Saturday, 31 May 2008

Taking the temperature

I talk to a lot of entrepreneurs. Guys just starting out. Guys up and running. Guys looking for an exit. The general chatter gives you a good feel for what's going on and who's doing what to who. It's a good way to take the temperature and get a feel for the general health of things from an entrepreneurial perspective. And right now I would say the patient has flu like symptoms, although it may just be a common cold.

This is most noticeable amongst the start up guys looking for early stage funding. I have heard from five or six fellow entrepreneurs in the past fortnight that VC deals that looked promising have fallen away and that private investors have gone to ground. Fund raising advisors are telling me that there is still money out there (they would say that wouldn't they) but even they admit that the money is moving towards later stage deals and is being more agressive on valuations.

I talked earlier in the year about how things might start to slow down this year and I think we are seeing the signs of that coming through now. People will still point to a few headline deals, $10m raised here, £8m raised there, to claim that we've never had it so good, but the chatter on the ground is sending out a different message.

If you are fund raising in this environment, the important thing to do is to qualify quickly. You need to know whether the investor is going to come on board or not. If they are not, you need to give yourself breathing space to sort yourself out, not find out at the last moment that it wasn't going anywhere.

The VCs will want to keep options open. So whilst they will be slow to invest, prefering to watch the market and watch their existing companies for signs of weakness before making a move, they will keep talking. Meetings will take a bit longer to set up. Analysts will spend more time asking random questions that they already know the answer to. You will get lots of positive noises ("we like this space and I'm keen to move forwards" I think means "it's useful to have you on the list of companies that I am talking to otherwise it looks like I'm not doing anything so when the partners decide to trim costs, I might get the chop").

A couple of rules of thumb. In this environment, and I expect it to get tougher from a fund raising perspective, assume it will take you 6 month minimum to raise any money. If you get it done quicker, good for you, but work on the assumption that if you start actively looking on 1st June then perhaps you will get some cash in the bank by 31st October earliest! Secondly, you will need to talk to more investors. Assume 20-30 different investors at least and 3-5 conversations, meetings, pitches each. So you will have perhaps 100 funding related conversations over the next six months to get a deal done. That's a lot of hard work but that's what it takes in this environment.

Also in this environment remember that the only money that counts is the money in your bank account. You hear a lot of talk of "smart money". As an entrepreneur the only thing to remember is that smart money is money sitting in your bank account available for you to use. All other money is plain stupid.

So, fellow entrepreneurs, the market is changing and if you listen carefully you can hear and feel what's going on. You can see it in the early stage investing end of things, so if you need more money this year then you'd better get started now.

The good news though is that just like 2001/02 the fair weather entrepreneurs should be giving up soon and heading back for the "safe" corporate jobs, leaving the field clear for the battle scarred street fighting entrepreneurs amongst us.

Wednesday, 21 May 2008

Committee Room K

Committee Room K is a grey, windowless room in the International Telecommunications Union (ITU), a UN agency building in Geneva. There is no natural light, no clocks on the wall. Five rows of desks with ten leather chairs on each row. On the right set back in to the wall on two levels are six smoked glass fronted rooms for the translators. Welcome to a meeting of the ITU`s High Level Expert Group on Cybersecurity.

Earlier this year, I was invited to join the group of advisors by the Secretary General of the ITU, the incredibly charming Dr Hamadoun Toure, a diplomat of pure United Nations class and smoothness. For the next couple of days I am closetted with about 40 other experts from around the world - governments, industry, academia - to advise the "Sec Gen" on global cybersecurity issues.

This meeting really does have a UN feel about it. I am sitting next to a couple of South African Home Office folks. The USA delegation is directly in front, Korea and Russia are behind. Front row sit Brazil, Syria, Saudi Arabia and Germany. Microsoft`s over there. Cisco over here. Verisign to the side, Carnigie Mellon University at the back.....and of course Garlik.

Bearing in mind that I have just flown half way around the world from San Jose, California from a big Valley-style tech conference to be here, the culture shock could not be more profound (or perhaps its the jet lag). Sure there are similarities. In San Jose a thousand or so people gathered to try to improve the digital world. In Geneva fourty or so gathered to try to improve the digital world. But there the similarities end, and there are difference, big differences. The most important are the ties.

You know, those funny bits of cloth than men wrap around their necks to restrict the flow of blood to the brain for reasons that are lost in the midsts of time, but have a suspiciously pseudo-erotic feel about them.

In San Jose I saw no ties. 1,000 people. Zero ties. In Geneva its 100% ties. I brought two with me just in case. We are being grown up here, you know, and everyone knows that you can`t have a really serious meeting without taking a long thin strip of cloth and wrapping it tightly around you neck until you nearly choke.

The conversation here is slow, formal and careful with "all protocols observed". To speak, you turn your name card sideways and wait to be recognised by the Chairman, an eminent European Judge. Someone from industry just randomly spoke up at one point! Shock, horror. How we shufled in our seats! When you speak you thank the Chairman gratiously for calling upon you, you thank everyone for their valuable contributions, you agree completely with the thrust of their comments but you have one small point to add....and then you rip into your target ruthlessly in the most charming way possible. It`s like watching the tango. Glide, step, step, twist. A joy to behold. Wonderful!

I don`t know what will have more impact. The 1,000 strong, tie-less, free flowing Valley boys in San Jose discussing the emerging Semantic Web that will change the shape of the web itself over the coming years or the fourty or so gentlemen in suits and ties representing entire countries in Geneva discussing emerging cybersecurity challenges that will render the web unusable if we don`t stay on top of them. But for me it`s been a fascinating week to have seen and contribute to two such diverse groups on opposite sides of the world in the same week.

These are the sorts of opportunities you get as a tech entrepreneur - wouldn`t have happened if I was stuck behind a desk being a wage slave somewhere.

Tuesday, 20 May 2008

The heart of the Valley

I enjoy visiting Silicon Valley. I don't get over here that often, once or twice a year typically, but it's always a pleasure. Well, mostly a pleasure. Everything is perfect. Everything is "Valley cool". Except for the tea. The tea is awful.

Why is it that no-one seemes to be able to make a "nice cup of tea" except us Brits (as we like to call ourselves when in America)? I am sitting in the legendary Palo Alto Creamery, 556 Emerson Street, Downtown Palo Alto in the heart of the Valley. I have just ordered the Early Bird breakfast (a farmyards worth of scrambled eggs, a mountain of pancakes and maple syrup poured directly over my head). The nice lady, who is very keen that I have a nice day, tried to force coffee on me but I demanded "Tea, dear lady, tea" in my best Prince Charles accent.

After momentary confusion as she look around to see where the voice had come from (they don't get a lot of black british people in these parts) she offered me a choice of something called "black tea" or a range of herbal concoctions. "Builders" didn't seem to be on the menu so to be on the safe side I chose black. However it turned out to be "Orange pekoe and pekoe" (presumably to ensure that I didn't feel deprived of pekoe).

But fear not. You underestimate me. I know how to deal with such an emergency. Yes, I had brought along a supply of English Breakfast tea bags of course. When she turned her back I discarded the so called Orange Pekoe with extra pekoe and got myself all hooked up (you see, I'm getting the lingo) with good, solid English Breakfast. I slipped in in to the luke warm water (would it kill them to boil the water?), added my cream (milk would have been nice) and made the best of a very, very grim situation.

The Palo Alto Creamery is the heart of the Valley. It's an authentic 1950's style diner complete with crome, jukebox and red leather seats. On a monday morning with the Californian sun streaming through the windows it's a beautiful place to be. Dotted around the restaurant I can see an assortment of casul yet intense Valley VCs being pitched at by hungry looking entrepreneurs, a few early rising locals reading their papers (Obama vs Clinton?), a family behind me celebrating their son's birthday and an odd looking Engishman grumbling and muttering in to his tea.

If you are a tech entrepreneur then at some point get yourself a meeting on a sunlit morning at the Palo Alto Creamery, Downtown Palo Alto, the heart of the Valley. Then you can retire happy.

Okay, here comes my contact. Right. Think, Tom. Get in the zone. Power breakfast, power breakfast.....

Saturday, 17 May 2008

Sky High

Sometimes as an entrepreneur you spend days and weeks in the office, brainstorming, planning, fixing problems, dreaming up schemes, hiring new people, dialing for dollars and all that. And sometimes you get out and about and do a bit of jet setting. Well, this coming week is my jet setting week so I'm dusting off my suit carrier and preparing myself for a tiring week.

First stop (Monday) San Jose in California where I am attending and speaking at the Semantic World 2008 conference. This is one of, if not the biggest gathering of folk involved in the semantic web, which is essentially the next generation of the web itself. Garlik has "bet the ranch" on semantic web technologies so we have a lot to learn from and a lot to offer to this community.

I will also take the opportunity to have a few meetings with key tech, VC, banker, contacts while I am over there, starting with a horribly early "power" breakfast in Palo Alto, on to Menlo Park and finally back in San Jose in time to do my talk at 5pm (which I've just relised will be 2am UK time - groan!).

Then a quick dash to the airport to fly back to London, which due to the time difference means I won't get back until mid-night Tuesday.

Up again Wednesday for a 6.30am flight to Geneva to attend a meeting of the High Level Expert Group on Cybersecurity of the United Nations agency, the International Telecommunications Union (ITU). I was invited by the Secretary General of the ITU to join his advisory group recently and this is my first meeting. It should be fascinating judging by the expert participants from almost every corner of the globe converging on Geneva for the two days and I am slightly nervous about whether I will have anything of interest to say to them when I address them. Well, let's give it a go!

Back again on Thursday night in time for a few hours sleep and a lengthy Board and Audit Committee meeting on Friday.

All I can say is thank goodness the following Monday is a Bank Holiday!

Saturday, 10 May 2008

Welcome to my world

Typical startup day on Friday.

Very important telephone conference call Board meeting, with VCs, execs, lawyers to finalise a $millions funding deal which will enable us to launch in the USA. Lots of detailed paperwork to go through. Resolutions to be passed. T's crossed and i's dotted.

Only I found it a bit difficult to hear everything that was being said as for most of the meeting I was lying on my back (in my suit) with my legs sticking out the office door, putting a new office chair together!

Hey, what can I say. I'm a startup guy. This is what we do. Welcome to my world.

Saturday, 3 May 2008

Mike is My Elephant*

Mike Harris is my elephant*. Not yours. His ears** belong to me. Not you. So the fact that he has written an excellent book, Find Your Lightbulb, telling all the other entrepreneurs out there how to build great companies from scratch, and thereby giving you all the benefits of having Mike as a mentor without the effort of hunting him down is just not fair :-(

(elephant* = mentor)

(ears** = knowledge and wisdom)

(so, why not just say mentor instead of that ridiculous elephant nonsense? See below)

And not only are you going to be able to read and learn everything that Mike knows about building entrepreneurial companies in a few hours that I have had to eak out of him bit by bit over the past 10 years, you won't even have to bother reading my blog anymore. You can skip the middleman and go straight to his blog instead. Outrageous!

So, where do elephants and their ears come in to all this? Well as an entrepreneur having the right mentor can be hugely beneficial and I have been lucky to have Mike as my mentor at Garlik and before for a number of years. But finding a mentor can be a bit like elephant hunting for pygmies. Pygmies are small. Elephants are big. Elephants can squash pygmies without noticing. So you have to proceed carefully. And the one thing you don't do if you are a pygmy is go straight up to the elephant, wave your spear in front of its face and say "hey, come over here".

When I was about ten years old a safari holiday took me to a Pygmy village on the Kenya/Tanzania border. The elders told us how pygmies actually hunt elephants. Apparently when they hear that there are elephants in the area, two pygmies team up and off they go, with short, sharp spears. First they look for some fresh elephant dung and roll around in it. Elephants can't see terribly well but they are good at smelling something that doesn't smell of elephant. The dung-covered pygmies then sneak up on the elephant and rush underneath it. One climbs on the others shoulders. He stabs upwards into its soft underbelly. Climbs, yes, climbs inside it and stabs direct at its heart. Very quick. Very, very quick if he's got any sense. As a prize the two hunter pygmies are awarded an elephant ear each and are carried shoulder high (after a long bath, I believe) through the village.

If you are a start up entrepreneur and you want to get a big, serious industry figure as a mentor you never go straight up to them and say "Be my mentor". You hunt them. You gradually get to know them. It takes time. You do genuinely useful things for them to help further their agenda, not yours. You don't ask them for anything. Any mentor worth his or here salt is too busy to be a mentor whether they want to be or not, so you have got to be useful to them before they will be useful to you. Have you done five helpful things for them yet? Ten? Then you are nearly ready to ask them to be your mentor.

Then when you are ready to ask them to be your mentor - DON'T. Don't mention the "M-word" to a serious industry figure. It's scary. It says "be with me for every more, in sickness and in health" and they just can't make that commitment to you. Why should they?

So, you say "can I buy you lunch in a few months time, at a nice restaurant? I'll pay". And if you have a good chat you say "I'd love to do that again, perhaps in 6 months time? No pressure". But you actually organise it for 3 or 4 months time. Plus, when you do see them you do two useful things for them for every one pearl of wisdom they give to you.

Finally at some stage, 2 years later, you strike. You make your specific request. Short, sharp, very clear. In and out. Still no mention of the M-word. Will you be chairman? Will you invest? Will you join advisory board? Whatever it is, you know already what the outcome will be because you have worked at it for months or years.

If you have really invested, really understood your elephant then you get the big prize. The Ears. You and only you get the ears. Hahaha! That is, until he publishes everything you'd ever want to know as an entrepreneur in a book that's available in all good bookshops!