Category Archives: Venture Capital

Alchemy in the micro media maze

Micromedia makes my life better. For one thing – I don’t have to take comprehensive notes at Chinwag events, because there’s always the trusty podcast :-) Thus I spent more of this event using my more evolved faculties of listening and thinking. Amen to that!

L-R: Umair Haque, Ewan McIntosh (The Guardian), Steve Bowbrick, Mitch McAlister (Last.fm), Miles Lewis (Last.fm), Gerd Leonhard

L-R: Umair Haque, Steve Bowbrick, Neil McIntosh (The Guardian), Mitch McAlister (MySpace), Deirdre Molloy (Chinwag), Miles Lewis (Last.fm), Gerd Leonhard

Another good thing about micromedia is that it can re-combine or aggregate into different – often richer – things than its constituent ingredients. The whole is indeed greater… usually. And that’s exactly what happened at Chinwag Live Micro Media Maze last Tuesday 20th May.

PANEL

Umair Haque – Director, Havas Media Lab / Bubblegeneration
Gerd Leonhard – Media Futurist, Author, Entrepreneur
Mitch McAlister – Product Director (Europe), MySpace
Miles Lewis – SVP, European Advertising Sales, LastFM
Neil McIntosh – Head of Editorial Development, Guardian Unlimited
Chair: Steve Bowbrick

From the premise of widgets, and disaggregated, widgetised media more generally – it quickly took off into a much broader debate about the value of media, the challenges for advertising, and the potential of openness for brands, innovators and society more generally.

That’s an exciting leap – and it’s alchemy in my book. Like a previous event we held in Manchester in April – User Centred Advertising – raising bigger questions and breaking out of the ‘media as entertainment’ mindset triggered a much more stimulating conversation with the audience and pointed to an almost boundless horizon of opportunities.

Syndicated companies vs dinosaur brands

And if you’re looking to the future, then Media Futurist (and author of books The Future Of Music and Music 2.0) Gerd Leonhard is your man. Gerd has a way with metaphors and was on good form that evening. He predicted that in the future, there will be one bookmark that represents me, which I can reveal and share different parts of with my friends, colleagues and network.

In the future, most companies are going to be 90% syndicated, he said, as few can afford the huge investment it takes to create a major centralised [aka monolithic?] brand.

Coming from a massively widgetised service, Miles Lewis had some fascinating facts and insights – Last.FM‘s homepage only has 3% of its total hits. They’ve built their success by being all about music and nothing else, he observed. As such, I guess they are one of the leading niche networks – certainly the leading one founded in the UK! [aptly – they spoke at the first NMK Beers & Innovation event I organised in February 2006 on Start Up Culture]

Steve Bowbrick, Umair Haque and Ewan McIntosh at Chinwag Live: Micro Media Maze May 2008

Steve Bowbrick, Umair Haque and Neil McIntosh at Chinwag Live: Micro Media Maze May 2008

The writing on the crumbling walls is that they’re doomed

Lewis estimated that by the end of this year 55% of their users will be partaking of Last FM via widgets (currently that already stands at 40%), of which the largest has 50,000 users, and the smallest just 3. Regarding those thousands of smaller widgets, he wondered – somewhat archly – how the big media buyers and agencies [with their dinosaur mindsets ;-) ]can reach down into these micro audiences.

Mitch McAlister threw his and Myspace’s support behind the tenets of and movement towards openness – what Gerd is doing, and Lawrence Lessig, and a whole lot of other people, plus open source technologies and development. Collaboration, data portability and more are all key.

What’s more, Mitch expected to soon see the majority of traffic to Myspace on non-PC devices. The main stumbling-block has been the mobile network operators but that’s starting to change. Social nets shouldn’t be walled gardens, he stressed.

Brands in the wild and the benefits of remixable culture

Neil McIntosh of Guardian Unlimited said micromedia is good news for journalists, quipping that “nobody wants to be a channel”. The difficulties he saw were twofold. Firstly, it’s harder to serve ads against feeds. The second challenge was context – if you have a brand built around trust, what happens when your content is presented in an upsetting or inappropriate context off your site.

Umair Haque of Havas Media Lab explained that he wrote a long piece entitled The Age of Plasticity in 2005 (accessible as a Powerpoint download from his Bubblegeneration blog), wherein he first articulated and explained at length the idea that we get productivity and efficiency gains when we are allowed to remix things. Haque didn’t mention that he was also one of the two people who independently coined the term micromedia – also in 2005 – the other being leading new media theorist Lev Manovich]

Coops on the mike and Ian Delaney (lurking left) at Micro Media Maze

Coops on the mike and Ian Delaney (lurking left) at Micro Media Maze

Last FM and Myspace have revolutionised and solved the problem of the music industry, Umair said. But what is happening now – apart from micromedia being seen as yet another way to shove shitty advertising down our throats?

Going beyond the trivial mindset…

Umair (who also blogs as a discussion leader at Harvard Business Online) loathes the term ‘monetize’, he said, because you have to *create* value before you can capitalise on it; you have to have a purpose before you can profit from it. It’s not about creating games for Facebook. We in London labour under the delusion that media is entertainment, but media is so much more than that, it’s the interface for so much activity and experience in the world.

He challenged the panel and the audience to come up with something that would help solve real problems, not trivial ones, and create value at the same time.

Gerd Leonhard drew this analogy: in old media control = money; in new media trust = money. In companies embracing new media, collaboration with the audience is supplanting the old business model of control. Gerd’s remarks on a trust-based market reminded me a lot of the ideas of social capital getting a published articulation in Tara Hunt’s book The Whuffie Factor due to drop this autumn.

Media and ad agencies looking in the wrong direction?

Paul Fisher of Advent Capital Partners was first in from the audience with a question. If industries are creating less value, does this mean there will be fewer jobs in the old companies? In turn, where should he be looking for growth areas in terms of investments? For its sheer audacity, this got a few laughs from the audience.

Miles Lewis of Last FM had an interesting perspective on this. He argued that it is media agencies and ad agencies that are the dinosaur industries. The billions of spend they control are not going to where people are, it’s all going into TV and search.

—-

PODCAST ACTION!

Well, that’s what I’ve deciphered from my pleasingly sparse notes… but the debate was long and lively, and continued as people stayed to chat and have a drink afterwards. You can catch it all on the Chinwag Live podcast due later this week. Subscribe here or for iTunes go to the event page.

MORE COVERAGE OF MICRO MEDIA MAZE:

There have been some superb write-ups already from people who attended.

Jonathan Hopkins – Middledigit
Ben Matthews – Pudding Relations
Jemima Kiss – PDA Blog, Media Guardian
David Jennings

[NB. cross-posted on my Chinwag blog]

Beers and Innovation 5: Aggregators and Upsetters

True to form, I wrote this up on 30th December to finally clear the decks of 2006’s inaugural Beers & Innovation event series. And I’m only posting it now… Indeed.

And what better way to draw it to a close with what was perhaps my favourite night in the series.

In truth, it’s a probably a dead heat with Beers & Innovation 3: Mash Ups & Web Services. Equally focused on how we’re re-forming and experiencing the web, B&I 5 had the edge in raising more questions than it answered, which is part of what fuels the quest for understanding in the first place I guess…

It also had more explicit “edge” focus. In fact I was originally going to call it ‘Aggregators & The Edge’ or (following on from RSS Frontiers) ‘Edge Frontiers’. But the dual musical and business model reference to “the Upsetters” just felt better, plus I know Mike Butcher likes a pop culture reference to his event titles, so it helped me persuade him to chair the evening ;-)

Reevoo CEO Richard Anson started by explaining the nature of Reevoo’s aggregation service – its business model is to provide customer reviews for clients and integrate them into the client-side business.

Trust baseline for sense-checking brands

They publish all reviews positive and negative and they don’t edit them (profanity and libel being the only barred content). Then they also aggregate all the reviews around each product to create an independent basket of reviews for that item that are accessible from the Reevoo site. Clients include Jessops and Orange among others.

Customer involvement backs and reinforces user loyalty. Revoo.com is where people can come and sense-check a brand, he stressed. They also aggregate reviews from blogs using the hReview open standard microformat. Additionally, they aggregate reviews from experts.

Underlying everything is the impartiality they get from consumer reviews. Between 8 and 13% of people that they ask to contribute a review do so.

[Note: As First Capital’s Paul Fisher has since explicated, their key differentiator from other (and especially first generation) consumer-review sites – guaranteed trustworthiness – derives from the fact that the bedrock of their reviews are from people who have actually bought and used the product. First Capital advised Reevoo in successfully garnering $6m investment from Benchmark Capital in December 2006].

Unexpected birth of an aggregator

Paul Pod Of TIOTI (Tape It Off The Internet) explained how the origins of the project arose from his frustration that he couldn’t watch Series 7 of The West Wing when it was first being shown in the US. He put up a webpage taking the piss out of the Web 2.0 phenomenon based around aggregating good TV shows. But his friends all said “this sounds like a really good idea!” So he put up a mock-up, got more good feedback, and started to take it seriously.

Now TIOTI is aggregating information about TV shows – episode guides, show guides, first broadcast dates, ratings, and then all the downloads available (at first the latter was all “naughty BitTorrent” downloads; now they aggregate Amazon and iTunes).

They’ve architected the site to pull in and aggregate all this content, have 700 people on active private Beta testing, and are going to launch in public Beta with 11,000 testers this week (starting 13 October 2006). [Note – the site launched publicly on Thursday 11 January 2007]

To Mike Butcher’s enquiry as to what he was most excited about, Paul said on the copyright front, they are talking to people in the TV guide side of things, as well as people on the Wikipedia side.

So a mix of legit content, grey stuff and user-generated content is propelling them forward.

Looking for value in all the wrong places?

Umair Haque began by comparing MySpace and Friendster. In many ways Friendster was the perfect model but the fact it crashed and burned begins to disprove that mere aggregation is the answer. Where was the network effect with Friendster?

Aggregation is a dirty word, he insisted. It stops people thinking. This room is an aggregator. A training course, parliament, the Senate, a nightclub – these are all aggregation. What MySpace got right was facilitating the kind of dynamics that happen in a nightclub. All the actions there are productive. But not all the actions of aggregation are productive.

The latest craze in the Valley is widgets, Umair observed. But once we atomise the content, what’s the value? We should be able to remix and hack things. Ecademy CTO Julian Bond remarked that Umair’s description of an aggregator wasn’t the same as his. Technorati was Julian’s idea of an aggregator.

To which Umair asked – how does Technorati collect value from what it does? The value comes from… [at this point I missed a bit as I had to skate over to the bar to ask someone to stop talking. Who was it? Well, he’s involved with a thingamy, ya know… "project"]

When aggregators go bad…

What’s the difference between Friendster and MySpace? On Friendster I’m limited to 100 characters of text. With MySpace I can do anything I want, Umair noted.

Wasn’t it just more of a business and technology failure on Friendster’s part, rather than being a larger social problem, commented George Nimeh. It certainly wasn’t technology that failed Friendster, Umair countered, as MySpace is built on [substandard] Cold Fusion technology.

Alan Patrick interjected that social networks seem to be subject to generational effects too [echoing Danah Boyd’s point that when Friendster lost favour, its twenty and thirtysomething inhabitants went back to email, IM and SMS; whereas most MySpacers are digital natives and will migrate to other digital social networks if they tire of MySpace].

Business built on shifting sands?

Mike Butcher asked the panel “will the edge aggregation effect work or are you going to be screwed by someone else” (ie. a better resourced company re-aggregating the same content)? And will aggregation be made easier by Microformats?

Paul said he didn’t know the answer to that. Richard Anson said their partners are shops and customers, but they try to do what feels right. Will you have user ratings of reviews on Reevoo, Mike asked, to which Richard replied: no, but they will have trust-based relationships. Digging further into this issue, Mike asked can people share their Reevoo reviews – can they be shared and widgetised? In terms of sharing, they already distribute Reevoo reviews to all their partners Richard explained.

Umair brought the discussion back to the question of value with his characterisation of Yahoo Answers as “just a collection and aggregation of Q&A’s. It’s a dumb aggregator.”

Squaring the social value circle

James Cherkoff wondered how we put social value on the balance sheet. A phenomenal question, Umair commented. It’s impossible for the bean counters to get beyond the basics; so how do you represent social value? Possibly brand equity, but that’s also impossible as the value that’s created is much more valuable than what you can represent though “brand equity”.

There’s a new kind of asset emerging, he continued, “knowledge value” that is both plastic and liquid [for more on this check some of the longer downloadable essays and presentations on Bubblegeneration]. For example, Reevoo reviews *can* be ranked, Umair insisted, but the challenge is huge. Take Google – where is Page Rank on the balance sheet?

Paul Pod remarked that TIOTI relies on old media still being centralised and doing their thing. For now, we rely on sources, but over time we may *become* a source, we may even become a new kind of TV station.

Pinpointing the aggregator mojo

Reevoo CTO Ben Griffith asked what is that the aggregator adds that gives it extra value? Richard reckoned that what they at Reevoo add is that they create a truly independent and trustworthy basket of reviews. In turn, it’s about adding and extending the ability for recommendation – not just through blog but via a number of different sources.

If you rely too much as a business on stuff that doesn’t belong to you, as many aggregators do, aren’t you going to have problems, Mike wondered. The word aggregation itself is a bastardisation, Umair countered. It’s about aggregating peoples’ preferences, but it’s just a pseudo business.

John Baker of Ogilvy One London noted that there’s been quite a few aggregators who have come through, most notably Google – where’s it going to be in 10 years? Paul Pod reckoned Google would be in managed decline, so it will funnel out into new properties that they own.

Isn’t aggregation purely about convenience, commented Philip Wilkinson of Crowdstorm. Richard Anson of Reevoo agreed and Paul Pod added that the value is in filtering the information out in a convenient way or in giving it a flavour that no-one else has.

Maintaining aggregator impartiality

Sophie Coudray of Antersite expressed concern as to how, as an aggregator, you remain impartial. Richard replied that Reevoo *is* impartial – the reviews are ordered only by date. Paul explained that TIOTI has a four-track revenue scheme that will allow them to remain impartial: advertising (they plan to use the site as an Advertising 2.0 laboratory); white-labelling the service; sponsorships; and ratings/download trend reports.

Umair observed that the people in the States who are really revolutionary are creating a new “currency”, but what do you need to support that in the real world? However, the real world is not necessarily the source, he noted. Interactions in the Habbo world and Second Life are what power some of those businesses.

Will you pay people for the user-generated content that they give you, asked Sam Sethi. Paul said no. Whilst agreeing information has a value, he argued that the public don’t care if they aren’t paid and that’s fine. George Nimeh cited the Pareto rule wherein 99% watch and 1% re-use and contribute. Given that user views are formed post-purchase, how will that affect this balance?

Unless you pay people, they won’t come back to you, Sam insisted. But Umair took this reasoning to task. If we pay them, does the stuff that we get back from them then improve? If you look at economic research you’ll see that people have a strong tendency towards reciprocity.

Aggregate or interact?

Rob McKinnon asked – referencing back to Tom from The Economist’s point [which I missed!] – what about sites like ChicagoCrime? These sorts of aggregators can have major implications *in* the social world because they are *about* the social world. So what’s the next big thing in this regard?

Paul Pod reckoned the environment was the upcoming social issue ripe for aggregation. He’d like to know, he said by way of a mainstream example, about what the differential health impact is between living one metre and three metres from the road. As for the legal side of things, Paul said “if we upset some people along the way, we’re probably doing the right thing!”

Richard Anson remarked that if you as a business aren’t pushing the boundaries, then you’re not going to grow as a business. Umair said we need to stop thinking about aggregation and start thinking about interaction. Closing with a flourish, Mike Butcher floated the idea of the first user-generated-content trade union.

—————-

BTW, a podcast of this event, as well as the ‘RSS Frontiers‘ and ‘Social By Design’ nights may be available in the future. From it, any flaws in my reports will be made transparent ;-)

All three events were recorded for purposes of podcasting but we didn’t have the time or resources to magic it into MP3 goodness. New NMK editor Ian Delaney will soon have a better idea of when it might happen.

In the meantime you can watch a video of the ‘RSS Frontiers’ talks and some of the discussion here, thanks to the industrious Ian Forrester of BBC Backstage.

SXSW notes: The Perfect Pitch

‘The Perfect Pitch – How To Attract Money For Your Digitally Convergent Business ‘

Pitching to investors of both the angel and VC vairety was the topic up for discussion at this session on Monday 13th March 2006, with a raft of investors, advisors and recipients of funding sharing their experiences and recommendations…

CHAIR:
Alex Cavalli – Chairman of the Digital Convergence Initiative
PANEL:
Ashwani Dahr – Venro / Iconixx (bridging early-stage to later-stage funding)
Josh Baer – Skylist
Harlan Beverley – Bigfoot Networks (fight lag in video games)
Sachi Gahan – VC, CentrePoint Ventures
Peter Huff – Blue Sage Capital (do more later-stage funding)

Q: What’s the single hardest thing in developing a pitch?

Harlan Beverly stressed knowing what you want – always go into a meeting with an ideal outcome and if you don’t sign the cheque today, have a thought prepared on what else would be nice.

Josh Baer said a lot of the best business plans that he’s seen have pulled together the market information and presented why their idea will make a success in this scenario.

Sachi Gahan listed (1) People (2) Technology (3) Market – different VCs will judge with different emphasis the order of importance of these. He was sceptical of Gartner and Forrester’s background information (which comes with a price-tag). So it’s great if you have these numbers but he was more interested in the bottom-up set-up and perspective as it shows the intelligence and analytic abilities of the entrepreneur.

What are your key strengths?

Beverly reckoned that the people aren’t so important but Gahan countered that the management team are important.

From Ash Dahr’s point of view, the people and management’s perspectives are paramount but the filter of the experienced entrepreneur has to be there, so it’s harder for the first time entrepreneur.

Angels have lower return expectations but VCs bring a discipline and rigour that makes a real difference.

Baer said the management team is the most common core requirement. Speaking as an angel he said it was very important for them. Also, they were most concerned with the customers – who are they, how are you going to get through to them, and do you understand them?

More than management and moneybags…

A delegate asked the question: as a technologist with a business plan but no management team, would any of the panel see him?

Beverly said that they see a lot of such plans. Dahr replied that as a technologist you need to know who you’re talking to regardless, then they quickly filter. So make sure you know who you’re talking to and how much money you need.

More than one person voiced frustration and disdain at funders’ attitudes, with several saying they’d been turned down once or more for funding but managed to bootstrap quite sufficiently and sometimes with great success.

Whither bootstrapping?

An angel investor in the audience quipped “it’s a bit like the bank, they love to give you money when you don’t need it.”

Others asked about the bootstrapping approach specifically, but they were steered to the session on ‘Bootstrapping Your Digitally Convergent Business’ directly afterwards at 5pm, where this would be the primary focus of discussion.

Filling in the blanks

Gahan added that they will always ask for a full reference list and do due diligence on the names you didn’t give and reference; so integrity is a deal breaker.

[This panel was part of the SXSW Interactive ‘Digital Convergence Initiative’ strand, which ran multiple panels and a few evening parties throughout the festival-cum-conference. The DCI is a project of the greater Austin-San Antonio Corridor Council – the Texas Technology Corridor]

See the motherlode complete list of SXSW Interactive 2006 panels.

SXSW notes: Running Your New Media Business

This session at SXSW Interactive on Sunday 12th March 2006 attracted a broad audience of start-ups, SMEs and freelancers with a variety of experiences, plus some bigger media players. 

The line-up of web entrepreneurs was equally varied, and while the discussion ranged over business models, recruitment and retention, working relationships and funding, the “people” thread dominated the discussion.

CHAIR:
Bryan Mason – Adaptive Path (user experience design, they sold MeasureMap to Google the week before he gave this talk)

PANEL:
Erika Hall – Mule Design (6 people)
Jennifer Robbins – Little Chair, also writes for O’Reilly on web design, blogs at Jenville and Cooking With Rock Stars (1 person company)
Jeff Robbins – Lullabot; also at O’Reilly 93/94, then started a web design company, then his band got signed and he played full-time for 6 years. Lullabot do mainly Drupal consulting.
Evan Williams – CEO & Founder, Odeo; formerly founder of Pyra Labs who sold Blogspot to Google, he also worked at O’Reilly in 1997. Ev added that he always started his own companies – the first couple (pre-Pyra Labs) “were terrible but good learning experiences”.

Growth, success and failure squared

Bryan posed a number of questions to kick off the discussion: How do you know it’s time to grow? What does success look like? Can you fail and what is the cost of failing?

Erika Hall said it’s a continuous process of making mistakes and getting over them fast.

Where does the money come from? Bootstrap or take someone else’s? How much should you take?

Evan Williams explained that VC money had enabled Odeo to grow a lot faster. However, it’s difficult to get a lot people at the table early on and it’s harder because it limits your manoeuvrability and makes getting everyone on the same page more cumbersome.

Odeo now (March 2006) has 12 people (but in October 2006 he bought Odeo back from the investors). However, growth means there’s an added communication tax on everything you do. In terms of funding, at the start they were just looking for an angel round.

Adaptive Path’s algorithm for hiring staff
(1) Billable (core team)
(2) Support admin
(3) Contractor vs staff

Start-ups – lifestyle careerists beware!

In terms of hiring, Odeo have used blog posting (that approach keyed into the Rails community); referrals (50%); and used 2 executive recruiters (2 of whom charge $75k per hire!).

Who do you hire? Contractors vs staff. Where do you find them? How do you pay them? How do you structure your company? A legal entity that’s structured for retention? Should you be traditional or inventive?

Erika replied that her company is more fun to work for than any other, and fosters the culture whereby staff have a real say in what goes on. Mule Design is also open to learning from people.

Evan observed that O’Reilly was / is basically a lifestyle company. It’s harder to do that with a start-up, he reckoned. If you’re a start-up there’s an assumed model that you go with and that drives you.

Transparent expectations

Jen Robbins said that she works with people that she knows and that she gets a along with. Adaptive Path’s Bryan Mason wondered is that structure and management where we want to put our energies?

Odeo aren’t a billable company as there’s no revenue and no revenue is predicted for a while, Evan explained. Erika stressed that because they are often working with contractors who are also friends – you have to be absolutely clear about expectations regarding what you want to get out of it, how they see it working and what they want to get out of it.

Jeff Robbins concurred – if you keep expectations really clear then the contractor will know when they’re screwing it up and you won’t even have to say anything about it.

Business essentials

With MeasureMap, Jeff recounted, they had unbelievable discipline and they paid around a 25% communications tax, but that worked because the people were in disparate places. They had a daily 10.30 conference call.

Evan noted that there’s a great blog on this called Founders Frustrations and he recommended trying Adminstaff for covering all your employee benefits.

How important is the written business plan for getting VC funding, someone asked. With time running out Evan said Pyra didn’t have anything like a plan and they were okay. Odeo had a PowerPoint presentation and just creating that was a good exercise for him to think the business plan through.

Was that the week that was?

It’s been another period of blogging lite in this corner, but things have been picking up elsewhere…

You probably know about the launch of TechCrunchUK already. Sam has been busy busy busy riffing on the why’s and wherefores of interesting UK start-ups.

In turn, Mike Butcher has outed Pete Cashmore of Mashable as a Scotland, UK resident (and clearly a man with global ambitions) even if a few folks knew that already. And Robert Loch has been listing UK start-ups on his new Internet People blog. So the week has been quite revealing across the board.

Calendar overload?

Meanwhile, tech and digital events are piling up thick and fast. September 14th’s Beers & Innovation on RSS Frontiers is sold out and the waiting list is quite sizeable. For details of what else is on check the Jigsaw UK events page or the Techrunch UK one.

Indifferent to the little people ;-) the swish London digital advertising and marketing scene continues to pump out pricey conferences for its execs, grand fromages and high-flyers. What about Next Gen TV – only £1,345.50 for their two day conference. Go to their pre-conference workshop as well and the whole package is a snip at £1,795.50. Yes, and some people complained to me that at £376 (£258 concession) Content 2.0 was too expensive. Deary me.

Nurturing talent beyond the hype

But there’s more to building a business than swanning around posh hotels and getting funding. What about some training to get your people au fait with all that’s new and essential in digital design, business development, project management, accessibility, usability (yep, these skills are still needed in 2006 and beyond), open source marketing and online communities..?

Well you could do worse than check out the courses listed on NMK’s Events & Courses page. And given the current recruitment crisis, good to see Chinwag Jobs are running a new Online Recruitment course. Takes a lotta skills to pay the bills. Word.

That was then, this is now…

Keeping established patterns intact, my report on the first Beers & Innovation has arrived 6 months after the fact.

The night was a great foundational event to the evolving series, as we heard from Skype‘s Saul Klein and Matt Ogle of Last.fm on how their businesses had evolved, and the challenges facing UK-based tech entrepreneurs and start-ups.

As for thorny issues raised and unresolved threads left hanging, take your pick:

VCs, angels and bootstrapping….

Saul Klein:

“There’s a lot of benefits to be had from not having a lot of funding early on, and the VCs can be your best critics”

Matt Ogle said that their angel investors had similar mindsets to them so they were able to grow more organically. He also praised affiliate programmes as excellent as they had enabled Last.fm’s growth.

Government support for innovation & start-ups

Saul had strong views on this point. He said the government’s role was zero. The BBC is a negative presence, he added. It takes talent out of the market and cannibalises media. The BBC creates a service industry around itself and is quite narrow.

Matt Locke, Head Of Innovation at BBC New Media disagreed. He spoke of the BBC Innovation Labs which provide “money and time to develop ideas.” Of 170 new ideas submitted, the BBC took forward 29 in the Labs.

Global or local?

Tom Coates noted that the English language makes us more permeable to US services, while Saul reckoned that

“media needs to be more local. Communications or search businesses are horizontal and can be more international”

Stuff to think about at every juncture. But that was 6 months ago. Good grief! So what, if anything, has changed?

Innovative start-ups need networks & expertise more than capital

In the lexicon of headlines, this is a low for journalists, bloggers and me personally.

And yes I’m on holiday, but this just came through, and I thought it was worth posting. It’s a press release from NESTA (the National Endowment for Science, Technology and the Arts in the UK).

It’s so hot I’m posting it on the stroke of midnight (with aforesaid clunky headline), just as the press release embargo ends but a nanosecond before the carriage turns into a pumpkin ;-)

Their headline is equally un-zingy in its literalness.

“Business support vital to bridging “equity gap”, says NESTA chief executive”

But hark at the content:

“The UK’s innovative start-ups require greater assistance in becoming “investment-ready”, NESTA chief executive, Jonathan Kestenbaum said today. Speaking in response to a new Library House report into the “equity gap” in the UK innovation economy, Kestenbaum commented:

“The debate around the so-called “equity gap” has raged for sometime and is likely to continue to do so. However, more importantly, this report points to the emerging consensus of an “investor-readiness gap”, especially for innovative start-up businesses. These enterprises often lack the business acumen and sense of the market to effectively commercialise their concepts and the crucial issue is therefore not one of the equity availability but of accessing equity.”

“Access to capital is only one of the critical ingredients required for embryonic businesses. Access to networks, mentors, role models and expertise is often more important than capital.”

I think Mr Kestenbaum might be onto something… he should come to the next Beers & Innovation on 14th September.

In case you’re none the wiser about NESTA, they are:

“working to increase the UK’s capacity for innovation, investing in all stages of the innovation process, backing new ideas and funding new ventures that stimulate entrepreneurship. It is the largest single source of early stage financing in the UK, and combines this investment with the provision of high quality mentoring and networking support for innovative business start-ups.”

And FYI, NESTA are currently reviewing their strategy.

Now, where’s that carriage?

[8th December update: NESTA have relaunched their website and the Innovation Gap report published in October 2006 can be downloaded from here]