Unthinkable in Lisbon

Simon and I were in Lisbon last week for a few days – always a real privilege. I’d been invited to speak at Tech Media Europe (TME) on behalf of the UKTI Global Entrepreneur Programme and Simon and I were both representing Unthinkable at a seminar hosted by the British Embassy and Beta-i at Startup Lisboa.

At TME I spoke on a panel chaired by Yann Manchamp of Mutual Benefits. The crux of the panel discussion was an exploration of how corporations and venture capital can work together to improve innovation in the EU. The other speakers were Stephane Goubau from Intel Capital, Joao Gunther Amaral, Innovation Director at Sonae, the large Portugese retailer, Luis Manuel from the Innovation arm of Portuguese electricity firm EDP, and Hugo Silva from Caixa Capital.

Some conclusions drawn were that similar tech trends are observable across several sectors – especially around big data and customer understanding. Sonae are even developing relevant digital content to engage with their retail customers. Something we at Unthinkable refer to as the “Amazonisation of everything”. There was also a consensus that right now the smart money is investing in entrepreneurial ventures rather than outright acquisition, not least to keep innovation from withering on the corporate vine.

Most of the rest of the day was made up of pitching sessions. Several of these happened simultaneously so I didn’t see all of the pitches, but I particularly liked 360Cities.net. They have the world’s largest collection of professional, geotagged panoramic photos which are used by Google Earth, Nokia Maps and Bing Maps. I was also a judge in one of the afternoon sessions and was particularly taken with the energy and enthusiasm of Laurent Blanchard, CEO of Yooneed.com. Launched 3 months ago, it’s essentially a marketplace for outsourcing small jobs with 7,500 members +50K uniques a month on their website already. Very much in the vein of TaskRabbit in US and Sooqini in UK. Building trust will be crucial for their business I think - TaskRabbit does background checks on all their members.

The next evening we were speaking at Startup Lisboa (SUL). A fabulous incubator space right in the centre of Lisbon.

We were given a tour of SUL by its Director Joao Vasconcelos. It covers six floors of an immaculately renovated former bank and currently houses thirty start up companies. The range of business we saw was wide – impressively so, including: golf course mapping app Hole 19, online medical bookings from Consultaclick, Uniplaces, who help students find accommodation, streaming music service MusicBox and Pumpkin, a service which helps parents find childcare.

SUL is funded by the EU and Portuguese Government. Companies are awarded places there through a competitive process and pay a small fee for a six month stay, after which they can renew if their project has achieved the milestones set for it. Companies from all over Europe can – and have – applied, and we met a couple of Brits on our little tour as well as several other foreigners. It’s not difficult to see why: Lisbon is one of the most attractive and affordable cities in Europe. Talent is plentiful and you can lead a good life (I lost count of the time the beach was mentioned!) while bootstrapping a business.

After our tour, Simon and I gave our talk. We were warned beforehand that Portuguese audiences can be pretty reserved and quiet but this was far from our experience. The Startup Lisboa crowd were enthusiastic and enquiring. The session quickly turned into a lively conversation between us and the ferociously bright and impressively multi-lingual technologists and business people. Exhausting but great fun.

The theme was a series of personal observations about tech trends and opportunities in media, drawing on some specific Unthinkable client work. We'll post our slide deck from the talk in our next post - it might not mean much if you weren't there - that's our kind of slide deck! - but hopefully will be useful to those who were.

It’s no secret that Portugal’s economic outlook is shaky at best right now, but meeting these young companies gave us hope that entrepreneurship will play a significant role in the country’s economic recovery.

Thanks to Renata Ramalhosa and Emilia Baptista from the British Embassy for inviting us over and being such gracious hosts. We hope to be back again soon.

Chutzpah nation: on Israel and tech entrepreneurship

The general subject of Israel normally provokes considerable disagreement in politically-aware circles, but it's hard to disagree with the country’s track record of innovation and entrepreneurship. Given that innovation is widely accepted as the best engine for creating jobs and growth and much of that innovation will come from start-ups rather than incumbents, I wondered what other countries could learn from Israel.

Start-up Nation is written by two Americans, Dan Senor and Saul Singer, one of whom now lives in Israel and the other is a frequent visitor and investor in Israeli companies (none of which are covered in the book by the way). Avoiding any discussion about the fundamental right of the state of Israel to exist or regional politics, the book looks specifically at what it is about the place and its people that has created the highest concentration of innovation and entrepreneurship in the world.

Some statistics:

• Israel has the densest concentration of start ups in the world – more than one per 2,000 Israelis More Israeli companies are listed on NASDAQ - than from any other country and the whole of Europe combined
• Per capital venture capital is 2.5 times higher than in the US and 30 times higher than in Europe
• Highest % of GDP spent on R&D in the world
• Israel experienced only one quarter of negative growth in the recent recession.

Yes, Israel has all the ingredients Michael Porter identified in the late 1990s as a requirement for successful clusters: universities, large companies, talent and money co-located and well networked. But so now do most other developed countries. Yes, Israel stands out from its neighbours in being a democracy where talent doesn’t tend to be stifled by nepotism. Yes, its small domestic market and regional isolation have forced Israeli companies to develop a global customer base from the outset. Yes, tech entrepreneurship has the same cachet with Israeli mums as lawyers and accountants do with Jewish mums elsewhere. But none of these factors is unique to Israel either.

Senor and Singer suggest the key difference is the role the Israeli military has in shaping the characters of its young people. Military service is compulsory in Israel. The best and brightest school leavers are recruited into elite units where they receive three years of advanced technical training as well as yearly follow-up stints as reservists well into their 40s. There is fierce competition to get into these units as career benefits will undoubtedly ensue. Other countries have conscription of course, but in the Israeli Defence Force and especially the elite units, junior ranks are encouraged to challenge their superiors and improvise. The phrase “an insatiable need to tinker, invent and challenge” seems to sum up their disregard for the rules. Not just in training, but in live situations. Senor and Singer argue that it is this on the job training and heavy responsibility from an early age that creates individual self-confidence, as well as tight and lasting bonds between team members, many of whom go on to set up innovative companies together.

Start Up Britain and Tech City are evidence of our own government’s belief in entrepreneurship as driver for economic growth, so what can we and other countries learn from Israel? Senor and Senior do not suggest conscription, but that military experience should be valued far more by employers and society at large. Also that we should find ways to challenge our young people with real responsibility, so they develop the confidence to question and invent. Another thing that struck me about the book was the sense that Isreal’s politicians, although not business people, are risk-takers, thereby creating a tolerance of risk and failure throughout society.

Finally, and possibly the most transferable lesson for other governments, Israel’s economic miracle may be due as much to immigration as anything else. Israel is possibly the only country that seeks to increase immigration and not just to people of narrowly defined origins, educational or economic status. It is now home to more than 70 different nationalities and cultures. It is well known that migrants often have more drive than better-established sections of society.

Serious Monkey Business with MiniMonos

MiniMonos is a virtual world for kids who love to play and love the planet. Originally from New Zealand, MiniMonos (which means little monkeys in Spanish) joined the Springboard accelerator programme and “flipped” to the UK when it became obvious most of their players were from the US and UK. Silicon Valley was always an option of course, especially since one of the founders is American, but the team liked the Springboard offer and picked Blighty. 9 months on and a roller-coaster ride later, do they still think they made the right decision?

My first meeting with the team was last May and only a 20 minute session – 1 of 10 quick fire mentoring sessions I did that day with each of the early stage businesses in the first Springboard in Cambridge – but I liked them immediately. As did many of the other mentors.

Melissa Clark-Reynolds, CEO and “AlphaMonkey”, is a well-known environmentalist and entrepreneur in native New Zealand. MiniMonos has enabled her to combine her experience of scaling startups with her passion for sustainability. CTO Greg Montgomery, aka “Monty”, has spent over 20 years in the software and games industry and “MissDawg”, CMO Kaila Colbin, is a prolific writer, internet veteran and climate change advocate. They were all seasoned entrepreneurs, about my age (that helps!) and convinced me entirely that they knew what they were doing.

Their business was further ahead than the other Springboard teams, so there was less opportunity to help them shape and build their proposition – something many mentors really enjoy - but with a beta launched and over 200,000 registered users, they had “traction”, ie some proof of concept demonstrated by a significant number of regular players and revenue, albeit small. Their need was help growing the user-base and revenue here through strategic partnerships, advertising and promotion as well as practical support getting their business up and running in the UK. All on a miniscule start-up budget.

So how have they done? A speaking slot at The Children’s Media Conference last July led to a major breakthrough: licensing deals with not just one, but two national kids magazines, Toxic and National Geographic Kids. They’ve also run a national advertising campaign on CITV and have MiniMonos gift cards (basically pre-paid membership) on sale in every branch of Sainsbury’s. From almost nowhere, they’re now the 4th most popular kids virtual world after illustrious and long-running competitors Club Penguin, Moshi Monsters and Bin Weevils. As of February 2012, they had 800,000 registered users with approximately 60,000 new sign-ups per month and monthly revenues of $20,000. Far from profitable but more than enough to cover marketing costs as well as funding projects which provide clean drinking water to kids in India and others that protect endangered animals. And with lots more licensing deals (including a trading card game, books, magazines, modeling kits and ethical merchandising) in the pipeline, user numbers and revenue will continue to grow.

Just as important in start-up land, what have they learnt? For one, most of their new users are Brits and they’ve found that the UK “monetizes” better than other markets. 2.5% of users are now spending money in the game compared to 0.57% this time last year. Melissa believes that their competitors have “trained UK players to pay”. But while Club Penguin and Moshi Monsters only charge for membership, effectively capping their average revenue per user (ARPU) at $6/month, MiniMonos has achieved an ARPU of $11/month through a combination of membership and micro-transactions.

They’ve also learnt how to do things cheap. They were able to create a TV advert using internal resources and use it to reach their exact target audience across the whole UK for only a few thousand pounds. Now they have some scale, they can use their muscle to negotiate even better rates.

Last but not least, they’ve found their niche. While Moshi Monsters tilts towards girls, MiniMonos are targeting boys aged 8 and older. They say girls will play boys games, but not vice-versa. There are also many licensees that missed out on a deal with Moshi Monsters and are hungry to work with alternatives.

So now they know how to grow, they need additional finance (or banana-chips!) to help them do it faster. Rupert Cook, corporate finance specialist, joined the company as Chairman and has been helping with fund raising activity. Stay tuned for news on that.

I’ll leave it to Melissa to answer my original question, “The UK has absolutely been the right place for us to get our business to the next level. We now know the product is a good fit for the UK market which tells us it will work well in other territories. Thanks to the great connections we’ve made here, we’re confident we’ll be able to keep progressing really fast and feel ready to take on the world!”

Another GA event in London: London Founder Exchange 2

Hot on the heels of last week's General Assembly event looking at start-up culture and techniques, Sarah and I popped into another GA event yesterday evening. Held at Dreamstake's excellent space in Clerkenwell, and again chaired by the highly energetic and ferociously smart Rob Fitzpatrick, London Founder Exchange 2 featured six brief presentations from founders of UK start-ups, a bit of a Q&A and a lot of networking over wine and beer. The talkers included Ed Cooke of Memrise, Will Orr-Ewing of Keystone Tutors, Roly Allen of Lyceum Partners, Alex O'Byrne of We Make Websites, Rob Welch of Small Car Big City and Fletcher Bowley of FoodieKiwi.

The business sectors discussed were highly diverse, from language learning to minicab hire, but I was struck by two overarching observations. Firstly, every speaker was highly articulate - and funny. I realise this shouldn't come as a surprise, but I think this is a relatively new thing for Brits. I've spent over two decades at conferences generally marvelling at what great communicators Americans are and slightly disappointed at my compatriots. I think the new generation of British entrepreneurs has definitely turned that around. And alongside that what really got to me was everyone's infectious enthusiasm and pretty boundless optimism, even when talking about serial failures on the way to eventual success.

I took some pretty rough notes during the evening, and thought I might share some choice quotes from the session. So, in no particular order, and strictly unattributed (and in at at least one case, a little at odds with each other):

"going from one failure to the next with the same level of enthusiasm"

"the only metric is retention"

"have a simple story"

"marketing is everything"

"tolerate mistakes"

"don't just work: go for a run, learn a language and play the guitar more" (That was my favourite, of course, and rather reflects my current obsession with Timothy Ferriss' 4 Hour Work Week.) 

"deep down people prefer to do things they're not paid for"

"what's the most fun you can have without having a proper job?"

"the camaraderie of a partner is seductive"

"you have a huge network at your disposal"

"don't listen to someone who says it can't be done"

"your business plan will change the minute you go into business"

"making peace with your business model"

"opening an office in Paris, by the way, is impossible"

"the most important thing about business is being honest with yourself"

"prove it works in your domestic markets"

General Assembly session on entrepreneurship in London

Last week Sarah and I attended a fascinating session hosted by General Assembly, London, an evening designed to help start-ups get thinking about business planning and, well, get on with it. It goes without saying that we were among the oldest there; most of the attendees were in their twenties and considering perhaps their first entrepreneurial adventure. We were interested in that, course, but were also interested from a kind of "meta" position: Sarah is professionally and personally obsessed with start-up culture and keen to see how it can be be "taught"; I, on the other hand, am very keen to see how others run workshops, that being one of my stocks in trade.

In fact it was a great evening, covering a huge amount of ground in three hours; course facilitator Rob Fitzpatrick was fantastic: engaging, hugely energetic and ready, willing and able to step into discussion and give instant and adroit feedback. I'm also already "on side" with anyone who kicks off a session on business practice by citing Taleb's The Black Swan, as regular readers would imagine.

Towards the end of the evening, Rob showed us this little video by CD Baby founder Derek Sivers which nicely sums up the importance finding a balance between persistence and flexibility from someone who's truly been there and done that.