding necessary to get product traction.
— C Round: The funding necessary to scale your product.

2014 definition
— Pre-funding: You build a prototype of your product.
— Seed Round: The funding necessary to launch your product.
— A Round: The funding necessary to get product traction.
— B Round: The funding necessary to scale your product.

2015 definition
— Pre-funding: You talk about your idea, you build a prototype & launch an MVP.
— Seed Round: The funding necessary to get product traction.
— A Round: The funding necessary to scale your product.
— B Round: The funding necessary to get founder liquidity, build groovy headquarters, and make competitors give up (or not start in the first place).

You’ve seen the pattern here, what used to be Series C is now Series A, what used to be Series B is now seed, and what used to be Series A is now ‘Pre-funding’. All this is being driven by increased capital efficiency. In 2004 it took until Series C to scale your product because it took a lot of money. Now you can do that with Series A. (There has been some inflation in round sizes, but the main story is definitely capital efficiency).

In his post Jason goes on to give advice to founders and angel investors and talk about his incubator The Launch Incubator and the consistent theme is that there is no support for pre-launch companies anymore. Founders who can’t launch an MVP will struggle to get funded, angels shouldn’t invest in pre-prototype companies, and The Launch Incubator is looking for companies with an MVP to take into their 12 week programme.

I think this leaves a massive opportunity to support founders who are pre-launch. There are lots of great entrepreneurs with big ideas that don’t have the technical talent to build a prototype or MVP. Investing at that stage is tricky because the company needs to quickly and cheaply build product and get traction, but the key is having the people in-house who can help the founder make that happen. That’s what we do at Forward Partners.

Presentation on the future of funding

I was scheduled to give the embedded presentation in one minutes time to the London School of Economics SU Alternative Invesments Conference but they are running late, which gives me a chance to put it online. You saw it here first :)

This will be the second time in a week that I’ve presented to an audience of students. It’s good to see such a high level of interest in startups and venture.

A common investor mistake: imagining you can fix a company

I just came across a post that Hunter Walk wrote last May titled Five Mistakes New VCs Make. Number three is a peach, and isn’t just restricted to new investors:

3. Imagining You Can “Fix” a Team/Product/Market

New VCs, especially those with an operating background, can see a company for what they want it to be rather than what it is. They use their own brain to fill in the blanks on an opportunity versus really understanding how the founders think. They see that the product is a little raw but imagine that if they invest and spend a few hours a week with the team, it’ll be okay because they can fix it!

Perhaps the most common flavour of this mistake is investing in a company with a fantastic market opportunity and a team they don’t fully believe in. It’s especially easy for thesis based investors to make this mistake when they find a company that perfectly fits their thesis. The usually secret plan is then to fix the the team with a couple of key hires.

In reality the only person who can fix a company is the person who is running it. Investors can help, and I certainly like to think that we do, but the key is that the founder knows the gaps and solicits assistance. If that’s happening then what we have is a company working to overcome it’s challenges and there isn’t really anything to fix.