I’m stoked that Appear Here, brainchild of Ross Bailey and one of our portfolio companies has raised £1m in funding from a range of strong investors. Howzat Partners led the round with participation from Playfair Capital, MMC,
and a small number of strategic investors from the property industry. This funding is just rewards for a hard working team that deserves the success they’re getting. See the Telegraph and Techcrunch for more details.
Appear Here is a market place for short term lets on the High Street. This video tells their story.
They are also a great example of how we work with companies here in our offices at Forward Partners. We backed Ross last November when it was just him, a plan, and some encouraging conversations with landlords. Since then he and his team have been sitting alongside us in these offices and we’ve partnered with them to validate their assumptions, launch a v1 product in month 3, build traction and then raise their next round of funding. Having an up close view of Ross sell, hustle, hire and obsess over his product and customers has been a joy and a privilege.
Every company will be different, but the Appear Here journey is a rough a template for how we would like to work with other very early stage companies going forward.
We also invest in slightly later stage companies who work out of their own offices.
Data just out from UK corporate finance boutique Ascendant shows that venture activity in the UK is slowing. £178m was invested in Q3, down slightly from £183m in the year ago quarter, but that combined with a slow Q2 compared with 2012 makes it look like we will be down for the year. Ascendant are now predicting that £800m will be invested in UK companies in 2013, which compares with £987m in 2012.
I’ve written before about the great work of BJ Fogg and Nir Eyal, both pioneers in the applied psychology of building habit forming services. Nir has just released a new presentation on Slideshare which takes their work to the next level. This is the money slide:
Core to Nir’s work is the Trigger, Action, Reward, Investment model which gets users hooked on a service in an infinite loop. The chart above shows the loop for Pinterest where the triggers in the form or emails, notifications or boredom cause people to log in, whereupon they get a little dopamine hit from seeing what their friends have pinned or finding cool new content, they then invest a little in the service by pinning or repinning which makes them more likely to respond to a trigger in the future, and so on.
The full slide deck is designed to help companies build their own infinite loops so they get a large base of regular users and the valuation that goes along with it. There are 137 quick read slides which I highly recommend to anyone trying to build a service that people keep coming back to (the Pinterest loop is on slide 113).
Steve Denning is one of my favourite writers on the future of capitalism and management. As part of an article about the New Centre of Gravity of Management yesterday he reiterated what is fast becoming a cliche amongst the entrepreneurs I talk to, namely, that all the best business are ‘purpose’ or ‘mission’ driven. Making money (for shareholders) is the result of having a mission to help customers, not a goal in itself. He gave four examples:
In the private sector the mission of a company is create a customer
In health it’s to help patients
In education it’s to teach students
In government it’s to help citizens
Similarly, our purpose here at Forward Partners is to help entrepreneurs. Our belief is that the better we are at helping entrepreneurs the more we will be able to get into the best deals. We talk more about partnering than helping, but the idea is the same.
In line with our purpose we look at everything we do and ask ‘how does that help the entrepreneur?’. We have restructured our due diligence process to be quick and transparent and are introducing a workshop which is designed to benefit the company as well as help us evaluate the opportunity. We are also restructuring the way our operational team partners companies after we’ve invested to be more transparent and deliver more value. More on that to come in the near future.
Ari Newman has a guest post on Brad Feld’s blog which gives some great examples of how a board of directors can be useful. This is not your usual ‘access their rolodex and give strategic guidance’ faire which gets regularly served up, but more about how a board can help founders avoid mistakes, including mistakes that can kill a company.
Ari makes his points vividly by telling a story about a fictitious company he calls ACME SaaS corp which raises a convertible debt round and then doesn’t form a board. One of the many differences between a convertible debt round and an equity round is that convertible debt rounds don’t stipulate investor presence on the board of directors. At the highest level Ari’s point is that even though they don’t have to companies that have raised convertible debt should appoint investors to their board to subject themselves to regular scrutiny and make sure they regularly open the kimono to trusted advisors. That process forces companies to properly think through their budgeting and cash out date and make sure they face up to difficult situations early enough to fix them.
The story format is great because it illustrates how easy it is to walk unwittingly into problems. As with most forms of discipline and rigour at one level having a board with investors can seem like an unnecessary pain in the ass, but also as with most forms of discipline and rigour they are a great way of optimising outcomes. If you’re not sure you agree with this point I urge you to go read the story.
The caveat here of course is that the board members must be good board members. I recently heard a very famous and successful west coast investor say that 90% of investors destroy value, 9% are neutral and 1% add value. I think that is probably overly dramatic but it nicely illustrates the importance of choosing directors carefully.
Check out this video of a robot herding cows. Apparently it does a better job than dogs and humans because it can afford to go more slowly which stresses them less and means the cows hurt themselves less. Even dogs are losing their jobs to robots now! The cows themselves will be at risk next… Roll on Modern Meadow.
It’s a pretty techie video overall, once you’ve seen the robot herding cows at the beginning you will have the gist of it.
I love Google for their bold innovation – driverless cars, Google Glass, but most of all Project Loon. For those that haven’t come across it Project Loon plans to bring internet connectivity to the world through a network of balloons floating twelve miles high in the upper atmosphere. These balloons will be blown around the world and navigating the winds to provide even coverage by pumping air in or out of the balloon to move up or down. Each balloon is projected to stay in the air for 100 days during which time it will circumnavigate the world three times.
As they say in the video of the launch flight below Project Loon sounds crazy, but it might just work. Either way it’s good to try. And the name makes me smile a little every time I hear it.
Look for the way they quickly get online after the balloon is launched. It’s very cool.
I just read that over 33% of viewing time on YouTube can now be attributed to videos that are 20 minutes or longer – i.e. long form content. There are now 1bn people viewing YouTube each month watching over 6bn hours of videos, so there’s a lot of TV style content being watched on the platform. Moreover, YouTube is growing fast and Google, Machinima, Maker Studios, and many others are investing heavily to bring more professional content to the platform in the hope of extending and even accelerating that growth.
Contrast that to traditional television viewing which is either flat or declining slightly depending on who you read and it is clear who the winner will be. And all this has happened before YouTube is meaningfully available on most people’s televisions.
Ben Rooney just posted an analysis of VC and entrepreneurial activity in Europe which included the two charts above. They confirm that the US is still meaningfully ahead of UK in terms of VC dollars invested per head, but show that we are closer in terms of number of VC funded companies per head. I see this as a good sign. You have to have the companies before you can invest lots of money in them so hopefully the number of companies funded per head is the lead indicator and the gap in funding per head between Europe and the US will start to close.
That will only happen if the quality of the companies is high enough. Anecdotally I think the gap there is beginning to narrow too.
The two other interesting things to note from this data are:
That the UK continues to be the main centre for investment in Europe
That Sweden is doing amazingly well for a small country (emulating Israel)
A lot is written about cognitive biases you want to avoid – e.g. the tendency to seek out information that confirms our hypotheses, but there are four other cognitive biases that are commonly displayed by successful people. These are biases that you want to have, but they come with risks as well. So the mind-trick required from those that would be really successful is to maintain the bias whilst being sufficiently self aware to avoid the risk.
Personal exceptionalism – a macro-sense that you are at the top of your cohort and that your work is snowflake-special
- Benefit: resiliance, stamina, charisma
- Risk: assuming that being top of your cohort means you need to be great at everything, brittleness
Dichotomous thinking – being highly judgemental of people and situations, viewing the world as black and white with little grey in the middle – everything is great or sh*t
- Benefit: achieves excellence quickly
- Risk: perfectionism
Correct over generalisation – makes judgements from limited data and is right most of the time
- Benefit: speed
- Risk: addiction to instinct and indifference to data
Sees creative destruction as natural
- Benefit: fearlessness, tolerance for destruction and pain
- Risk: heartlessness, alienation
I think this is a great list for anybody who aspires to success to look at, both to assess whether they share characteristics with other successful people and to see if they are falling on the wrong side of any of the risks. I know that I have.