The accelerator finished last week and my latest cohort of startups has flown the nest. Insert shedding-a-tear emoji here. I'm super proud. And a personal milestone: that makes 20 startups I'm connected with, either directly or via R/GA Ventures.
Campaign magazine did a great write-up and video of pitch day. Campaign noticed that five of our nine startups were pitched by women founders. A shift towards normality after last year's male-skewed cohort, but still not representative of the real world: ignore the presenters themselves and look at the companies in their entirety. Only five of the nine startups have women in the founding teams. It should be all nine. There's work to be done.
Here's a puzzle. What connects these two startups, both in the 2018 program:
The rationale I gave to the R/GA Ventures investment committee was the same in both cases.
The logic goes something like this...
Commercial real estate is changing. The days of the 25 year lease are over. We're seeing the WeWork-isation of everything. By which I mean, instead of long leases, we see not 5 or even 3 years, but companies moving to annual or month-by-month leases. This provides flexibility (reduced risk, ability to grow) plus access to pooled services normally only available to much larger firms.
Why is this happening? We can guess. My hunch is that it's to do with Ronald Coase and the internet. In 1937 Coase asked why firms exist. If the free market is so great, why bundle together everything from finance to marketing to tech inside one company; why not do everything by contracting out to the market? The answer is that the free market isn't free. There's a cost associated, and firms exist to make everything inside them cheaper.
But then the internet happened. Transaction cost dropped precipitously. Now firms can be smaller than ever before. Consider startups: everything is outsourced except core activities. Finance, HR, marketing operations, customer support, etc. Tons has been taken over by software (or rather, by the people at external firms who provide the software).
So firms are smaller and more nimble than ever.
Aside: I think the same dynamic is responsible for the fact that some firms are more_gigantic_than ever. There's a bimodal distribution. Another effect is the growth of freelancers as a mode of employment, and what is either called the sharing or gig economy depending on the class of the worker: "sharing" if it's rich people renting out their homes on Airbnb; "gig" if it's working class people renting out their bikes and their sweat.
These firms pop into and pop out of existence. They don't want 25 year leases. They don't want to do fit-out, or manage their own office services.
This trend (here's my guess) is only going to continue.
Assuming this is true, what are the implications?
One shift I think we're seeing is that property owners are no longer planning (as much) on making their profit from rent. Instead rent should get them merely to break-even. Profit comes from selling services to their tenants.
These services have healthier margins than property, and they're charged on a recurring basis. Services like the usual ones: gas, electricity, cleaning, security. Then also higher-level services... like office productivity, and coffee. Bingo.
The shift is parallel to what happened in the consumer space. FMCG (fast-moving consumer goods) used to sell to consumers via supermarkets, unit by unit. Marketing was focused on keeping consumers loyal to the brand. We're in the middle of a shift to subscriptions--look at my oft-referred-to purchase of subscription shaving supplies co Dollar Shave Club by trad FMCG giant Unilever for $1BN. Marketing is now focused on customer acquisition, and highly targeted.
As it is in the consumer product space, and as it happened in the software space (from boxed software to SaaS) and also media (from DVDs to Netflix), so (I believe) it's happening in the property space. A shift to a services model.
What Beringar and CupClub have in common, for me, is that they are both beneficiaries--and will continue to be beneficiaries--of this property trend.
There were other reasons to invest, to be sure, but I made this same argument for both of them, and I get a kick out of that.
Is this all correct? Honestly? Who knows. It's a hunch.
It's useful to have a hunch about the bigger picture, because then my hunch-making muscles get some feedback. I have a similar hunch about all of the startups I've worked with. Sometimes it's obvious, sometimes it's not. Once you have a hunch you can build models and do research to check assumptions. Hopefully over time my hunches will get better.
I'm guessing that to proper investors (I just play one on TV, as they say) this kind of thinking is painfully obvious, so apologies for talking about how to suck eggs.
It's Wednesday of week 12, which means the big pitch event that we've all been working towards is tomorrow morning. The pitch decks for each of the nine companies are looking great. There's been a ton of practice. The attendee list is also looking good. The program team around me is working super hard.
Accelerators usually end in something called Demo Day. Everyone pitches. Everyone claps. In theory it's great networking and a kick-off for investment, but my feeling is it's more of a finish line to the program. Everything has to be done by this date. No loose ends in the business plan, or the articulation of the product. Demo Day is a forcing function. The real work happens next, so the past couple of weeks I've been saying to the founders they should fill the week following the program with investor meetings.
The risk is that because the program is so full on, you take a breather in the week following. Then you arrange meetings, and the emails take a week to get through then a week to arrange. Then suddenly it's a month later, and you can no longer say as your opening gambit "so, a lot has changed in the last three months."
Pace yourself. I can't remember who described to me closing an investment round as "sprinting to the start of a marathon" but it's true for finishing these programs too.
This will be the final mid-program reflections piece.
I've been thinking about the other side of the value equation: what do corporate partners and sponsors get out of these programs?
Here are all the posts so far:
Bonus post from 2017:
Half of these 163 are corporate backed.
Helpfully, the report gives reasons why a big ol' corporate would want to back an accelerator. Benefits:
Rejuvenating corporate culture to create an entrepreneurial mindset among employees
Creating an innovative brand that attracts customers, business partners and future employee
Solving business problems quicker and at lower risk
Expanding into future markets by accessing new capabilities or channels
Which, yes ok, I buy:
It's all about innovation.
I believe-although I can't prove-that over the 15 years I've been working in it, innovation has become more central to more businesses. It used to be buried in R&D departments (engineering) or "Labs" (often marketing). Now it's at the top of an organisation.
Why? Again, only a guess, but for what it's worth here's my take: technology continuously changes and creates new opportunities; a market of technology-native companies means both the competitive landscape and consumer expectations also change rapidly. Innovation is how to keep up and get ahead.
A friend told me this, probably apocryphal, story about British Sugar. British Sugar processes beets. They are the sole purchaser of sugar beet in the UK. How much they pay and how much they buy is specified in legislation. How much the sugar sells for, and how much is produced, is similarly on a quota. Consultants are brought in periodically to find optimisations in the business.
One day one bright individual realised that the by-product of sugar manufacture is hot air. What needs hot air? Greenhouses. Tomatoes. So now British Sugar is the largest producer of supermarket-sold tomatoes in the UK. I am assured this story is legendary in management consulting circles and held up as the pinnacle of consultant achievement.
I just googled to check veracity. No luck. But I did discover that British Sugar is switching from cultivating tomatoes to cultivating cannabis.
Despite my 15 years in the innovation game, I couldn't tell you with any authority what it means.
I can tell you the results. The results of a business innovating are things like:
It's harder than you would think for an established company to do these. Companies are optimised to continue doing what they already do. They are intricate machines and so, in order to maintain smooth-running of the machine, individuals are discouraged from arbitrarily changing what they do day-to-day.
Yes, a good business will always be looking for "new ways of doing things." But new ways are non-obvious because the machine cuts across lots of people who may not even know one-another. And even when discovered, there are vested interests in the old ways: it's not easy to sit in a meeting and propose, say, automation or a website to replace multiple Excel spreadsheets, when that means your buddy over the table is going to be put out of a job.
All of which is to say: discovering new ways is tough.
So innovation itself is not the result, but a whole grab-bag of processes to get there. Such as:
You can add new product lines without adding new internal structure or direct reports
Plus old-school R&D, plus simply working to invent and launch a new product and service, plus communicating new ideas, plus changing employee incentives to encourage new approaches... Etc.
And of course: working with startups.
Startups are technology-native. They make decisions with a customer-first mindset, prepared to sacrifice product, strategy, and existing practices if that means serving the customer better (to me, this is why startups differ from incumbants. It's a fundamental difference in organisation). They embody "new ways of doing things." Simply exposing corporate employees to the startup mindset can be transformative!
But there's often hand-holding required to get corporates and startups to spend time together, let alone work together. And, even when the benefit of working together is clear from the outside, corporates--as I said earlier--resist new ways.
The job of an accelerator is to reduce that friction. Accelerators help corporates innovate using startups.
Are accelerators effective at helping corporates innovate?
Well that's a different question.
Ideally what we'd see, in addition to the accelerator itself, is corporate engagement like:
But we don't, not always. Some corporates do some of these; all could be doing more.
I think: accelerators are not as effective as they could be. Too often, accelerators are considered in isolation from other innovation processes. Innovation is poorly coordinated, done piecemeal, and best practice is not shared enough.
There's a phrase in the marketing world which has dropped out of fashion. Agency of Record:
In the world of marketing and advertising, Agency of Record (AOR) was typically understood to mean a single agency responsible for all the services that a particular business might require. These services traditionally included brand strategy, creative and media placement, but today, can include a mix of other services as well, such as interactive media, web development services and digital marketing.
Advantages (see the above-linked article) include effective strategy; ownership; efficiency; trust.
more businesses now rely on a mix of different agencies to provide various specialized services.
My take is that what we need to start thinking about, for effective, coordinated innovation, is Innovation Partners.
Instead of a corporate having multiple strands of research, new product development, startup outreach, and so on, this should be coordinated by let's say a VP Innovation. Their job is to set strategy and to coordinate. Also to choose when to do work internally, and when to bring in partners. This role already exists, and I think it's important to separate it out: corporates shouldn't be innovating the whole time, in every area. Sometimes they should simply be executing in an excellent way. The job of the VP Innovation is to choose when and how to shake things up.
This points at a possible future for the traditional agency.
Given agencies are already tasked with finding new ways to communicate with consumers; to work on new products and services; on organisation change and digital transformation; on startup outreach, I feel there's a new way to package this and also solve the innovation effectiveness problem:
I'm saying agencies should step from the pier to the boat and call their role what it has already become: the stated ambition of the agency of tomorrow should be to become Innovation Partner of Record.
A new phrase for an old relationship. This is what I've been calling it in my notes, and I think it makes sense.
By which I mean: an agency should aspire to consult directly to the VP Innovation on all the innovation processes a corporate undertakes. Sometimes the individual projects will be run internally, sometimes the go-to provider will be the partner of record, and sometimes by a specialist in the partner's network will be brought it.
Translate this back to accelerators: a startup accelerator should not be run on its own, but as part of a package that includes internal comms and strategy; an audit of procurement processes; events and external comms to increase dealflow; and so on, and so on.
Thinking about my own program, this is why the Services phase is so important: the brand, visual identity, and messaging work is not merely value-add creative services for the startups in the program. It's work to make the startups understandable and easy to work with for the corporate partners attached to the program, and is a big part of what makes the Venture Studio model effective.
To my mind, we're still at the beginning of understanding all of this.
R/GA Ventures is the innovation and investment arm of R/GA. Behind the scenes these programs are not just about running the core startup accelerators. In the programs which have corporate partners, there's already strategy work to understand business unit needs and build towards meaningful collaborations. As we learn more, the process develops.
Of all the agencies I've seen, R/GA is the closest to realising the "Innovation Partner of Record" goal.
So I'll wrap up with a quick pitch: if you're a VP Innovation or similar, you should talk to R/GA Ventures about running a program.
Not least because if run it in London you'll get me as program MD, and that would be neat.
I meet with each of the nine startups for an hour every week. The session is called "Office Hours" and I'm pretty sure that all startup accelerators do something like this.
For me, it's about founder coaching and generally making sure each team is getting the most out of the program.
I first saw how this works because of Jon Bradford. I was lucky enough to sit in on his Office Hours sessions in 2014 when he was MD with Techstars London. I've developed my own style since. All the good bits are from Jon.
"MD" stands for "Managing Director."
What does a program Managing Director do? I can't tell you in general, but I can say what I do.
I lead on outreach and then selecting the startups. I make the case to the rest of the team about why each startup is worth investment, and I have a thesis about what's happening in the market. I lead on deal negotiation, and I coordinate the legal team.
Programming: I work closely with the Program Director, Lisa Ritchie, and her program team. In theory I'm backstop if there's trouble, but there's been little of that: Lisa both runs a tight ship, and thinks imaginatively ahead of the puck. So I'm consulted only as needed, usually as a startup is being handed off between the different parts of the program. Because of my design consultancy background, I'm a second pair of eyes on the briefs for the agency-led Services phase. I bring in much of the network of experts and advisors, and founders for Founder Stories sessions.
I run Office Hours. I coach the startups when they're in the room, and evangelise for them outside it.
These reflections are about Office Hours. Although this is the ninth paragraph, it was the final paragraph written. I finished writing this post, read it through, then came back here to give you a warning: there are too many words, and I have that horrible deer-in-the-headlights feeling I sometimes get when doing public speaking that, holy shit, everything I'm saying is obvious and asinine. So I'm going to do what I usually do when that feeling comes on, which is to double down and barrel on.
I estimate that I've led or sat in on 250 hours of Office Hours sessions. This doesn't include advisory sessions or board meetings. I don't feel that 250 hours is enough to get good at it.
Also: who the hell am I to be giving advice? I'm less successful at the startup game than a lot of the people I meet with, and with the rest that's only because they're just getting started. But I've seen a lot.
So given I don't feel particularly good at it, I keep notes of approaches that seem to work. This is something I've been doing for a couple of years, on and off: privately journaling at the end of the week about working practice and team dynamics.
Then I come back to the approaches later. I don't mean to follow them slavishly. Only that, in a session, I try to remain conscious of them rather than reacting in the moment.
Six things I try to keep in mind while I'm running an Office Hours session:
1. Do they know how to run the room?
My first session is about us getting to know each other, and talking about what we can expect from Office Hours. After that, I start by asking a question: what's one great thing and one challenging thing that's happened over the last week. (Then we dig into the challenging thing.)
About halfway through the program, I put more of the agenda in the hands of the founders: at the beginning of the meeting I get them to write the agenda up on the whiteboard. This becomes habit pretty quickly. If I'm not clear what a topic is, or what kind of response I'm being asked for, I say.
Much of any founder's time will be spent meeting advisors and investors. There's a knack to running the room and getting what you want out of it, while maintaining a feeling of collaboration and conversation. Meetings aren't just time you spend in a room together. Meetings are an atomic unit of work. They should have purpose and outcomes, although these don't necessarily need to be stated. There are lots of small ways to make sure attendees don't drift or feel lost.
Most of the founders I work with already know how to run a room. At which point, reassured, we can go back to chatting.
2. Am I thinking a couple weeks ahead?
We provide a bunch of programming to the startups, and I want to make sure it's effective.
For example, ahead of "mentor" meetings with experts and advisors, we discuss how to pitch (5 minutes to intro the company, then dig deep into one or two issues. They may have to work to make it useful). During the Services phase, I try to bring up the differences between how agencies work and how startups work, and also how to integrate the deliverables.
Absent anything else, I think ahead to the eventual pitch deck. I'm imagining the slides. If there's not yet a strong traction slide, I work backwards through sales and then to processes around customer development, and guide the conversation to those topics.
Because of this, I need to have a strong opinion about where the company should go and how it will get there. I spend a lot of my time between Office Hours thinking about this. This isn't so that I can say there is a "right" or "wrong" answer, it's so I can have a good understanding of the complexity of what they are taking on. Rather than "correct" or "incorrect," it's useful to feel out decision qualities such as "ability to easily iterate" or "here be layers of unconscious assumptions and hope."
Founders are very convincing people, so I have to watch for where an argument is strong because of good analysis versus mere charisma. Sometimes founders convince even themselves. There's a knack to jumping between sharing visions of the future and robust self-honesty.
My personal mantra is: strong opinions, weakly held. I have to remember that my view is secondary to what the founder and the team wants. Of course my opinion might be that the founder is missing something, so I have to satisfy myself that their decision is made with a good process. (And sometimes the choice is between two routes and the answer is: do whatever you're ok waking up at 4am and thinking about for the next 4 to 7 years.)
3. Why hasn't the founder answered this question already?
These founders are some of the brightest people I've met. If anyone has the mindset to tackle any challenge they meet, it's them.
So when a question is brought to Office Hours, I try to ask myself why the answer is not obvious to the founder. I try not to immediately answer it myself.
(There's another reason why I shouldn't leap to answering questions, in that the founder has been closer to and thinking more deeply about their startup than I ever will. In the end, all I really have is a perspective.)
Why might a founder ask a question?
There might be a knowledge, skills, or experience gap. This is possible. I think to myself why they have not worked it out with friends or google. We can figure out an approach together, and what I try to do then is ask smaller questions which will lead the founder to the answer for themselves.
A second possibility is that the higher-level framework has something missing. A question about, say, which product features to highlight on the homepage should be obvious given a validated model of the customer and an understanding of product differentiation. And those should be possible to figure out given their priors: in this case, a process of having a business model hypothesis and testing it by speaking to customers and investors.
So a question from a founder is a chance to dig upwards to these frameworks. Frameworks aren't axioms. They can and should change, but always deliberately.
The important thing here is not the answer, but the ability to deconstruct the question, to ask it intelligently, and to discuss it. If a question can be treated like this, then it can be worked on by the founder with their team and with their advisors--all people who are much smarter and more experienced than me. A question answered by instinct can't involve and take the benefit of all the smart people around us.
A third possibility is that the answer is clearly evident, but there is some personal or team resistance to seeing it. A resistance comes about often because the answer implies something undesirable. You'd be surprised how often this happens, or maybe you wouldn't. If it's a single founder, some possibilities are that:
So in this case, I try to help the founder be clear-eyed about what an answer means.
If it's a team, these different viewpoints can be embodied in different team members. This is not necessarily a conflict. One member might be not surfacing the answer because they imagine another team member is highly invested in a different approach. Possibilities are unvoiced from an overabundance of care. My job here is to help them become a functional team, and one way to do that is to illustrate the power of saying conflicting viewpoints out loud. So I try to point of differences of opinion. Just because differences of opinion have been unearthed does not mean they need to be resolved. Differences can be tolerated and embraced. (Although courses of action, once decided, need commitment.)
I have a hobby interest in small group dynamics, so I love these sessions intellectually. Though they are the hardest to work.
4. There is often a crisis. Fixing the issue is not my job.
A special type of Office Hours is when there's a crisis. I would characterise a crisis as any time the founder brings urgency into the room--whether it's good or bad. There are times when sales are going just too well! "A great problem to have" can trigger a panicked response just as a more existential crisis such as an unhappy team.
I have to remind myself that fixing the issue is not my primary job. Participating in panic validates panic as a response. But if a startup responded to every crisis with panic, nothing would get done. (I would characterise panic as short-termist thinking, accompanied by a stressed and unpleasant emotional state.)
What makes this challenging is that I often know what they're going through. Sometimes I recognise a situation and my own emotional memories well up. There have been sessions where my heart races, or my palms sweat, or I look from team member to team member and wonder if they realise the dynamic they've found themselves in.
So before we talk about the issue, I try to find the appropriate emotional response: enthusiastically cheer first sales (but don't sit back on laurels); get pissed off about bad news but move on with good humour; treat obstacles with seriousness but don't over-generalise. It's a marathon not a sprint, and so on.
Then use the situation to talk tactics and build some habits. I like to encourage:
I find these viewpoints sink in better when they're using in responding to a crisis.
I also like to encourage self-honesty. Sometimes my job is to say out loud things which are unsaid. Founders are very good at being convincing (both themselves and others) otherwise they wouldn't be founders. Sometimes that data that doesn't fit the narrative is left out... to others and to themselves. So I can help break that down.
There will be crises and crises and crises. But we only have these Office Hours for 12 weeks. If we concentrate on fixing just today's issue, we miss the opportunity to build habits that can handle tomorrow's.
5. Am I being useful right now?
As much as the above is useful in the long-term, there has to be a balance: these sessions should also tackle the issues brought into the room. In the last few weeks of the program, I find that we spend more and more time on day-to-day business issues. The founders have figured out how to get what they need out of me. And if they can do it with me, my hopes are high they can do it with anyone.
What do we look at? An iteration of the pitch deck. A run-through of the sales process. How to hear a "no" as a description of what a customer wants, and to use it to win the sale. Examples of pipelines and proposals. The agenda for a weekly growth meeting. Showing how the almost identical pitch deck can be re-pitched with added intensity if you pay attention to emotional narrative and rhetoric. Investor motivations.
I'm not an expert, but I do a lot of things a little bit, so I can be a useful second pair of eyes.
(I pay attention when the same topic comes up more than once and try to understand why the founder has not instinctively generalised.)
Also towards the end of the program, I get more open about some of my approaches above. The sessions get more and more collaborative. In the end I'm learning quite a lot.
6. If nothing comes up, getting to know each other is great.
I want to make it very clear that all the good stuff you see is entirely down to the startups themselves. Advice is bullshit. The bar I set myself is: can this hour be more effective than the hour they would otherwise spend building their business. Almost certainly not.
As I said above, the founder has been thinking way more about their company and their market than I have. There are experts out there far smarter than me. But there's a bigger point:
I have to remind myself it's not my company. I don't make the decisions. In the event that I do recommend a direction, I remind myself that I mustn't get offended if they don't take my advice. (It's a natural and human response to be offended when offered office is not taken.) It's not that I ought not be offended--it's that being offended would be a category error. The material I work with is the actions of the founder. The material isn't right or wrong, it simply is.
A good way to do all of the above--to react appropriately, to coach good habits, and to be useful--is for the founder, team, and me to get to know one another. The better you know each other's values, the higher the information content of any given interaction. So sometimes the best thing to do is to hang out.
Reading these reflections, I sound, even to myself, like a pompous arse. I mean, there's a very good chance that I am a pompous arse, which would be the reason why.
Honestly mostly the sessions are just chatting. I work hard to make them useful chatting, and yes I probably overthink it. My Office Hours will be more useful to some founders than to others. And I sure a lot of people, in my shoes, would do a much better job and wouldn't indulge themselves with endless introspection.
Amateur hour coaching, that's all it is.
This feeling is so strong that I think I will have to warn readers somewhere near the top. Say, around the ninth paragraph.
Here's a quote from Bob Shaw's short story "Call me Dumbo," found in the collection Tomorrow Lies in Ambush.
An aircraft factory is a machine for producing aeroplanes and it may be disastrous to attempt to improve production by piecemeal tinkering with individual departments--one must seek out in all its ramifications, and destroy, the machine for stopping the production of aeroplanes, which lurks like a parasite within the organisation.
I love this way of thinking.
Let's start from the perspective that a startup is a machine for growing. But there are obstacles which temper the growth. Our job, together, is to identify and to remove the invisible anti-growth machine.
The end of week 10.
As I write this it’s Tuesday of week 9 and it's 8.30am so there are only two of us in the office: me and the founder of one of the startups.
Week 9 marks a change of pace. For the last five weeks, "programming" (that is, meetings and workshops) has been relatively light. The focus has been on "Services"--the strategically-led creative work provided by agency teams that makes this particular startup accelerator different from the others. In addition there are weekly meetings with me that the industry universally and mysteriously calls Office Hours.
The team working on Services has produced fantastic work. It’s spot-on. The feedback has been tremendous. And the Presentations work has already resulted in exciting pitches, radically more easily understood.
Warning: working practice simplification and stereotyping ahead.
The cadence of how startups work:
Do something end-to-end, whether it's a web product, hardware prototype, or pitch deck. Get it in-front of its eventual users, customers, or consumers. The earlier and uglier the better. Observe feedback. Iterate.
The cadence of how agencies work:
Follow the process and build foundations for the first 80% of the time. Foundations are answers to questions like: what are the values of this brand? To what customer segments should it appeal, targeting what motivations? At what points of the experience of the product or service can these brand values be made evident? Then suddenly the invisible work is completed. For the remainder of the time create highly visible executions--web pages, sales collateral, dashboard wireframes, point of sales communications, guides to words and phrases to use in future marketing.
Both methods are highly effective.
The Services phase of this program poses a challenge. To a startup, agency cadence has pros and cons.
To me this last point is the most serious: no matter how much thought and strategy has gone into it, no work survives contact with the market. An iterative approach is essential.
Yet work that has been over-thought becomes brittle and slow to change.
So the risk of agency work to a startup is that it takes the startup down a dead-end with no way to turn around.
My response is to ensure that the Services phase focuses on amplifying what is already working. Create only where there is traction and proof that customers are responding positively.
Given the above, the question is why run a program that includes agency services supplied to startups? The same can be asked of the Presentations phase. I’ll let you know in another 540 words.
I said there had been a change of pace. Services is winding down; Presentations is winding up.
This four week stretch is about creating a 5 minute pitch deck. There's assistance with crafting the story, speaker training, and design help to make great-looking slides.
What's the deck good for? It's always handy to have an intro that hits all the bases: the what and the why of the product; the business potential and customer traction; the team and roadmap; the secret sauce. This intro, with adjustments, will get used for investor intros, and also to explain the company to partners, customers, and new hires.
A key skill in any pitch, whether you're a founder or a young designer, is to quickly and uncontroversially explain your idea space, so you can concentrate the discussion on what matters. For example, how to work together. This deck does that job.
Producing the pitch deck in this form does another job, which is to shake out the inconsistencies in the business.
I think of these decks as a narrative versions of the Business Model Canvas. I used to be a skeptic. Surely it doesn't make sense to outline an entire business in nine boxes on a single sheet of paper? But I’ve become a convert.
The Business Model Canvas is like an electrical wiring diagram but for flows of motivation and money. For example:
So you draw out the business and look out for gaps or anywhere the gears grind. When I'm starting a new project, I make a quick Business Model Canvas to give me an idea of any dark corners. It's not everything, but it's a sketch.
When you run through a pitch deck, ideally it should cover all the same points--but with proof too. Ok so the goal is to sell such-and-such product to such-and-such customer? Well how can that be demonstrated? Ok so the business is dependent on a special technology. Well does that tech exist, and can it be protected? And so on.
In Office Hours over the past two months, I've tried to keep in mind each company's upcoming pitch deck, and I've been steering the conversation towards exploring some of the gaps.
I believe that a good pitch (and a good startup website, and good startup sales collateral, and a good introductory paragraph) has got to include belief and desire.
Desire: make your audience see dollar signs in their eyes. Make them want it.
Belief: make this seem inevitable. Show the detail. Build trust.
The sizzle and the steak.
So given my above misgivings, why do this work with the startups? Why not operate like other accelerators, focusing on coaching and pitching?
First--some teams need to plug a design gap. If you help with the right 'kit of parts' then it's a proper leg up.
Second--the process is useful. But you could get the thinking via Office Hours and conversation, right? Why do the additional hands-on strategically-led creative if there's a risk of compromising the startup's ability to iterate?
So, for me, the answer can be found on the customer side: some customers, big and small, judge a book by its cover. Even when meeting a startup with crazy new technology, a radical business model, or simply a better mousetrap, they're put off because the website isn't professional, the sales deck doesn't quite express the whole story, or the dashboard looks a bit fiddly.
Big corporates are not monolithic. They are, internally, networks, and these networks resist anything which is hard to understand. Sales material will be passed around behind the scenes to people who are finding out about the startup for the first time. The product will be used be people unfamiliar with startup norms, and seen by people who aren't trained. An aspirational story will transmit better than a hair-shirt story. Etc.
More than that: an employee of a big corporate who takes the reputational risk of introducing a startup wants to look smart to their colleagues. No matter the quality of the startup's product, if the benefits are hard to understand or it's easy to give a kicking, it's not going to fly.
Corporates want to be innovative. A path to being innovative is to work with startups. But when they meet a startup, they often can't digest it. So either the corporate has to change. You could push water uphill. Or the startup can change--just a little bit--to accommodate the relationship. A spoonful of sugar helps the medicine go down.
Iterate with the agency cadence, then amplify with the agency cadence.
My feeling is that's what makes R/GA's programs different: in the DNA of the organisation is partnering with corporates around innovation.
One last thought. Despite all of this, startups shouldn't look too professional. The character of the team should still shine through.
Once you take away the product and the revenue model and the technology breakthroughs, the big reason that a person working in a big corp wants to work with a startup is that they love hanging out with startups.
For a few years I've run a session at Bethnal Green Ventures about sales and marketing 101. (It's an incubator for social good startups. Early stage. Great organisation.) I joke about people who work in corporates. I say they have miserable lives. I say they wish they could leave but they have mortgages and school fees and they're addicted to holidays. Instead they live vicariously by working with startups. So take advantage of it.
It's a horribly mean thing to say and it's certainly not the whole truth. But there's definitely a glamour that mustn't be washed away. So I'm also paying attention to that, in the Services and Presentations phases.
Anyway. It's Friday now, somehow. Next week: week 10.
It's the middle of week 7 and we had our third Founder Stories session on Monday. (Here's some general background on the program.)
Back in the winter of 2014, Jon Bradford roped me in to be EIR at Techstars London where he was Managing Director at the time. Techstars is the standout global network of startup accelerators. They've worked with over 1,200 startups, all via three month programs built around mentoring. "EIR"--my role in that single program--stands for
Entrepreneur in Residence and it's a fancy phrase for hanging out, lending Jon a hand, and getting exposure to all the companies and the programming while figuring out what to do next.
Founder Stories was a component in that program: every week or so, a founder of a more developed startup would come in and present their story, with a Q&A afterwards. I loved it. I'm pretty sure the startups on the program all loved it. When it came to running a program myself, I wanted something that did the same job. So I nicked the format.
Here's how it works:
I have a bunch of buddies who run startups. For a Founder Stories session, I invite one of them in for an hour-long interview with the program cohort as audience. The interview is 40 minutes; the open Q&A is 20 minutes. It's an interview because it minimises prep time for the guest.
The session, ideally, runs 5-6pm. Last year we ran it later, but that meant that people with home lives found it hard to join. So this year we're running events in the evenings as little as possible.
I get everyone in the room to introduce themselves to start with. This opens up the room, and provides practice for founders and team members to introduce their startups in just one sentence. The final person to introduce themselves is our visiting founder.
I have a pattern for the interview:
If the founder brings up a particular topic, I like to follow it along and see how it develops over the stages of their company. If they are interested in team dynamics, I like to ask how the team has evolved and how processes have been adopted. If fundraising comes up, it's interesting to follow that thread.
Endpoints often seem either unattainable or inevitable. My goal is to point out the steps and to show a chain from then to now. If you can imagine such a journey, you can work on taking it. If you can't imagine your shoes taking those steps, you won't even notice the opportunities and invitations that come your way.
Here's what I avoid:
I prefer to avoid gasping at luck or indulging in struggle. This is entertaining, but puts the founder on a pedestal: they must have been exceptional in some way to get through it. I don't want them to appear anointed. I want the founders in the audience to think, hey, that could be me.
There are small ways of building identity between speaker and audience. One is to avoid stages and use low chairs.
I want the startup story to become normal. Almost mundane. This is delicate because the founders who visit to tell their stories are exceptional. Getting this far is rare. So it's not a matter of popping the balloon but rather steering the conversation to acknowledge that success is a combination of, yes, luck, and also talent and hard work. Sometimes, for a new entrepreneur, the key to unlock success is to recognise their own talent and their own superior knowledge about their domain.
It's such a balance. My favourite founders balance humility to listen and learn from their customers and advisors, with a strong resilience grounded in an understanding of their own talent and a mysterious vision. Plus luck! It takes belief that sometimes the universe hands you luck in order to notice it and drink from it.
Here's why I think Founder Stories is useful:
A startup is as much an approach as anything else--an approach to solving problems (visionary yet iterative and data-driven), language (the strategy of startups is there for the reading, but it's encoded in a shorthand that you can learn through immersion), an understanding of what is normal (it's easier to ride the tiger if you know what to expect), and an ecosystem of reputation, introductions, and people. Reading this back, I realise that I don't mean that startups have an approach. Startups have a culture.
One of the jobs of a successful accelerator is to transmit startup culture.
(Different accelerators do that in different ways, and that they do on-top is what makes different accelerators appropriate for different startups at different stages. And just to be clear, an accelerator isn't a necessary step in a startup's life. There are many other ways to be part of the culture, and joining an accelerator should be a considered decision like any other business move.)
I say transmit because culture isn't taught.
When I think of transmission I think of the way a sourdough starter is created by taking a fist of the original starter, and growing it with flour and water.
My go-to analogy used to be that you can't cold-start a gut biome. If a person unfortunately loses their gut biome, it has to be replaced by taking a sample of a compatible biome from inside another living person and medically transferring it. But the connection with startups always got lost as I started getting into the reasons and methods of fecal microbiota transplants, so I abandoned that particular explanatory method as possibly too distracting.
Demystifying. Allowing a new entrepreneur to picture themselves further along the road. Scouting ahead to build familiarity with the language and the challenges. Hearing the story isn't (or so I believe) directly about learning.
After Emily's visit, one of the founders in the cohort said to me that she could see a bit of herself in Emily. Seeing Emily let her know that, in building her startup, being herself was okay.
It’s week 6 out of 12 so I figured I’d write a bit about how this 3 month startup program works, and what I’m learning from it.
The “#1” in the title is entirely aspirational. I'm writing this with my thumb on the tube between Moorgate and London Bridge on my way to a morning meeting. I used to write and look at email on my commute, but in 2018 I've been either reading books or running. The first due to a successful new years resolution, the second a thinly veiled response to turning 40. So let's see how much time I actually get to write these reflections.
In case you missed it, I’m Managing Director of the R/GA IoT Venture Studio which is a three month program here in London, aimed at startups in the general area of the Internet of Things, and it includes investment and hands-on support. This is the second time the program has been run in London, though there have been many more programs along the same lines in the US.
R/GA is a global digital agency.
Mostly, the startups we work with sit with us in the office.
The London program works like this:
The first three weeks are dedicated to meeting mentors and people from the sponsors and around R/GA. The goals are to get feedback on how the founders are building their businesses, and to build personal relationships between the founders and the "mentors." (I dislike the term mentors because it sets up a power imbalance with respect to "wisdom" and this is often inaccurate and usually unhelpful. Instead I prefer to call people what they are, which is experts, advisors, investors, and potential customers. But that's cumbersome so mentors it is.)
The next five weeks, the second phase, is called Services, and it's what we're in the middle of now. A team from the agency side of R/GA, which is much larger than the newer Ventures side, works with each company to refine and professionalise its offer via brand, visual identity, and copy work. Often but not always there are sub-projects focused on areas like the user experience of particular dashboard, or the design of communications at the point of sale.
The idea, which I buy, is that by presenting in a more professional way, you can close more customers, get more traction, and therefore build the value of the company. Professionalising means making decisions and nailing down brand, etc, to deepen appeal to particular customer segments by highlighting particular benefits of the product or service. So the trick is to only nail things down where there is already positive customer traction. You have to avoid carving in stone anything speculative. Untested ideas do not—or at least, should not—survive contact with real customers. Putting work into untested ideas reduces your ability to iterate them. This is toxic for a startup, because a startup is a machine for learning. All of which means there is a knack to Services.
We also lend a hand with more future-facing or operational tasks. Examples of topics hit in the Office Hours sessions (I meet with each company for an hour each week) and in meetings with our program team:
These meetings happen throughout the 12 weeks, alongside the odd workshop and fireside chat with guests.
The third phase is called Presentations and it’s about refining the pitch, the story, and the deck. R/GA New York has a dedicated presentations team, and they visit to work directly with the cohort.
There’s a demo event at the end which is a kind of finish line for the formal programming, at which point we move into a continuous phase which is internally called Engagement. This simply means that we make sure people in the R/GA agency know of all the startups, and we look for opportunities to make connections that could lead to work.
Other programs—there have been a dozen or so—have a more active strand of building collaborations between corporate partners and the startups in the cohort.
We’re working with nine companies in the 2018 cohort. R/GA Ventures investments to date number in the mid 80s. Here we have our first circular economy startup. We have our first applied biochemistry startup.
I spoke with Fast Company and they did a great write-up of all nine.
We invest £75,000 in each company, in addition to the in-kind investment of the three program phases, in return for equity.
Here’s what W6 involves, for me:
What I’m not saying is that most of the time I’m not with startups or in a meeting, I’m working with Lisa Ritchie. Lisa is the Program Director here, which means she runs operations, the budget, and the program team. Lisa has been my single hire (for this program she has hired or selected everyone else), from back before the first London program, and we run this thing together. She is even more excellent than I had hoped.
When I say “we” I mean any of R/GA, R/GA Ventures, the Ventures team in New London, this program, and the program team. The program team is me, Lisa, Soala, and Amanda. Each "we" is great, but considering this program team in particular, I couldn’t be happier to work with them.
My intention is to write more words like this.
This incredible 1933 Betty Boop animation from Snow White, to the music of St. James Infirmary Blues.
What happens when you treat animation as a pure moving visual field, rather than constraining it to representing a physics-compliant 3D simulation.
Be reminded of: the bit in Dumbo where he gets drunk. Pink Elephants on Parade.
Moods ranging from
I'm not sure what I would use these slow videos for, but I would like to find a place in my life for them.
Versus: Archillect TV. Fast moving video slideshow of GIFs, snippets, and patterns.
5 minutes of default Cisco system hold music, set to fast-cut glitchy cyber-era video.
See also: Mark Leckey's GreenScreenRefrigerator, Part 1. A black Samsung Bottom Freezer Refrigerator
stood on a green screen infinity cyc while [Leckey] coaxed it into revealing its thoughts and actions.
See also: the vapourwave aesthetic, an early-2000s musical and visual microgenre associated with
glitch art, Ancient Greek sculptures, 2000's web design, outmoded computer renderings and classic cyberpunk aesthetics.
Prisencolinensinainciusol, by Adriano Celentano. 1972. You may die laughing.
The robotic goose interface allows people to approach the birds, follow them closely and interact in a variety of ways that would not otherwise be possible without this interface.
The remote-controlled, human-haunted goose can speak:
The goose drivers can 'talk to' the geese, issuing utterances through the robotic interface, delivering prerecorded goose 'words,' their own vocal impersonations, or other sounds (such as goose flute hunting calls). Each utterance via the robotic goose triggers the camera in the robot's head to capture 2-4 seconds of video recording the responses of the actual biological geese. These video samples upload to the public web-based goosespeak database that the participants can annotate, i.e. "the goose was telling me to go away," "he was saying Hi." As this database of goose responses accretes, redundancy and correlations in the annotations may provide robust semantic descriptors of the library of video clips.
Speaking to animals not by attempting to translate, but by entering their world.
See also: Umwelt,
the semiotic world of the organism, including all the meaningful aspects of the world for any particular organism. A bat will see and inhabit a different world than a human, than a goose, than an artificial intelligence.
See also: Timo Arnall's film Robot readable world,
an experiment in found machine-vision footage, exploring the aesthetics of the robot eye.
From 2007, 3D Mailbox is an email client that visualises your messages as a virtual reality 3D environment.
The BBC covered the application,
a virtual Miami Beach, a place where your e-mails are represented as bikini clad avatars.
When you receive an e-mail the avatars appear at the entrance to the hotel's pool. Your spam manager acts a gatekeeper, only allowing through genuine messages to lounge by the pool.
Spam is dispatched to the beach, where they are represented as overweight tourists. Hitting delete results in the spam taking a deadly swim in shark infested waters.
Meanwhile your unread e-mails perform lengths in the pool. Read e-mails tan themselves on the sun loungers.
It used to be, when I went hiking, I'd step across where a stream was marked on a map or mentioned in the guide, and it would be a measly trickle or a torrential river. Well that's clearly not a stream, I'd think.
For me a stream is a permanent feature of the landscape. It's a constant, regardless of rainfall or time of year. It flows gently and runs in a ditch maybe a metre wide. It is probably clear.
It turns out this is rare.
My conception of a stream is a chalk stream.
Underground chalk acts as an aquifer, and then
Bubbling up out of thousands of springs, chalk streams collect first in ponds and then ripple over gravel beds through chalk hills towards the sea. They are typically wide, shallow and crystal clear, their alkaline waters pure thanks to the constant purifying and filtering in the chalk.
They are an irreplaceable relic of our past, created as the ice sheets retreated from England 10,000 years ago.
There are at least 210 chalk streams in the world, and 160 of those are in England.
In particular, in the south of England. And in particular, in particular: where I grew up.
I never realised that my picture of a stream isn't how most people will think of a stream. Who knew.
Stafford Beer was the cyberneticist and business management pioneer who, in the early 1970s, built Project Cybersyn for the revolutionary government of Chile. Command economy meets socialist proto-internet.
In the early 1960s, he was running a more esoteric experiment, in pursuit of his desire to build an automated factory.
From historian Andrew Pickering's essay, The Science of the Unknowable: Stafford Beer’s Cybernetic Informatics:
The T- and V-machines are what we would now call neural nets: the T-machine collects data on the state of the factory and its environment and translates them into meaningful form; the V-machine reverses the operation, issuing com- mands for action in the spaces of buying, production, and selling. Between the T- and V-machines lies the U-machine -- the homeostat, or artificial brain -- which seeks to find and maintain a balance between the inner and outer conditions of the firm
By the way,
The cybernetic factory was not pure theory. By 1960 Beer had at least simulated a cybernetic factory at Templeborough Rolling Mills, a subsidiary of his employer, United Steel
It is a core tenet of (early) cybernetics that sufficiently complex learning systems are somewhat equivalent, whether they are made of flesh and blood, or vacuum tubes. It is this tenet which allowed the audicity of the cyberneticists to consider building "intelligent" machines, or to model the brain as a network of moving information.
And sure enough, when I went to the library to consult Beer's collected papers, How Many Grapes Went into the Wine: Stafford Beer on the Art and Science of Holistic Management, Beer discusses the search for his ideal U-machine:
a self-organizing system need not have its circuitry designed in detail -- otherwise what virtue is there in the self-organizing capability? Furthermore, if systems of this kind are to be used for amplifying intelligence, a fixed circuitry is a liability. Instead we seek a fabric that is inherently self-organizing, on which to superimpose (as a signal on a carrier wave) the particular cybernetic functions that we seek to model
And he continues:
Dr Gilbert, who had been trying to improve the Euglena cultures, suggested a potent thought. Why not use an entire ecological system, such as a pond?
So Stafford Beer captures a woodland pond, and attempts to train it to run a factory:
Accordingly, over the past year, I have been conducting experiments with a large tank or pond. The contents of the tank were randomly sampled from ponds in Derbyshire and Surrey. Currently there are a few of the usual creatures visible to the naked eye (Hydra, Cyclops, Daphnia, and a leech); microscopically there is the expected multitude of micro-organisms. In this tank are suspended four lights, the intensities of which can be varied to fine limits. At other points are suspended photocells with amplifying circuits which give them high sensitivity.
The intention was to communicate information about the factory into the pond via optical couplings. Earlier attempts, reported by Pickering, included
attempts to induce small organisms -- Daphnia collected from a local pond --to ingest iron filings so that input and output couplings to them could be achieved via magnetic fields.
The state of this research at the moment is that I tinker with this tank from time to time in the middle of the night.
I have this picture of Beer, in his slippers in his basement, trying to figure out not only how to speak to this tank of water and algae in its own language, but attempting to put it through business school.
What would be the management style of such a factory foreman? Risk averse? A deep sympathy with the principles of sustainability and the circular economy? (Given it sits in a closed-system tank.)
Our modern efforts into machine learning and artificial intelligence have a familiar feel: we place the neural network at the heart of the system... and just turn it on. And although we can't tell how the neural network recognises a face or optimises a system, we can tell that they have some natural politics: AIs are unable - or unwilling - to correct for their implicit racism and sexism.
What is the umwelt of a pond? What is the umwelt of an AI?
Uber's marketplace and Facebook's newsfeed are run by captured artificial intelligences -- unreasonably efficient optimisers, blind to human feelings, natural free market libertarians; a warp core of tremendous ability and held only just in check. We don't know how these things make their decisions, but we are beginning to see the biases in their actions.
Obviously Stafford Beer's experiments came to nothing: the factories of China are not run by captured, semi-sentient woodland ponds.
Or. Who knows. Maybe we should put one in charge of Facebook.
Recents hacks are about finding holes in the deep physics of computing.
Here's a technical explanation of Spectre and Meltdown, the two recent big ones. The words alone are beautiful:
Spectre can be thought of as a (previously unknown) fundamental risk of speculative execution, one that can now be weaponized.
Here's a metaphor explaining both exploits, to do with librarians. In short, they involve measuring how long it takes for the computer to look up hidden data. Even if the data is eventually not shared, the computer has a terrible poker face.
I see this as a kind of information asymmetry. Computer chip architecture is about the regulated control of information. The design never anticipated that unregulated information - time - would be brought in from the outside.
See also: Rowhammer, which is an exploit of how memory chips work where the wild information, intruding from the outer reality, is electromagnetism and geography.
As DRAM manufacturing scales down chip features to smaller physical dimensions, to fit more memory capacity onto a chip, it has become harder to prevent DRAM cells from interacting electrically with each other. As a result, accessing one location in memory can disturb neighbouring locations, causing charge to leak into or out of neighbouring cells. With enough accesses, this can change a cell’s value from 1 to 0 or vice versa.
That is, the fact that two memory address happen to be physically close to one another is completely outside the computer's knowledge of itself. Geography and electromagnetism have no presence in the computer's inner reality. But bring that knowledge in from the outer reality...
was able to use this to induce bit flips ... and hence gain read-write access to all of physical memory.
Long profile in the New Yorker of Sam Altman, the head of Y Combinator (the incubator behind startups such as Airbnb, Dropbox, Stripe, and reddit).
Many people in Silicon Valley have become obsessed with the simulation hypothesis, the argument that what we experience as reality is in fact fabricated in a computer; two tech billionaires have gone so far as to secretly engage scientists to work on breaking us out of the simulation.
Here's an interesting exploit that I feel should be better known: System Bus Radio.
Some computers are intentionally disconnected from the rest of the world. This includes having their internet, wireless, bluetooth, USB, external file storage and audio capabilities removed. This is called "air gapping". [However] Even in such a situation, this program can transmit radio.
Computers can now write to memory with a high enough frequency that it's in the radio spectrum. Now you're hitting the RAM fast enough, you can play it like a xylophone and carve radio waves into the air.
There is demo code provided. And:
Run this using a 2015 model MacBook Air. Then use a Sony STR-K670P radio receiver with the included antenna and tune it to 1580 kHz on AM.
You should hear the "Mary Had a Little Lamb" tune playing repeatedly.
Breaking out of the simulation.
Also the average density of the Sun is 1,410 kg per cubic meter: 1.4x that of water. Or to put it another way, the same as honey.
So yeah. The Sun. A million times bigger than the Earth. As hot as a reptile. As thick as honey.
Risk is like a balloon with a price tag attached to it
Nice turn of phrase.
PCalc is a calculator app, and it's 25 years old. From the announcement of the original version, in 1992:
Enclosed is a binhex file containing a submission for your archives. PCalc is a neat simulation of a programmable scientific calculator.
A simulation of a calculator! Now simply a calculator. Since the 90s, software has become part of the real world. The virtual no longer exists.
I like words and I like how they change. I like that sometimes everyone is using a particular word or phrase for a year or two, but look at the word closely and you'll see how weird it really is. Or there are some new words that are weird now, but I know they will be commonplace in the future.
From Rolling Stone's coverage of the unveiling of Magic Leap, the (potentially) groundbreaking augmented reality device:
"You're basically creating the visual world," he says. "You're really co-creating it with this massive visual signal which we call the dynamic analog light field signal. That is sort of our term for the totality of the photon wavefront and particle light field everywhere in the universe. It's like this gigantic ocean; it's everywhere. It's an infinite signal and it contains a massive amount of information."