The vacations seems like a very distant memory as we hit the ground running at Forsyth Towers in January – unbelievably we are already almost 6 weeks into the new year! We completed 2 assignments in January for our favourite e-invoicing SaaS company Tradeshift [www.tradeshift.com]. We have now built out their sales leadership team in the Netherlands, Germany, France and the UK (2). We also completed a Venture Partner assignment for Connect Ventures, it’s great news when another VC enters the European ecosystem!

Our Seedcamp portfolio companies are going from strength to strength. Brainient raised $1.8M from Atlas Venture and Credo Ventures. GrabCAD raised a $4M Series A led by Matrix and David Skok will join the board of directors. Congratulations to Robot Media, the company received its second consecutive Publishing Innovation Award at Digital Book World New York.

Brett has been invited to present “An evening with Forsyth Group” at London Business School, talking broadly about the Hi Growth Technology Ecosystem. We hope to have a video of the evening to share.

Live blogging casts, Transhumanism, SOPA, the rebirth of SMS and more…

1) What if you called a bandwidth crunch and no one came? AKA have you ever seen a bandwidth crunch in Boise Idaho?

2) The decline, fall and potential rebirth of SMS in a world dominated by Smart phones

3)  Will we see a compromise on SOPA?

4)  Why Facebook will make an impact beyond advertising in 2012

 5)  Free.fr and the business model of unbundling the set top box: I have been tracking the rise of  free.fr for some time .. and it could be truly disruptive. Gigaom explains the context and says that the set-top box could be a stealth weapon. Unbundling – decoupling the set-top box could be a powerful concept.  It is also relatively easy for other providers/countries to also do the same i.e. decouple the set top box from the network and provide connectivity services by including Nano cells/femtocells etc

6)  The perfect storm driving the uptake of Smart cities : Relating to my work on the advisory board of the Word Smart Capital Initiative  - Amsterdam, in the recession, many local governments all over the world will adopt the idea of smart cities. Smart cities reflect ‘Internet of things’ in action. There are three drivers to Smart cities: the Smart home, the smart building and mobile devices. However, the biggest driver for Smart cities could well be Smart data and the enabling of people to ‘add intelligence’ to locations and objects –ex the tweeting cat door , the live blogging cat , Adruiono etc.  This is a perfect storm of many elements: Cheap sensors , open source hardware and software, Sensors in mobile devices, networked homes and most importantly, Open data. For instance, the European Commission has launched an open data strategy  and here in the UK, professor Nigel Shadbolt will lead an “Open Data Institute” with Tim Berners-Lee.  This is the perfect storm driving Smart cities. See my presentation at the Oxford University on Apps for Smart cities

7) Tech policy issues impact mainstream computing because they effect both cloud computing and the Internet:  Cloud computing is everywhere – but the technology is not the only issue now for CIOS. SOPA, the Patriot act and other regulations are now taking center stage. Privacy, identity and cybersecurity dominated tech policy headlines coming.  The U.S. government’s National Strategy for Trusted Identities in Cyberspace addressed key issues around creating an “identity ecosystem online.”, the eG8 showed that online innovation and freedom of expression still need strong defenders. We covered this in the policy bloggers network – Fostering trust in the Cloud in the face of law enforcement access to data and IGF – Nairobi : voices from the blogosphere and beyond

8)  Social media ‘inside’ like ‘Intel inside’ – TV finally becomes a ‘social’ platform: Social media is fast becoming ‘embedded’ i.e. ‘Social media inside’ (just like Intel inside ). The value of Social media is not in itself but rather as a component of other services. This will have the greatest impact on TV this year. Already, we can login via facebook or twitter, we can logon using spotify on virgin (i.e. listen to spotify on virgin media) etc. Social media recommendations via TV,  co-viewing apps (tablet apps used to watch with TV) etc all are becoming mainstream. A year ago. Western Europe suffered its first Q1 drop  in TV sales ever and now Smartphones, tablets are edging out television sets on buyers list-Accenture. So, this year, TV will finally become a social platform – despite some resistance from the traditional TV purists.

9) Transhumanism: I have been interested in transhumanism like many in the technology industry specifically my latest book  - Meditation in the age of facebook and twitter – this trend of ‘augmenting human capability through technology’ is being picked up by more mainstream companies – IBM says mind reading is no longer a science

We first worked With Ed Bernarden, founder and VP International Business Development, in 2003 when we started building their European team. At the time Vistagy was an emerging technology PLM/PDM software company with one great product called Fibersim and a second under development. Over the past 8 years  we have added seven key members to their European management team and  the company now has  300 customers across the globe and over 4500 software users. The company is a strategic supplier to hundreds of the world’s leading manufacturers in the aerospace, wind energy, automotive, and other industries—including Bombardier Aerospace, General Motors, NASA, Ferrari F1, and Lotus Renault GP.

It has been an absolute pleasure working with Ed, Ralph and the rest of the team, we congratulate them on their continued success and we look forward to working with them in the future.

This is a great result for the people we know at Fizzback. Fizzback is one of the companies that could have gone on to be a significant European success, so the question that one has to ask is, why did they sell out now for $80m? As Robin Klein of TAG puts it “On the other hand, its a disappointment that a company which had begun to make a global impact in the world of Customer Experience Management, had captured some of the largest corporate clients worldwide, is not going solo ‘all the way’.” http://bit.ly/odzkvz . “The TAG philosophy has always been to support founders and to recognize that entrepreneurs’ own motivation must ultimately be the deciding factor in these types of decisions.”

It seems like the founders have executed brilliantly but have now decided that it’s time to call it a day.

Hopefully we will see a new group of angel investors Fizzing around that London scene in the coming months.

Facebook have suggested that this new addition is a reaction against the illegal profiles people have been creating for their children (users have to be over 13 before they are legally allowed to create a profile). Look no further than this extraordinary screenshot here http://bit.ly/pv9hUW  to see the problems that can occur when the rules are ignored.

With this in mind, it seems that Facebook is trying to exercise control over already established social media behaviour. Despite their “over 13’s” policy, an estimated 5% of babies have a social media profile and almost half of British children between the ages of 9 and 12 have a Facebook profile. http://bbc.in/ppxbnn 

Clearly social networking is appealing to a younger audience, and the more users Facebook accumulates, the more underage children who aren’t allowed to join feel like they are missing out. Now it seems that pregnant mothers don’t want their babies-to-be to be left out either.  By allowing parents to create a profile for their baby, Facebook are acknowledging that their “over 13’s” policy is being ignored and that they are taking control of the reigns again.

In the world of social networking where relationships are announced, photos of intimate gatherings are uploaded, and status’ reveal the trials and tribulations of everyday life, is this latest addition to Facebook really a big deal? I think that for those of us who feel it is a step too far to put an unborn child on a social networking site, it is because one feels the innocence of the child is somehow compromised. The child is not in control of the pictures that are displayed on behalf of her, or who is in her network. If a baby can have an online existence before it has been born, in a way, her parents have already assigned it a character or personality, especially if the parents interact with other users comments on behalf of the child.  At present, the expected child cannot have a full profile created by its parent, but their name, due date and scan picture can be added. It surely follows that from a very young age such a baby would be introduced to Facebook and the online profile and comments that existed before she did. In such scenarios as the absurd case of the “unborn child Facebook argument” linked to above, this could surely lead to some disturbing revelations.

As far as Facebook is concerned, it helps them to curb the creation of illegal profiles. It also gives them a chance to compete with the arrival of Google+ and its “family circles” by promoting the family unit. I expect that a big plus of the whole thing is that it enables Facebook to target advertising at expectant parents. The site has come under fire multiple times for using members’ personal information to make relevant adverts pop up whilst they are using the site, and it is more than likely that those who advertise their pregnancies on their profiles will be subjected to banner ads about nappies and strollers.

All in all, being able to put your unborn child’s profile on Facebook is not a big deal. Technology is moving so quickly thatassigning your unborn an online profile is arguably no great leap from putting all the details of your own life online.  Facebook have seen the writing on the wall and know if they don’t do it, one of their competitors will. The money that can be made from targeted advertising is a massive incentive in itself, and if the targeted advertising works well for Facebook, I expect pet profiles won’t be far behind.

 Cheap cloud computing and open source technologies have driven innovation over the past 5 years. Together with the “not so smart money” about to enter the system – everyone will want a piece of the coming wave of IPOs – we’re going to see many sub-optimal companies springing forth. That means more copycat companies and more niche-within-a-niche businesses. Finding the right people is always the key challenge to building successful start-ups. It’s about to get worse.

 Thank God we’re not in Silicon Valley or New York right now. Irina Shamaeva who is recognised as one of the leading candidate researchers/sourcers, recently tweeted “What’s up with the Software Development job market in the Bay Area? Are there ‘any’ strong Java back-end engineers open to a new opportunity?” If one of the best sourcers is finding it challenging to find software development candidates in the San Francisco Bay area then you better believe there is a big problem in the valley. According to Facebook’s Director of Corporate Development, Vaughan Smith, top developers are being valued at between $500k and $1m a head. And Google recently offered an eye-watering $100 million in stock to retain Neal Mohan, a high-level product lead. (That came shortly after the same company had offered employee Sundar Pichai $50 million to turn down a job at Twitter.)

We’re seeing senior executives who would normally be ideal C- or VP-level candidates for our current clients “turn into” future clients themselves. There are a lot of new start-ups in the pipeline in London. At the junior level, we’re seeing a shortage of good developers in the London market. Everyone I know who is building their site utilising the LAMP stack of technologies is desperate to hire in PHP, Ruby and Drupal skills.
CEOs are offering incentives that echo the crazy Google and Facebook deals in the Valley. Tom Allason, CEO of www.Shutl.com  recently posted the following on LinkedIn and Twitter: “We are hiring… and thought that you might know someone suitable for this role? Feel free to forward it on to others. We are paying £1.5k (or if you prefer bottle of 1928 Chateau Brane-Cantenac) for intro that leads to a successful hire. Thanks! Tom”

Founders are even joining forces to encourage and build interaction with the developer community in London. The recent siliconmilkroundabout event on the 15^th May was set up by a “who’s who” of the London start-up scene to try and tempt developers away from joining the big banks and to build stronger links between the likes of EDITD, Groupspaces, Skimlinks, MindCandy, Conversocial and the developer community at large.

So what should companies do?

• Become desirable. Candidates should want to work at your company. A great team, tier-1 investors, interesting technology challenges, market traction (awareness and buzz) and revenues are all highly desirable to potential employees.

• Build a hiring process that eliminates weaker candidates early in the process. Avoid wasting time with unnecessary interviews.

• Ensure that your internal hiring processes and documentation are in order.

• Make sure that everybody on the hiring team understands what you are looking for in this hire and why. Do this by getting the hiring team’s input into the job profile.

• Make sure that all board members on the hiring team are readily available to interview the final shortlisted candidates.

• Be prepared to hire quickly. Get them through your interview process and make them an offer. Don’t delay when you find the ideal candidate.

• Show the desired candidate that there’s a clear path for them to meet their goals within your company.

• Build up relationships over time with the best people in the industry. If they can’t/won’t work for you, they may know someone who might. Building the right team as the company grows and changes is an ongoing process.

• Work on building up the team spirit in the company. Candidates will invariably meet 2, 3 or more members of your team during the interview process. A strong consistent team spirit is seductive.

• The best candidates may be more expensive than you originally budgeted for, be flexible and be prepared for this.

• Create company perks; the little things can make all the difference in a situation where another start-up may be competing against you for the same candidate.

• Communicate your company’s cultural DNA and your mission, in your blog, on your web site, in the job description and in the interview process.

• Join or create initiatives like http://siliconmilkroundabout.com/.

The Groupon IPO filing has had lots of airplay this week. Apart from everything else, this really impressed us:

The company now has more than 8,000 employees worldwide, up from 37 employees two years ago. Via CNN

Another Groupon titbit, if you do a search for Eric Lefkofsky on Google, the second automatically generated result is “eric lefkosky fraud”. FYI, Eric is the main shareholder with almost 22% of Groupon. Via CNN

Paul Kedrosky posted Eric’s quotes from his Ha-Lo days in “Then and Now”. If you try and access the original link, it seems to have disappeared though…

We will watch the Groupon IPO with interest.

Team Building

Thankfully we are not in San Francisco or NY at the moment.

http://nyti.ms/jZpkT3 

Investment

And finally CONGRATULATIONS to Seedcamp www.seedcamp.com  invested companies EDITD www.editd.com and Grabcad www.grabcad.com!

http://bit.ly/l40T8Q  

http://tcrn.ch/jYuy0R 

“The third factor contributing to the far high valuations accruing to private companies today is the speed at which companies can now exploit the global marketplace. When I was at idealab in the 1990s, none of our start-ups attempted to address international markets in the first few years of their existence. In fact, for many of those companies, international markets didn’t become a serious focus until after they went public. How times have changed.”

One of our early stage US clients expanding to Europe will hire 8-10 people in their new London office in the next 12 months. They will also hire locally in the German, French and Scandinavian markets. In the last 6 months we have sourced Head of Sales/Country Managers for the UK, Germany, France and The Netherlands for a Denmark headquartered client and are now assisting with their expansion into the US. There is an increased urgency with which companies, with serious traction in their home market, are attacking international markets.

William also noted “Today it is possible to pursue an international growth strategy almost as quickly as a domestic one. The cost of running a global business has dramatically shrunk, and while costs of going overseas have plummeted, the revenue opportunities have increased manifold.”

It takes a lot less time and money to start a business than it did 5 or 10 years ago, by the same token it takes even less time and money to copy a successful business model. Companies do not want to be “Samwered”  and watching eHarmony acquire the rest of  eDarling who have rapidly expanded into 10 countries in Europe, is going to be fascinating, to say the least! Companies with an experienced executive management team, traction and deliverable growth strategies have to think international and this has to be good for the ecosystem.