Big Tech malaise

I loved that the FT published a version of Cory Doctorow’s Marshall McLuhan Lecture in the FT Magazine. On the surface it seems so ‘unFT’ – both in style and approach – but it’s reflective of a lot of conversations I have with people in the tech and finance worlds.

They’re often called ‘Big Tech’ but the biggest tech firms aren’t just big, they’re ginormous – both in terms of their financial power and influence over our lives and politics. They’re Big with a capital B. And I don’t think it will last forever.

The backlash among activists and people in the industry has been going on for a while but as Cory points out, now the experience of users and customers (often advertisers) is getting worse and worse. At some point, people and Governments will break.

It strikes me that the moves by some of those large companies to do share buybacks and even (whisper it) pay dividends smacks of desperation. It’s a defensive play to prop up share prices for a bit longer and an admission that they’re not the best allocators of capital for innovation.

I think that leaves lots of space for new startups to create value in a more sustainable way. And if those startups learn what the current generation of giants forgot (that you need to be able to demonstrate that you have a positive impact on the world), then the future of tech is rosy. Those companies that success will still be big but not Big.

Start With Why

But probably don’t bother reading the book

My second ‘book a week’ of the year was ‘Start With Why’ by Simon Sinek. It’s linked to one of the most viewed TED talks of all time which I watched after reading the book (I’m not sure which came first — the book or the talk).

My short review would be ‘watch the talk rather than read the book’. I ploughed through it but didn’t enjoy it much. It’s very repetitive and the tone of voice is a bit grating. There’s no elegance to the writing compared to Black Box Thinking which I read the week before.

Digging a bit deeper into why I didn’t like it, I think it’s because when you work in the tech for good world, everyone starts with why. All the founders we work with have a social purpose and if they need convincing they should start with why, you’ve got something to worry about.

The strange thing is that Sinek often talks about companies that he says focus on the why but doesn’t say what their reason is for existing. I don’t disagree with the examples — Southwest Airlines, Apple, Microsoft are all good companies — but he doesn’t say what their real social ‘why’ is. It’s all a bit vague. Southwest is about letting people travel more. Apple is somehow about creativity. Microsoft about ‘a PC on every desk’. But the why of all those companies is much more dominated by ‘to make money’ than any real social purpose.

The other section of the book that I didn’t like was the one about mixing ‘why’ and ‘how’ . It’s very muddled. Sinek seems obsessed with the idea that the charismatic leader who defines the why can’t be involved in the how. Walt Disney needed his brother Roy. Steve Jobs needed Steve Wozniak. Maybe that was the case for those companies but it’s not a universal principle. The idea that as a ‘visionary’ you can just ignore all the practicalities and hand those over to someone else is a bit 20th century.

Of course you should start with why. I wholeheartedly believe that the world of business is gradually shifting to that conclusion but I don’t think this is the book you should read to help you on the journey.

Two revolutions


Occasionally I get to go on some fun days out for work. Yesterday Virgin Media Business invited me to help them think about the future of social enterprise for the morning. The spin was that we were going to do it on the London Eye — six of us in a pod with an hour (twice round) to think through how social business might change over the next 30 years and then explain our thinking to Richard Branson.

From where we are now, it looks like social enterprise/ventures/business will be a much bigger thing in 2044. There’s been a rapid growth in finance available which shows no sign of slowing down and a generational shift towards more people wanting to start or work for organisations that have a positive social or environmental impact. Add to that growing customer demand for more ethical information about the products and services they buy and governments looking for help in solving the big social issues they face and it feels like something big is starting to emerge.

What we hoped as a group was that social business wouldn’t be a ‘sector’ in 30 years time — it would be what all businesses do. Almost all businesses would be created with both social and financial goals in mind, all businesses would have to live up to high ethical and moral standards and all finance would have at least a ‘do no harm’ approach if not a more pro-social or environmental goal.

We also talked through what role technology will play. We now know it’s not universally positive — left to their own devices, technology companies and creators don’t always have society’s best interests at heart. You won’t be surprised to know that I think we should focus on tech that matters, directing technological innovation and application towards important problems rather than just daily annoyances. That’s something the tech industry is only just waking up to but hopefully in 30 years time will be the norm.

Unexotic but interesting

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.
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Guy Kawasaki’s 10 Mistakes Entrepreneurs Make

Here’s a great little video of Guy Kawasaki speaking at the Haas School of Business at UC Berkeley on 10 mistakes that entrepreneurs make — particularly if they’re rockstar engineers trying to disrupt the pet food industry.

  • Multiplying big numbers by 1%
  • Scaling too soon
  • Partnering
  • Pitching instead of prototyping
  • Using a font smaller than 30 points
  • Doing things serially
  • Believing 51% is control
  • Believing patents = defensibility
  • Hiring in your own image
  • Befriending your VCs
  • Thinking VCs can add value

The Power of Habit

We all do things without thinking about them. We swallow our food after putting it in our mouths without too much thought and it’s not too much trouble to put one foot in front of the other without having to remember how. The reason is that our brains have evolved to make it easier for us to not to have to bother to consciously think about some things — we’ve developed a neurological response which we more popularly call ‘habits’. The premise of Charles Duhigg’s book The Power of Habit is that if you can teach the deep parts of your brain habits that are useful, you’ll do them more often and without the pain of having to motivate yourself. It’s a very simple loop — a cue leads to an action which gives a reward. If you can set up that loop and practice, your brain will gradually learn to spend less effort thinking about it.

Once you’ve mastered that you can apply it to the things you want to improve in your life — whether that’s eating healthily, sleeping better or exercising more. There’s also pretty good evidence that some habits can become ‘keystone habits’. Exercise is the most obvious one — it turns out people who exercise regularly are also more likely to have good habits and although it sounds strange, people who make their beds are also more productive. I certainly found the whole of the first section of the book — which charts the emerging science of habit formation — pretty interesting.

The second two thirds of the book are about organisational habits and social habits. They include the harrowing story of the Kings Cross underground fire and the organisational dysfunction that caused it. It tells the story of Paul O’Neill’s reign as CEO of Alcoa which is a really interesting positive story which also has lessons about CEOs who by focusing on ‘shareholder value’ are probably getting things wrong. There’s also the story of how organisations can take advantage of the science of habits to make more money — something ‘big data’ has made much more possible. The example in the book was used to trail it — how Target knows whether you’re pregnant based on your shopping habits, sometimes before you do.

The final section looks at the habits of societies. It tells the story of how Rosa Parks personal protest became something much larger and changed the habits of a nation towards a whole section of its population — in part it’s a story of her habits and the way that religions at their best are a set of habits and routines and often have a hugely positive impact on the lives of their followers. It also draws in the science of social networks (which I know much better) to show how change spreads when the conditions are right.

It’s a fantastic book and well worth a read. As you might expect of a New York Times journalist it’s incredibly well written with a lyricism and attention to character that firmly pull you along. I don’t know whether it’s an accident but I’ve managed to get into the habit of running every day since I finished the book last week and it certainly made me want to get back into the habit of reading great books more regularly.

The Five Dysfunctions of a Team

For the first Startup Book Club we read The Five Dysfunctions of a Team by Patrick Lencioni. The team is often described as the most important aspect of founding a startup but it’s incredibly difficult to assess other than looking at the experience of the individuals. The Five Dysfunctions goes beyond that though and is one of the most useful things I’ve read on what to look for in the way a team works together. More impressively it also has some good suggestions about what to do about it if it’s not working.

The book is written from the point fo view of Kathryn — a fictional turnaround CEO of a Silicon Valley startup with a hundred or so employees. The team in question is the executive board and after watching the way they work together for two weeks, Kathryn takes them out of their office environment and starts to confront them about their dysfunctions by explaining a model she draws on a whiteboard.

  • The base of the pyramid is absence of trust. Do they know anything about each other and feel comfortable sharing with each other?
  • The next level up is fear of conflict. This is usually the most obvious sign of dysfunction in early stage startups for me although I think I did used to misread it. If a team can’t have disagreements and work through them, they’re often holding back.
  • Next comes lack of commitment — this isn’t the same as commitment to the cause, it’s about commitment to decisions. The easy way to spot it is whether the team having the same debates over and over again.
  • Avoidance of accountability — how do they deal with failure.
  • Inattention to results — do they know what they’re trying to achieve and all

At BGV, because we’re working at such an early stage, it’s not really possible to know whether a team has those dysfunctions at the time we select them. We get some signs though and actually most of the interview is about assessing the team (we make our judgement about the idea from applications).

Once we’ve selected teams and are trying to help them develop, the thing we focus on is honesty, which sounds simple but really isn’t. Getting any group of people to be honest with one another takes time and effort. We’re constantly trying to get the startups to share what they’ve learned — whether it’s good or bad — and also we ask them at least twice a week what they need help with, which is a good way of checking how honest they’re being with themselves. Having spent a bit of time with them now I can safely say they’re on the right track.

The book we’ve chosen for the next Startup Book Club is very different but no less valuable to startup life — it’s Where Good Ideas Come From by Steven Johnson. You can sign up to come along here.
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The Startup of You

Reid Hoffman and Ben Casnocha’s book The Start-up of You

 went straight to the top of the best-seller lists this week and it’s not difficult to see why. I read it in a couple of sittings and once I’d overcome my British reserve about the slightly cheesy style of business writing I have to admit it is a very good book. It’s also well worth listening to two podcasts with Reid Hoffman that add to the argument and advice in the book. This one of a talk he gave at Stanford University and an interview with the ever brilliant Peter Day for the BBC’s World of Business.

It’s really a book about how to get yourself in the position to start a startup or create new opportunities in your career. It suggests a few things that I did back in 2005 when I left Demos such as saying yes to events I wouldn’t previously have gone to and taking people who I only knew a little bit for coffees and drinks (see the Strength of Weak Ties for why). That all led to me finding new networks of people and being exposed to plenty of new ideas — I ended up spending a very odd Valentines Day with an amazing group of people that included the very nice man who is now Denmark’s Culture Minister for example.

All of the stuff in the book about Plan A, B and Z is really good advice. I actually don’t think most people should just “jump off a cliff and assemble the aeroplane on the way down” and start a startup because the financial risks can be very high. You need to be comfortable with the ‘downside case’ or Plan Z as Reid and Ben call it for it to work. What pains me is that there are some people who would be brilliant at starting something up — in fact much better than many people who are successful as entrepreneurs — but who don’t because the ‘scene’ puts them off.

I’ve met Reid Hoffman once and spent half an hour talking about early stage investing for the Startup Factories report, quite early in the morning if I remember rightly. He’s a pretty impressive guy all round but there’s one thing he said that I remember clearly as I pushed him on why he works with so many companies and how he chooses what to work on. He said with a smile, “I’m trying to build new institutions that help millions of people and last forever”, knowing how ridiculous is sounded, but he was at least partly serious — startups were just his vehicle for achieving social change. I wish more people in the tech world thought like that.
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Laptops and Looms

I spent a wonderful three days last week in Derbyshire talking about how we could use everything we’ve learned about creating and supporting digital technologies to start a renaissance of making things. Instigator-in-chief was Russell Davies who wrote a little bit about why we were getting together in his Wired column last month:

We need an economy that makes things again. And I’m not alone in thinking this. The generation that built the web is tiring of the immaterial and is turning back to objects: to 3D printing, to laser-cutting, to Arduinos. And maybe they can — as with the web — transform hobbies and eccentricities into industries.

We kept it all a bit Bilderburg as we were worried that hundreds of people would want to come and we had no idea whether it was going to work or not, but on reflection it was rather good so we decided we’d do something a bit bigger and more organised next year. At the end of the three days we all agreed to write down some of our thoughts from this year, so here goes. Ten lessons and questions the discussion raised for me:

  1. It’s easy to romanticise the industry of old but much of it was horrible and remains so in the countries where we now outsource many of our manufacturing needs. If we’re to bring manufacturing back to Britain (which I think will gradually happen over the coming decade) we need to think differently about the economics of consumer goods including the jobs created and how to eliminate the environmental impacts.
  2. There are very good reasons why the manufacturing of consumer goods and electronics shifted East. The skills of people and companies in China and the other manufacturing powerhouses are absolutely incredible and combined with low wages meant the economics made sense to Western brands. That doesn’t mean is was always the best decision though -Â this article on why the US can’t make Amazon’s Kindle is spot on and probably applies even more acutely to Britain.
  3. Craft and making things is fulfilling whether it’s a professional or an amateur pursuit. There was quite a lot of discussion of labels we put on different types of activity and people in this area. It brought back the conversation that The Pro-Am Revolution created about how those boundaries are blurring. It seemed that the boundaries were even more blurred today than five years ago to me.
  4. We talked a lot about ambition for businesses and I think there was a pretty clear split between people who were looking for this to be a world of lifestyle businesses and those who were more ambitious. Personally, while I think they’re great for the people involved, I’m not a big believer in lifestyle businesses being a driver of social change. I’m looking for ways of creating services and products that radically improve lots of peoples’ lives. As Reid Hoffman says “Things that help millions of people and last forever”.
  5. There is massive potential for software and the internet to revolutionise other sectors — including manufacturing. Marc Andeessen’s metaphor of software eating the world is pretty aggressive and I’m not sure entirely accurate but broadly I agree with the power of code to improve the way things and people are organised. There’s huge potential for digital services that stitch together resources and institutions in new ways.
  6. There’s a very important economy in Britain that is hidden from Wired Magazine. It’s a world of railway arches and industrial estates. There were a number of examples of projects that had succeeded by picking up the phone or knocking on doors to see what small businesses did and how open they were to trying new things rather than trying to find people to work with using LinkedIn or Yelp.
  7. Everybody loves owls.
  8. One thing we didn’t talk about was the renaissance of food businesses in the UK and I wonder what’s going on there. I’d like us to get more people involved next year who are finding new ways of creating food using tech enabled processes. I wonder whether people like Square Mile would have been able to grow in the way they have without technology, both in terms of manufacturing and ways of reaching and communicating with their customers.
  9. Dan Hill pushed us to think about what we should tell David Cameron. I’d like to see a huge increase in funding for manufacturing apprenticeships — with financial incentives for people to do them and businesses to take them on. One local government thing would be commercial use restrictions. I think it’s got to the point where it makes little sense to have demarcation within the ‘business’ bracket and I’d get rid of them altogether. I’d also create an empty building tax — doubling business rates on properties that are empty and forcing local authorities to sell all buildings that meet the empty buildings criteria. That way we should have many more spaces where people can start businesses cheaply to see whether or not they are going to work.
  10. All good conferences should end with a spot of cricket at Chatsworth House.

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Defining Accelerator Programs

As we start working on The Startup Factories there are a few things we need to get straight. First of all we need to try and settle on a definition of what constitutes an accelerator program. Quora is doing a great job of listing the kind of scheme we’re interested in as they pop up, but what are the defining features? Our first thoughts are:

  • They work with pre-seed stage companies — usually with small teams (2–4 people) of first time founders.
  • They are selective — they have some form of application process, this could either be by referral or by an open application system with expert judgement that picks the most promising companies.
  • They are time bound — they have an intense period of support for companies that usually lasts for three months, although there is often some form of support beyond this period.
  • They support teams in cohorts — they tend to take companies in batches to create peer support. This can be anything from six per cohort up to over 30 in the case of Y-Combinator.
  • They have a heavy focus on mentoring — bringing in people from the local tech and business communities to help the companies
  • They have the aim of securing further funding for companies. Accelerators are often described as ‘on ramps’ to the investment world.

Then there are a few features that accelerators have different approaches to:

  • Providing shared office space — Y-Combinator and Seedcamp don’t provide shared office space, Techstars and Springboard do.
  • Providing finance at the beginning of the program — While most accelerators do provide finance up front, Village Capital for example provide a prize at the end of the program.

I’m sure we’ll come up with a sharper definition as the project progresses — in the grand scheme of things it’s early days for the accelerator model and things will change over the next few years. There’s also a lot of room for diversity within the model because the context makes a big difference. Whereas we know an awful lot about starting companies using bank credit because the model has been in place for centuries, we’re only just learning how to create and support new businesses in the internet age.
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