Invest in the talent, not just the idea

There are plenty of ideas out there, but it all boils down to ability and execution. Looking back at my investments in startups, it is now quite obvious to me which ones had the potential, based purely on the enthusiasm and ability of the people pitching them, and their willingness to give up everything and do whatever it might take to make their startup dream come true.

Keep in mind, though, that great execution of bad ideas still results in failure—so you do need to get both sides of the equation right. Nevertheless, the team to me is the key. As the saying goes: “rather invest in a great team with an average idea than an average team with a great idea.”

Passion, passion, passion

To become really successful, I believe that genuine passion for the idea is the most important element—if you are going to put 16 hours a day into your business, it had better be something you love. Many startups are “just” in it to make money as their main objective, and although the money aspect is important, of course, keep in mind that a well-executed, innovative and useful idea for a sizeable number of people or businesses will attract money eventually.

Be realistic

I have seen my fair share of beautiful PowerPoint presentations, and some remarkable spreadsheets outlining the projected growth of a new business in just a few years (sometimes even a few short months). Common to most of these presentations is that way too many hours went into making the presentation look great, and not enough time into being realistic about how long most things take, the scaleability of the income in real life, and the inevitable bumps on the road getting there.

Are you solving a problem?

So what is a good idea? In my view, most good ideas are developed out of a need for something which is not currently available, or which is very complex or expensive. Some of the worst startup ideas I have come across are those based on the idea of just making a startup for the sake of it—not actually solving any problems or making anything that already exists smarter, better, easier or just cheaper.

How to get started?

If you have a great idea, knowledge about the topic, some skills and a lot of passion, I suggest you start off by searching the web extensively to make sure you fully understand the competition and how you will differentiate yourself—chances are that someone else out there is thinking along the same lines.

Once you have established that there is room for your idea, you should begin by reading about starting up a business, and attend events to learn as much as you possibly can by networking with like-minded people who might help you progress and avoid making the most obvious mistakes.

Try to get as far as you can before asking for funding—ideally, some proof of concept, or even proof that your idea can actually generate revenue of some sort, and has the ability to scale.

Startupism

There are many places where you can get help and meet entrepreneurs—one of them is Startupism. Below is a bit of information about what they are trying to achieve. Feel free to get in touch with them at their next startupism event.

In the Bay Area, the word “startup” seems to naturally be part of everyday language and conversations. The surrounding areas of San Fran-Start-Up (as the city should rightfully be renamed) is unquestionably the juncture where innovative thinking, entrepreneurship, and a passion to change the world meet. The startup culture is, of course, not confined only within the boundaries of the Bay Area – it’s all over the U.S.! We are absolutely amazed at how openly collaborative this culture is. Incubators, venture capitalists, and endless other resources are readily available to forward-thinkers who are hungry and determined enough to launch their own businesses.
 
Adversely, for international students like us who dawn from different parts of the world, the word and (more importantly) the culture of “startupism” is something completely new to us. Yes, it’s gaining some traction world-wide, but not at the pace and magnitude it is here. It is something our entrepreneurial minds have always been craving, but have never had to the opportunity to explore – until we came here.
 
Through Startupism, we not only hope to raise awareness of the startup culture both nationally and internationally, but we also hope to inspire young visionaries to get up and do something that will change the business world.

Since selling my business in 2006 I have invested in numerous ventures from startups to traditional banking products as well as equity positions in various more or less well established companies – some with more luck than others. In fact, looking back, the common theme seems to be exactly that – luck – sometimes good, sometimes bad.

Despite the widespread “end of the music industry” prediction, I am confident that music will not go away, not now – not ever. In fact, I think the music industry is strikingly similar to the newspaper and publishing business – it simply needs to transform itself to benefit from the development of digital distribution and, in the case of music, the ability to track and collect royalties more efficiently.

Think of royalties as dividends

How about this for an investment idea: Acquire parts of the performance or mechanical royalty rights of your favorite songwriter and/or artist and secure for yourself a steady income as the music is repeatedly played.

When I first started exploring these opportunities, I found it particularly exciting, as I am convinced that royalty income can only increase in the years to come – partly due to the rapidly growing (and music-consuming) world population and partly as intellectually property rights become increasingly protected by governments. Plus, as stated before, tracking usage and collecting royalties will only become easier, more accurate, and efficient over time, thanks to ever-evolving technologies.

Another appealing aspect of royalties is the fact that they can be collected globally and in multiple currencies. So, although you are likely to be paid in U.S. dollars from a U.S.-based service like Broadcast Music, Inc. (BMI), for example, I consider royalties an inflation protection as well as a currency hedge, as the US$ equivalent will fluctuate based on the various currencies royalties are paid in.

Will the internet kill the radio star?

No, the royalty collection companies are evolving, and they are making use of the new distribution channels and turning them to their advantage. To further underline the advantageous prospects, BMI, as an example, tracked 1.6 billion performances on BMI-licensed websites in the second quarter of 2011. In fact, BMI is paying more songwriters, composers, and music publishers than ever before in its 71-year history as of 2011.

Does this mean music royalties or other intellectual property rights are a 100% safe and a guaranteed investment? In my experience, when it comes to investments of any sort, one thing is for sure – there is nothing certain.

Revenue depends on the popularity of the songs and the artists you invest in, and although I prefer to look for older, popular, widely recognizable and, therefore, “proven” songs with years of royalty track record – unforeseen things can, of course, always happen. However, unlike equity and bonds, for example, a good song will always have some value, emotional as well as monetary, and the rights to collect royalties are yours for 70 years after the passing of the writer or artist – so if the song’s equity drops, you can always try to help the artist promote the song or album you have invested in.

As a potential bonus – one or more of “your songs” could appear as a title song in a new blockbuster movie or TV series, be part of a best-of album or something similar, and you would likely get a significant boost in revenue for a period of time.

Investing becomes a matter of taste

Musical taste is not easy to discuss or agree on, but it really isn’t necessary, as there is plenty of choice out there for everyone. “Jimmy Lee” is an example of a song I really like and have recently invested in – it was written by Preston Glass and performed by the amazing Aretha Franklin in 1986 and you can listen to it below – enjoy!

If you are interested, you can listen to the rest of my current catalogue or feel free to drop me your thoughts.

Update: As of January 2012 evershift has acquired an equity stake in The Royalty Exchange.

The project was chaired by Sir Roger Moore KBE.

Although there was a lot of interest in what we thought was a novel idea, and despite significant media coverage, the timing of the project was not the best, to say the least. At the time it proved incredibly difficult for us to raise capital to the level that was needed for the movie production side of the project.

Star One Media

At the end of 2010 we decided to rethink the project altogether. Christian and Geoffrey Moore went ahead and focused exclusively on the blockbuster movie production side of the business and established Star One Media Fund in association with Level 1 Entertainment, which is headed up by Bill Todman, Jr. – a very exciting opportunity indeed.

Nobody hates music

On my part I continued to be interested in the royalty side of the industry, particularly related to music, as I firmly believe that intellectual property rights will remain valuable and something that will be protected – even more so in the future.

I am also convinced that as technology evolves and copyright protection is further enforced throughout the world, artists and rights holders alike will enjoy a far more efficient and fair collection process and eventually create more value.

There are no two ways about it, people are passionate about music and it is a very big part of most people’s lives. In fact, as digital distribution grows there is a clear trend that more and more people are indeed willing to pay for content and thereby support their favorite artists. New delivery technologies may evolve into new types of performance or mechanical rights over time but the fact is that music is not going away anytime soon.

Performance royalties

This is the right to perform music in public. It is part of copyright law and demands payment to the composer/lyricist and publisher. Performances are considered “public” if they happen in a public place (including concerts, nightclubs, restaurants), and the audience is outside a circle of friends and family. Public performance also includes broadcast and cable television, radio, and any other transmitted performance of a live song, including but not limited to:

• a performance of a song or composition – live, recorded or broadcast
• a live performance by any musician
• a performance by any musician through a recording on physical media
• performance through the playing of recorded music
• music performed through the web (digital transmissions)

There are royalty collection societies all over the world, below I have listed some of the main US and global organizations:

• ASCAP
• BMI
• SESAC
• SoundExchange

• Association of International Collective Management of Audiovisual Works (AGICOA)
• Bureau Int. des Sociétés Gérant les Droits D’Enregistrement et les Reproduction Mecanique (BIEM)
• Christian Copyright Licensing International (CCLI)
• International Confederation of Societies of Authors and Composers (CISAC)
• International Federation of the Phonogram Industry (IFPI)
• International Federation of Reproduction Rights Organisations (IFRRO)
• Motion Picture Licensing Corporation (MPLC)
• The Societies’ Council for the Collective Management of Performers’ Rights (SCAPR)
• Christian Video Licensing International

Mechanical royalties

Although these rights are currently focused on royalty income from the sale of CD’s and DVD’s their scope is much wider and covers any copyrighted audio composition that is rendered mechanically; that is, without human performers:

• tape recordings
• music videos
• ringtones
• MIDI files
• downloaded tracks
• DVDs, VHS, UMDs
• computer games
• musical toys etc.

My pursuit continues and I have finally taken my first steps in the music royalty business.

The reason I was interested in this business was that it is probably the closest I can get to a “bricks and mortar” business and still be very much in the “cloud”. Managed Services, in my mind, is the way to go for an increasing number of tasks, and with the evolving speed and reliability of communications in general, managing even complex tasks remotely is completely viable, and will be simple plug-and-play utilities in most cases moving forward.

It is not just the financial aspect that makes it interesting for companies to go with a managed service solution; it is the peace of mind more than anything. Many companies have dedicated in-house IT departments, despite their core business being in a completely different industry, and it does take away the focus from what they should be doing.

At AME Info, we have used 24/7 managed hosting since 2000 so that we could focus on content and developing customer relations and products – in other words, doing what we had set out to do while a competent team deals with all the stuff under the hood. Having to patch, update and make sure that everything is running, optimized and safe is a business in itself.

Outsourcing your IT infrastructure obviously requires a huge amount of trust and ability, which is not something one can set up and deliver overnight – and trust is something you can only earn over time, which is why a merger of the two businesses was obvious, as there was hardly any overlap at all. As part of the merger, I went along to meet some of the customers to get a feel for the business, as well as their requirements and concerns. One thing that became apparent to me was that the research segment often lacks the storage, the computing power and sometimes even the technical skills needed to cope with the deluge of genomic data.

The storage and computing power required to deal with bioinformatics, for example, is extraordinary, and a cloud computing solution seems like a logical next step to meet these requirements. Paul Flicek, a bioinformatician at the European Bioinformatics Institute near Cambridge, UK, recently stated that “if somebody can produce a cloud service that’s ideal for bioinformatics and costs less than Amazon, there’s a niche market there they could really capture.”

Should intellectual property rights be protected, as we move forward? Absolutely – but we need to keep in mind that the world has changed dramatically these past few years, and consumers now expect instant access to any content from anywhere and on a variety of devices.

In my view trying to protect intellectual property rights exclusively through legal means will be extremely difficult – and the solution in my mind boils down to:

• availability
• price
• quality

Considering how fast news spreads these days and how connected the world is, consumers want instant access to content as soon as it is released, because everyone in their social circles is talking about it.

Availability of legal content

When a new movie is released in cinemas in the United States, consumers based outside the US still have to wait, sometimes several months, to be able to legally watch the movie. The real problem is the distribution rights across borders.

I fully understand that studios are concerned about piracy – but at least if the content was legally available globally it would make a far more sensible case to enforce strict legal action if consumers then continued to choose to download illegal copies despite legal alternatives being available.

I am convinced that a very large percentage of consumers are more than happy to pay for content and thereby support their favorite shows, movies and artists provided it is
easily available in high quality and at a reasonable price.

How about streaming new movies released globally online at a premium?

I am not suggesting piracy can be completely eliminated but with a very large connected and growing global population there is a lot of scope for additional revenue just by ensuring customers are able to actually obtain your content legally.

This article was copy edited by Wordy

Building a brand today is increasingly difficult particularly as the online presence is becoming more important to businesses and the internet is becoming a very crowded place.

Can you think of a large successful consumer brand without a web presence? if you can, please post it in the comments.

Finding a relatively short and memorable company or brand name for which you are able to secure a domain name (ideally .com), Twitter handle, Facebook and LinkedIn usernames etc is not an easy task as the most obvious names and abbreviations are already reserved. I will be writing a separate post about using brand names on social networks in case you wonder why these things are important – it obviously ties in closely with reputation and having your brand show up in search engines.

Some companies are resorting to spelling a word wrong like Flickr.com, others like 4shared.com are using a number in their brand name, when they can’t get the exact names they want. When Flickr was first launched and I was telling friends about the service I always had to spell it out to them which is not ideal – but such brand names can of course be successful too provided they have the right team, product and resources to consistently build the brand – sometimes it can even be an advantage with a typotypographical error.

To me the most important in a brand is that it is memorable and that anyone can easily spell it without special instructions – in other words not having to explain for example news4u.com is with the number 4 and the letter u and not the obvious newsforyou.com it sounded like.

If you have a brand name which can easily be spelled/typed in different ways or just hard to tell how it is spelled when pronounced I suggest you try to reserve obvious domain name variations and redirect them to your preferred version – examples includes gogle.com which redirects to google.com and also the other way around where flicker.com redirects to flickr.com

A brand name does not have to give away the business activity to be successful, as an example search.com logically  should have been the winner in the online search industry but instead we have names like Google and Bing dominating – it is all about what you do with your brand or company once you have secured the right name.

If you are interested in branding in general and what it means to your business I recommend you head over to the brand futurist, Martin Lindstrom‘s website and watch some of his videos or read his books.

The amazing photo used in this post is provided by Rainer Brunotte

In a nutshell the problem he was set out to solve was the fact that governments and large companies receive thousands of invoices every month – in thousands of different formats!

Although companies have been doing electronic invoicing for many years – it has been focused around getting invoices produced and internally organized – not receiving them and getting them into the system.

So these large entities consequently spend a lot of resources and hence money opening the envelopes, scanning the invoices, OCRing them and manually verifying they are correct – not to speak of the cost of producing invoices including paper, ink, postage and manpower on the other side.

In short Tradeshift solves this problem and offers an entire social business network in the process by providing a platform where anyone can sign up for free and start invoicing literally within minutes.

“Invoicing is something all companies do,” explains Christian Lanng, Co-Founder and CEO of Tradeshift. “It’s also one of the few business processes that’s really viral. If I invoice you, you have to invoice somebody else or you go out of business.”

Perhaps I should just let Christian Lanng explain the details in the following interview by Robert Scoble during a visit to the US in 2011 attending the Web 2.0 Expo.

- and yes the pitch was successful.

It has not only become increasingly popular with the rise of popular search engines, as well as free blogging and web-hosting services – it has also become increasingly important for companies, brands and professionals to keep an eye on how they are perceived by the public and to reassure themselves no embarrassing information is readily available about themselves that could jeopardize their reputation.

can we influence what people find?

Although it is possible to optimize pages and websites to rank better in search engines for specific keywords or phrases – it can be both costly and time consuming. When it comes to reputation management being proactive is the best approach in my opinion – the objective in this case is to make sure that your name, company or brand is well positioned (ideally several positions on page one in major search engines) with content that you are in control of or can influence (like blogs) so at least you can add balance to any bad publicity that may appear in the future.

If you are already facing problems there are services out there claiming they can help you clean up your digital traces like reputation.com for example.

why is this important?

The internet gives everyone the opportunity to speak which often is a good thing as it helps push companies to provide a better service. However, if you as a company make a mistake you can suffer some severe consequences even for minor problems if the wrong people write about your company and your lack of ability or willingness to resolve a dispute for example.

Just think about the impact it would have when anyone search Google for your company name or brand and the first result is “Do not deal with X company” and that website is a complete case study of mistakes your company made.

On a personal level this subject is just as relevant. As an example from an article in the New York Times, an advertising executive in New York City who is an accomplished online marketer and New York University professor, but search his name, and one of the first results is a press release from the United States attorney’s office. Eight years earlier, he was charged with wrongfully receiving 9/11 grant money. “Even after all these years,” those links remained, said Bryan, who paid a $2,000 fine.

Another example from March 2011 is when the ceo of GoDaddy, Bob Parsons, went elephant hunting in Zimbabwe claiming to help some villages save their crops which are often destroyed by elephants - but ended up causing damage to the brand when PETA, the animal rights group, closed their account with GoDaddy and asked others to follow suit. The story went viral through thousands of tweets, blog posts, news coverage and Facebook supporters.

As a result GoDaddy is now linked with the killing of elephants forever.

how can I keep an eye on this?

You can simply surf the Internet for your own name on a regular basis to see which articles appear about yourself, your company or brand on a regular basis.

A very useful tool is Google Alerts which is a free service allowing you to enter specific search terms like your name, a brand or even a specific phrase and you will receive an e-mail alert when the search term is mentioned anywhere on the web – in theory at least – but it does work very well.

To get an idea about where the mobile internet is now and where it is going, I recommend you take some time (about an hour) and listen to Eric Schmidt from Google explain at Mobile World Congress in Barcelona, Spain on February 15, 2011 where we are heading and just how quickly things are moving.

is your business mobile?

Is your business positioned on the mobile internet? What sort of experience are users getting when visiting your website from a mobile device? If you are in the e-commerce space have you taken the time to check how your shop works (if at all) on a mobile device?

It is not only about apps (although it is the buzz word at the moment) – it is about the whole thinking and planning of being available on the various platforms and not least devices that your customers are using now and in the future. The consumers are all looking for the best smartphone for the money out there and expect a great experience when they use your service on their phone.

content on a coke can

When people asked me what I thought was the next big thing on the internet while I was at AME Info I was always replying that it is not so important what is next as long as you are there – so even if one day we were able to deliver our content on a can of Coke – then that’s what we should be doing.

The reason for that is of course that to reach your customers you need to be available where they are – so at the moment that means among other things having a presence on some of the many social networks and to ensure that your message and service are available and functional on the next generation internet – the mobile internet.