Nic Brisbourne's view from London on technology and startups

Facebook still dominates teen social media

By | Facebook | No Comments

PI_2015-04-09_teensandtech_01

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

exponential-organizations-chart-1

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

FP_LogoMockups

 

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.

Tech City, entrepreneurial density, and startup ecosystem health

By | Startup general interest | 4 Comments

People often ask me about the importance of Tech City to London’s startup ecosystem. I think it has made a big difference and I usually reply saying something like “It’s great, now that a critical mass of people are in the same place we bump into each other in the streets and it’s much easier for people to come to networking events. Moreover the perceived success of Tech City is good for confidence, which is the underlying driver of so much in the startup world.” If I’m feeling flippant then I might add “And we moved here”.

Now the Kauffman foundation has just published a report which lists indicators of startup ecosystem health (summary here), and it turns out that “density” is top of the list:

Density: density of new and young firms, defined as the number of new and young companies per 1,000 people in a geographic area; share of employment in new and young firms; and high tech (or the region’s preferred sector) density.

The other three indicators are Fluidity, Connectivity, and Diversity.

The report goes on to suggest measures for all the indicators. It would be great to see someone research this properly and publish an index, mostly because it would tell us what we need to work on. The research will need to be thorough though, for example distinguishing between small companies and young companies that can scale.

Successful marketplaces evolve away from transaction revenue

By | Startup general interest | 7 Comments

Hand crafted goods marketplace Etsy recently filed for IPO and Techcrunch has a great analysis of it’s S1. As you can see from the chart below much of the recent growth has come from seller services.

etsy9

The post also looks at Homeaway, Grubhub, and Shutterstock, three other marketplaces that have similarly diversified away from transaction revenues to drive growth and profitability.

You have probably guessed where I’m going with this by now. Startup marketplaces should take note and think about how they can build non-transactional revenues in the future. There are two main reasons:

  • Non-transactional revenues enables more aggressive pricing for transactions which will grow the market and make it more difficult for competitors
  • Seller and buyer services increase switching costs making it more difficult for new entrants (again) and increasing life time value

In the early days – at least the first year or two – the focus should be on driving transactions, which are the lifeblood of any marketplace. After that non-transactional revenues should become part of the focus, particularly if there are any questions over the size of the opportunity.

The hustle of being more generous than you need to be

By | Startup general interest | 7 Comments

Back in January Seth Godin wrote about Two kinds of hustle:

  1. The hustle of always asking, of putting yourself out there, of looking for discounts, shortcuts and a faster way.
  2. The hustle of being more generous than you need to be, of speaking truthfully even if it delays the ultimate goal in the short run, and most of all, the hustle of being prepared and of doing the work

This is a great breakdown. As Seth goes on to note hustle type 2 is largely unused. That’s a shame because it’s this second kind of hustle that makes the world a better place and is more effective in the long term.

It’s interesting that hustle type 1 is often associated with entrepreneurs, and saying XYZ has ‘good hustle’ is a common compliment. Dave McClure even went as far as saying that the ideal startup founding team of has a hacker, hustler, and hipster. I buy into the notion that entrepreneurs should have hustle, but some take it too far. We all know people who hustle too much, and their constant search for quick wins can be wearing and undermine relationships.

Most startups hit tough times at some point, and in those moments when survival is the only imperative there can never be too much of  hustle type 1. At other times there should be a balance, and the more a company grows the more the balance should tilt towards hustle type 2.

Not all businesses can be a habit

By | Startup general interest | No Comments
Nir Eyal’s book Hooked has become the go-to manual for anyone wanting to build a habit forming business, and who wouldn’t want to build one of those? Businesses that are part of our regular routines profit hugely from regular custom without marketing spend, and many of today’s biggest businesses have habits at their core. Want to know something? You probably reach for Google. Have some time to kill? There’s a good chance you go to Facebook (unless you’re a millennial…).
But not all businesses can be based on habits.
Habits are, by definition, part of our routines, and most of our routines are daily. When you think about it, it is only a small fraction of businesses that we use daily. The others we find each time afresh each time we need them, or maybe remember them if they have a powerful brand. On the desktop we find things via Google and we also use Google to help us remember the brands we only half recall, and that has worked fine. Booking holidays, buying clothes, fixing up our houses – these are all examples of things we spend big money on but don’t interact with regularly enough to build a habit.
Apps are changing the game for these non-habit forming businesses on mobile.
Habit forming businesses are able to get an icon on our home screens and maybe lure us back via notifications. Non-habit forming businesses, which you could define as those which we don’t want to download an app for, are challenged by the fact that traffic is now predominantly on mobile and skews more that way each month (Baby2body, one of our partner companies, gets 91% of it’s traffic from mobile), and that within mobile an increasing share of time is spent in apps.
The solution to this problem is not yet clear, although there are some hints. What we need is a mobile equivalent to Google search, including paid marketing (these things exist on mobile, but the user experience isn’t equivalent). I suspect the answer will lie in a combination of services being surfaced through contextual app platforms, of which maps, messaging and maybe calendars are the most obvious, and a much smarter notification stream.
Facebook’s new Messenger Platform is a sign they are thinking this way about the future and in China Baidu maps already acts as such an app platform for millions of users.
How this plays out, and how quickly, is critical for the mobile strategies of most ecommerce companies, including many of our partner companies.

Are accelerator programmes backing more mature companies?

By | Uncategorized, Venture Capital | 3 Comments

This tweet from YC’s Sam Altman was in my feed this morning:

You can see why he’s pleased. Lots of his companies have got a $1mm revenue run rate which is a sign they are valuable.

It takes a while to get to a $1m run-rate and I’m wondering if YC is trending towards backing more mature companies and fewer true startups.

Here in the UK it seems to me that Seedcamp and Techstars have made a similar shift in strategy. It makes sense, they get similar equity positions in businesses with more proof points that are therefore more likely to be successful. On top of that the introductions these programmes can make to potential investors, customers and advisors are more valuable to companies that have product and revenues.

That leaves a gap for true startups. Which is where we play :-)

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