Working with entrepreneurs and world-class venture capital firms to create and build fast growing Internet services, eCommerce and Digital Media
businesses.
One of the highlights of my year - without a doubt - is Seedcamp. The one week of mentoring, networking, working, learning is really exhilarating.
Seedcamp is itself a start-up and its formation, evolution, development and growth is not unlike many of the start-ups in which I have been involved.
In my view, Seedcamp is destined to become a significant brand in the technology world. A founder with amazing vision (Saul), strong backing and goodwill from almost all the leading players in the industry and a brilliantly determined and smart CEO (Reshma) is a pretty good cocktail.
As was made clear last year, Seedcamp is not all about the relatively small amount of funding which the winners receive, it is designed to provide a publicity platform, an incredible network and some intensive and expert mentoring to the 20 or so finalists.
Every day this week, Seedcamp will be featuring highlights of the day on their site. Check it out.
The blog too has loads of interesting stuff - I particularly liked Michael Orland's post on the Zeitgeist:
It read in part: "Our 2008 application zeitgeist post exactly one month ago generated some attention, which is why when it was suggested we do a follow-up for our finalists I was a little hesitant. There's a fine line between a useful device and a gimmick, and I feared we might stray into the latter territory. After actually performing the analysis though, I see there are some interesting contrasts: "mobile" has dropped off the top of the "what are you creating?" list to be replaced by "travel", "advertising" is less of a top-line panacea (and yes, we realize the tautology of "revenue" as a way to make money - thankfully it was substantiated a bit more than that), and Amazon has replaced Google as the cloud solution of choice. There are other differences as well - which is why I'll cease my yammering and leave you to draw your own conclusions."
You should read the whole article.
As Michael acknowleges, its a bit of fun ....but ...interesting to see what teams are building and what the judges thought was going to be most successful.
Retail Week list the ten most visited 'Apparel and Accessories' websites in the UK for the week ended August 9th, 2008.
The data was supplied by Hitwise. They are: Next.co.uk market share 6.61% asos.com 4.99% topshop.co.uk 3.00% riverisland.com 2.67% newlook.co.uk 1.92% mandmdirect.com 1.54% mothercare.com 1.48% dorothyperkins.co.uk 1.40% koodos.com 1.13% jdsports.co.uk 1.08%
Interesting to note that only ASOS, M&M and Koodos of the top 10 are pure web businesses - all the others have extensive exposure on the high street with hundreds of stores each.
Consumers are clearly interested in the Koodos proposition of great international brands (about 120 of the world's top brands are now represented on the Koodos site)at heavily discounted prices. Especially in these credit crunch times. See examples like Prada .... private sale coming soon. The Koodos blog which features fashion and celebrity gossip is also getting noticed and helping to develop the brand's authority and establish its fashion credentials.
The rich functionality and continued focus on fashion has paid off handsomely for Stardoll. Mattias and his team have continuously evolved the simple idea of dressing up dolls in a virtual environment in a sophisticated and intelligent way. This is a community which is really engaged and interacts. And Stardoll is now truly a global brand. With 20m members worldwide and still growing strongly its not surprising that a new Neilsen survey of kids sites puts Stardoll at No1 for under 12's Ahead of Club Penguin, Nickelodeon, Lego, Cartoon Network and the like, for proportion of audience under 12 Stardoll's challenge was always going to be monetisation. Stardoll has approached this intelligently too. Revenues come from the sale of virtual clothes, gifts, scenery as well as from sponsorship and advertising - all in an integrated and non-invasive way.
Sunday, July 27, 2008
Following an extensive beta test of the service during which 50,000 customers were served, Wonga.com has now launched. Wonga offers a new source of fast credit, without the long-term commitment associated with bank loans, overdrafts and credit cards. The premise is simple, the customer inface clear and easy but the technical execution extremely complex.
Wonga is offering a service that could not have been provided pre-internet. Loan applications are processed in real time and, if approved, funds are transferred to the customers account within minutes. Its about as close to instant cash as it can be.
The service does not compete with Bank Loans, Hire/Lease Purchase or other larger amount finance packages - initial loans are restricted to just £200. When might one want a Wonga loan? The service has been designed to appeal to anyone who experiences the occasional ‘Wonga moment’ - such as an urgent time-sensitive purchase, an unmissable social event, emergency repairs or a shock bill. Errol Damelin, founder and CEO of Wonga, has a neat way of positioning it. "we're not the cheapest way to borrow money, but we provide a service that's much faster, more convenient and flexible than anything else out there. It's much like a black cab, which might not be an economical way to get around on a regular basis, but you get a fantastically fast, convenient and secure service on the occasions when a bus or tube won't do."
The central ethos of the company is openness and simplicity. The customer is informed of the cost in a clear way and is able to choose precisely how much they want to spend. Like in many other service industries, the Wonga customers are willing to pay a premium for a high level of service and the instant response which only it can offer.
The back end processes and the number of 3rd party integrations needed to make this all so simple for the customer has been anything but trivial. Wonga uses a sophisticated and proprietary credit decisioning system to assess every application -its only interested in lending to people whom they believe can reasonably afford to repay their loan without undue financial stress. All these features are in contrast to many internet or high street lenders who offer little or no flexibility, few or no credit checks and large fixed fees.
Errol explains: “Banks and other lenders are weighed down by tradition and complexity. People have come to expect rigid terms, realms of paperwork and slow decisions - particularly in recent times with the increasing pressures of the credit crunch. So a frequent reaction to our service has been amazement at the speed of our process." Wonga also operates a trust system, similar to community-orientated sites like eBay, whereby new applicants are initially limited to borrowing up £200 but can increase their credit limit by using the service responsibly over time.
Errol and his partner, Jony Hurwitz, have a number of further innovations to the Wonga service in the pipeline which promise to add more value to Wonga customers soon.
Wonga employs 37 staff in London with a development team in the Ukraine, and is backed with venture capital from Balderton Capital, TAG and Kreos Capital.
Read the Guardian article which features an interview with Errol for further information.
Oh yes! Almost forgot. The company has also won a string of awards (including "entrepreneur of the year" from Credit Suisse sponsored National Business Awards, SE region) and been shortlisted for others.
Ryan Notz applied to Seedcamp 07 with his Buildersite plan(since relaunched as MyBuilder). He came all the way through and got his funding and with it many column inches of publicity. Like the piece in the Observer. Ryan's presentations at Seedcamp will be remembered for the obvious passion and sincerity that he displayed for his project. His own experience as a Stonemason and his intimate experience of the way in which the building trade works and what a nightmare it generally is for consumers, has guided the development of the business. He has chosen the success-fee marketplace approach rather than the lead generation model believing that it particularly attractive to both buidlers and consumers because unlike the lead generation sites, MyBuilder is able to retain their builders through both the good and the tough times. Lee Dryden, a builder registered on the site says: "This site is great. I paid for lots of leads with another site and didn't get any work at all. I'm more than happy to pay MyBuilder's fee when I get work -it's fair!" Ryan says that the approach works better for consumers too. "If you want to find a great builder, you need a lot of choice. A lead generation site can only put you in touch with builders who have bought your lead. Worse, they can only sell your lead to a few tradesmen (or they'll get an even bigger drop-out rate). Consumers prefer to choose their builder based on feedback, distance, skills, qualifications and experience, rather than simply those who buy their lead. MyBuilder gets around this problem by providing an open platform where consumers can search the entire database of over 10,000 tradesmen, and tradesmen can look at and enquire about all the jobs (currently at 1000 a month and growing). It ensures a better match, with satisfied customers that come back, and tell other people about the site. The network effect with this model is powerful, and it also enables MyBuilder to publish search results of both live jobs and registered tradesmen, which helps implement valuable partnership deals." Key to MyBuilder's 'go to market' plan has been the partnership with Travis Perkins (including Wickes) who joined Alex Hoye, TAG and others in a post Seedcamp funding round. A major PLC with sales exceeding £3bn, Travis Perkins is a leading company in the builders’ merchant and home improvement markets, and is a main supplier to the building and construction market, one of the largest industries in the UK. The Mail on Sunday covered Travis' investment in MyBuilder here.
There are 3 weeks left to get your application in to this year's Seedcamp in London. If you are not yet convinced of the benefits or unsure of whether you qualify, check out Seedcamp and read Saul's recent post.
Part of that post read: "At Seedcamp you know that if you apply and get through to the main week in London from Sept 15-19th just some of the folks you'll get to hang out with and get feedback from include:
the founders behind some of Europe's biggest recent exits like Niklas Zennstrom and Michael Birch plus the key folks behind MySQL, Lastminute, Last.fm, Buy.at, Plazes, Kelkoo and Zyb the founders of some of Europe's most promising next generation businesses like Seatwave, WAYN, Moo, Spreadshirt, Lovefilm, Huddle and GlassesDirect some of Europe and Israel's best seed and venture investors; including Atlas, Balderton, Amadeus, Index, Atomico, Northzone, Eden, DJF Esprit experts in product, marketing and technology from Google, MySpace, Facebook, Skype, Yahoo!, Microsoft, Cisco, IBM, Sun and Oracle folks from Techcrunch, LeWeb, FOWA, O'Reilly and the FT plus we'll even throw in some specialists in startup legals and recruiting ;)
It's pretty intense - check out some of the content from last year. But its a lot of fun and pretty useful to the winners.
It's worth applying anyway though - lots of last year's teams who didn't make it told us how useful the application was in helping them to focus and articulate what they were trying to build."
Seedcamp is now established, thanks to the drive and energy of Saul, Reshma and the many others in the community who support it, as one of the prime engines for the start-up ecosystem in Europe. The recognition it has received across the tech world is remarkable given its short history. Certainly those at the heart of the startup world in the US are looking at Europe in a different way - partly because of it. During my month in SF and the valley I met a number of people keen to come over and support Seedcamp. Validation from Fred Wilson certainly helps too.
In the month in which lots seem to have happened with TAG companies, Fizzback's winning Supplier of the Year to the Retail industry must take the top spot. Retail Week - the leading journal for Retailers runs something called the European Retail Solutions award. Fizzback won the award in the Best Use of Technology in a Hospitality and Leisure environment for their work with Bourne leisure which enables Instant Customer Feedback via a variety of channels including SMS, email and voice. This would have been almost expected given the innovative solution it offers for this environment, but to go on to be the overall winner of The Supplier of the Year - against competition like BT, NCR, Torex, Bazaarvoice etc was some achievement for a company which only launched its service less than 2 years ago. Their work with Marks and Spencer was also shortlisted. This important award comes shortly after being awarded 'cool vendor' status by Gartner. Fizzback was included in the list of "Cool Vendors" in the “Cool Vendors in CRM Customer Service, 2008” by Michael Maoz & Ed Thompson” report by Gartner, Inc. Gartner defines a cool vendor as a company that offers technologies or solutions that are: Innovative, enable users to do things they couldn't do before; Impactful, have, or will have, business impact (not just technology for the sake of technology). The report covers vendors that offer innovative approaches and technology for improving the customer experience during service interactions. The report highlights the primary importance of the customer experience and begins “Businesses expend tremendous amounts of money and energy on marketing and sales, yet lose customers by providing inferior service experiences.” Fizzback enables companies to have meaningful conversations with their customers via mobile devices. The journey begins with customer feedback at the point of experience, initiating a two-way dialogue that builds customer engagement, and ultimately drives advocacy. A unique artificial intelligence engine lies at the heart of the Fizzback system, driving large volumes of customer conversations at a low cost. Instant, tailored responses are provided to the customer, and front-line employees are alerted to take relevant action. Through an interactive dashboard, executives have a real-time insight into the 'voice of customer', including mission critical metrics such as net promoter score and propensity to defect. Fizzback is one to watch - as Fred predicted in Feb 07. Fizzback is backed by TAG and Advent Venture Partners
As regular readers will know I very seldom muse on the 'state of the nation' or other lofty and worthy subjects. I leave this to the philosophers and commentators in our ecosystem. My posts generally relate specifically to TAG companies. Excuse this piece but it seemed necessary after spending almost a month in the 'theatre of dreams' which is the Bay Area of San Francisco. Normal service will be resumed soon.
A month in San Francisco and 37 meetings has given me some real insights into what has made The Bay Area of San Francisco - or more precisely, Silicon Valley the technology crucible for the world. Its instructive to look at which of the elements are replicable elsewhere and which are uniquely SV.
Key elements: 1. Culture: emanating from the gold rush 1848 when the surge of prospectors arrived from all corners of the world, the ethos is liberal, open, diverse, multi-cultural and the sense of opportunity is pervasive. 2. Lifestyle: the weather helps as does the natural beauty of the bay, the ocean and the mountains. 3. Size: The city is surprisingly compact, the population relatively small, the valley is accessible by 2 fast moving freeways and once there of course parking is plentiful, immediately outside the relevant office. All this makes for intensive interaction, there is a high concentration of tech start ups with easy accessibility to one another. The tech industry is extremely important to the city, the region and even the state. Its a significant driver of economic growth and activity. 4. University: Stanford is a major factor – its school of entrepreneurship is focused towards making engineers into entrepreneurs. Some of its programmes [eg Prof Tom Byers' Stanford Tech Ventures Programme and the Entrepreneurial Thought Leaders Course] are turning out some of the best new entrepreneurs around. Just another example of the focus on Entrepreneurship is The Mayfield Fellows Program (MFP) which guarantees an automatic summer job at a start up. The Mayfield Fellows Program (MFP) is a nine-month work/study program at Stanford University designed to develop a theoretical and practical understanding of the techniques for growing technology companies. 5. A very active angel community and an informal‘investor club’ capable of rustling up a $1m seed round with a few phone calls in an hour. More angels are joining this community every time there is a significant exit or a group of Google execs cash in their options. 6. Of course, lets not forget that the US is still the largest market in the world - for most products and services. This is a fundamental factor.
All above factors attracting some of the best and brightest in the world. Including a number of Europeans. Brits, French, Scandinavians, Spaniards etc.. Many in the Euro ecosystem wonder how one competes with all this. In my view its a not a matter of competing its a matter of creating. Its also a case of Europe joining the global ecosystem and not seeing itself as separate. In the old economy it was a zero sum game – for every winner there were losers. In the New Economy we are thinking about creating or reinventing markets, disrupting old and inefficient methods and processes.
We in Europe can certainly play our part. Here are some of our fundamentals: 1. Creativity: Home to and heart of some of the great entertainment (eg music) and advertising industries. Great literary traditions. For the new web companies – which are global in reach and capital efficient - content, design and style is becoming ever more important (aren't the Apple style gurus all Europeans?) 2. Core engineering education: High standards pertain all over Europe - lacking in commercial and entrepreneurial sophistication - but with strong engineering traditions. 3. Low cost, highly efficient development capability across eastern Europe and easier access to India. 4. London – the most culturally diverse city in the world - with multi-lingual resources. Europe generally tends to have a more global outlook from day one - knowing that the home markets are small(er). Look at Israel - not much is developed for the home market - much has been world beating. 5. More advanced mobile technology and infrastructure than the US.
Things for us to work on: Collective effort needed. - Create centres of excellence – shared working spaces - Develop further the great networking and learning hubs: Seedcamp, Opencoffee, conferences, first Tuesday. - Stimulate, encourage, help the Universities create world class entrepreneurial education programs and enable them to share the economic advantage. Stimulate and encourage more cross pollination with US companies - both East and West Coast. We can learn a lot and gain easier access to their big markets by partnering or locating commercial operations there.
From Tuesday, for the rest of the month of June, I will be based in San Francisco. I am hoping that by stretching the day, it will be business as usual for me in the UK (except for face to face meetings) while I meet with partners, entrepreneurs, VCs, Angels, bloggers and folks at Stanford. Already, the openness and generosity of spirit of people I hardly know has been very encouraging. Rob Young at First Round Capital has offered me a place to camp; Scott Rafer, Lance Cottril and others have made a number of key introductions and the diary is filling up. TAG does have a number of investments on the west coast and naturally visiting them and meeting with some of the great co-investors we have there will be enlightening. The companies based on the West Coat (incl 2 in LA) are: Mashery, Lookery, Spotrunner, 60 Frames,OpenX and Academia. In addition Zemanta and Dothomes have recently made strong forays into the markets there and are considering establishing presence. There is much to read about the ecosystem that has been developed in the Valley and many other cities are attempting to emulate that special 'sauce' they apparently have. I figured a month may give me some insights. [A really interesting book dealing with the PRE-web period which describes the way in which Silicon Valley took over from Route 128 - Boston is Regional Advantage by Annalee Saxenian]
Zemanta is more than just an exotic start-up from an unlikely source. They were one of the Seedcamp winners of 2007. At the time the Zemanta founding team of Bostjan Spetic and Andraz Tori - read about them here - moved their entire team (5-6 folks including a biz dev guy who knew the ropes quite well) to London for 3 months and brought the same attitude of complete dedication in going for the total win. They used every opportunity Seedcamp gave them to expand their network, they knew exactly what they wanted and who they wanted to meet. One of their meetings was with Scott Rafer (Lookery) (who sold Mybloglog to Yahoo) and Oren Michels, of Mashery, who have helped them ever since. Now Reuters have done a video piece on the company, helping further raise its profile and new releases of the software and new partnerships will be announced soon. One to watch - and to use, if you create content.
Bostjan and Andraz have hired Bostjan's brother, the experienced Ales to head the company and he has been spending lots of time on the the West Coast, East Coast, all coasts spreading the Zemanta words and striking partnership deals. Best of luck chaps! Zemanta is backed by Eden and TAG. PS: I will be spending the month of June in San Francisco and hope to do my little bit for Zemanta while I'm there.
This piece by Reuters is a reminder to the tech investment community that there is good tech innovation coming out of Europe. Saul's interview draws attention to Seedcamp and the other initiatives. Lets hope that the current slowdown and change in general investment sentiment does not filter down too strongly to the start-up zone where companies still need decent length runways to establish themselves. Despite the lower cost of getting tech companies off the ground and the measurable and effective marketing routes available, great companies will still take time, effort and capital to build build them. Patience and persistence is called for.
Congratulations to Richard and the team at Moo for being nominated in the retailer category and winning the people's voice Webby award in the services category. Moo is only one of 5 website winners from the UK this year - the others being: FT, Wagamama, Transport for London and the Discovery Channel.
Its great to win awards from knowledgeable and eminent judges but getting the most votes from an admiring (or loving, in the case of Moo) public is the real accolade.
Dopplr is a service created for frequent travellers who belong to the same social, business or industry network. If you travel a lot to conferences, meetings or otherwise its amazing how frequently you find that someone in your network happens to be in the same city at the same time - or perhaps you'd miss by a day or two. The Dopplr site was built early last year and about 500 heavy travelers from technology and media companies were invited to road test the software. Since the Dopplr users were logging thousands of air miles a month, the site quickly became the place for wired globe-trotters, many of whom are now hooked on checking each others' movements.
The site is now open but of course permission to view another member's itinerary is by invitation only.
The service has attracted a lot of attention including a nice piece in Time magazine and is now being adopted by some large corporations as a way of optimising 'face-time' between their wide travelling executives. Now Dopplr have added a superb, fully integrated partnership (through to booking) with the Boutique Hotel group - Mr and Mrs Smith.
The Hotels recommended by Mr and Mrs Smith may not meet everyone's budget but the direction which Dopplr are going is clear - great functionality for the user and smart monetisation of a super service. Great job, guys!
Yesterday the OFT gave the go-ahead for LoveFilm and Amazon to merge their DVD rental operations. Whilst most people expected this, it was by no means a 'slam dunk'. The OFT said that while it had competition concerns about the merger, which will control 90% of the online DVD market, it concluded that LoveFilm had no incentive to worsen its customer proposition because of the competition it faced from an array of other providers of video content. LoveFilm in the UK and Netflix in the US have once again demonstrated the power of the web to disrupt well established and entrenched business models - in this case the Video Rental stores. Lovefilm's CEO Simon Calver says the high street film rentals market has "completely imploded" with 50 per cent fewer stores trading today than two years ago as consumers continue to flock online to hire their movies. Speaking at the First Tuesday 'Retail Revolution' event in London this week Calver said there are simply more attractive options online for film fans, with the internet now accounting for 45 per cent of the total rentals market, as it provides a platform for more choice, greater convenience and better value-for-money. Although LoveFilm will have 90% of the DVD on-line rental market after the merger, the OFT clearly recognises that the next disruptive wave could be coming from downloads and other VOD channels.
Congratulations to Fizzback, Wonga (currently trading as SameDayCash) and Zemanta for making Red Herring's top 100 in Europe. All three have strong technology at their heart and are backed by first class VCs: Fizzback (Advent), Wonga (Balderton) and Zemanta (Eden Ventures). The full Red Herring list is here.
Alex Chesterman, Simon Kain (both ex-Screen Select/Video Island/LoveFilm) and the Zoopla team have put together a really superb service addressing the needs of property owners, buyers, sellers and agents. Very few subjects in the finance arena touches so many people as residential property. Nor do many generate the emotion, the column inches, the TV hours as does the great house price debate. Until recently getting 'sold prices' on any property has been difficult or costly for consumers. Sold prices are, after all the one 'stake in the ground'. Zoopla is a cleverly put together service. Its aim is to create a more transparent property market and to empower users by making information free and easily accessible. Its goal is to become the must-use resource for all data related to the property market. Its interesting that people often spend time intensively researching the prices of PCs, TVs and Cars but when it comes to Property (by far the biggest investment of all) getting a discount off the asking price is the extent of the due diligence!
• Current value estimates on ANY home - using a carefully devised algorithm AND consumer generated data • Sold price data on historic transactions • Local information, trends and statistics • For sale listings – agent and direct listings • TemptMe! – owners set a magic number to tempt others to make offers • AskMe! – find out anything you want to know
Zoopla! provide data on ALL homes – over 26 million – not just homes for sale. Users can find out about any home – theirs or anyone else’s – and participate in the community by sharing information
It has elements of a community website in the true sense, where everyone can participate by adding content and where usage and contribution helps improve the service.
Not everyone is delighted by this transparancy. Some estate agents, instead of using Zoopla to the full - its rich data set is a great tool for them and they can list their for sale properties pretty easily - seem concerned that their hitherto exculsive position as valuation experts is undermined. Of course, there is no substitute for an actual careful examination of the propeerty itself and Zoopla can only ever be a guide - accurate as it is.
The Telegraph has picked up on Zoopla's potential as a voyeur's paradise. Ever wondered what your boss's house is worth?
Meantime consumers appear to love it. The site has been live for only 9 weeks and it has: * Over 50k registered users already * Over 250k visits so far in March alone * Over 1m unique property searches so far in March alone
Zoopla is backed by Atlas Venture and TAG with William Reeve and Simon Murdoch as angels and board members.
My recent post has caused something of a flurry. I am just not used to that. Then again, I don't normally craft my sentences that inelegantly or ambiguously. I wrote: "Funding business plans from first time entrepreneurs just won't happen anymore!" What I meant, but didn't spell out clearly enough, was that in my view, first time entrepreneurs who simply have a business PLAN (ie a PowerPoint + spreadsheet) would find it very difficult to get funding. They will need to have built something - a demo - a basic service. In fact TAG loves first time entrepreneurs and makes a habit of backing them. If you look down the list of our investments, more than half were first timers. We particularly like those who can demonstrate the tenacity, invention, persistence and sheer bloody mindedness that has enabled them to get their product together with little or no external funding. Those are the guys who when they do raise cash use it wisely and well. So, please be assured, TAG would not be one of the originators of Seedcamp or OpenCoffee if we didn't believe in and back first timers!! Apologies for any confusion caused by a sloppy posting.
Despite the generally uncertain economic climate, we have seen no diminution in the flood of interesting new ventures being launched. In common with others who are investing in start-ups, I receive at least 2 or 3 propositions per week. Its undisputable that the bar has been raised pretty high now for new tech companies. There is so much outstanding innovation about and the volume of new businesses is so high that fairly tough criteria are having to be set in order to filter. For example, the companies we are favouring are those: 1. Founded by 2nd and 3rd time tech entrepreneurs 2. Aspiring to build global businesses with scale 3. With genuinely original ideas which are game changing or a significant advance on current state of play 4. Where the founder(s) have built prototypes or are already demonstrating momentum in customer/consumer adoption 5. Where founders have shown an ability to considerably ‘bootstrap’ the business with very little or no external cash (outside of friends and family).
Funding business plans from first time entrepreneurs just won't happen anymore!
For businesses with some or all of these attributes, there is still a large amount of money available.
The web’s ability to disrupt well established markets or entrenched trading practices is well documented. The inexorable growth of many sectors of eCommerce at the expense of the high street continues apace. Every now and then a new form of retailing is ‘invented’ which captures consumers imagination and represents a real threat to established players. The markets which are ripest for attack are those laden with regulation ie those where the freedom to trade in an unfettered way has been severely restricted. In the past 5 years a new breed of on-line retailer has come out of France which has taken advantage of the years of conditioning which French, Belgian and other European consumers have been subjected to. Vente Privee is generating hundreds of millions of Euros of sales at high levels of profitability and has spawned more than a dozen copies. Their formula is simple: a product or group of products is offered for sale for a limited period to their ‘members’. The product is usually very good value and is highly desirable. How different is this from a retailer’s sale? Many retailers in the UK and the US have storecards (ie members) – they are often offered first crack at the bargains. The difference is the application of rather archaic and restrictive trading laws in France, Belgium and elsewhere. These laws restrict retailers from running sales at any time other than those specified. The Economist ran an interesting article which explains these laws more fully:
Part of the article reads as follows: "If all this sounds fundamentally illiberal, that is because it is. One Eurocrat suggests that a key ancestor of many continental bans on unfair trading is a German law from the mid-1930s that sought to stamp out what Nazi officials called aggressive “Jewish” conduct among shopkeepers. But the laws also carry more than a whiff of distrust of capitalism itself. Belgian parliamentary papers from the late 1960s describe indignantly how some shops “deliberately” sell products at a loss to attract customers who might buy other goods at full price, a ploy referred to as “destructive” competition. Such loss-leaders were banned in Belgium in 1971, along with any selling below cost or at “extremely reduced” profit margins. This has kept the lawyers busy as the courts argue over what extremely reduced might mean. And that is why sales in Belgium are such a big deal: though offering discounts is legal at other times of the year, the sales are the only time when Belgian shopkeepers may sell goods at a loss."
Another snippet of news on a closely related topic caught my eye recently: A union of French bookstores sued Amazon last month over the free shipping on orders over €20, saying that the cost of Amazon's delivery reduced the price of a book to one lower than allowed by the Lang Law. The booksellers were awarded €100,000 in damages in the suit, and Amazon was ordered to enact a delivery charge. Amazon.com said that it would rather pay €1000 a day in fines than abolish its free shipping on books in France.
Readers of this blog may wonder which TAG company does this piece directly impact since I hardly ever write on subjects not directly concerning portfolio companies. It is Koodos, the off-price branded fashion eCommerce site which has both open and closed sale platforms and is making quite a name for itself in the UK fashion scene right now. Clearly our belief is that in the US and UK, retailers run sales any day, all day - even pre Xmas - so consumers have different attitudes and are more inclined to buy on the merits of the offer itself.
Get your own partner koodos widget today ...they are starting to appear in many of the best publisher's sites.
Yahoo have been running competitions for the best websites of 2007. This is what they posted today:
"Move Me, this year's People's Choice winner, beat competition from far and wide to take the number one prize, proving that moving doesn't have to be as stressful as we may think.
In addition to taking the People's Choice crown, it also proved a popular site with the expert panel of judges, winning the Innovative category award announced earlier in January.
Move Me aims to take away the stress of moving house with its free Move Planner. The planner takes everything into account from finding reputable removal firms to who you need to notify of your change of address. "
Apparently, there were 18 sites shortlisted by the judges and Moveme took 1 in 6 votes - over 17% of the votes cast.
Congratulations to Mark, Keith, Charlie, Andy, Seb and the team.
In addition to being Yahoo's choice MoveMe announced today that it is the choice of Balderton and Advent too. The following goes out on the wires today: Moveme.com, the online home moving specialist, today announced it has secured £3.4million in its second round of funding from Balderton Capital, formerly Benchmark Capital Europe and Advent Venture Partners (“Advent Ventures”). Moveme.com will use the funds for further product development, marketing, recruitment and a new site launch in February.
Moveme.com is a free service which takes the hassle out of moving house in the UK. It helps both renters and buyers to manage the moving process online, giving information on everything from booking a removal company to changing satellite TV subscriptions and re-directing mail. The site is easy to navigate and requires only the date and addresses of the move. It can then provide a bespoke planner in diary-form to streamline the moving process, saving users’ time and money. The site currently has over 40,000 registered users.
Mark Cunningham, co-founder and CEO of Moveme.com, said: “Moving house can be one of the most stressful experiences in people’s lives. Moveme takes away this stress and helps those with very little time arrange all aspects of their house move online.
“We are delighted to partner with two premier investment firms. This latest investment is testament to Moveme.com’s continued success. The proceeds of this funding now give us the resources to re-launch the site and accelerate our plans for growth.“
Commenting on the investment, Sean Seton-Rogers of Balderton Capital, said: “All of us at Balderton are excited to be part of the Moveme team. Each of us has experienced the hassle of moving home and wish Moveme.com had been around to help us. We believe customers are going to love this free service that takes all the hassle away. The company has experienced tremendous growth and Balderton is proud to invest in the company’s expansion.”
If winning awards was the key to success, MoveMe has certainly unlocked that particular door. After being shortlisted for Yahoo!’s Finds of the Year 2007 campaign, moveme.com has just been chosen by the judges as a winning site of their category in innovation. There is also a People Choice award as this does not take place until 16th Jan 08 so get voting now on Yahoo! Finds.
Move Me (www.moveme.com) aims to take away the stress of moving house with its free Move Planner. The planner takes everything into account from finding reputable removal firms to who you need to notify of your change of address. The judges particularly liked the user interface and design of Move Me. They also described the calendar as a brilliant tool which set the site apart from the other entrants.
This award follows the one they got from New Media Age back in June for the best new business.
MoveMe are working hard to get the latest version of their site launched this month but already many thousands of home movers have reduced their moving headaches by using www.moveme.com and the flow of complimentary comments from users back up the judgement of those who have chosen Moveme from the many great new sites launched in 2007.
The concept of Seedcamp is not difficult to explain. What is tougher is to convey the spirit of the enterprise. Seedcamp have recently published its video. Its a 10 minute piece edited from 80 hours of film which is worth the watch if you have an interest in the entrepreneurial scene in Europe and what practical steps people are taking to fuel it in the tech arena.
The filming, editing and production was done by Bonney and Klein (the Klein being Anthony Klein, my nephew). This post would have been up a month or two ago but I was waiting the the guys to get their website up - to give them a well-deserved plug. Alex and Anthony are very talented film-makers who are applying their talents in a number of creative ways. For example: FilmWorks is a film-making ‘boot camp’ developed by Bonney and Klein Productions for companies wanting interesting and exciting training and team-building programs.
Bonney and Klein did a superb job on 80 hours of Seedcamp footage - thanks guys!
I don't normally comment on non-TAG companies but I felt compelled to write something about one of my favourite digital companies, WGSN. WGSN (originally Worth Global Style Network!) describes itself as 'the world's leading online research, trend analysis, and news service for the fashion and style industries'. It was a pioneer in subscription based information services on line at a time when major clients required a dedicated satellite dish to receive it because the web was inadequate. WGSN was launched by the brothers Julian and Marc Worth in 1998 and was sold to EMAP in October 2005 for £140m. Amidst the myriad properties that APAX and Guardian Media Group (GMG) have acquired this nugget which from EMAP's public statements in March and July this year indicated was continuing to perform ahead of its plan. I wouldn't be surprised if WGSN could recover half of the entire purchase price for Bidco. Another coup for Stephen Grabiner and his team! APAX and GMG both have strong digital credentials and will certainly understand WGSN a lot better than EMAP did and its potential should be unleashed. My own connections with WGSN go back to when I introduced the service to Arcadia and it became WGSN's first significant client. Later, Marc and Julian were very keen for TAG to invest but we were never able to come to terms. Ah well ....
Apologies to the few readers of this blog that my previous post announcing the sale of Agent Provocateur was thin on detail. You'll understand that confidentiality rules apply and one has to wait for details to enter the public domain before commenting or confirming. On the numbers provided, a sale price exceeding £60m looks very full but the business is well primed for a classic retail rapid roll-out. The aggregate, consolidated pre-tax profits for the year ended March 07 (accounts were filed last week) were £1.9m but quickly heading north. The brand is capable of being a global luxury brand of sizable proportions. Many more stores are planned but the role of digital media and its viral effect has been a significant factor in the brand being far bigger than the business at this stage.
Whilst both founders remained in the business, rapid expansion was impossible. The solution found is one that is perfect for the business and the strong management team that has developed over the past 5 years. 3i have made a very good buy.
Trust the Sunday Times to add the colour - and there is a lot of it.
From TAG's point of view a very successful exit but one which we would not have sought had the unfortunate breakup between the founders occurred a year ago.
Digivate is one of TAG's oldest investments. Its positively mature. TAG invested about 7 years ago. Far from getting a 7 year itch, we're pretty excited about the way its shaping up. Profitable and cash generating from its core business of building eCommerce websites on its own open source platform, Digivate has fairly recently extended its activities beyond eCommerce and database building/email marketing into search engine marketing (SEM) and particularly into SEO.
Their approach to SEO is comprehensive. Understanding the internal structures of websites through building dozens of them certainly helps but adding a really good understanding of how contextual links works and building forums, blogs and developing (writing) appropriate content for clients all go to deliver a compelling solution.
Digivate have developed their own sophisticated SEO evaluator tool that emulates the Google search algorithm and breaks down the relevant site to identify the specific areas where improvements can be made. Its tools can also provide detailed reports of competitors' weaknesses to provide an advantage for the most competitive search terms.
The next step for Digivate is to extend their graphical and UI (User Interface)design capability
The heritage of the founders lies in catalogue mail order, direct marketing, database design and development. It shows.
Digivate clients include leading high street retail groups, catalogue companies, new internet services and financial services companies.
Imagini the company that introduced or 'created' visual DNA with such compelling effect has announced its Series A funding round.
Imagini definitely falls in the 'intriguing' category and a year ago left many potential funders scratching their heads as to where the company would ultimately go.
By April 2m users had completed their visual profiles in a matter of months (now well over 4m) and Imagini was seen in a somewhat different light and wrapped up a very interesting group of investors fairly quickly.
Now Imagini has developed a super facebook application called Youniverse which promises further engagement with the concept of visual DNA.
Victor Keegan has written intelligently about the company in the Guardian. This is worth a read if you're still scratching your head.
Today's Sunday Times style magazine ran a 2 page article on Rebecca Clarke and her Astley Clarke Jewellery business. This type of coverage is just what new, young eCommerce businesses need and Astley Clarke are well aware of the role that PR plays in establishing credibility and inspiring trust. With prices ranging from £35 to £6000 trust is vital and the Sunday Times together with the many other column inches which Rebecca has got is certainly helping.
One of the biggest impacts on the world economy and probably the biggest factor in keeping inflation low in the Western Economies has been the emergence of China as a world's manufacturer of a huge range of quality goods. The massive importers of goods from China such as Wallmart own dozens of factories there. All the leading retailers have buying offices and visit regularly. Now medium-sized and small scale retailers, wholesalers and eBay traders have access directly to Chinese manufacturers and traders via DH Gate. DH Gate have solved the problem of finding, sifting the goods on offer but more importantly have developed an escrow system backed up by a buyers rating system (similar to eBay)which gives buyers complete security that the goods will be as ordered and that payment is only released on satisfaction. DH Gate have set up a dispute resolution process to deal with transaction problems if and when they arise. All in all a thoroughly thought through business which is already generating multiple millions of dollars of revenue monthly and listing 2.5million items. All this in only 2 years. Accelerator invested alongside our friends at Atlas Venture.
It is very interesting to note the aggressive price stance being taken in the latest Specsavers press campaign.
Full pages featuring "A massive range for less than £40" - at the "UK's most trusted Optician"
[Source: Readers Digest Most Trusted Brands Survey 2007].
I think this is all very flattering for Glasses Direct, the tiny eCommerce upstart founded by Jamie Murray Wells and backed by Index and TAG amongst others.
A concerted campaign by the UK's leading opticians may slow Glasses Direct down a little but a price war is probably the last thing the high street operators need right now.
The fact is that as more and more consumers start to understand that there is relatively little mystery in buying subscription glasses on the web then Glasses Direct with their - "from the factory to the consumer" approach - is likely to keep taking market share.
Jamie has built his business on a lot more than price. The range is expanding rapidly to embrace fashion products and the service and quality that he is offering is superb.
Glasses is demonstrating a most interesting disruptive approach to a market which has paid little attention to price until recently.
It is noticible that more and more user actions are being accomodated within the browser - not requiring new web pages to load. This undoubtedly leads to a more satisfying user experience and providing greater stickiness (to use a web 1.0 term) to publishers. This phenomenon is now moving towards eCommerce and Koodos is an early adopter of this technology with the help of Nooked. Click on the grid below and see that you don't need to leave the publishers page to get product descriptions and price. Only at the point of transaction do you call upon the Koodos site (by all means do so and place an order).
Koodos is an ideal ecommerce application because it specialises in scarce inventory which changes daily so the feed technology keeps the offer current, exciting and relevant. [Hot tip: If you do go to Koodos before 22nd August, make sure you register for their private sale of Diesel Jeans at only £29.99!]
Edgeio (another company in the TAG portfolio) has recently launched its paid content network enabling publishers to have their content paid for 'within the browser'.
A feature that makes it easier for consumers and publishers is one we are likely to see much more of soon.
If you know of any really great applications of FeedCommerce please comment.
I sincerely hope the Guardian Newspaper know how to pick winners - in the tech start-up space anyway! They recently ran a series of articles headed Top 10 Dotcoms to watch. Their picks were:(in alphabetical order)
Fizzback has been shortlisted for in the 'Best Use of Technology' category for the 2007 UK Startup Awards. This category is for companies which have applied technology to provide an advantage in a traditional market or have come up with a totally new product, solution or service.
Fizzback's idea is brilliantly simple. Consumers comment or provide feedback using digital channels - primarily mobile phones using SMS. The service provider has their finger on the pulse of customers issues and comments in real time - while they are experiencing the service. Fizzback enables consumer facing companies to capture instant feedback from their customers and convert real time insights into improved acquisition and retention. Some of Fizzbacks clients use the service to identify 'at risk' customers and initiate intervention or communication within minutes.
The powerful Fizzback engine uses artificial intelligence to interpret free form comments and instantly analyses and interprets the feedback delivering it its clients in a format that ensures they receive a continuous and real-time view of their customers’ satisfaction levels, issues and priorities. This is done via a web interface dashboard.
Feedback can give companies a real insight into what their customers are experiencing at the front line. Senior management can’t possibly patrol all their shop floors, train carriages, or hotel foyers. So they rely on feedback to tell them what’s going on. And yet it is often something that companies seem to dread receiving.
If you get to a customer quickly, at the point of the experience, you can not only stop that customer defecting to a competitor, but can actively convert them to loyal advocates. But you have to know that they’re having a bad experience in the first place.
Traditional methods of capturing customer feedback are deficient in many ways. Questionnaires, on or offline, are notoriously unreliable for gathering a real understanding of customers’ future intentions. The feedback form that tells you that a guest at a hotel was ‘satisfied’ with the service, but is it enough to get them to return? What would have changed that view to ‘excellent’?
Fizzback’s research shows that companies using this system have reported a 67 per cent drop in issues and complaints from customers (up to 73 per cent in the retail sector) coming via other methods such as letters of complaint. The immediacy of feedback stops disgruntled customers defecting to a competitor. Some companies use it to identify common problems, for example, with suppliers. If they receive a number of complaints about a particular supplier, it may be that the contract needs reviewing.
Some of the companies using Fizzback - on trial or as part of their ongoing operations and customer experience monitoring are: Barclays Bank, The National Health, Phones4U, National Express, Bourne Leisure, First Capital Connect.
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