Peter Day’s podcast is another cracker this week. Admittedly he mainly interviews people I know so I might be a bit biased but the underlying message is an important one — the way you design things matters. Ben and the team at GOV.UK get a deservedly big shout out for their win at the Design of the Year awards.
We put quite a lot of design thinking into BGV. We started with a clear idea about who our users were (very talented small teams of committed people coming out of hack weekends or similar), we analysed their needs (a small amount of finance, connections to expertise and a supportive community) and then we built a prototype (in 2010 in Bethnal Green) and iterated it.
It’s strange to think that so many schemes for startups aren’t designed that way. Related articles
For one reason or another I’ve recently been dealing with lots of big companies in markets where new entrants find it difficult because of the way they are regulated. They all have one thing in common — terrible customer service. I’m wondering whether it’s just a coincidence or whether there’s something inherently wrong in the basic way we regulate markets like banking, electricity, broadband, mobile phones, insurance and many more that leads them to have no incentive to improve.
Liam and Peter have a post up on the Nesta Impact Investment blog asking whether crowdfunding can work for social ventures. It’s a very good explanation of the issues you might face if you’re thinking about doing it.
We’ve just watched Fairphone do incredibly well by using crowdfunding for pre-sales but I have to admit I’m a bit sceptical about equity crowdfunding at the moment. Ownership is a about much more than raising money. When you’re very early stage you need a very trusting relationship with your investors — one that can’t really be codified in legal speak or a set of terms and conditions — and I worry that’s difficult if you have a large group of investors with different motivations for backing you.
Having said that I don’t have direct experience of a startup that has done it yet — maybe my opinion will change if I get the chance to see how it really works. Related articles
I wrote this a while ago but never posted it for some reason. Aza Raskin’s tweet and the shortÂ discussion it created got me thinking. I’ve always had a hunch that startups are a very efficient way of achieving change but I realise that I probably don’t have the evidence to prove it yet.
There are a few different ways to think about capital efficiency. The first is to ask if you have a certain amount of capital (say Â£1 million) what’s the best way of deploying it? You could measure that based on direct return on investment but there are also lots of ways of measuring that, especially when you’re talking about changing the world. There’s a mini industry of organisations with their own ways of measuring SROI (Social Return on Investment). Even Bono has got in on the act saying that ‘change the world’ efforts should be driven by data.
There’s a wider question though, beyond any individual founder, investor or startup. Does money going into a startup ecosystem (say Â£1 billion) give a return? This would be a question of combining all the investment that goes into the different stages of startups (including the money lost on startups that fold) as well as looking at the money made or lost for the Government through taxes or tax breaks. Then you’d have to look at what problems had been solved as a result.
There are no simple answers but it’s worth us setting up some experiments to test the impact of different approaches. Related articles
Watched a funny little episode unfold last week as we walked past the Royal Festival Hall. As we crossed across Waterloo bridge we spotted what I first thought was one of those cameras they have hanging from wires at sports stadiums — but then we noticed there weren’t any wires. It was one of these:
A team were using it to film in and around the concrete buildings and it was pretty eerie to watch. As Â soon as they let go of the controls it just assumes a perfectly still and level position hovering in the air. What was funny was that they had a crew of people in high viz jackets to close off the area on the ground anywhere near where it went. It reminded me of the man with the red flag walking in front of the first motor cars. I wonder how long it will be before having drones around feels normal.
Care homes are in the news again and not in a good way. The combination of an ageing demographic, shrinking public finances and a history of policy neglect points to that horrible word — a crisis.
Around about the time of the Dilnot Report a few people suggested the idea of a National Care Service and the idea is still around. I’ve started wondering whether it might be an opportunity to create the first 21st century public service. If you could start from scratch without the inertia of an existing bureaucracy how would you go about building it?
Most of my workflow is done through email. I’m a big believer in Inbox Zero and generally I think I’m pretty good at replying to people in a timely and hopefully helpful way.
But over the years I’ve noticed that there are certain emails I receive that completely knock me off balance. They start a cycle that means my inbox starts filling up again and I’ve been trying to work out what it is about them so that I can avoid sending similar emails myself and work out how to get myself back on track more quickly.
They basically have two characteristics:
They contain multiple asks that require multiple pieces of research — hence they’re difficult to add to a task list
They include things that really should be talked about face-to-face or at least on the phone
The steps to get over them are:
Recognise the email and realise I need to deal with it
Pick up the phone and sort out the bit that needs to be talked through
Set aside a time to deal with the multiple asks and put it in my calendar so it gets done
Sounds simple doesn’t it? But they do still hit me for six every now and then.
We’re going through induction for the next cohort of BGV teams at the moment, part of which is sorting out the paperwork around our investment. A few months ago there was a bit of chat online about ‘handshake deals’ rather than complex legal contracts. Fred Wilson particularly would rather things were simple:
We negotiate a sophisticated set of documents when we invest in a company and for the most part, those documents never come into play. Many times when things go badly, we rip up the documents and decide what to do based on an honest discussion among the interested parties. When things go well, all we need are the stock certificates.
We get a few questions at BGV about why we make investments in the way that we do. Especially because we’re ‘social’ which means there are a whole range of options to choose from such as loans, revenue participation agreements or even social impact bonds.
We make Â£15,000 equity investments based on receiving 6% of the ordinary (sometimes known as founders’) shares in the company. We don’t ask for any preference or special rights. We don’t ask for a seat on the board. We don’t even ask the founders to draw up a shareholders’ agreement with us. The paperwork is still a bit fiddly but we try to make it as easy as possible for the teams.
Why do we do it that way? Firstly it’s the simplest and if things go well for our startups, things will get very complicated with later stage investors if we mess around. But secondly we do it because it feels right. Once we hand over the money, we have very little say over what the teams do with it. However our incentives are exactly the same as the founders because we have exactly the same type of shares as they do.
David Lee writes that ‘investors are not your friends’ and he’s right. I like his analogy of us being like fans. We’ll stick with our startups through thick and thin but that doesn’t stop us from having opinions about how they should go about getting to the top of the league. Fundamentally we’re on the same side.
The strongest evangelisers of Bitcoins have always been libertarians. But an increasing majority of the people interested in Bitcoin are only â€œlibertarianishâ€, despairing of government rather than opposed to it.
I’m not quite sure what to think about Bitcoin but the feature in this weekend’s FT has a healthy level of scepticism which probably mirrors my emotion towards the idea. When a financial asset is ‘interesting’ and fluctuates wildly up and down, I tend to stay away. I’m not anti-government but I also doubt that governments will retain a monopoly on currency forever. To be honest I’m more interested in innovation in banking than in currencies. A user-friendly system for making transactions and financial planning — now that would be truly radical idea. Related articles
We shouldn’t live in a universe of solipsistic startups where I start a company and produce things only for myself and for people who resemble me.
The Unexotic Underclass is a pretty interesting blog post bemoaning the polarisation in the startup world about what problems are worth solving (thanks to Ivan for the link).
At BGV we mainly look for startups solving problems for groups of people that many startups don’t think of as important markets. We’ll be announcing the next batch of teams soon but they include teams working on everything from services for care homes through to young people struggling to find work. I guess the key for us though is that they’re doing it in an interesting way. There’s no point just recreating existing services in digital form — we always look for something that can be radically better. Related articles