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CUTEC Conference

Make sure you do not miss this fantastic conference.  Follow on Twitter #tvc2010

Written on 07 June 2010 by Philip under Uncategorized with No Comments

Break outs so important

Some people think that break outs from companies - people with cash from options/shares and the experience of working in a start-up - are not important.Guess this post on TechCrunch says it all - Yelp is “another company founded in 2004 by two former PayPal employees…..”.Guess we need to include some history of the founders - adding in both cash and experience of a start-up to show how the initial valuation is increased to reduce dilution in the first round - in the business plan resource.

Yelp

 

Yelp image

Website: yelp.com
Location: San Francisco, California, United States
Founded: July 1, 2004
Funding: $56M

Another company founded in 2004 by two former PayPal employees, Yelp is a local reviews website covering almost 40 states. Yelp also launched in the UK in January 2009. Users write and read reviews about… Learn More

Written on 04 June 2010 by Philip under Uncategorized with No Comments

Not a fun game starting Trivial Persuit

The obituaries are a strange place to look for business lessons on equity funding to build a business.  However the obituary of Chris Haney who helped to invent Trivial Persuit makes for interesting lessons.  It has it all: the inspiration, the perspiration, the desperation, the break, the envy and the success.  I quote:

“After a stint with the Canadian Press news agency he worked as a picture editor at the Montreal Gazette and met Abbott in December 1975 after being assigned to help with coverage of the 1976 Summer Olympics held in Montreal.

The two developed their idea after work on December 15 1979 while playing a game of Scrabble in a bar and finding that some of the letters were missing.

Over a few beers, and scribbling on the back of some paper napkins, they sketched out a game based on questions of trivia, with a six-spoked circular board and six question categories: art and literature; history; science and nature; entertainment; geography; sport and leisure.

The following year Haney resigned his job and, with his wife and child, travelled to Spain, spending the autumn and winter of 1980 researching 6,000 questions across the categories. In the meantime, with his brother John, Scott Abbott, and a lawyer called Ed Werner, he set about raising $75,000 in capital to market the game. The foursome appealed to friends, colleagues and acquaintances. Some turned them down flat — but eventually 34 people each put up $1,000.

The first investor was one of Haney’s high school friends, who earned a return of some $50,000 in the first two years alone. Although the game went on sale in 1981 Haney said it was two years before they “saw a nickel” for the idea.

Initially 1,100 copies of the game went on sale in Canada for $15. The company Haney and Abbott formed to market the game, Horn Abbott, lost money on each of these initial sets, which cost $75 to make. Because none of the big games manufacturers was interested, Haney and his cohorts sold the game mainly via mail order.

After exhausting his savings, he was stricken with anxiety attacks, and spent some time in rehab. In February 1982 Haney and his team showed Trivial Pursuit at the New York Toy Fair, but found themselves allocated a room at the far end of a remote corridor; most of the people passing by were actually looking for the lavatory.

But when the game was featured on a television chat show, with the host reading out questions to the guests, sales picked up.

Originally developed under the name Six Thousand Questions, Trivial Pursuit now sells in more than 50 countries and 20 languages all over the world.

Haney became a multi-millionaire, and regularly took the Queen Mary II across the Atlantic to Europe — and especially his favourite country, Spain — because he was afraid of flying.

In 1984 and again in 1994 lawsuits were filed against the distributors of Trivial Pursuit. One man claimed the creators had lifted questions from his trivia books. Another, who claimed he had been hitchhiking when Haney picked him up, said he had outlined his idea for a game and later realised that Haney had hijacked it. Both cases were thrown out, one by the US Supreme Court.”So sad that his life was cut short at the age of 59 years; an amazing entrepreneur among many other qualities and a great loss to his family and friends.

Written on 03 June 2010 by Philip under Uncategorized with No Comments

Ramblings from watching tooooo much TechCrunch

These are notes from watching TechCrunch, New York City 24-26 May 2010.  Too many to attribute so go watch the videos!

Music.  The big money has always been made from the tours.  Always was and always will be.  Stars now found on YouTube who already have traction, say 70,000 downloads.  Point that VCs made later - looking for data on traction with the market and YouTube gives you the stats.  Once you have watched a star it is a race to sign up and then market the star to the world.  YouTube videos for Lady Gaga cost around $1million.  It is now a worldwide audience and the stars have to want to and enjoy Facebook, Twitter and social media.  MySpace is history.  You are dealing with digital kids who have grown up with the digital world.  A star can quickly be number 1 in 17 countries which would have taken many months a few years ago.

One of the founders of Twitter, Jack Dorsey, has launched Squareup.com  which allows mobiles phones to read credit cards and take payment and keep all sort of records on customers.  Small cafes do not know how many different sort of drinks they have sold each day.  Square lets small retailers have access to all this detail.   When Square had a beta, they visited 25 VCs in Silicon Valley and New York City as the other founder had never raised VC funds before and Dorsey thought he should meet them all.  The Square team enjoyed aggressive questioning by VCs - people who would care about their business.  Expressing value of ideas with questions.  Looking for VCs who liked Square and not the reflected glory of Twitter.

Susan Lyne, CEO of Gilt Groupe and the panel gave fascinating insight into how shopping is changing as site know so much more about customers.  Biggest problem is encouraging the customer to pay for the full trolley.   One way of doing this is to offer small numbers of products and if not paid for within ten minutes they are put back on the shelf.  Make the experience one of a game and not dull shopping like Amazon.  I guess a touch of eBay.  People “win” something, not “buy” something.  Build a community.  Problem: how to scale good service?  Concentrate on the bits vital to the shopper.  But to be successful you need to work so hard.

Speakers love the iPad and it will be a paradigm shift with everyone wanting to touch a screen and lots of iPad devices will arrive.  This is old and for mice.  The iPad is transformative.

A VC panel said you must arrive with some data from a beta product.  Everyone can get some data from customers.  If it is web, like music, we need tens of thousand.  Sometime a few hundreds will suffice.  No data, no deal.  Looking for scope of vision and ability to execute.

New York City panel say things are moving to NYC.  Investors adopting cluster approach of investing in syndicates.  VCs looking for people who are passionate about a problem not people who have looked at a large market, segmented it and then looked for a problem.

Often great companies are started by rookies so catch them young and help them grow.  Interesting comments about Facebook where Mark Zuckerberg got great advice and controls three votes on a board of five so he can keep building the business not be forced to sell.

Great conference and hope this help someone.  Great three days watching in the comfort of my home in Cambridge, UK.  No need to worry about the ash cloud.

Amazing group of people working incredibly hard behind the scenes making it all happen both moving the furniture and solving the gremlins with the sound and technology.  Not much clear talk about a business plan resource.

These are not CUTEC start-ups.  These are funded VC companies with teams, in the case of Saluto, of twenty people working together for two years.

More than 75,000 people have watched TechCrunch Disrupt on-line over the three days - wish I could have talked to them…….

Written on 26 May 2010 by Philip under Uncategorized with No Comments

Scobleizer crashes Soluto! Hope they can get PCs to start faster!

From Twitter ” Yomper RT @WinObs: Soluto: Always Be Ready for the @Scobleizer Effect! - http://clkon.us/9uJpp0. Great video. Saluto crashed by Scoble overload.”

Great to see geeks caught on the hop and having their site overloaded when they launch - a bit like a PC when it starts up and the problem they are trying to solve.  Everyone loves Saluto and good to see that they have some great angels on board first and then Bessemer and other VCs.  They must have a great business plan resource!  Watch the last few minutes of the video for more details.  They raised $7.8million so far - figure appeared at the end of their presentation.

Written on 26 May 2010 by Philip under Uncategorized with No Comments

Mayor Bloomberg takes centre stage at TechCruch Disrupt

Amazing to watch the best of VCs and entrepreneurs at TechCruch Disrupt.  Great to see Robert Scoble in the front row.  Reports say that the show has been dominated by Facebook, iPad/Apple, Amazon and Google with little mention of Microsoft.

Mayor Bloomberg gave a fantastic presentation and promoted New York both as a resident and as the best place to start a high margin/great people/low physical space business in the USA.  New Yorkers come from all round the world and live as a mixture and not a mosaic with great diversity in one block.  In reply to a question about tax incentives, he replied that everyone wanted lower taxes but his job was to make sure that the taxes were spent well to build a city where people are living longer, have more culture and is good for business.  Of course he has built a great business and he stressed the importance of change over the last thirty years from wiring your own computers, to PCs arriving to embracing the Internet.  The problem with the big media cluster in New York was not technology but publishers losing contact with their customers.  Provide great content and use technology to get it to the customers in a variety of ways.

Perhaps Cambridge, UK, should follow New York’s decision to establish a Media Lab at a university as have been so successful at MIT and Stanford.

Mayor Bloomberg could not be a greater contrast to Mayor Boris of London and not just the hair cut!  Not sure which business plan resource Mayor Bloomberg used to underpin the expansion of his company but the Mayor did well.  Inspiring.

Written on 25 May 2010 by Philip under Uncategorized with No Comments

Growing companies in clusters

Been away for some time but met some very good people and so need to post!

If companies in clusters have option plans, does this help the cluster to grow?  Of course entrepreneurs can build companies with no option schemes and if they do so, they are best to go for a Passive Equity Company and keep the number of shareholders down to two or even one.  Even a couple of extra very small shareholders in the very early days can lead to problems in ten years time when the company is very valuable and the reason for them having shares has long passed.  So if you do not want other people to be part of your equity structure, decide from day one and offer a bonus and/or excellent working conditions.  However do remember that however well you do, it is so much easier to build a technology company in a cluster.

But from the point of view of the cluster, it is much better if most companies are Active Equity Companies and offer options.  When the liquidation event occurs, as it must with an Active Equity Company and the business is sold or floated, then there will be people in the cluster who have cash and experience of a start-up to form new companies.  The original Segal Quince Cambridge Cluster report from 1980’s has an excellent diagram showing how the cluster grows by companies being “born”.

One of the great joys of Active Equity Companies is that everyone is a winner but there can be times as in the bubble of the late 90’s when team shareholders can spend too much time checking their vesting rights and valuations.  If the values of the options fall below the “watershed” then resources have to be allocated to re-price the scheme with attendant professional costs.

How are you going to generate value in your business and which business plan resource will you use?  Can you generate the value on your own or do you need a tightly knit team of people and investors?

But do not fall into the trap I have seen in the Cambridge Cluster too often - use the difficulty of raising funds to put off the venture with all the risks and stress involved.  Go out and find customers and get building value and find another way of making your dreams come true.

Written on 23 May 2010 by Philip under Uncategorized with 1 Comment

Hauser Forum, Cambridge, UK

Made the mistake of driving to the Hauser Forum after a very pleasant lunch in Coton.  The next door Institute of Manufacturing has an enormous car park protected by various contraptions designed to do great damage to any unauthorised car.  The Hauser Forum has a very modest car park with plenty of parking for disabled users.  I guess that the other drivers should use the Park and Ride, park in one of the nearby streets (do wave at the residents and say thanks0 or just use the unprotected car parking at the Computer Labs.

On my second visit to the Hauser Forum for TEDxCAM, I arrived by bike and enjoyed the wonderful new cycleway with good lighting.  The only problem is that the cycleway runs past a jogging track for the university’s athletes.  As I huff and puff along, they glide silently past.  Not even much parking for the old bicycle so I attached it to the very smart rails in front of the building.

Such a great idea but it is going to be interesting to see how it works as a regional centre with limited car access.  Is there any parking at the EEDA offices or are you expected to use Park and Ride?

One great advantage of visiting the Hauser Forum and looking at the IdeaSpace floor is that I managed a thirty second audience with Teri Willey, Director of Cambridge Enterprise.  Hope she was meeting some great entrepreneurs.  But even more pleased that she remembered my business plan resource!  Let us hope she thrives at her new location and the Hauser Forum becomes the centre for entrepreneur in the Eastern Region.

Written on 18 April 2010 by Philip under Uncategorized with No Comments

Not so innocent at Innocent!

Papers full of stories that the Cambridge University educated team who founded Innocent are cashing in some more of their smoothie shares.  The only angel investor Maurice Pinto (76yrs) is selling out and the three founders are taking some of their juice rewards.  Coca-Cola is buying a further 40% of the equity to add to the 18% in bought in April last year.  Interesting the price is unchanged even though the new range of “veg-pot” had an “awesome” start.

So at a reported deal of 40% for between £60million and £70million, Innocent is valued at some £160million.  Each of the founders owned 25% after Mr Pinto bought his 25% for some £250,000.  So Mr Pinto has turned his £250,000 into £40million - a great return for an angel investor.  I think that he had little to do with the management but did appoint the Chair.  If Mr Pinto has sold all his shares and the three founders have sold theirs in equal portions then they will have realised some £13million each.  (58%-25%=33%/4=8.25%x£160m=£13million).

For founders who are so strong on ethics there is little or no mention of options.  Seems a shame to build a great team and then not share the rewards.  Wonder what business plan resource they use?

Written on 14 April 2010 by Philip under Uncategorized with 1 Comment

Great day at TEDxCAM

I have never been to a Hackathon before but the TEDxCAM was inspirational.  So much talent and so much achieved in one day.  Do watch the video on the TEDxCAM site of Tim Berners-Lee’s presentation at the TED event in the USA.  Amazing to see data mashed (I think that is the correct phrase) and see how much data the UK government provides on line.

Well done to the team of Cong Cong Bo, Dawson King and Jeremy, the latter is the manager of IdeaSpace.  I visited the Hauser Centre on Thursday afternoon and met only Stu and Jeremy and lots of empty space.  Lot of hard work through the night to make the TEDxCAM happen.

Great that Redgate Software supported the event and a fantastic goody bag from them.  Get hold of the Book of Redgate - they are recruiting!

But not much talk about equity and a business plan resource.

Written on 11 April 2010 by Philip under Uncategorized with 1 Comment