The coffee shops of Mayfair

The Ebay Skype write down is bad news for venture capital

Since ebay admitted that, really, they messed up with Skype, there is an amusing opportunity for the vcs who passed on investing into Skype 3 years ago due its lack of revenue model to say "I told you so".  It would not be the first time that the vc community thinks its a lot smarter than the listed markets.

But why does the Skype write down worry me? Surely, I hear people say, the vcs shouldn't care. They got in and out and made some good money.

This is quite wrong.

The point is that we will all need to sell a number companies into listed web companies.

We want their acquisitions to make them money so they come back to us for more.

The FT does a good job of comparing the terrible Skype acquisition with the wonderful myspace acquisition which has made lots of money from Newscorp.

A pity they can't all be like Newscorp.

I also think Nic is missing the point.  it's not what you can auction them up to in the short term, it what value these businesses create over the longer term.

I REALLY REALLY hope that CBS eventually turns a terrific profit line from Last.FM .  And I really hope, not that Facebook sells for $10bn but that Facebook creates real value. Real revenues and real profits for an acquiror or for retail investors at IPO.  Without real value being created, over the longer term VCs will be on shaky ground.

Crossing the Chasm?

We are announcing today my new role with Advent Ventures.

I have joined at an exciting time at Advent with a terrific new portfolio,  new people and we are fully switched to investment mode.

To start with I am focussing on new investments into digital media.  What this means is that we are looking for very early OR relatively mature businesses doing online media, ecommerce, mobile apps, gaming. 

Having been “out of the market” for the last 8 weeks, I’m looking forward to catching up again with Europe’s best entrepreneurs and management teams, and as ever it’s be great to hear from entrepreneurs and blog readers for private conversations.

I am incredibly excited about not only Advent (have a look at Moveme, Echovox, Fizzback ) but also the way that the market is developing for tech entrepreneurs.  As I’ve previously written I think that the European ecosystem, investor-base and dialogue is improving rapidly which gives a great environment for VCs and entrepreneurs to build great companies.

Drop me a mail.

Incidentally, I took some time out between First Capital and Advent to do some work with Mint Digital .  Mint launched their Bloombox  about a year ago. It is a bit like a white-label youtube & myspace but Mint excel at enabling big brands to actually develop something with credibility that that the kids love & use.  In the last year their customer wins include BBC, MTV, and two other major brands who I wish could reveal.

Things are cooking on gas at Mint as they are doing more and more proprietary  stuff.  I’ll blog more when I can.

* Note.  I Couldn’t bring myself to call this “my new gig”.  Does this mark me down as distinctly WebOne?

Reevoo is a trust filter for the web

Reevoo today announces a $5mn Series A fundraising* from Eden Ventures and a raft of experience angels. There have been a few questions about what is this investment  is all about.

 
Let me give a view.

 
A massive problem with the web is knowing who and what to trust. Not only because of the growth of dodgy review sites and spoof blogs / affiliates but also because “kosher” ecommerce sites themselves want to increase the levels of trust consumers place in them. They have worked out that higher online trust = higher online conversion.

Reevoo is solving this problem with a two pronged attack;

 
1) The ReevooMark product is a service to collect reviews from retailer’s customers who have already bought goods. ReevooMark aggregates these reviews around products and serves these reviews back to the retailers sites. (see Dixons , Currys , Jessops etc ).

 
2)Reevoo.com, which is still very much in Beta, also provides a destination for consumers to read these reviews to help choose what to buy. Price comparison engines were the first generation in helping consumer WHERE to buy.

Reevoo provides a trust filter to help consumers work out WHAT to buy.

I have blogged before about how much value there is in delivering what the consumer wants without them having to ask for it. For me this remains an area of white space on the web and one where VCs have been making their bets this year. Last.fm does exactly the same thing for music.

The other exciting thing is that if Reevoo can dominate the part of the purchase process that focuses on WHAT to buy rather than where to buy it will become an enormously powerful platform for shaping purchase decisions.  Ben Tompkins is the General Partner at Eden Ventures who I negotiated the
Reevoo investment with. In his previously life at Broadview Ben was the guy who sold Kelkoo to Yahoo  for €475 million. Ben understands what the value an investment in a second generation site like Reevoo could yield.

 
*First Capital advised Reevoo on this fundraising.

Islandoos and don'ts for sucessful social software

This Tuesday's FT devoted half of page three to Mint Digital's Bloombox product implemented as Islandoo (disclaimer: I have a personal interest in Mint). 

They were right to: BloomBox is more than an off-the-shelf YouTube.  Let me tell you more.

Bloombox is essentially a white label social network and rich media tagging system that enables enterprises, media companies and brands to recruit and retain customers or serve employees.  It achieves this by creating an interface to information that is both intuitive and social. 

Mint Digital have got it right on a number of levels.  Their implementation for RDF is called Islandoo which is a social network set up specifically to recruit contestants and viewers of a reality tv show called Shipwrecked.

The numbers are remarkable: "since its launch (6 weeks ago) it has garnered almost 18,00 profiles, 1.5m comments from users and almost 10m page views" (some other wonderful quotes here and here)

Yet many groups have failed with similar attempts. The worst forays into company sponsored social  networks have been dismal. The biggest failure was Pepsi who made a Youtube-esque site during the world cup.  A worldwide multi-million on-can promotion encouraged customers to upload their own versions of the Pepsi TV ad was a dismal failure: a worldwide campaign yielded only 23 videos. The majority of which were from the same family in Romania!

So what is the secret to Mint Digital and islandoo's success? The secret is in the incentivization and execution of the software.

1) Incentivization . Mint Digital have spent time and money to work out the formula of how to make web2.0 successful for an enterprise.  It conducted research on how people use myspace by studying a range of 12 - 25 year olds online. The results were fascinating (also here).  They found female users spent most of their time messaging other buddies and making their sites look pretty.  Male users spent most of their time checking out photos of pretty girls.

Mint has designed the user journey and incentives of islandoo so that within the first day of signing up, and male will get about 10 pings from attractive females asking for their votes: a win win scenario.

2) Execution. Bloombox is more user friendly, prettier and has more user focussed functionality than anything else out there.  The platform has been coded by the team who made the origional Real Player. Cameron Price, the CTO, was part of the original team behind the original Microsoft Media Player.

I think one of the most exciting aspects for Bloombox is the transferability of this technology to any industry that needs to recruit or retain customers. Or educate a work force.  The challenge here is not only making a site that people like using, but also a site that incentivizes people to use it.  For customers and employees this is more tricky than offering an audition for a tv show, but can be done.

I believe that this could be the next generation of enterprise software.  A lot more on that in forthcoming posts. 

PS. I have been taking a lot of stick recently on my poor post rate. (No match to the prolific rates of Fred, Nic or Max). The good news is that I have been incredibly busy working on two deals.  Delighted to say we did announce the sale of Smart421 to Kingston Communications.  Smart421 are leaders in managed services of applications to enterprises, which many argue is the first manifestation of a larger movement in enterprise 2.0 (arrrgghh: another buzzwood...).

PPS.  Delighted to see that VCs don't need to ask entrepreneurs "who else are you talking to?", nowadays they just need to check Flickr.

User Generated Content

Just a quick note to say looking forward to seeing many of you this week at my favourite media technology software business MintDigital's UGC event.

Just like the rest of the VC community, we are seeing a big up tick in UGC businesses.

Just as I predicted ;)

I have been looking at this value chain in detail ever since the BBC interview, and I am going to follow up with a couple of entries post-event.

PS. For those who've not got the invitaiton from me, forgive me, and do ping me if you'd like to be on the list.