Having reached a personal milestone, part 5 of my entrepreneurship diaries, I should mention that it’s very pleasurable and useful for me to write on these topics, and I hope it’s the same for you. In this post, I want to briefly address the issue of uncertainty in early stage technology companies and how that affects management.

As I mentioned before, I was asked to join this company as CEO after consulting them on the commercial applications of this exciting new technology. Joining a year later, we had a good understanding of the strengths and weaknesses of the current organisation. During the consulting stage, I wrote a business plan with a fairly clear time line (to me and our sponsor), but it wasn’t being executed upon as required. One of my the deliverables I set myself was therefore to get development back on track, which not only respects the resource boundaries (financial, human, technological) we face, as well as sends out the signal that we are a serious business.

One thing I keep hearing over and over from entrepreneurs is that you have to be comfortable with ambiguity. And that is absolutely true. We continue to iterate on ideas based on changes in technology, customer and partner feedback, and our own ideas, something that would drive any sane man crazy, but we have to keep it under control. The best way that I find to do that is continuing to develop the vision of where we are going (the strongest motivator I can imagine) and maintain a loose type of project management that gets us to that goal.

I call this project management, as it deals with schedules, milestones, and resource allocation over a period of time. Uncertainty is an important factor to consider in this. In a large company, chances are you’re dealing with a predictable environment, in an early stage startup this is not the case. Getting a tighter schedule in place continues to be a challenge we are working on, however I find that being alert, flexible, and adaptive all the time contrasts with the more stable art of project management. Please correct me if I’m wrong, in which case present a solution also! Of course, there have to be thresholds in place, which to me is very much defined by risk assessment.

Regarding risks, let me start by saying that not all risks can be addressed, which is why being comfortable with ambiguity is so important. And second, there are many different types of risk, technology, financial, market, etc., but one usually outlines the thresholds that you have to respect. In my case, I see this clearly as market risk, as nothing matters if your customers aren’t buying… however, this really is not something to take for granted.

In medicine for instance, which is traditionally patent-based and largely dependant on a complex regulatory process, you have a 15 year window, of which you can spend up to 12 years developing your super-innovative cure. Clearly the technology risks outweigh the market ones (note: this ignores the rise of generic, cheap, knock-off drugs). In the web-industry, on the other hand, it’s perfect for rapid prototyping, it’s hard to protect innovations and easy for competitors to clone them, and it makes much more sense to push out your products asap. That means that there can be plenty of competition and the risk lies in grabbing sufficient market share to make a (sustainable) profit.

In our case, we are not as “high-tech” as medicine and not as “high-market” as web-development, in the sense that we face both market and technology risks. However, I see market risks as more important and try to align both market & technology approaches together. As an example, one of the things we did several months ago, was demo our technology to the general public and to selected partners. After the experience, we interviewed them thoroughly on their experience, as well as their initial expectations. We want to make sure that people don’t expect something different than what we deliver and that our product meets and exceeds their expectations. That gives us a clear view of where we want the product to go.

On a technology level, that presents us with certain thresholds in terms of “the experience” and price-points. And whenever we face a technology change, whatever solution is being developed, it has to fit within that end-picture the customer expects. That also overcomes the problem of black-box development, which is not uncommon in technology development.

So, that’s more or less how we continue to develop the vision for our company and the project management that supports it. We started with a lucid dream of producing great technology. We demoed initial versions and tried to align our vision to the needs of our users. And we end up (hopefully) building what our customers want and pay for. I would love to do this in a web-environment, as that really makes prototyping so much cheaper and quicker, but we do the best we can with our not so intangible technology.

All my entrepreneurship diary posts can be followed under the tag ‘Vincent’s eDiary.’ I don’t write about what we do as a company on purpose, but you can always ask in the comments or via the email address on the right.

Like

Unlike

Both ’startup’ and ‘entrepreneur’ are terms that immediately evoke an often false reaction from an audience and I would personally prefer not to describe my work using those words. In the following post, I write about three associations in regards to entrepreneurship, one positive, one negative, both somewhat false, and one what I see entrepreneurship as really: just a job. As usual, these diary posts, which I try to write in a short amount of time, are produced with minimal editing. I hope it makes sense. All my entrepreneurial diary posts can be followed under the tag ‘Vincent’s eDiary.’ I don’t write about what we do as a company on purpose, but you can always ask in the comments or via the email address on the right.

The popular associations
The word entrepreneur has two popular and a third upcoming association. One association is negative, that of a risk-taker and in some ways a loser—this would be more in a European context where job-security is highly valued. The other is positive, that of a potential Bill Gates or Steve Jobs, i.e. the smart entrepreneur who sees a big opportunity and has the drive, intelligence, and access to other resources to make it very big.

Of these two, the latter is what we are all aiming for, but realistically that applies to less than 1% of entrepreneurs today (using the very broad definition of someone that starts anything from 1-man webdesign company to an ambitious cure for cancer). The first association is also a misunderstanding of entrepreneurship, as entrepreneurs are not blind risk-takers, or at least they shouldn’t be. I would say and hope that it applies to a minority of entrepreneurs also.

The third association: a career-choice
The third association is that of an upcoming trend: entrepreneurship as simply a job. You’ll find plenty of job-adverts with “entrepreneurial attitude a plus” or similar in the job-description, a term I hate just as much as the often mis-used “business development,” standing for just B2B sales.

Added to the job-description part comes that there are plenty of entrepreneurial courses and full academic programmes available to the public, one of which I enjoyed, though I know from personal experience that that doesn’t make a person an entrepreneur.

A third factor contributing to the ‘entrepreneurship is a job’ association is easier access to the marketplace. I’ve had some online discussions with Cecil Dijoux on this blog about today’s technology culture in the context of enterprise software development, and there is as much a democratisation of software-/web-ware development, as there is of other increasingly “low-tech” industries. (As a side note: My definition of low-tech is a technology something has very low barriers to developing it.).

I think that the abundance of resources (not just) in regards to programming, to very well developed (internet) distribution methods for getting products, tangible or intangible, out to customers, as well as more-and-more programmes for funding/assisting startups, means that entrepreneurs have access to a better developed funnel where it comes to their profession of gathering resources and marketing their products.

That doesn’t make it easy, and actually brings other challenges like being one tree in a very large forest, but it does mean that it can be seen as a type of job.

Now, what is there not to like about the word ‘entrepreneurship’?
Maybe it’s a personal thing, but I feel very uncomfortable telling people I meet that I’m an entrepreneur. One, I do see it like a job, a job that I have to do well, and nothing special really. The term ‘entrepreneurship’ makes it sound fancy, which it is not. Two, I’m a European and I do feel the same association that many Europeans have to the word, which is that it’s “less than a real job.” Rationally, I don’t think that’s true, but emotionally I have found myself feeling the following initial reaction more than once when someone comes up to me and describes himself as an entrepreneur:

“Get a job, you hippie!”

Add to this that a startup is not a company until it makes money, and an entrepreneur is not an entrepreneur until he makes money doing what he does.

So I think the term ‘entrepreneurship’ is glorified, perhaps invented to make entrepreneurs feel like they’re doing something special, same as the term ‘Artist’ or ‘Inventor.’ Art isn’t art unless the audience considers it so, and people have invented plenty of mousetraps that are now collecting dust in a garage somewhere.

Suggest something new please
I’d like a new term for what I do and maybe you can suggest one. It should perhaps be related to a startup, which immediately summarises what is happening: A company that is starting up and isn’t there where it wants and needs to be yet.

The problem is that an entrepreneur is not always in the same class as a startup. He can be 50 years old and have a long and successful career behind him. Would you call him a “starter,” a term often used for people fresh out of college applying for a job at Consultant X or Multinational Y? Generally, entrepreneurs are responsible for the activities that happen in a startup in order to make it a success. Their chances of success increase if they have prior experience, resources, and networks to build upon, that make it easier to access the three pillars of “starting up,” as I’ve summarised in the picture above.

In regards to the above, I personally like to describe my work as “I’m running a small company and we’re developing a new product X,” but that is also a bit of a mouthful.

The other side of the coin is that entrepreneurs are in (desperate) need of marketing, where glorification does play a part. I read somewhere that entrepreneurship can be described as the process of developing something irregardless of resources currently in possession. That suggests a pitch is necessary, and perhaps already being termed an entrepreneur helps getting a foot in the door. I doubt it and it would personally bother me if that’s all it took, but I’m smart enough to realise that we “entrepreneurs” need to do whatever it takes to acquire resources, as long as it fits our code of ethics of course.

So, entrepreneurship, yes or no? I don’t like the term, but I may be stuck with it. If I come up with something more apt, I’ll let you know. And same for you please!

Like

Unlike

This post is part of a series, a diary of starting a business if you will. It follows part 1, the decision of becoming an entrepreneur.

One thing I found out is that it’s hard to put your responsibilities down on paper… there are so many!!! There is of course a basic job-description, which more or less sounds like that of a project manager/pull-the-rabbit-out-of-the-hat magician: “make it happen that we go from this thing on paper to the product in the hands of customers.” “Make it happen” is a super-loaded phrase, which can mean countless things.

There is a continuous struggle between micro-management and keeping the overview. Micro, because it is your responsibility that every (little) thing is carried out by your employees (if you have them). Overview, because You the entrepreneur are The Organisation. There is a third struggle that shouldn’t exist really, that between your professional life and your personal life. I’ve come to the conclusion that the only way to do this thing well is to focus on it exclusively. Friends, family, love, …blogging… it’s a nice luxury to have, but it comes second place.

The responsibility of an entrepreneur are thus: have a goal and make sure that everything is executed to get to that goal.

In a technology company, there are matters of technology and business (really, in what business except for strategy consulting isn’t there a mix of “technology,” which can mean anything from cooking to software development, and the commercial side of things, which is meant to pay for everything?). What I found was that as someone with a business background, who sort-of-kind-of has an idea about product development, and has a better grasp of business development, I still can’t let go of the reigns of product development entirely.

Product development ties in directly with business development. People are unwilling to pay for something that doesn’t exist and similarly our budget is supposed to last us until we have something worth paying for or investing in. Therefore, as an entrepreneur I have to make sure that product development stays on track. The absolute best way to do this is to have a capable product development manager in charge. The truth of it is that startups by their nature are resource-poor, which includes tripple-A product development managers (probably employed at multinational X or Y somewhere), and there is a lot of learning/training on the job. Learning/training means that the (hopefully) existing product development manager (in our case yes) still has to be managed, through schedules and regular meetings. In any case, product development is in its conceptual stage a very brainstorm-friendly activity, which means the more the merrier. But ultimately, a startup must get beyond this stage, respecting the entire resource-poor situation that a startup usually faces.

So, responsibilities of an entrepreneur as far as the technological product development is concerned: If you have a product development manager, you have to make sure that he works under the realities of the business. If you don’t, which I imagine many 1-person software startups operate under (as well as those lucky strategy consultants), well then you have to do the job of product development as well, keeping a close eye on the business realities.

OK, the business part of things. My role is fairly well-defined here as I come from a business background and approach startups from a business perspective. Assume that role 101 is having a firm grasp on everything that goes on, which can be phrased as “where are resources (people, time, money) being expended at and is it wise to do so.” This entails having a good budget plan and sticking to that.

Role 102 is to build the business, which I call business development, but that often gets confused with sales as that that is what it says in job adverts. Business development is the building of the business, which includes sales, but also includes building the company and all that entails.

So, we are trying to get from point A to point P, how do we go about it? If product development is about turning an idea into a product, business development is building a business plan into a business. Business plans are total BS unless they contain validated information. Some key-chapters in business plans are the market overview, the market approach, the time-line, and the financial need to meet all these objectives. Business plans can serve as a. cannon fodder, b. a plan of approach, c. one of several signals to attract investment. For c. no investor will take a look at your business unless you have a plan of approach (b.). On that plan, there should be a time-line, which you are following (predictability!) and there should be a goal: the market you are targeting and your approach.

The market section of the business plan presents a big problem for technology entrepreneurs. Because (non!) customers often don’t know what they want. I can ask a target group “what kind of air do you like to breathe?” and it wouldn’t surprise me if a significant number of responses would say: “I like to breathe air that smells like perfume.” OK, that’s a terrible question, but what I mean is that people sometimes make up answers that have nothing to do with reality (that said, both the perfume business and the fast-food industry have made lots of money from essentially selling air that smells good. Scent is also plays a very important part in memory, but I digress…)

What I’m a big fan of is validated market data, which is data gathered from actual customer experience with your product or part of it. That brings forth another problem of a bias towards early (and over-excited) adopters, something which the book “crossing the chasm” deals with, but is really not something that I think is realistic to address at an early stage, except that validated market data can also come from experts in the markets you are targeting.

The implication is also that product development is again completely tied in with business development which leads us down the path of rapid prototyping, another practice that works great in software / on the web, not as easily (though not impossible) with hardware. In any case, the experts in this area most well-known today are:

• - Steve Blank, who wrote “The Four Steps to Epiphany” and is currently hosting the excellent Stanford’s Entrepreneurial Thought Leaders seminars (btw. Steve Blank also writes a great blog on customer-focussed development, which I’ve only just started reading.
• - Eric Ries, who authors the blog Startup Lessons Learned and has some great articles on responsible (=lean) development.
• - And Donald Reinertsen, who wrote an incredibly dense book called “Principles of Product Development Flow,” a book which is clearly an authority in the field, but which I cannot recommend to any sensible entrepreneur with a 60hr/week schedule. Those principles, by the by, number in the 100+.

As well as of course Toyota and plenty of other experts out there, I’m sure, many of which are referenced by the people mentioned.

I think that it can safely be said that task 3 or a sub-task of business development is working towards the customer, the lifeblood of a business.

There are other tasks of course, which have to do with human resources, legal work, accounting, etc. Some of which can be outsourced, some of which can be done half-heartedly (oh no, I didn’t say that), some of which are really-really important, etc.

All these tasks, however, require a certain authority. The entrepreneur’s responsibility is to either be an authority on a task level or to be sure to work with authorities, either in the company or in an (informal) consulting fashion, so that they are carried out responsibly.

Task 4 can thus be entitled: be an authority on the tasks that need to be carried out or have access to one.

So, a whole can of worms starting a company can be and it is vital that it does not interfere with the single most important thing that you must do as a human being: be healthy! Health is part sleep, part exercise, part food, part love. There is no yin without yang and vice versa. Thus forget everything I said about personal life being no. 2. The best is if it reinforces what you do in your work. Health leads to happiness and happiness leads to optimism: a key-quality in entrepreneurship if there ever was one.

So the responsibilities of an entrepreneur summarised:

• 100: keep your eye on both sides of the court: the goal & the resources needed to get to that goal
• 101: align Product development with Business development
• 102: always validate your market data by staying close to your customers
• 103: be an authority on the tasks that need carrying out or have access to one
• 104: stay healthy and happy.

This was written in a single session with minimal editing. I hope it kind of makes sense. Part 3 of my e’diary will be on the topic of: can you prepare for entrepreneurship? As I have a master in entrepreneurship, I thought it might make for an interesting perspective. All my entrepreneurial diary posts can be followed under the tag ‘Vincent’s eDiary.’ By choice, I’m being mysterious about my company. If you have questions, feel free to comment or write to me via the email address on the right.

Picture courtesy of Be The Dream.

Like

Unlike

I’m always fascinated by business models, i.e. at how entrepreneurs and companies put together services in order to make money from them. I’d call it the source code of business if I hadn’t seen the other source code in Luxembourg —legal and accounting—but arguably that’s more like binary code, i.e. 99% unintelligible.

Sarah Lacy writes about SMSONE, a ultra-local news provider in India similar to Outside.IN, a Union Square Ventures funded US-only company that provides news updates via the web. SMSONE does it, as the name suggests, via SMS. And it spreads through a franchising model, working with local entrepreneurs that pay a franchise fee and also collect a share of the advertising revenue from locally focussed businesses. It is able to do this because of something that apparently doesn’t exist in the US (but does in Europe): receiving an SMS in India doesn’t cost the recipient anything.

When reading about this, I was immediately reminded of a similar business model employed by a Dutch entrepreneur in Russia, Ms. Annemarie van Gaal, founder of Independent Media, a company that distributed Russian versions of magazines like Cosmopolitan, Marie Claire en Good Housekeeping (source). When she spoke at the Star entrepreneurial seminar in Rotterdam a year ago, she told us about how she differentiated herself from the competition (paraphrased as I haven’t got my notes with me):

The trouble with getting your magazines distributed in Russia was that you had to pay quite a lot of money (some would call it bribes) to companies that would then take care of it… badly. Instead van Gaal decided to do it differently. She would hire street kids to distribute her magazines, similar to the gold days of newspapers: the newspaper boy.

If you read Sarah Lacy’s account on Techcrunch, you’ll see that SMSONE does it similarly, hiring local kids, often without much education, to take care of distribution. Doing it via official channels is likely a nightmare over there, and centralising distribution kind of defeats the purpose of micro-news.

It’s a different way of thinking, which many of us westerners don’t have. I mean, would you entrust your products to a beggar on the street or to a street musician? Not only is it probably against the law (except if the government does it), we pride ourselves on our super-organised infrastructure, where anything from temp-workers to interns are there to provide companies with a flexible workforce, and anything from printing presses to mobile internet exists to produce and distribute your stuff.

Of course, I wouldn’t just leave you with these two examples. In the beginning of 2008, Boston Consulting Group published a study of “local dynamos”— domestically focussed companies, which use creative business models to capture value from emerging markets that are filled with challenges, like lacking infrastructure and low-income consumers. The map below shows how widespread these companies are.

Some very interesting examples are mentioned, like:

• Shanda, a Chinese gaming-company, that, in order to combat software-piracy, focusses on providing interactive services through gaming, services that are impossible to pirate. And to overcome a lack of a financial infrastructure to pay for online services, they work with pre-paid cards.
• Indian CavinKare, which sells cheap sachets of shampoo through small local retailers, while using educational marketing to teach customers how to use their products.
• Goodbaby, which targets the many 1-child families in China, who are both willing to spend more on their child than multi-child families would, but are also in need of education.
• Amul, an Indian food-and-beverage-marketing-organisation, which collects and pays for milk locally, while tracking all operations via satellite and uses ERP solutions to make analysis based on the data and gauge whether future supply needs to be increased or decreased.
• Wimm-Bill-Dann Foods (Russia), which works extensively with local partners, and has devised leasing schemes for expensive machinery to boost their production and is able to serve 280 million consumers nation-wide.

The BCG, of course, takes the stance of its customers, Western companies, and the study is mainly aimed at how multinational companies (MNCs) can replicate 6 of these dynamo’s advantages, in order to compete with them. They are:

1. Customising to local needs – which involves first understanding these needs, and then meeting them.
2. Devising innovative business models that overcome local challenges – a logical follow-up to the last point, how to make money from the info you gained.
3. Leveraging the latest technologies – meaning that these emerging economies are less burdened with traditional infrastructure and quicker on the uptake of more affordable, newer, and easier-to-spread technology, e.g. mobiles.
4. Benefiting from low-cost labor and overcoming shortages of skilled labor – there’s two ways to look at this; a local workforce will be better equipped to interact on a local level, a highly-trained workforce will be better equipped to run a business. Tough call.
5. Scaling up fast – Russia, India, China, Brazil, etc. are all giants with the promise of huge rewards when you capture them. Many of these dynamos grow quickly through both through acquisitions and building up their network of suppliers and distributors.
6. Sustaining long-term hypergrowth without imploding – this kind of follows on to the last point

Some of the Western companies mentioned, which have managed to compete on a local level, include:

• General Motors, which has adapted its luxury-liners to meet the demands of its Chinese customers, who are usually sitting in the back;
• LG, in China, which has learned that the audio-quality of its televisions is more valued by its customers, who often reside in noisy environments;
• Carrefour, which has started to work with local municipal governments in China, as these don’t meddle in their operations like local dept. stores would, and are able to provide access to prime locations;
• Perfetti Van Melle, in India, a candle/chewing-gum manufacturer, which has found local means to advertise, interacts frequently with local partners, and has adapted its products to local tastes;
• and Yum! Brands, which owns Pizza Hut and KFC, and has adapted its menus to meet local Chinese tastes, started a new food-chain aimed specifically at the market, and uses its international expertise to integrate IT, lean supply chains, and a higher level of food standards into their offering.

It shows the value of out of the box thinking in terms of reaching people, and I believe that traditional “Western” thinking should long ago have been thrown out the door anyway, particularly in light of the troubles that media-, automotive, and financial industries are going through. We are in the flux of disruptive innovation and only those quickest to grasp new technologies and ways of thinking are able to survive another day.

No shortage of lessons on that from entrepreneurs in emerging economies…

Vincent out

Like

Unlike

Last February, I was in Silicon Valley for a week thanks to a course I was taking. Here’s a summary of what happened there.

UC Berkeley: Center for new Music and Audio Technologies.

Prof. David Wessel showed us a new instrument that was basically 32 touchpads. Each was connected to a sample loop and the x- and y-axis and pressure modified that loop. It was an interesting idea, because it didn’t look like just pushing buttons to make sound.

Fail whale at LHS

UCB: Raymond Yee, “Mixing and Re-mixing Information”

A lecture from a course on web mashups. Yee has written the book, Pro Web 2.0 Mashups. The students need to plan and work on a mashup project. There were lots of interesting ideas, but I was worried that most of them were remixing for remixing’s sake and didn’t add value along the way.

Lawrence Hall of Science

Our contact at UC Berkeley had warned this place was mostly for children, and sure enough, this is a place to avoid unless you’re 7 years or less. Almost as complete waste of time as our Google visit.

We had also pizza available for but no-one from UC Berkeley came (we were too scary). Except one guy, whose name I forget. But he took some of us for drinks downtown, so that was great.

Digital Chocolate / Trip Hawkins

Hawkins really loved "Bowling alone"

Trip Hawkins talked a lot about how leverage is the key to successful business and what are the differences between the supply chain in when he was at EA and in operator-controlled world of mobile gaming. He told how he built EA so that it was NFL who wanted them to use their brand, not the other way around. This is why he sees that his competitors who just put out license games based on movies will ultimately be driven off the market, because they do not control the IP.

He thinks that the iPhone is the coolest thing in all time and how the rest don’t get it: “If you’ve played around with Storm or Android you know, wow, these suck”. In his view, the others had focused in Features (“What it is”) and not on Advantages (“What it does”) and not at all at Benefits (“Who cares?”).

Digital Chocolate’s game development doesn’t depend on the device, because they change all the time and they can publish all their games in every device. This is the only way to make the business work in the mobile space. Hawkins doesn’t see that there will be any standardization, because that would move the leverage away from mobile operators to handset manufacturers.

He also believes that the social starving that began around 1950’s because of TV is the reason people are so keen on the social gaming and internet services and is the driver for “omnimedia”. His suggested reading are The Innvator’s Solution and Bowling Alone. Even in the old days, he didn’t see gaming as waste of time. When playing, he said that “I was thinking, learning and motivated”.

He recommended that we try Tower Bloxx, their Facebook game. I was a bit disappointed, the game itself isn’t that bad if you want to kill time, but it is really spammy. Not only is more screen real estate spent on questionable ads than on the game, not only does it notify your timeline every time you play the game, not only the “social aspect” is just a high score table of your friends, but it also spams your friends every time you play to add the game. Not exactly what I’d expect from the guy who’s partly responsible for the great games EA pushed out in the early days. I asked why is it that as a former hardcore gamer, the only interesting game I played last year was World of Goo. In his opinion this down to how big corporations work and can’t innovate. If Tower Bloxx is Digital Chocolate’s answer to this, I don’t think it’s just big corporations.

Sun Microsystems / Mårten Mickos

FAQ: "If heating is a problem, why is it black?"

We were given the tour at Sun’s Executive Briefing Center. They showed the SunRays and other stuff and it was pretty nice to see up close the Black Box.

Afterwards, Mickos gave us a presentation about open source development and MySQL. He said that MySQL is like “New Orleans” of web apps in that if you want to control an important river, you need to control the important cities and this was the reason Sun acquired them. He also anticipated the question about superiority of Postgres, which is probably asked from him all the time. “When I joined MySQL, Postgres was better. Some say it still is. But who cares?”

He also started a discussion about “Why are web companies so closed?” – a poke directed among others Google, who benefit a lot from GPL software, but due to a loophole in the agreement can get away without publishing their improvements because the software isn’t redistributed. This is what he calls the hypocrisy of open source: “People just want to get stuff for free”.

Like Hawkins, he said that the most important thing for startup business is category-leadership. One advice he gave for Finnish start-ups was “not to be Finnish”: MySQL didn’t have sales offices in Nordics, only in the US. Other thing was that if something sounds good in Finland, it takes 10-15 years for until it’s widely accepted as a good thing, so don’t go to market too early. “There’s still time to make a Google-killer”, he said.

This was one of the best sessions we had, not only because Mickos isn’t there anymore and looks like Sun won’t be either but also because we got vodka and swag. You could see there was an economic crisis, because elsewhere we didn’t get anything.

Nexit Ventures / Michel Wendell

Wendell, from Nexit Ventures, a VC firm interested in Nordic IT startups, told how the VC market works and what kind of mistakes Finnish companies usually make. He told how he ended up in the business of helping Nordic companies make it in the US. Being a VC has lot to do with knowing people.

Lots of interesting discussion, but it was late in the evening and it’s pretty hard to upstage either Hawkins or Mickos.

IDEO

We got a standard theme park tour at IDEO. If you have seen the documentaries on TV or at YouTube, there’s not much to see. I was surprised that they actually avoid any systematic or analytical approach to design and focus more on a holistic, iterative and therefore probably pretty expensive (to the client) approach. As a case study they presented Nokia N-Gage platform they did concept work for. A surprising choice, because not only being old was also a spectacular flop. I guess they thought that being from Finland and the course given by ex-CTO of Nokia, we’d be interested in Nokia or something. If we were, we probably didn’t need to come all the way to Palo Alto for that.

Stanford University / VHIL

At Stanford, we got a nice presentation from Jeremy Bailenson from Virtual Human Interaction Lab. He was talking about the Proteus Effect, or how avatars change humans and their behaviour. For example, even though Blizzard has nothing in World of Warcraft code that gives advantage to taller avatars, they nevertheless level up faster than shorter ones. Also, taller avatars get better results in the Ultimatum Game, the real world height of the human is irrelevant. As I’m interested in behavioral decision making, it was nice to see that it might be possible to do empirical studies in virtual worlds, where we can control many variables that social sciences haven’t been in the real world.

Nokia Research Center at Palo Alto

First NDA of the tour. They showed us some research projects they were working on and had the worst slides of the tour. Most of us came out there frightened how out of touch Nokia can be.

Stanford University / Entrepreneurship Week / “Next Big Thing” Panel

Tim Draper, Tony Perkins and Michael Moe talked mostly about Twitter and iPhone and how making revenue is irrelevant. Draper really loves the free trade. Apparently ad-supported business model is the next big thing.

These guys were either drunk or lived in a bubble of their own. Probably both.

IBM Almaden Research Center / Ray Strong

There's pr0n in it, I'm sure.

Strong talked about how IBM tries to predict the future. First of all, the Almaden Research Center looks like a super-villain’s secret lair from Bond movies (it didn’t help that the guy we met had a Bond-esque name). Forget Google, this is the place to visit. There was the world’s first hard drive in the lobby, which was a nice monument to how long IBM has been in the game.

The main thing Strong told was that it isn’t possible to predict technology in to deep future, only in to the business horizon of up to 5 years. This is what they told to an unnamed government agency that wanted them to do so. As government usually gets what it wants, IBM decided to find a way to do it. They brought in people from academy, futurologists and social scientists. Their approach is half scenarios and half technology landscapes, but their ideation emphasizes backcasting from deep future (>50 years) using trends that can be with high probability assumed to continue.

One problem with scenarios has been that it’s really hard to transform them into strategic actions a company should take. IBM tries to close this gap between scenario planning and strategy by using what they call signposts. These signposts are future events that are both recognizable (when they happen) and actionable.

Strong also talked about how predicting future, it’s important to stay in the qualitative side of things, not only because quantitative side of things usually doesn’t work and might be harmful because of the tendency to use numbers to calculate expected values or other figures, even though they are full of uncertainty and can be harmful.

This was by far the best visit during the tour.

Google

NDA. It was a standard theme park tour. It was pretty clear that Google is exactly as “open” as SEC demands it to be, not an inch more. I guess many for many of us the myth of Google was totally burst.

To be fair, this was the only place where our contact wasn’t executive level so we might have gotten a better experience with a more suitable contact. Even though our host was great and all that, he probably wasn’t the right one for our group.

HP Labs

Runner-up in best architecture for a research lab.

NDA, but they mostly showed published academic research about nanophotovoltaics or something to that end. Our guess is that they didn’t want to tell us anything but out of courtesy showed something. When they talked about things I could understand, they talked about MagCloud and how HP is transforming from a printer and computer company into printing and computing company.

Next day, couple of us went to see the garage (more like a shack) Hewlett and Packard started from and what is considered as the “Birthplace of Silicon Valley”. Not much to see, but at least it had some historical value.

All pictures by me. All rights reserved. Originally published in my private blog, but I decided to get rid of it so I republished this thing here for people interested.

Like

Unlike

Hey guys,

I wanted to pose this question on Twitter, but couldn’t describe it in 140 characters. Basically, if I want to learn about investing, what would be the best way to go about it?

I noticed, reading Business Accounting for Dummies, that accounting is a topic that is very nationally driven. Sure, there are general standards, but there will be subtle legal differences for each country and in the end you have to learn something twice or thrice (depending on how often you move).

Is it the same for investing? Am I better off talking to my local bank and seeing what my options are there? I have to say, I prefer being already informed before letting myself be sold service X or Y, so what is a good way to find out about investing via books or otherwise?

I’m not a Dummies-freak or anything, but I did like Consulting for Dummies a lot (review here) and some chapters in the (British) Business Accounting for Dummies book. Would you endorse reading the Investing for Dummies book or another one (bear in mind, that I am a “dummy” as far as investing is concerned!)?

In any case, those were my questions, which wouldn’t have fit the 140 character format. Any advice you can give is welcome!

Vincent

P.S. we are now on a new server, which shouldn’t affect your experience one bit. We may post more polls though :p

Like

Unlike

Inspired by the Grasshopper podcast on Venture Voice.

Har har,

Vincent

Like

Unlike

First, what I love about business plans. I contains four elements very close to my heart: Writing, talking to people, innovation, and entrepreneurship. That is not to say that writing business plans is a fun activity that should be taken lightly. The crux of writing a business plan is that it needs to be executed upon. And that is where the complication arises.

One of my last freelance projects was amazing fun and in two ways very rewarding. Financially, because the investment that followed it, far exceeded the more than generous fee I was paid. Creatively, because my involvement lead to a lot of focus product- and strategy-wise, and we developed what I thought was a clear timeline as to the execution of the plan in different phases of product and market development.

But, as mentioned, writing a plan does not mean that it reflects the reality. I was reminded of this again, listening to a venture hacks podcast on “pitching hacks” (you can watch and listen to the presentation here). Business plans are worth squat, because a. there’s a lot of them, and b. the proportion that is executed upon is fairly small.

In theory, business-plans serve as a way to make the strategy of a young company explicit. Kind of like Gerber’s “Franchise manual” for startups in the E-Myth Revisited, it allows you to solidify what you do while you’re doing it. But, I don’t think it automatically leads to a (better or actual) business…

…

Those three dots is where I stopped writing some three weeks ago, and I have in the mean time developed my thoughts further on this. I think that the gist of good business planning is taking ownership of the project. And the single most important key-component of the business plan is the timeline section. And the single most important action as an entrepreneur is to already have at least 10-30% completed of that timeline.

In other words:

• if you’re an entrepreneur you should write your own business plan: you cannot outsource this!




• The most well-developed section of your plan should be your timeline: as conservative and realistic as possible!




• The best way to illustrate the value of your plan (and timeline) is to already be following it: actions scream much louder than written words!

If those three components are in place, I think that the world of business planning and entrepreneurship would be a much better place.

End braindump…

Vincent

Addentum: The problem of multiple agendas! I should also add that another complication is that plans are written with a singular vision in mind, perhaps alternative scenarios are included, but it still very often reflects a singular approach to “doing things.” But… many companies are composed of multiple people, who may or may not have multiple agendas. I still think it can belong to taking ownership of the idea, in the sense that the plan is worked on together and perfected until everyone agrees with it. But more often than not, the business function is delegated to certain individuals, meaning that this isn’t the case.

Like

Unlike

Depending on where you stand, this is going to a long boring blog post or an interesting one. While I didn’t write much about it, my last consulting project as a freelancer was to help get a startup into the European Space Agency Incubator (ESI)… successfully, I’m happy to say. I wanted to write a post about how interesting it is, I think, to invest your time and money into space technology businesses, particularly because it’s about spinning space tech off to applications into the real world, but realised that this interview with Bruno Naulais, ESI network manager, would probably do the trick.

I conducted this interview in the summer of 2006, as part of my thesis. It was previously published on my personal blog, but it [the whole blog] has since disappeared into MySQL “does not compute” hell. Here goes.

The Interview

VvW: What is the ESA Incubator all about?

BN: It is actually called ESI, the European Space Incubator. It is part of a network, called ESINET, and consists of 35 incubators, spread across most of ESA member-states and some Eastern European countries (eg Ukraine, Bulgaria).

The ESI business-model, in a large part conceived through Niels Eldering’s thesis [a fellow Rotterdam School of Management graduate] and BN’s Business Plan, could be described as consisting of three dimensions. These are the start-ups, the stakeholders, and the supporting services.

1st Dimension: The start-up

The start-up is seen as a place where fertile (space) technology meets an individual or a team of people. They in turn go through an incubation process (at the ESI) and finally come out as a company to do business.

2nd Dimension: Stakeholders

This doesn’t apply to all incubators in the network, but in the Netherlands, the two main stakeholders are the ESA and the Dutch ministry of economic affairs (EZ). Both naturally want to promote employment, economic growth, and entrepreneurship in the Netherlands. Furthermore, ESA has the objective to improve the image of space in the eyes of the general public, of investors, and of businesses.

The latter is of particular importance, as space is still perceived as expensive, dominated by large players, and generally irrelevant to the lives of Earth’s citizens. What the incubator aims to do is to show to it’s stakeholders and to the general public, that space-technologies and space-systems can be benefited from in everyday life.

3rd Dimension: Support

This happens both through 3rd parties, something called Key Innovation Business Services (KIBS) and in-house. Through this, the aim is to prepare the start-up for doing business in the real world, and to receive further investment. The latter of course depends on the ambitions of the founder. Some are pretty limited in their targets. They only want to set up in their country, or perhaps the Benelux. Others want to go cross-continental or even global.

VvW: Exploring the “Support”-angle further, how does the ESI assist it’s starters in finding private financing?

BN: First, it is necessary to assess the type of start-up. Depending on the type of product/service and the market, an advice is given as to what the growth-strategy should be. This doesn’t always need to be angel or venture financing. In many cases, the advice is to consider a strategic partnership. In this case, there’s a larger company already active in the market/industry that the start-up is targeting, and has an interest in taking a stake in the company, with the option to acquire it at a later stage. This requires there to be a kind of fit between the partners. So far, the ESI has had two start-ups taking that option.

Then there is also the option for a joint venture, an equal partnership between two starters in ESINET, or a starter and an existing company. One ESI start-up has done that.

For private financing, like a business angel or venture capitalist, start-ups usually still have a way to go. Usually, they first attract financing from the 3 F’s: Friends, Fools, and Family. This can happen before or during the incubation-phase. More experienced investors usually require the company and idea to be more mature. With a proof of concept, you can attract a business angel. When you are ready to sell a commercial product, you can approach venture capitalists. There are some exceptions to this of course, but this is the way it usually works.

The aim is to ultimately have a core group of business angels that are allied with the incubator. To a degree, this is already the case with venture capitalists, of which a group is being made aware of the inner proceedings of the incubator-companies. The idea is that the start-up does not need to educate these people on space or their idea, the incubator is already doing that for them. And the incubator will basically give residing start-ups feedback on their stage of development and, depending on that, the availability of pots of business angel- or venture capital.

VvW: What are the advantages of a start-up approaching investors through the incubator, rather than going at it alone?

BN: To start, a venture capitalist can receive thousands of business-plans during a year. The aim is that ESI-plans land on top of that pile. This is because the ESI, and the ESA, provides a quality label to its’ residing startups, which manifests itself in four ways.

For one, there’s the quality of the work done at the ESA, their procedures and methodologies. The incubator tries to pass those on to the start-ups.

Second, there are the favourable statistics for technostarters residing in incubators. A survey from 2004 [which I still have to read] reports that ca. 87 % of start-ups in the incubation process are still alive after three years. For a standalone technostarter, this figure is much lower, between 20-30 %.

Third, there are the networking-aspects of the ESI. Business incubation does not work well as a standalone function, it has to be part of a network. In the case of the ESA, it is present in 17 countries, as well as active in non-member states, such as the US and Russia. This can be useful as a gateway for the start-up to expand or move to another country. It’s also good for cross-fertilisation—between different ESI-start-ups and -graduates, suppliers and customers, investors, and other companies. Through the ESINET-network, it is also easier to conduct international market-studies.

Last, but not least, there is the access to the ESA technology and resources (experts, labs, test centre, software tools, facilities, etc.).

VvW: Are there examples of venture capitalists investing in any of the ESI startups?

BN: Sure, there’s ThruVision, which received a substantial amount in two rounds of investment [note: I know the exact sum, but am not sure if I can make this public knowledge: I think it's public since it is mentioned on their web site; perhaps you should have a look (http://www.thruvision.com)]. This company has now graduated, i.e. no longer resides within the ESI.

VvW: From your experience with venture capitalists, how do they feel about the companies that are still in the incubation-/seed-stage?

BN: As was mentioned, they prefer more mature ideas to work with. The key-phrase here is “work with.” Venture capital really means two things, investment + support. Along with the investment, the venture capitalist wants to coach, put people in the right place—on the board, as a CEO. For the latter, most of the start-ups in the ESI-program are founded by someone with an engineering-background. A founder is typically someone that understands the technology and how to build a service or product on top of it.

A venture capitalist, on the other hand, looks at the team, the product/service, the market. He or she will look for people that can run the course, manage the growth. The preference then usually falls to someone with a track-record, who has experience doing that. In the case of ThruVision, the founder is now the technical director, and the CEO is someone with an impressive business-cv.

Another statistic from the European Venture Capital Association (EVCA): In something like 95 % of start-ups invested in by venture capitalists, the founder has been replaced as CEO.

VvW: Do venture capitalists also support the incubator itself in some ways?

BN: Not hands-on, no. They do provide access to a network of companies, investors, and people to work with, which wasn’t there before. There will be more, once the ESINET-fund is started.

VvW: What is the ESInet fund?

BN: First a little background. There is obviously a gap between early stage and growth. This was known from the start of the incubator. This is especially so when you talk about space. Investors look at the space-sector with skeptical eyes. They see it as a market for large players like Alcatel and Astrium. They see it as a niche-market. And when you think about satcom, there’s a lot of international competition from the terrestrial systems. The satcom has already lead to a few big-name and big-investment projects to go bankrupt, example of this are Iridium and GlobalStar.

Furthermore there’s a misunderstanding about what the utilization of space-technologies and -systems really means. Utilization means you are using something that already exits. You only need to adapt it to a non-space sector. This means testing, modification, and validation, something that doesn’t need to take years, rather months. Space-systems refer to satellite-technology, for which you don’t need to build the satellite, you need to be able to receive a signal and use it. For space-technologies, we are talking about transferring and adapting applications and materials used and developed for space to non-space sectors.

First investors need to get this picture. But even if a few of them understand, that doesn’t mean they have the needed expertise. Usually venture capitalists are experienced in certain areas like biotech, meditech, telecoms, etc. Space-related technology does not have that many corresponding VC-experts. So the thought was, if investors will be so hard to find, why not start our own fund?

And this is where the ESINET-fund comes from. Its fund managers don’t need to be convinced on potential business development from space systems and technologies (much) and there is funding for early stage ideas. ESA was convinced to sponsor the fund with 5 million Euros and recently selected a management company from 12 applicants to manage the fund and raise more. The target-size of the fund is 40-50 million Euros in total, to be completed by mid-2006. The ESI is responsible for the deal-flow. This will mostly come from ESI-startups, though if those do not fulfill the needed requirements, investment van occur into other ESA-“ventures.”

The fund-management company will act much like a venture capitalist as far as investing is concerned. It will be present during selection of start-ups and have a supporting role in the development of invested-in companies. And it will take shares in the companies it invests in.

VvW: What do you think the effect will be on other investors, to have this fund running?

BN: It’s always a nicer picture to have a fund tied to an incubator. Having a fund will hopefully attract other investors. Many venture capitalists like to invest in syndicated deals, meaning a group of investors spreading the risks between them. In investments, there’s also usually a leader and followers. It is hoped that the fund can fulfill a leading role in the process.

For business angels and the three F’s, there will always be space. For one, they invest much smaller sums, and second they provide the added value that they bring as people. Like many informal investors, business angels are often interested in a hands-on approach, to be involved in their start-ups, which will benefit entrepreneurs greatly.

VvW: What is the investment climate like in the Netherlands, compared to other European countries?

BN: The Netherlands is not so great for finding private capital, except for subsidies. Both the UK and Germany rank highly for private capital. France and Italy have good governmental support.

VvW: OK, back to your start-ups, what criteria do they need to fulfill to become part of the incubator?

BN: During the course of the incubation-phase, they are asked to prepare financial projections, including parameters like Net Present Value (NPV), Return on Investment (ROI), and other ratios. Templates are provided, if needed, and access to third parties that can help. Over the course of the incubation-phase, the incubator-staff tries to follow the evolution of the NPV. In the future, it is hoped that NPV will be calculated at the application-stage, before the start-up becomes part of the incubator. If that’s possible, of course.

Other than that, the number 1 criteria is the market. If they are not able to define it, they will not be accepted. Similarly, a market-study must be prepared.

VvW: How does the ESI feel about teams starting?

BN: Very supportive. On the whole there are both types, entrepreneurs starting solo and finding partners along the way. Or entrepreneurs that start in a team. Generally the incubator encourages partnerships between technologists and business-people. Investors invest in a team after all. The incubator also has good ties with MBA-programs to find people for start-ups.

VvW: Is the staff able to deal with all the demands of the incubator?

BN: The staff has broad knowledge about issues like legal and intellectual property matters. There are specialists that advise on strategy, market, technology, etc. But it is impossible to know everything in depth. For that the start-up can approach third-party specialists, of which they can get the contacts via the incubator.

VvW: Do you compete with other incubators?

BN: Not at all. In fact, collaboration is encouraged and projects are sent to others as well. Geography is also very important to entrepreneurs, they have a life, etc., so it’s not that feasible to draw them away from a more logical location-choice.

Note: If you have any questions, don’t hesitate to post a comment or mail me. If you are interested in applying to the incubation programme at the ESA also, check out this page and also don’t hesitate to ask me about my experiences of working with two tech-startups in the programme.

Vincent

Like

Unlike

I’m sitting here writing this on my new Intel Macbook, 4GB of RAM and 256MB of video-memory, coming from a 4-year old PPC iBook with 1GB of RAM and 32MB of video-memory. The latter is the very definition of the principle I’m talking about. From the beginning, I’ve had to find creative solutions to doing my work and it’s been incredibly rewarding. I’ve yet to experience a boundary to the Macbook’s abilities. Having total freedom is exhausting. It encourages exploration, rather than getting things done, and it leads to exhaustion. No matter how far you try to go, you’re still inside that box.

I’ve been engaged in three funding proposals in the last two months. The first, ok, more of a business-plan competition than a funding application. The second, applying for a government grant. The third, applying for a large venture capital investment. Of these three, the grant application was my least favourite and I loved the VC application process. Why?

We have an undefined amount of time to apply for the government grant. We had to follow a template with ultra-confusing headings (e.g. I have three sections that want me to describe the market… am I supposed to do it thrice?). And the total had to be no more than 25 pages.

We found out about the VC option very late in the game, 24 hours before the deadline in fact. We had to fill out a webform, which was in total ca. 8 chapters. Each section had a character-limit (not word), ranging from 100 to 4000. One section for the market and business model = 4000 characters. What the company does = 100 characters. A simple form to fill in the finances, focussing on the key-figures only (revenues, EBIT, equity) which forced us to do all of the complicated calculations for ourselves, and a section for what we wanted to give away of the company and why. Instead of doing an unlimited amount of writing, we used whatever extra time we had to discuss the problems and solutions.

I wrote the 8-page piece for the competition in two hours. Because that’s all the time I had left, after handing in the VC proposal that same day. It forced me to focus on the essentials and nothing more.

It doesn’t matter if we’re talking about a productivity-tool like a laptop, making a startup survive, raising kids, educating people, boundaries are the key to ultra-focussed, ultra-creative solutions to the problem at hand. Giving people total freedom rarely leads to the right results; it makes life easier to both in the very short-term. In the long-term it definitely creates more overhead, as you’re constantly chasing after those that you gave the freedom to. “Kid, it’s been a month, where are you now?” “I’m on the introduction, but I have all the time in the world, right?” Kid, for your sake, I hope not.

The end.
Vincent

P.S. looking for the right picture lead to this article on the same topic.

Audience: How do you set yourself boundaries? I’d love to know!

Like

Unlike

I attended LeWeb, a conference dedicated to…the Web industry, almost 2 weeks ago in Paris. I apologize not to have blogged before, but December was a frantic month, business-wise, and I wish I could blog during the conference but as you may have read on the blogosphere, there was no Internet. On top of that, I wanted to leave some time before I blogged to check whether my words would soften.

I arrived at Le Web, investing a lot of time (2 full days) and money (more than EUR 800, that is to say around USD 1100 – which is a lot of money for what I got), with very high expectations, and I have to say that this conference was a huge disappointment to me. Actually, it was more of a disappointment: I actually found Le Web ‘08 conference to be a huge piece of crap. Here’s why.

The organizers: Loïc & Géraldine Le Meur

Prior to the conference, I was a big fan of Loïc Le Meur. The guy looked like Midas to me: everything he touched became gold. The guy gets people lining up to invest in his startups (look at his list of investors in his last startup Seesmic here, impressive). Loïc understood that blogging was going to be big before everyone, and positioned himself accordingly (a huge blogger and founder of Six Apart, the editor of TypePad). Loïc is also an early investor in LinkedIn, my favorite web app, and recently founded and funded Seesmic that I find to be a very cool video conversation platform. Well, the guy seemed to be the perfect investee for VCs, and the perfect investor for entrepreneurs. However, when it comes to organizing conferences, I would tend to say it’s not there yet. Loïc and his wife Géraldine have been organizing the Le Web event for something like four years. Last year already, criticism had emerged, but overall comments were positive. Well, after attending one Le Web conference, I can only blame myself for not having due diligenced better: I wasted my time and my startup’s money.

The theme

Love. This year’s Le Web conference was about love. At first sight, I found this theme brilliant – too bad the idea wasn’t well executed. Love is a universal value that is only discussed in novels and Vogue. Plus, Love is the perfect theme if you want to think an outside-the-box conference program. Unfortunately, this wasn’t the case at all. Although there were a number of supposedly quality speakers, most didn’t actually mention the theme, and I guess some didn’t even know that the theme was Love (Marissa Meyer of Google, Didier Lombard of France Telecom, Maurice Levy of Publicis, to name some of them…). I think it’s a big waste, because having a truly deeply-thought consistent program around Love, with at least some continuity between speakers, could’ve made of Le Web a truly mainstream event rather than just a reunion self-proclamed visionaries.

The speakers

Speaking of self-proclamed visionaries, I had a hard time looking for new ’stars’ on Le Web panels. Or even just interesting content.

Paulo Coelho is a brilliant man, but he had nothing to do at Le Web: his speech didn’t bring anything new, it was self-promotion, and an uninteresting one as a matter of fact. Same with Susan Wu from Ohai, preaching her church (virtual goods): boring slides, boring intervention.

Didier Lombard was absolutely out of scope too. He basically paid to get on stage. And you could feel it.

I was very disappointed by Maurice Levy from Publicis (and by the questions asked by Loïc Le Meur: boring) – the guy could’ve given us interesting insights on web advertising. Instead, we had a boring “fireside chat”, as they say. I liked one thing about Maurice Levy though, he publicly gave his email address saying he was looking for startups to invest in.

Startup competition updates were extremely repetitive; the only thing you could here was “despite the crisis, there are still a lot of innovation around; I’m thrilled by what I saw in the startup competition room”. Except that when you looked at the jury in the room, they were all on their Blackberry or iPhone aswering emails.

I liked Yossi Vardi, Chris Anderson, John Buckman (good tips for entrepreneurs), Marissa Meyer (a few insights on the Google roadmap, like wanting to take Chrome out of Beta) & Joi Ito though.

The sponsors

Le Web’s official sponsor was no company else than Microsoft, the tech giant that probably least understands the Web provided the very poor quality of its online applications, like Hotmail, or its total absence of the collaborative web apps landscape outside its expensive minority stake in Facebook. The good news is, Microsoft folks are smart asses and let some selected startups (some of them embedding no single Microsoft technology) demo their applications rather than demo Microsoft products. Microsoft alone paid Le Web USD 110,000 or EUR 80,000 to get its brand on top of others, rent a lounge space, and get speaking time.

Google also was a sponsor of Le Web – they had Microsoft move first when it came to getting the “official sponsor” title. Google had a special room dedicated to presenting its own stuff during day 1. Nothing new there, except that Google brought in speakers on a number of topics like Adwords, APIs, etc. I guess the fee also included the 2 keynotes Google got. If I were Google, I would, to ensure a maximum buzz around my brand, not attend or sponsor Le Web. That would make the entire conference speak about the absence of Google whilst the whole web revolves around the Google search engine. Google being a sponsor amongst others makes of it a regular company. Too bad.

There were other partners, like SwissCom that sucks big time (they had a booth, and did not manage to make the Internet work during the entire conference + Loïc Le Meur says they got paid more than USD 100,000! to make nothing work), Facebook (?), SixApart & Seesmic who got it for free obviously,…and a number of others that are not worth talking about in this not-so-long post.

The budget, the price

1,400 participants x an average of EUR 1,000 per entrance

Sponsoring & demo room for at least EUR 200,000

The overall budget for this 2-day conference amounted to EUR 1,500,000. Yet, there was no wifi running, definitely not enough food for all participants (I had to go grab a sandwich each 2 days), no consistent editorial line, a crowd of people investing time and a lot of money to listen to the same self-called visionaries on stage.

I haven’t paid myself in one year (I live on my fiancée’s salary), every since I started Verteego. I bought myself a ticket to Le Web almost as a Christmas gift, hoping to enjoy a lot. It was a sort of sacrifice (EUR 850 + 2 days of turnover for Verteego – I’m the sales guy there – is hell of a lot of money! the price of a superb laptop or a great long weekend, say, in Venice) but I was plenty of hopes. The least I could say even 2 weeks after the conference is that I have a very angry feeling at myself: I feel I’ve been financially abused. And I lost two days of hard work during an important period.

The place, and the temperature…

Well, it was free-zing. Which is okay for me, except that with so many people inside, there must have been a sort of natural warmth, which wasn’t the case. I felt this place had the worst energetic efficiency in Paris. This absence of environmental awareness stroke me: the second day, it was warmer. I couldn’t believe how much energy was used to heat the place. I am very disappointed by the overall lack of consciousness of web entrepreneurs for environmental issues: if you are really about changing the world, then you should think about measuring their environmental footprint and take action to reduce it from one year to another & compensate the remainings. But they sure didn’t. And I’m not writing this just to sell Verteego Carbon here: I just don’t understand entrepreneurs to pretend they want to change the World and who don’t care about behaving socially & environmentally responsibly. I think that Le Web, an event that took place in Europe at the same time as the Poznan conference (pre next Kyoto talks in Poland) AND which theme was Love, was just perfect place to ensure Social Responsibility and Sustainability became buzz words in the blogging, startups & VC microcosm. Géraldine & Loïc completely missed the train here.

The startup competition

I didn’t apply to the startup competition. I felt it wasn’t right to make startups pay EUR 1,500 for just a pitch. I was wrong in doing so. The startup competition was probably the only interesting thing during this conference. I paid, as I said, EUR 800+ to go to Le Web Paris ‘08 and basically meet with friends. It would’ve been worth paying the double to try and get 7 minutes to pitch Verteego in front of around 300 people. That makes it 5 euros per viewer’s attention, + the backlinks, visibility, and blog coverage you could get later on. Not applying to the startup competition was perhaps my only regret. And that would probably be the only reason I would attend next year.

The food

It was a shame. There’s no other word for it. I could get no food at all, not during the first day, not during the second day. The first day because there was none left. The second because there was no vegetarian food! Both days I went outside for a sandwich. I could then make friends because people were coming to me to ask where I had gotten this.

Worse: during Day 2, I needed to drink water during the day because I caught a cough during Day 1, because of the cold. And I was basically given a negative answer, because the bar was opened neither at 11am, nor at 3pm (which actually made me leave the place). You get 1500 people pay EUR 1000 on average, and there’s no food, and no water???

The Internet

There was very little Internet during the whole conference. Here’s a recap of this lousy situation: not only were you locked in with boring old speakers & because of the price you paid, you couldn’t answer client requests, or blog because of this.

Loïc Le Meur wrote an apologetic post, but I found this post actually ridiculous for him: Le Web gave EUR 100,000+ to SwissCom not to get a service. The excuse is: no provider is used to so many attendants. This is untrue: the very week before Le Web,  I attended a huge (20,000 visitors per day!) Trade Show, Pollutec, in Lyon. And there was perfect Wifi.

The attendants

Obviously, I met with many of my existing friends, and I was glad to. I also met with new people from everywhere around the world. Lots of great people there, from everywhere around the World. But come on, at what price…Furthermore, the mindset was rather negative: people weren’t ambitious or optimistic. They should be: the crisis is a great opportunity to move fast whilst remaining lean.

The TechCrunch party

It was so-so, I was disappointed and angry: 1) I had bought my business partner (who hadn’t attended Le Web) a EUR 30 ticket, to be told at the entrance that a pass to Le Web was worth 2 entrances. I think it should’ve been explained somewhere because I basically wasted EUR 30 with no possibility to get a refund. 2) I waited for 30 minutes outside, in line, to get in. And during this time I saw 2 groups of people showing up in front and squeezing the line: I found this very abnormal, because the Web is about democracy, having all the same access to information. 3) the place was very small, but this is less of an issue.

Conclusion

For the price I paid, I got very little value back (basically, the only benefit of Le Web was that I got to see many of my friends in very little time). Rather than apologizing, and provided the HUGE profits this conference made, I believe not reimbursing participants for providing no wifi, no heating, and no food services is irresponsible at that cost. I repeat: rather than blame their food supplier, Swisscom or the Cent Quatre (for the heating), I think Loïc & Géraldine Le Meur should’ve refunded participants for providing such a low standard service rather than making this huge profit (I also think they should display publicly the P&L of the conference). This is the least they could’ve done since giving me back 2 days of work isn’t physically possible. Loïc and Géraldine Le Meur didn’t show any social responsibility here, no respect for their customers.

Last, but not least, those who are not going to complain about Le Web ‘08, both in terms of organization and content, are either those who didn’t pay anything to attend, or those who paid so much that blaming the event would make them look stupid.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… C: wait… SD: wait…

Like

Unlike

In many ways, I consider this the best strategy book, I’ve ever read. “Valuation,” by George Norton, is, as the name suggests, a book that uses financial models as a basis to build (sound) strategies. It is also a textbook—my version is hardcover and 190 pages long—but written in a format that reads easily and is structured to be implemented—ca. 30% of the book are (group-)exercises meant to implement what the book suggests.

If I had to criticise it, it’s that I don’t consider it very practical in an entrepreneurial setting. One thing that such methodologies require, is time, which is often a luxury that smaller/younger companies and projects do not have. Building up a set of co-ordinated, organisation-wide strategies can be a matter of years, and, I expect that if you were to follow the book’s advice, you’d engage in a 6 month trajectory, at least.

That said, it is a well-written book and achieves the objective of a book, which is to make understood its topic. In this case, valuation means understanding the value of companies, their products, and business activities. The financial part only really plays a part in the first third and last third of the book, while the middle is more about the actual coming up of the company’s mission, its broader goals, its objectives, and its strategies—the latter being the nitty-gritty activities of how to fulfil the grander vision.

And, where valuation comes in, everything will affect the cash position of the business: some activities may be research-intensive (= costly), but lead to greater rewards in the long-term; others will be quick-sale actions, which generate revenue, but may not always improve the long-term position of the business, unless that revenue is re-invested in more sustainable growth.

I find that these principles easily translate into small business- and individual activities, but only if taken on a holistic level, in which case reading this book may be overkill. But if you’re a finance-geek that wants to learn how to better translate the numbers into practical company-activities, or, vice versa, if you’re a creative business-person, who wants a relatively easy intro into the financial fundamentals behind strategies, then this book may be for you.

Vincent

Like

Unlike

A lot more multi-part blog posts on Tech IT Easy; finally some continuity again, which is nice for both you and me! So, today was the ceremony for stage 1 of the New Venture business-plan competition, the submission of the idea, of which a prize of €500 was to be won by 10 contestants. As I expected, for several reasons, I wasn’t among those 10, though the race isn’t over yet! The next submission is February 26th 2009, the feasibility-study, for which I may compete with my own idea or change it (to another, if needed). The feasibility of an idea entails technological and business aspects, and there’s still a lot to be worked out on both ends. I’m letting you know for completely selfish ends—it would be nice to see a familiar face, if only on the other side of the court. Of course, one team-member must be residing in the Netherlands!

So how was today? I wasn’t really top-fit as it feels like I’m doing a 101 things and am a little overwhelmed, i.e. stressed out. So I didn’t come with high expectations, mostly to check out the competition and perhaps meet some people. The event was presented by Roland Koopman, a Dutch TV-presentor, and the awards were handed out by Pim Batist, founder of SellaBand.

Two “insider”-stories were presented, one was SellaBand and other was Taniq, a rubber-company, for lack of a better word—the company makes it so that rubber hoses and similar are more stable, while using less materials and no metal. You should check out the film their site, it’s very well-made. Most important insight from Taniq: the importance of coaches/mentors, which appear to be abundant if you take part in the competition, for bouncing off ideas & solving problems. But also on the hiring process—when the three young founders decided to look for some “grey haired” commercial talent, they found out, the hard way, that big-company sales-talent is not the same as small-company talent. In the end, if you can’t sell your own products as an entrepreneur, you’re probably in trouble!

The best example of this was perhaps Pim Betist; what a magnetic personality! SellaBand is a crowdfunding mechanism for bands, who, instead of walking to a record-company (for whatever reason), can place themselves on the site, after which fans can vote—with their wallets!—for the band they like. And with that a music-cd, etc. can be produced… He came up with the idea in 2001, residing in New York. Then, for reasons unexplained, he decided to take on a 3-year job at Shell, until he finally quit that job, sold his car, moved into some (illegally) free housing and focussed all his energy on working out the idea. He recruited a guy from Sony BMG as co-founder, by posing as a student wanting to write a thesis and holding several meetings with the company under that subterfuge—a side-note: recruiting people from Sony should never be hard, these guys, from my experience, are all chronically made unhappy by the politics in that company. I’m a little more into music over rubber, as you can tell, but that’s maybe also because the presentation was excellent. Not that Taniq didn’t have a nice movie either, definitely to be watched on their site!

So what about the winners? If there was a definite theme to the evening, apart from innovation, it was that pretty much all of the prize-winnars had a sustainable idea. It wasn’t necessary green, but more efficient, more ethical, more social, etc. What I remembered was:

• a one-handed fire-extinguisher for handicapped people
• a crowd-funded electrical cart for people in third world countries
• a way to make fuel consumption more efficient in cars
• a sensor that measures how people sleep

On the off-chance that you are planning to take part in round 2 (send me a mail, if interested), that should give you a hint of where to direct some energy at! Looking at the credit crisis now, it should perhaps not be a surprise that attention is being drawn towards both efficiency, but also more sustainable ways of doing things—that is, incidentally, one the conditions that will probably be imposed on the car-companies, if they receive financial aid: to become more green.

That’s it from me on this subject! It’s not too far a leap for me to write a feasibility study, but I’ll only know for certain if I’ll take part a few months from now. So, let’s hope for a part 3, 4, and beyond!

Have a nice weekend!
Vincent

Like

Unlike

From Stanford Entrepreneurial Thought Leaders, a lecture by Mohr Davidow Ventures partner, Erik Straser, on innovation in Clean Tech:

…As you’re thinking about what you’re going do, the no. 1 thing I would advise you is how to find a long wave. Some immutable trend that is gonna permeate most of the 10 years of your career, the next 15-30 years! If you sat down and thought “what are the big long waves during my lifetime?”, jumping on them as a professional will probably be one of the smartest things you ever did. Because if you did nothing, but jump in the computer-business in the late 70s, early 80s, maybe even up to the Microsoft IPO, you had a phenomenal run, 20-something years where you had a very high chance of achieving a higher position, more material income, and just being in a better place, then if you’d chose, for example, Detroit.

So you got to think what wave you’re on and how you get on the wave that makes sense for you both from an interest perspective, a geography perspective, what you want to do with your life. […] Its easiest to see [these waves] right here on campus (note: talking about Stanford School of Engineering). […] Research universities are the start of the waves.

The no. 1 thing you can do is figure out what wave are you riding, and make sure you’re not on a wave that’s going down.

He identifies three streams, according to what’s going on at Stanford: IT, which is a mature wave, biotech, and clean tech. It puts a lot of things in perspective for me, regarding all the companies, projects, and my own business ideas that I come across on a daily basis.

Focus on things that are going up, not going down! And focus on your fit with them!

Thanks to vodpod, you should be able to watch that whole scene here (if not: here).

[vodpod id=ExternalVideo.747763&w=425&h=350&fv=]

Vincent

Like

Unlike

If that phrasing sounds a little weird, let me explain. Over these last three days, I’ve been watching Dharmesh Shah’s really great presentation on what he knows about startups, in which he talks, amongst other topics, about the attention economy vs. the wallet economy. If you haven’t already, you should really check it out!

The attention economy is based on eyeballs, on non-paying visitors to your site or users of your app that, through some magical reasoning, will translate into clicks on advertising, eventually leading to income to you the entrepreneur. I call that magical because no one I know of actually clicks on adverts.

The wallet economy is based on eyeballs with little hands reaching out of it that hold cash with which they pay you. I serve product A, it costs $20, you pay, I just gained $20 (minus cost of goods sold). The feedback is instantaneous and you don’t have to wait for X000 customers to land on your site and 0.000X% of them clicking on adverts.

This is pretty much the way the world has always worked, with the exception of newspapers and, arguably, the internet is one big newspaper (seriously lacking in editors).

It’s very easy to go the attention route, because it’s very easy to build soft-/webware in the first place. When you start a business in the real world, you make real investments, usually with the help of external funding like banks, that want to see a real return on their money. When you start a “digital” startup, you need a PC, you need to know some code, you need to spend $20 on a domain and $10-50 per month on hosting. The pressure isn’t there to really push for every dollar of income, because you aren’t feeling the banks et al. pushing down on your back. As a matter of fact, you can just set up a service, and go pursue another career, waiting for it to magically attract enough eyeballs to make you millions.

It’s nice, in theory, but it’s not what entrepreneurship is about. Entrepreneurship is like the film “There will be blood.” Life is tough, you have to fight for every drop of oil, people hate you and you will probably end up killing (=divorcing) a member of your family in the process.

And that kind of work deserves the instant gratification that cash for your product provides.

The end. Have a nice weekend, y’all!

Vincent

Like

Unlike