A Brief History of Alan Sugar…

How can anyone possibly sum up Baron Sugar’s countless career highs in just a few words? Easy – just use his own:-

• The 1970s:- “Build me my f**king hifi now, or you’re f**king fired.”
• The 1980s:- “Build me my f**king word processor now, or you’re f**king fired.”
• The 1990s:- “Build me my f**king crappy electronic gadgets now, or you’re f**king fired.”
• The 2000s:- “Find some mug to buy my f**king company now, or you’re f**king fired.”
• The 2010s:- “Powder my f**king nose now, or you’re f**king fired.”

Enjoy! 😉

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Should Muammar Gaddafi pivot?

(This week’s guest post comes courtesy of a well-known celebrity VC blogger.)

When your startup’s magnificent plans inevitably crumble to Ozymandian dust in the face of some unforeseen market reality, VCs often say it’s simply your customers’ way of telling you to change direction fast, AKA “pivoting”. So, if Muammar Gaddafi were a startup in my portfolio, what do you think I should be saying to him right now? “Pivot, you moron!“, right?

Well… there are those who would point out that the sustained highlights of 42 years of the Libyan Arab Republic make pretty persuasive slideware:

• plenty of traction (usually at gunpoint)
• great channel control (also usually at gunpoint)
• extreme horizontal and vertical integration (forming a monolithic state apparatus)
• sustained dividends payouts to keep the execs motivated (typically in Swiss bank accounts)
• sustainable advantage from a chokehold on regional resources (of the liquid, black, underground variety)
• strategic alliances with well-funded allies (Idi Amin, Bokassa, Mengistu, Charles Taylor, Gordon Brown, Patassé, etc)

Having myself seen thousands of startup presentations, I think that if you presented a killer presentation deck full of slides like the above, most VCs would eat your hand off even for a slice of the Series Z round. So, when Gaddafi’s IP (‘Ideological Property‘) is so clearly a winning formula, why on earth would anyone want to fix something that isn’t broken?

Well… if you believe the news reports (which, as you know, VCs never do – the world outside Sand Hill Road remains eternally off our radar), events in Tripoli would superficially seem to indicate that Gaddafi now has active competitors in his segment. However as we modern VCs like to say, the presence of competition merely validates the whole marketplace. Hence for us, fighting on the streets is no more than a market signal that Libya is indeed a prize worth fighting for.

It’s entirely true that back in 1969, VC firms would surely have invested in risky, passionate, ambitious young guns like Gaddafi (though for, say, Sequoia Capital, this would not have been possible – it was founded three years later). But really, we’re now far more interested in backing old guns: those heady days are long, long gone. And even though as an industry, we continue to be obsessed with talking about startups and with blogging about pivoting, you have to understand that in reality we find it 20x easier to do deals with mature industry players (e.g. Gaddafi circa 2011), simply because the main reason they need money is greed, not growth. Which is an attitude LPs in Menlo Park can really relate to.

Don’t get me wrong, VCs still love backing startups: the only caveat being that we tend to define ‘startups’ as “40-year-old firms with multi-billion dollar revenue who don’t actually need VC money“. So what do you think now: should Gaddafi pivot? I’d say no way – if he was smart, he should email us a deck, I’m sure we’d be able to work something out…

* * * * * *

(PS: a note from the editor: it’s a little-known fact that the letters in the phrase ‘Venture Capital’ can be anagrammed to form

• An Evil Pact – True!
• Let Avarice Punt!
• Cue Viral Patent!
• Crapulent Vitae
• Vertical Peanut
• Teacup Interval

Enjoy!)

Flagons Den, Sampo, and the curse of first order problems…

Having managed to drag myself away from the grittily addictive business of building hi-tech stuff, I got to the “Flagons Den” startup pitch event in London a few nights ago, only to have… a thoroughly lovely time. (Just so you know, I was down as a reserve pitcher, but when it reached 9pm that was the end of that).

It was a right old people-evening for me: people I’d met before (Glenn Shoosmith, Andrew Lockley, etc), people I’d only previously met online (Jay Nguyen, etc), people who had seen me pitch (Conrad Ford, etc), and a fair few who I met for the first time (Huw Walters, Shash Deshmukh, etc). Excellent!

Just so you know, I originally floated the idea for Flagons Den on the OpenCoffee Meetup Forum with my Ghost of Startups Future post in mind: basically, that ‘Big Ideas’ are often a Really Bad Place to try to start a company from. Arguably, it’s much more effective to research a zone of opportunity, matchmake it to some capital-rich angel who you happens to like that zone, and only then go hunting for ideas. And so it was especially nice that some of the evening’s pitchers weren’t actually pitching what people like to think of as ‘backable ideas’, but rather (particularly Avi!) were pitching perceived opportunities to see where they might lead to.

I have to say, though, that the stuff that makes me despair about most social media pitches is that they continue to be (as described by a Hacker News article this week that Shash mentioned to me) only solving “first-order problems”. The paradox about hacking most commentators fail to get is that real hackers despise ‘baby hacks’: whereas a “proper hack” is something that doesn’t just solve a problem, it changes the rules – ideally, it alters the conceptual status quo of how things mesh together, how objects in the world work, how you go about solving problems, while (in particular) empowering individuals to do things that they formerly could not.

I suspect you can trace much of the startup dreamworld back to an uneasy compromise between VC / greedy individualist MBA thinking (build big fast, retain ownership of a percentage) and the hacker ethic (Stallman, Torvalds, etc) – either way, we visualize ourselves as the Finnish blacksmith god Ilmarinen, cranking out our own versions of Sampo, a “magical artefact… that brought good fortune to its holder“. The people in both groupings are, without much doubt, all social revolutionaries at heart: the only real difference is that entrepreneurs want to retain some kind of ownership percentage. 🙂

Yet these days what’s missing from the pitch is keen vision (the kind of piercing insight that looks beyond the shiny, overfinessed surface of the present to the shaky bonds that link everything together) and towering ambition (which has the arrogance to conceive of ways to to redraw the lines between industries, but also the technological skills and persistence to make it happen). Change the world or stay home, I say: but does that make me the only properly revolutionary entrepreneur left in town? Or just a scaled up hacker with an MBA?

Your new job title: Chief Opportunism Officer!

Opportunity is rather a strange thing. In many ways, it’s the life-blood of business: but what kind of entrepreneur would have the cojones to pierce the pretence of business strategy and put their job title down as “Shameless Opportunist“? [To be honest, I did try it for a while, but got bored and moved on].

Perhaps we collectively need to kill the stigma attached to “opportunism”, to rescue it from the shadowy depths business theorists have relegated it too, and instead declare: I’m proud to be an opportunist. I’d say that Steve Blank and Eric Ries don’t go nearly far enough with iteration and customer development: the real point of running a startup is not to pivot until you get motion sickness, but rather to do everything you can to prepare it to grasp with both hands whatever near-workable opportunities come its way.

In fact, I’d go so far as to say that luck in business is perhaps more of a skill, comprising extensive scenario preparation and a certain kind of glinty wide-eyed-ness quick to alert you to analogous chances you can take advantage of. Yes, ‘business luck’ is 50% preparation and 50% opportunism – the new reality of startups.

Might this also point to what is so wrong with the implicit contract between angels and entrepreneurs, that foolishly seems to assume (as business schools like to insist) that sheer force of intellectual will can bend reality sufficiently to force a commercial opportunity to come into being? Strategy is dead, long live opportunism!

Similary, the high failure rate of startup investments is often explained away in terms of eventual market luck. But rather, isn’t the real point of seed stage research is not to find a single mega-opportunity (i.e. a single ostrich egg to put into your creaky basket, VC-stylee), but to instead make sure that the proposed venture is sitting squarely in the middle of a field vigorously blooming with multiple opportunities? (Not knowing which one will ultimately work for you goes with the territory)

All in all, if you were to be brutally honest about what what you actually need to do to succeed as an entrepreneur, the real job title on your business card would be Chief Opportunism Officer, no more and no less. So march over to the nearest window and shout your new mantra to the world outside: Opportunity-Ready Is Investment-Ready!

TSB funding workshop / pitch day…

And so it was that eighteen startups bearing £100K TSB promissory match-funding notes came to London to stand before a roomful of people (a good few of whom were genuinely angels) and have their eight-minute pitches evaluated for investability. On the same bill was the comic relief, the twenty nearly-but-not-quite-funded startups – myself included – whose two-minute pitches were abutted together to form a kind of weirdly psychedelic blur, intended to be some kind of mashed-up Powerpoint speed-dating session.

I love catching up with old faces, putting faces to email addresses, meeting new people and watching new pitches, and I thoroughly enjoy the inevitable rush of pitching (getting a big message across in two minutes is a great writing and performance challenge), so I had a thoroughly great time: and as far as the Technology Strategy Board goes, “I love it when a plan comes together“, regardless of whether David Bott and his crew did or didn’t shave a few corners to push through to the 128-day end line.

But putting all the adrenaline aside, though, the real issue is what to make of the whole event: and as I sat on the train coming back, I have to say that I felt a little bit of sadness. Even though a £100K TSB promissory note could well have been a wonderfully positive thing for my particular company, I do wonder whether it will genuinely help even half of the 18 grantees. For a start, the grim reality is that £100K doesn’t buy you much in Old Street: there’s a kind of implicit £20K “Tech City tax” (in terms of living, commuting, overheads etc) imposed on you just for the, ummm, privilege of working there, rather than (say) Croydon.

For another, because the TSB is only technically allowed to help companies back free-standing loss-making projects (to the point that if you make short-term money from the grant money, they probably won’t cover the payment), all you’re really allowed to do with the grant-plus-match-funding is learn stuff. Yes, in its own curious way the TSB forces grantees to run projects as learning-based “lean startups”, where the important outputs are all intangible, and the most important thing is failing fast, and then pivoting / iterating as a result.

Ultimately, this makes each TSB Tech City funding tranche contingent on finding one or more angels who would be happy to lose invest £100K in something entirely intangible as long as the TSB also loses invests £100K. And I have to say that I have met very few active UK angels who have pockets deep enough to make such truly conceptual calls: as a rule, they don’t yet get Eric Ries’ whole “lean startup” movement. For all the talk of digital media, most social media pitches are just short-term hacks: truly intangible angel investment has fallen drastically out of fashion over here (if it ever was in fashion, for some would loudly argue not).

However, arguably the biggest structural problem of all is that UK angel investors are, by and large, attuned to investing in tangible profit-making companies rather than free-standing intangible loss-making projects: and I suspect most of the angels who eagerly attended yesterday will have felt rather caught in the middle. This was perhaps best exemplified by the Somethin’ Else people, who essentially said: Option A is to invest in our high concept £200K 3d audio game project, while Option B is to invest in our £6.5m turnover (I don’t remember the precise figure) international audio production company from which Option A came. It’s no big secret that most angels are looking for something between the two, that somehow manages to extract the best of both worlds: I can see how presenting such a sharply polarized smorgasboard may end up getting neither (for all the individual merits of both Options A & B).

I don’t know: I suspect the TSB may (wrongly) believe that giving money to startups can only be a good thing for them, when everything comes at a cost. It all reminds me of a short story that popped fully-formed into my mind a few days ago:-

Once upon a time, a boy inherited a box of ancient Arabian junk. While polishing an eerily familiar lamp, out popped a genie. “Thank you immensely for releasing me from the magical prison in which I have languished these long millennia“, pronounced the genie, with more than a hint of Brian Blessed. “I therefore grant you two contingent wishes.”

The boy was puzzled. “What on earth are ‘contingent wishes’?“, he asked.

“My goodness – don’t schools teach you anything these days?” boomed the genie genially.

“No, not really“, sighed the boy.

“Well“, the genie heaved, “they give you what you want, but at a matching cost. For example, receiving great wealth would plunge all your friends and family into abject poverty and debt.”

The boy sat and thought for a while. “My first contingent wish“, he said eventually, “is to be just a little luckier in everything I do for my whole life.”

“Ah, a good choice!“, said the genie. “I grant you your wish, but with the contingent cost that if you tell anybody that you are the recipient of magical aid, you will instead be just a little less lucky in everything you do.”

“Then my second contingent wish is easy“, said the boy. “I wish to forget that I ever met you.”

“No!”, exclaimed the genie, “that means…”

But it was too late. With a loud squelch and a flash of green light, the genie was yanked sharply back into his lamp prison for another millennium. The boy stood there blinking blankly, with just a tarnished old lamp in his hand. What had he just been thinking about? He couldn’t remember. All the same, he did feel like it was going to be a good day…

Basically, there’s no such thing as a free lunch, or indeed a free grant. Just because you cannot immediately see the cost doesn’t mean that there isn’t one.

The (short) prehistory of “gamification”…

Here’s a little story that hasn’t yet been told, hope you find it interesting!

* * * * * * * *

Though I wrote my first computer game waaay back in 1981, by 1999-2000 I’d grown disenchanted with the near-abusively one-sided way things worked in the industry. Given that one major games publisher tried (unsuccessfully, thank goodness) to sue me for £2.56m while another cancelled a big project days after approving a full-on milestone, you can see why that would be. Hence I decided to do an MBA: this was partly to try to salvage anything worthwhile from the bruising experiences I’d had, but mainly as a form of lightweight business therapy. 🙂

At the same time, I also started to move away from games into an unfashionable mix of embedded development and business analysis. So at some point during late 2002, I put all these pieces together [in a buggy-whip ‘core competency’ kind of way] and began to wonder whether the kind of games user-interface I had been developing for so long could be used to turbo-charge all manner of transactions and activities on commercial electronic devices – in-flight video, ATM machines, vending machines, mobile phones, etc.  Unsurprisingly, this was the point when I coined the deliberately ugly word “gamification“, by which I meant applying game-like accelerated user interface design to make electronic transactions both enjoyable and fast. Note that I was much more interested in applying gamification ideas to electronic devices than to the Web back then: just as now, I wanted to build physical things and to make them fun and effective to use.

All of which is why in 2003 (9th April) I founded a one-man consultancy called Conundra Ltd specifically with the idea of pursuing gamification, though I eventually dissolved it in 2006 (17th October) after eliciting no significant customer interest. Here’s a copy of the original 2003/2004 Conundra webpage, which should give a fuller idea of what I was aiming for (though note that the email link there doesn’t actually work, I gave up the conundra.co.uk domain loooong ago.)

Ultimately, the little genuine gamification work I did was essentially restricted to developing a couple of 3d casual games (3D Pool, 3D Chess) for a mobile phone platform that was never directly released (the Alphamosaic VC01). Sure, these games coupled particularly easy interfaces with high-gloss rendering technologies (direct-maths raytracing on a 16-bit array processor!), but the particular vision of gamification I had briefly glimpsed back in 2002 was simply a decade too early. Besides, the whole MBA mindset that tends to drive such high-concept business ideas was already on the downward slide by then… but that’s a story for another day.

So as far as “gamification” goes, I devised [I believe] the term, tried to make money from it, failed miserably, pulled out long before anyone else used it, and that was pretty much the end of my involvement. Oh well! 🙂

…but there’s a follow-on. Having then joined the CCTV industry and then started to develop my own innovative kind of small ‘speed dome’ security camera (hence ‘nano-dome’, doh!), it only struck me a little while ago that what I was doing was at heart a curious kind of culmination of the gamification path I had started out on way back in 2002. For PTZs – keyboard-steered cameras – are essentially a kind of industrial videogame, and one of the key things I was aiming for with the control software in my own camera was to make it what I would call ‘properly interactive’. And what would that make it but a truly gamified device?

Of course, I may have missed the biggest gamification boat of all (mobile phones), because in many ways Apple picked up the whole gamification UX ball and ran further with it than anyone else. So however much I like Dieter Rams’ designs, I’d argue that maybe the real secret behind Apple’s iWhatever devices isn’t Jonathan Ive’s aesthetic but the underlying idea of gamification – making hard things easy, expressive, near-effortless to use. Automating sprezzatura, one might say. Put in those terms, perhaps the full societal rollout of gamification has only now just begun, hmmm?

OK, so no grant this time… :-(

I’m disappointed to have missed out this time round, of course: but a Tech City grant was always going to be a bit of a long shot for a Surbiton-based non-social-media startup. Some of the TSB’s anonymous judges clearly liked my whole “Soft Factory” pitch: but given that the point of the competition was to fund loss-making collaborative Tech City projects rather than Tech City companies, perhaps I did ultimately end up veering too far towards the latter (certainly, one of the judges felt compelled to reiterate this point several times). And being in a consortium of one probably didn’t help either. Oh well. 😦

Still, I’ll be doing my 2-minute thing at the TSB’s investor day this Wednesday (please feel free to say hello!) in the 3.55pm-to-4.25pm Pitch Session #5 (AKA the mid-afternoon graveyard shift). Given the homeopathically low amount of interest that UK angels tend to have in manufacturing and the brutal-but-unavoidable fact that angels are mainly there to sniff around the 18 grantees, my expectations for positive funding outcomes from the day are perhaps even lower than the normal ankle-highness. All the same, it’s always nice both to catch up with people you already know and to meet new people. For example (going through the list of attendees), Twickenham-based Wren Capital looks interesting, as does MMC Ventures: and perhaps I should be cultivating more of a relationship with NESTA Investments. Anyone else there I should be talking with?