Nic Brisbourne's view from London on technology and startups

The internet shrinks industries – auto is next up

By | Startup general interest | 4 Comments

This morning I was talking with an investor in our fund about how when the internet disrupts industries it often makes them smaller and, from the perspective of incumbents, less attractive. Amazon is doing that to much of retail, MySQL and other open source companies have done it to large swathes of the software industries, Craigslist did it the classifieds industry, and I could go on.

Two forces typically combine – automation takes out cost and the internet is used to displace middlemen – allowing new entrants to offer a radically cheaper product which incumbents don’t want to compete with because it means shrinking their companies. The new product typically starts out inferior in some way allowing incumbents to dismiss it as a competitive threat, but then it gets better and incumbents notice too to mount an adequate response. This is disruption in the Clayton Christensen sense that the word should be used.

Something similar is about to happen to the auto industry.

Autonomous cars will be

  • smaller because they don’t need the padding to protect passengers (look at the latest Google cars)
  • simpler electronic drive systems
  • shared more and/or sold direct

This will put massive downward pressure on car sales, both in volume and $ terms. Smaller is cheaper to produce, simpler is cheaper to produce, shared means fewer cars are sold, sold direct means dealer margins get passed onto the consumer.

What’s interesting now, and this was the main point of our conversation this morning, is that smart execs at incumbents know this future is coming and that it poses an existential threat to their businesses, but are struggling to find a good path forward. Execs at Mercedes, BMW, Ford, GM etc have all read Christensen and I would bet my house they have people shouting at them to wake up, but it’s super hard for them to respond to what is no less than an existential threat. That’s partly because they don’t have the data and software capabilities to succeed in this future and partly because the bulk of management and shareholders have become adept at finding reasons for not embracing strategies which would shrink their revenues, profits, teams and returns for shareholders.

Parallels between data science and traditional scientific observation

By | Startup general interest | No Comments


Reading The Art of Observation and Why Genius Lies in the Selection of What Is Worth Observing on brainpickings (which seems to be the source of much inspiration for me at the moment) I was struck by the parallels between what data scientists do at tech companies and the traditional scientific observation.

Hence these descriptions of scientific observation are relevant for data scientists and their managers.

  1. There are two types of observations – (a) spontaneous or passive observations which are unexpected; and (b) induced or active observations which are deliberately sought, usually on account of an hypothesis
  2. One cannot observe everything closely, therefore one must discriminate and try to select the significant.
  3. Most of the knowledge and much of the genius of the research worker lie behind his selection of what is worth observing. It is a crucial choice, often determining the success or failure of months of work, often differentiating the brilliant discoverer from the … plodder. [NB – track the right metrics]
  4. Powers of observation can be developed by cultivating the habit of watching things with an active, enquiring mind. It is no exaggeration to say that well developed habits of observation are more important in research than large accumulations of academic learning.
  5. Effective scientific observation also requires a good background, for only by being familiar with the usual can we notice something as being unusual or unexplained. [NB – know your benchmarks]


Each compute platform is 10x its predecessor – what’s next?

By | Startup general interest | No Comments


Benedict Evans of A16Z used this chart to illustrate his point that each new compute platform brings a step change in scale when compared with its predecessor. Smartphones will soon be 10x PCs, PCs were a step in scale up from mini-computers and mini-computers were a step in scale up from mainframes. In the title to this post I used 10x to describe all the changes because I think that’s approximately right and implied by Benedict’s post, but I don’t have data.

The other thing to note is that the time between each of these platforms hitting scale is falling. Mainframes came to prominence in the 1950s, mini-computers hit their stride in the 1970s, PCs were in the 1990s and smartphones were in the 2000s.

If this pattern is to be extended the next compute platform will soon be upon us.

Which leads to the question: what will the next platform be?

The only thing I can conceive of which could evolve into a compute platform with 10x more nodes than smartphones is a meshed compute network which distributes computing into the fabric of life – our watches, our white goods, our bedroom alarm clocks, as well as our thermostats, alarm systems and everything else. To me that sounds about as fanciful as an iPhone 6s would have at the peak of the PC era 15 years ago.

This vision of the future points to early investment opportunities in point products – e.g. thermostats and watches – and then into closed ecosystems, and the into infrastructure that builds an open ecosystem before a new generation of apps emerges.

As I write these words it feels highly likely to me that this sequence of events will occur, with the primary short term benefit being that we are saved from carrying computers with us the whole time. Maybe the odd inter-generational tech question my grandkids will ask my kids (their parents) will be “what, you used to carry computers with you?”.

Balancing skepticism and openness

By | Venture Capital | No Comments

Finding the right balance between skepticism and openness is important for everybody. Being overly skeptical makes one curmudgeonly and to be too open is to be gullible. Neither is good.

Scientist Carl Sagan put it like this (credit brainpickings):

It seems to me what is called for is an exquisite balance between two conflicting needs: the most skeptical scrutiny of all hypotheses that are served up to us and at the same time a great openness to new ideas. Obviously those two modes of thought are in some tension. But if you are able to exercise only one of these modes, whichever one it is, you’re in deep trouble.

If the balance is important for everyone, for VCs it’s the difference between success and failure. Any decision to back a tech startup requires a high level of openness to new ideas, but doing it well also requires an ability to quickly dismiss the ideas that aren’t going to work. If you’re too skeptical you don’t get any deals done (and founders won’t want to work with you) and if you’re too open you invest in too many blue sky ideas that don’t get off the ground.

Reading that Carl Sagan quote made me reflect on how to get the balance right. These are a few of the things we try to do at Forward Partners:

  • Be reflective and self-aware – know that you are striving for balance, and keep an eye on yourself and how others are perceiving you
  • Link big ideas back to use cases
  • Avoid being nit-picky
  • Always be prepared to explain an opinion
  • Assess dependencies
  • Write things down
  • Welcome challenge
  • Seek out contrary views
  • Strive for high levels of objectivity
  • Value correctness over consistency
  • Have no pride

A lot of these apply to good decision making in general.

First thoughts on the YC Playbook

By | The Path Forward | 3 Comments

Sam Altman of YC recently published a Playbook which sets out the advice they give to startups. In many ways it is similar to The Path Forward that we announced a couple of months back – both of our underlying thinking is rooted in Lean Startup methodologies, we share a strong belief in the importance of building products people will love, and both of us are motivated by a desire to share what we’ve learned for the benefit of others and to learn more in the process.

However, there are two really significant differences:

  1. The YC Playbook is written for all startups whilst The Path Forward is written for ecommerce and marketplace startups. That focus allows a greater degree of detail and specificity. This stands out most clearly in The Path Forward blueprint for entrepreneurs in their first year which helps founders set priorities in their first year – work on the idea (hopefully for two months), then once that’s done move to the product (hopefully for four months) and then turn to working on making the business scalable. That sequence and timeline work for ecommerce and marketplace companies and hence make sense in The Path Forward, but need adjusting for other types of business and hence don’t fit in the YC Playbook.
  2. The YC Playbook is authored by Sam Altman (admittedly with the help of Paul Graham and a bunch of other smart people) whereas The Path Forward has multiple authors. I have written articles in my areas of expertise, the Forward Partners team have written others in their areas of expertise, and people from the community have contributed as well (if you would like to contribute let me know in the comments). You could think of The Path Forward as an evolving library of articles written by experts in different aspects of starting ecommerce and marketplace companies. We started The Path Forward and at the moment it has a strong Forward Partners feel to it, but over time we want it to become a community owned project. The YC Playbook will always be a YC project.

I’m glad I’ve got that straight!

My final comment is to say go read the YC Playbook! There’s lots of really important stuff in there for founders to remember. If you’ve read Paul Graham’s essays and other stuff by Sam Altman then some or all of the themes will be familiar to you, but repetition helps with memory, and you really want a lot of this stuff to become second nature.



Evaluating markets for ecommerce category killers

By | Ecommerce | 2 Comments

Alex Malorodov (@amalorCBS), an MBA candidate at Columbia University who recently completed a summer internship at Gotham Ventures penned a great post about ecommerce category killers on CBInsights last week. His conclusions came from analysing seven top ecommerce category killers: Dollar Shave Club, Harry’s, Warby Parker, Frank & Oak, Bonobos, Casper and Helix Sleep.

The bit I liked best is that Alex found they all operated in markets with favourable conditions, which he lists as:

  • Total Addressable Market > $2B in US: offers opportunity for new entrant to gain share and build brand prior to incumbent retaliation;
  • High Concentration: > 50% of the market is controlled by ≤4 incumbents;
  • Limited Brand Allegiance: existing companies focus on selling product rather than lifestyle;
  • 3rd-Party B&M channels: incumbents typically distribute their offerings primarily via brick-and-mortar locations of other brands; little focus on e-commerce distribution;
  • High Headcount: > 60,000 employees each for the incumbents; and
  • High Price Point: the incumbents generally enjoy high margins and distribution involves several middlemen — a structural mitigator to lower prices.

The first one of these says that the market must be big enough, and the next five are characteristics of markets open to disruption.

The only thing I would add is that the incumbents offer a ‘so-so’ product. That’s arguably captured in the limited brand allegiance point, and Alex goes on later to say that the seven companies he analysed all offer great customer experiences and have high Net Promoter Scores, showing the importance of offering great product. ‘Great product’ is a relative concept though and unless there’s space to be way better than the competition life will be difficult. That difference can be price point – e.g. Dollar Shave Club and Warby Parker –  or it can be product quality – e.g. Frank & Oak and Harry’s.

Alex’s analysis ports well to the UK and Europe, and the biggest challenge we have from a venture perspective with many ecommerce ideas is potential market size. If a market is $2bn/£1.3bn in the US then if we pro-rata based on population is will be $400m/£265m here, which, depending on margins, is on the small side to build a £100m+ business. (10% net margin on a 10% market share yields profit of £2.65m – a good business, but probably not a £100m exit.)

Hence we either look for larger UK markets or the ability to expand internationally.

Startup ups and downs – Friday fun

By | Startup general interest | No Comments

relative joy of entrepreneurship

I’ve seen lots of diagrams over the years that depict the ups and downs of startup life, but this is the best.

It’s from a post by Scott Belsky, and as he says the ups and downs are inevitable. The only thing to hope for is that the best fit line has a positive gradient.

He also wrote:

The science of business is the things that scale, the art of business is the things that don’t.

I love that too. A large part of what we’re doing at Forward Partners is building processes to make the ‘art’ piece of starting a company more reliably successful. We often describe that as ‘bringing science to the art of building a company’, but I’m now thinking that an analogy with learning how to create art might be more appropriate. Just as there are techniques which enable skilled artists to more reliably create great drawings/paintings/music/movies etc. so there are techniques which enable great entrepreneurs to more reliably create great companies.

The new Nexus5x is a good workhorse

By | Uncategorized | 2 Comments

I got the new Nexus 5x Google phone on Sunday and have been using it for five days now.
I like it.

It’s a bit bigger than my old iPhone 6 and I was worried at first that would be a problem, but I can still use it one handed and it fits in my pocket OK.

Whilst we’re on the negatives the software mostly isn’t as pretty as iOS and I find myself stabbing frustratedly at the screen a little more often than I used to. I think the battery drains a little faster too.

But the swipe-to-type keyboard works much better, and for me that’s a huge bonus. Writing an email of any length was always a pain for me on my iPhone. Non-swipe typing is too slow and the third party swipe keyboards were glitchy and even when they’re working they don’t seem to work as well as on Android.

In contrast the native swipe keyboard works brilliantly on the Nexus 5. So much so that I feel comfortable processing loads of email on the device and writing long notes (including this blog post).

The other good thing about this phone is the finger print sensor on the back. It’s a fast and convenient way to wake up the phone that has been very reliable so far. More so than the finger print sensor on my old iPhone.

Beyond that the apps are much of a muchness. My password app Lastpass auto-fills inside apps on Android, which is nice, but I miss being able to text from my laptop like I could when I had an iPhone.

So I’m happy to be back on Android (although I will have to buy a new watch…) but reading this post back the striking thing is how little there is to choose between the Nexus 5x and the iPhone.

Two areas of opportunity in ecommerce

By | Ecommerce, Forward Partners, Startup general interest | No Comments

Kara Nortman of Upfront Ventures has just published an interesting and well grounded post on the future of ecommerce which got me thinking about where we see opportunities. I think there are two broad areas (Kara lists four, but I merged her four into two).

Brandtech – new brands that change stodgy industries

Simplified formula for success:

  1. target a large and valuable segment with poor product or unsustainably high margins
  2. deliver a great product and brand

As Kara notes this formula has played out well for numerous companies, including Warby Parker, Transferwise,, Just Eat and many others, but there are still many verticals with space for innovation, including food, soft home goods, furniture, toys, and educational products.

Forward Partners investments in this area include Lost My Name, Spoke, Zopa, Wool and the Gang, and Makers Academy.

Modern merchandising – new services that revolutionise how we shop

Simplified formula for success:

  1. target a large and valuable segment with a poor customer experience
  2. deliver a wow customer experience

This formula has also played out well for numerous companies, including Netflix/Lovefilm back in the DVD days, MoneySupermarket,, Uber, and many others. Once again there are other verticals that are still ripe for disruption, including many of the ones listed as open under Brandtech.

Forward Partners investments in this area include, Top10, Appear Here, Edge Retreats, Snaptrip, Live Better With, and The Gifting Company.

There’s obviously a lot more to building a business than the two simple steps I’ve listed hut the themes of great and/or radically cheaper product and radically better customer experience are big ones for Forward Partners.


Musing on inevitability, timing, and use cases

By | Startup general interest | No Comments

I’m at the Web Summit in Dublin this week and attended two interesting talks today. One was an interview with Palmer Luckey, founder of Oculus VR and the other a panel with Rana el Kaliouby, founder of Affectiva and Ebbe Altberg, CEO of Linden Labs (creator of Second Life).

All three of these people have an incredibly high level of conviction that the technologies they are working on will become become ubiquitous. Luckey believes that virtual reality will, for many use cases, be superior to what the physical world can offer and when the price and quality are right we will all carry a virtual device. Kaliouby believes that when our devices can sense our emotions they will be able to serve us better so we will all choose to let them read our feelings via the camera. Altberg believes that virtual worlds will allow people to meet, maintain relationships and be more productive than the physical world and that when they get easy and cheap enough to use we will all flock to them.

I think there’s a very good chance that all three of them are right.

But it’s hard to say when.

As I’ve written before being too early to a market is as bad as being too late, and that generally the idea of first mover advantage is a chimera.

There are two strategies investors can employ in these situations.

The first is to back the early visionary in a space with large rounds to solve the technical problems and create the market. That is the ballsy and arguably most exciting play. Occulus was that play in virtual reality. Makerbot was that play in consumer 3D printing. Fitbit was that play in wearables. Affectiva may be that play in emotionally aware computing.

The second strategy is to wait until the use cases become clear and back companies solving clear customer problems. This approach is more conservative but, I believe, ultimately more rewarding for both entrepreneurs and investors. Most of the biggest startup successes have followed this route and the odds of success more generally are higher. Facebook came after Myspace and others had established the social networking use case. There were many search engines before Google. Oracle was not the first database company. The same is true of the hundreds if not thousands of companies that have gone on to achieve exits in the hundreds of millions.

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