In the Game - Julie Meyer

greed doesn't work

In this interregnum between the last days of the Reagan and Thatcher era, and the new order – call it global finance 2.0, the talking heads have been going crazy.       Jeffrey Sachs, a high-profile Columbia University Professor, was heard on CNN the other day saying that the poor have no market value, that’s why governments have to step in to take care of them.

Tim Draper, one of the leading venture capitalists of Silicon Valley was heard on the stage at ETRE, the European venture capital forum for technology start-ups in Stockholm this past week, saying when provoked, “Greed is neither good nor bad.   It simply doesn’t work.    People notice pretty quickly when all you’re out for is yourself.”

The counterpoint was interesting.    One the one hand, the professor argues that we’ll ignore the poor if we could.   And on the other hand, one of the wealthiest men of the world, says if you’re out for yourself, you probably won’t win.

Who’s right?     

People will meet your expectations of them.   Treat your colleagues as if they love their jobs and they are the asset of the firm, you get the best out of them.   Those who subscribe to the “Abundance Mentality” believe that there is enough out there for all of us to succeed, and they make investments in others for no apparent reason.   

People who run businesses know all about this.  But recessions have a funny effect on this behavior.    We all start building walls, and assuming that life is a zero sum game, and that if you win, I lose and vice versa.    I would posit that the single biggest challenge of a leader in a market downturn is to keep the Scarcity Mentality from invading an organisation.

Organisations like the Grameen Phone and Bank which create micro-entrepreneurs, or in this country the Fredericks Foundation, or Paul Newman’s summer camps for the disabled, or Mo Ibrahim’s Celltel phenomenon which provided a role model and wealth to Africa, or the Gates Foundation all speak to people investing in the success of others because of their common humanity.

Sabeer Bhatia, the founder of hotmail, made a fortune when he sold to Microsoft, 10 years ago.   But is he out for the money in building the largest green city in the world with Nanocity in India?    Or is it the challenge of creating something which should exist which doesn’t.    In the process however, many Indians will benefit.

No matter who you are, or where you hail from, everyone starts life vulnerable, dependent, naked and small.     Birth is the great leveller.    Your life enables you to show the world who you are.    Be a net contributer to any system you’re in.    For one thing, you’ll stand out as most people are merely trying to exploit whatever gambit they’re in.   Let’s not allow a nanny state to do the job of being a human being:    creating our sustainable communities, taking care of the poor, and redistributing [our] wealth to those less fortunate.    We know what to do; let’s get on with it.    

I for one will continue to expect the best of people, knowing that more frequently than not – this will create the most goodwill and the biggest virtuous circle.

Julie Meyer is the CEO of Ariadne Capital; Sabeer Bhatia is one of her shareholders in Ariadne.

Nothing can replace founder passion

Irwin Jacobs founder of QualComm once said, “QualComm is still a start-up, just a start-up with really good cash flow.”    What he was referring to was the corporate DNA.    Innovation, focus on bottom line, inate competitiveness, performance-driven culture.   He also went to China

to establish Qualcomm more than 30 years ago, and said that it took him more than a decade to do the right deal in China.

Playing a long game and always thinking like an emerging company who has to prove itself are pretty good characteristics for any company and any time in the economic cycle.    

In the wake of the financial meltdown, managers are looking for a blueprint through the haze.     Serial entrepreneurs who repeatedly achieve success are a good place to find clues.

Glen Manchester founded Geneva Digital, an electronic document solutions firm in 1990 ultimately selling it to Xenos, a North American publicly listed firm.    He set out again with Thunderhead, an enterprise communications company in 2001, which has hit a deep vein in financial transactions in Insurance, Government and Telco sectors.    Glen is known for a strong sales culture and relentless customer focus.

Neither did the market down turn dissuade Colly Myers who has created a mobile data service with AQA – Any Question Answered in 2002 which became profitable after only 18 months.   He previously led the Symbian team where he was the chief architect of the mobile phone operating system Symbian OS.   Symbian was recently acquired by Nokia.    AQA’s competitors are giving away the service for free which doesn’t seem very smart in this market.

John Paleomylites’ BeatThatQuote is the UK’s fastest growing company and one of the smartest technology companies in the UKtoday.   They provide price comparison information to UK consumers.   But he did it once before with his security software firm, JCP, which he sold to Sun Microsystems in 2000.    In a crowded market, John knew that he would have to have a technological advantage to win.     So he didn’t outsource, but built best of class software to outrun MoneySupermarket.

We can assume that the first home run meant that each of these men didn’t need to go through the pain of setting up another firm.    They did it because they spotted an opportunity which they felt was inevitable.   They clearly know how to inspire a team to achieve greatness, and yet, I imagine that they know the dark heart of fear as well and fear of not succeeding may fuel them to a certain extent.

Vladmir Putin once famously said that there was “no such thing as an ex-KGB man”.     Neither is there an ex-entrepreneur.    The path from founder/CEO through a successful company journey leaves one exquisitely well-suited for leading a bigger battalion into battle again.    Manchester, Myers and Palemylites will know economic cycles, but will focus on building winning corporate DNA’s which not only transcend market downturns but developed because of them.

Founders who have the ability to be the CEO are gold dust.       Nothing can replace founder passion, and they must be encouraged and mentored to become great CEO’s.  The more founders who stay and succeed as CEO’s, the better our economy will run.

If you’re really good, you prove it when the market takes a dive.  The tools for repeated success are always inspiration and fear – such a fine line. 

 

 

The Great Sadness

is gone

Read The Shack

Global Finance 2.0 * the Week that Was

What a week – markets crumbling, and the G7 meeting to coordinate action.   And yet, it seems this is much bigger than the G7.   Those countries whose sovereign wealth funds will bail out some of the G7 nations or who have been financing the spending habits of the G7 nations are not at the table.    It seems clear to me that a new Bretton Woods will emerge from all of this.    

Just as the network-orientation to business of Web 2.0 is deciding who the winners will be, we are witnessing the death throes of Global Finance 1.0, and a new order will emerge.    States will coordinate action, but the individual’s faith in government as an actor has taken a serious dive.    The individual’s role in Global Finance 2.0 has not yet been determined.   I think the collaborative play of Zopa and Covestor offer a hint of the P2P activity which will happen in the consumer financial sector.   

 

Investment banks will never be the same.   And found it fascinating that Allen & Co in New York use a model very similar to that of Ariadne with their lead deal makers - low base, high % for getting deals done.  

In the short term, it seems like banks are becoming larger, and yet the smaller the unit, the greater the accountability.  

Overall, I keep finding example after example of how you can’t engineer outcomes, you can only provide oppportunity.     The Clinton administration in its quest to encourage home ownership for poorer classes encouraged the banks to lend to less creditworthy individuals.    Roots of the subprime fiasco stem from this policy.

This week, was a busy one:

• I celebrated the 10 Year Anniversary of First Tuesday with Peter Whitehead leading a panel at the Hospital  Club in London
• Then I was the keynote at the Young Talent Network founded by Obi Abuchi
• Wednesday was PopKomm, Europe’s second largest music conference, where I keynoted, and was a judge for the Innovation Awards - http://www1.messe-berlin.de/vip8_1/website/MesseBerlin/htdocs/www.popkomm/en/IMEA/index.html
• On Thursday, I participated in Radio 4’s In Business debate along with Jon Moulton on the Financial Crisis - http://www.bbc.co.uk/radio4/news/inbusiness/inbusiness.shtml
• On Friday, I keynoted at the Future of Web Apps conference - http://london2008.futureofwebapps.com/schedule and coverage at:  http://www.guardian.co.uk/media/pda/2008/oct/10/startups
• I was on the nominating committee of the Silicon.com Agenda Setters, and the top 50 list was announced this week:   http://www.silicon.com/research/specialreports/agenda-setters-2008/list-top.htm - I was pleased that 8 of nominations made the list.

Julie

First Tuesday - 1998 - 2008

Tonight was the 10 Year Anniversary of First Tuesday, a meeting place for entrepreneurs that I founded and which was for a while the love of my life.   It was good to see - amongst the people tonight - before and after the panel I spoke on - that a good crowd still shows up, but how far I've come since then.

where great change occurs, great fortunes will be made

The retail guru John Wanamaker in 1886 supposedly said, "I know half of my advertising spend is wasted; I just don't know which half."    More than 120 years later, one can still ask whether due to the lack of technology to check whether brand impressions are reaching the target audiences, whether they are remembering the messages and taking up the calls to actions.   Some would argue that advertising agency executives got to spend lots of money and build large firms without any real way of seeing if it was actually cost-effective.   But accountability has a funny way of arriving at last.    Recessions typically usher it in, and/or the moves to the big industry beasts.

Successful start-ups, defined as those who make money for their shareholders in the first instance, tend to create the “supernova effect”.   They release a team of people who have tasted success and then go off to create new start-ups believing that they too can be successful.

Founded by RohitChugh, former CEO of PartyGaming UK, LogicServe has taken advantage of Google’s recent announcement of plans to remove its European agency commission structure in 2009.  This move by Google will impact small agencies which rely on the ‘kick-backs’ it provides enormously.  Along with their financial health, their client campaigns are likely to suffer.  LogicServe will be resilient however.    

Founded in 2006, LogicServe has already acquired CK Net and Broadplace Advertising – and counts several blue chip companies amongst its client base, including BT, Sky, Three, Jessops, HP and npower.  How did they do it?    They develop, update and enhance online marketing campaigns almost in real time, and can guarantee that their clients will save the cost of working with them.

Rohit saw that the SEM market was flooded with small garage agencies of web developers turned SEM/SEO providers and large agencies managing accounts worth upwards of £50,000 per month.    He could see that he would win if he could operate between the two extremes using a tech approach and off-shore low cost base.    It probably didn’t hurt that he had managed $200 m of online ad spend at PartyGaming so he knew what he was doing.

With the recent energy bills skyrocketing making big news in the press, a flurry of searches specifically for “capped energy bills” provoked LogicServe’s proprietary SEM system, Affilibid, to recognise this immediate trend and enabled LogicServe to best position its client to capitalise on this momentum.  By being the first to build the keywords into its client’s campaign, LogicServe made the customer acquisition cheaper for its client and provided the users with exactly what they were looking for – capped energy bills.

The real trend to watch is what happens as brands migrate online with the benefit of technology and other offshore assets to improve targeting, response time, and overall effectiveness.   Will aggregate brand ad spend go down by half [if 50% of the ad spend offline has historically been wasted]?   Or is the supply of online advertising infinite?    That as well will change the face of the advertising industry forever.

Where there is change, there is opportunity, and fortunes are made.   This change will be seismic, and the rewards will be large as well for those who swim through the risky currents.

We have the richest poor people of the world in the UK and Europe. Isn’t that good or enough?

http://ww2.ftbusiness.com/ftablog/?p=228

September 29, 2008

The rules of engagement : Julie Meyer

Filed under:

• Other People's Money

— Industry commentator @ 2:36 pm

Twenty years minus one day from Margaret Thatcher’s famous Europe speech in Brugges, and 15 kilometres down the road in Ghent, I found myself just over a week ago giving a speech to help Flanders celebrate 25 years of innovation.

She warned of a lack of accountability that was inherent in the European political project, and importantly, she was fighting for Europe to be strong by keeping the unit of accountability as close to the person or country as possible.

Everyone on the 10 person panel after my speech ate from the public trough of funds, and yet intriguingly agreed with my speech’s thesis that Europe is feudal.

People have voted in a system whereby the implicit deal is that they subordinate themselves to a master who promises to take care of them. It’s no longer the monarchy, but a large, unaccountable state. Big government creates dependency and weakens the individual spirit.

Proof positive of my thesis: the accounts of the EU have gone without an auditor’s sign-off for more than a decade, and there is no uproar.

We have the richest poor people of the world in the UK and Europe. Isn’t that good or enough?

We see everywhere the building of a society for the lowest common denominator. Even the Football Association announced that it would remove “winning” from matches for seven and eight year olds. No results will be collected. Whether you win or lose won’t matter. And you can be sure that if you can’t win, fewer will train for victory.

Today we try to engineer fairness everywhere, and yet one of the assumptions of capitalism is that there are winners and losers. The market failure that was Lehmans was allowed to happen bringing down innocent employees with it.

But isn’t that ruthless, not to care about society?

Successful entrepreneurs tend to care about the outcomes in society. Case in point: Paul Barry-Walsh. He founded SafetyNet which he sold to Guardian IT making a fortune.

What he did next, however, was to give people who had fallen by the wayside a chance to get back up on the road. Barry-Walsh set up the Fredericks Foundation, the leading micro-finance organisation in the UK, which makes micro-loans to hundreds of ex-convicts and recovering drug addicts.

So what we should really care about as a society is how to create more Michaelangelos, or Rebecca Adlingtons, or Charles Dunstones.

It’s a tough call. The world is going to hell it seems, and yet, we have to decide what kind of society we want to have – where greatness is encouraged, accountability enforced, or where medicracy rages. And the rules of engagement that we embrace now as many panic, will shape our future for the next cycle.

I know which future I’m up for.

Julie Meyer is chief executive of Ariadne Capital