Yesterday, on the 25th of August, we held our monthly Convergence Conversation event at Intellect. After 90 minutes of full on and intense discussion, there were far too many interesting insights to capture or even to do justice to all. Here then is my attempt to draw out the key themes of this discussion.

Is there really a revolution?

Anthony Rose’s new company Zeebox wants to re-architect the entire experience of Television. At the heart of this is giving consumers the choice that traditional Broadcasters and EPGs just don’t. Zeebox will be a transformative user experience which will also seek to integrate social behaviours and multi-tasking into the TV experience. Edd Uzzell from Sony suggested that Sony are also looking at redesigning their TVs from the ground up, keeping in mind connectivity, operating system and app environments. Facebook is streaming FA Cup games live. Google have announced a UK launch for their version of TV. It’s fair to say that there is indeed a revolution on.  

But Will it all happen on the TV Screen?

It is indeed true that many experts are envisioning a future where apps drive a significant part of the TV experience, or where the TV show incorporates Twitter feeds and Facebook features (such as “like”). But there is an equally strident voice cautioning against detracting from the “Television” experience. For both sets of people, the second screen is clearly a key component. This could be a smart phone or a tablet. Most of us know this already. And many of us (myself included) no longer like to watch TV without a second screen at hand. For me this is often just a hedge, since the majority of TV programs don’t really engage me 100%. But sometimes, especially during football matches, I might be talking to people in my special-interest football group. This group has people from across the world who mostly know each other, and during the second leg of the recent Spanish Super Copa game between Barcelona and Real Madrid, my friend Bobby and I exchanged over 50 messages via our Facebook group. And I’m sure everyone has seen this twitter timeline from the New York Times.

What is fascinating though is the possible coupling of devices, so that the TV & second screen “know” what’s going on with each other and can react to this. The tablet or laptop could be communicating directly with the TV (rather than over the cloud/ via Sky’s servers) and this direct coupling could be used to drive a lot of interesting user experiences on either screen. Especially interesting to advertising and commercials, many of whom are currently struggling to get their heads around social TV, having wandered in the wilderness for many years in the social networking world. For device makers like Sony, who have TVs, tablets and mobile phones, this opens up a whole new way of thinking.

There was near unanimous agreement that the second screen is a game changer and Fintan, who argued the other way found himself defending the single-screen experience like Horatio on the bridge, but with less spectacular results.  

Richard Kastelein pointed to the 4 C’s (content, community, context & commerce) and context was picked up as probably the most crucial element of social TV. And the second screen might be well placed to deliver context.

But Do We Need To Rethink TV Itself?

What is Television? Is it a device? A broadcast mechanism? A type of content? A schedule? A viewing experience? In fact, TV is a very loaded word which probably implies all of the above. And a number of recent technological changes have led to the questioning of each of these. The TV is in a sense just a shared screen at home. It can as well be a monitor for the gaming system, or a large digital picture frame, or a blu-ray movie screen or a screen for viewing broadcast content. I know that in our home, we’d love to have the family calendar available on the TV screen so we can take a quick look at social commitments, travel dates, and all kinds of other reminders that have to be written down and maintained elsewhere (dates for renewals of parking permits, and doctor’s appointments, for example).

But in the more narrow definition of TV, which is simply a broadcast content screen, there is a sea change. It’s not just about peripheral additions such as adding a “like” button onto a TV program, running a twitter feed at the bottom or allowing people to “check in” to shows. (“Check in is not the answer”). No, it’s much more fundamental – it’s a rethinking of content and storytelling, to incorporate the social networking implications. The game-shows and voting programs seem like killer apps today, but can probably be defined as Social TV 1.0. Many more ways of inserting oneself into the show, and as Mark Grundland put it, “to put the consumer at the centre of the show” – will emerge. And the influence of the social networking phenomena on storytelling itself will be immense. Jed Daly (the LA Guy!) told me about a game show in the US where while one contestant was facing the cameras, the audience were tweeting and communicating with the other contestants, backstage. This takes us to a point where social media is not just playing second fiddle to the main program, it’s a strand of programming in its own right. We are not far from the days when the social network will be the program. This is not a dystopian view of watching people on social networks a la big brother, but some very clever and creative way in which social network is integrated and centre-stage in the program concept. Plenty of examples exist where the cross over between the real and fictional for social media and TV has yielded interesting results.

After all, TV has so far only had the capability to address the one need – that of leaning back and being entertained. Hence to argue that people only want to be entertained passively by TV is somewhat specious and circular. Other basic behaviours such as inquisitiveness, or engagement are equally valid, and might be displayed by some viewers all of the time or all users some of the time. TV now has the ability to address those behaviours as well. And in that, it has changed fundamentally as well.

Is All TV The Same, When It Comes To Social?

The time has come to stop using these broad brush strokes to make generalist comments about “TV Shows” as though the same rules apply across genres and categories of programming. Clearly the pulling power of sport, when it comes to social experiences is more than a documentary on the history channel. Or indeed, the willingness of a viewer to tweet or interact during a show will vary dramatically between watching a revolution unfold in Tahir square, versus watching a rerun of Singing in The Rain.

One of the parameters is the sheer size of audience and interest groups. Arguably, content that draws very large audiences is likely to engender much more social interest. Big news, unfolding major live events, popular sports, the big game shows and participation TV, the biggest soaps, all create interest groups of their own. Some are more tribal than others. Sport naturally creates tribes and very specific patterns of social behaviour, which will replicate itself on any forum it can find, be it a pub, a stadium or on Facebook. Hence the expected social patterns will vary by genre and type of program and experiences must be designed accordingly.

But Hasn’t TV Always Been Social?

This is the question that usually half way through a heated discussion on Social TV. Hasn’t Television always been a social event and so what’s new? Are we simply putting old wine in new bottles? The answer, apparently is yes and no! Yes TV has always been social and continues to be so. And a part of social TV is simply providing people the technological tools to do the same things differently and often faster. So rather than wait for the water cooler moment the next day at work, you can have your “oh my god, did you see that!” discussion just after or even during the show.

But what’s different is the selection and the shape of networks. The old social was limited to the living room, the office and social get togethers, very bounded by place and time. As recounted by many people in the discussion, even when the family gets together to watch the same program, very often some or all the members are also participating in their own social networks – across affinity groups, social groups and interest groups. This doesn’t preclude the family acting as another group, but it adds many dimensions to the “social” in social TV. TV is now differently social.

What Of The Masses?

A room full of broadcast and technology professionals does not social TV make. Ed suggested that there were significant gaps in the average consumers’ understanding of social TV or even many other concepts such as digital switchover. So the danger here is for the industry to rush on ahead and forget the users. Not a new pattern, lest we forget. But on the other hand, if sufficiently interesting, people will find a way to navigate even complex environments. Just look at Facebook or worse, Myspace.

Anthony broke up the classic technology adoption curve into simpler chunks. The creators, the blogosphere and the rest. The trick is to build something that sufficiently engages the blogosphere, so that subsequent following and uptake is assured, but not so advanced that it caters only to the blogosphere and to converts, and becomes a technological toy which the average user can neither navigate, nor enjoy. It remains to be seen how many providers can find that sweet spot.

Where’s The Value?

The money question is always a good way to bring the discussion to a focus. How can businesses make revenues from this?

Irwan Owen from Live Talk Back is trying to just this, by providing to broadcasters a platform which enables the 2^nd screen participation, predominantly on mobile phones (where the IOS significantly outstrips android, according to Irwan and his data). Producers and broadcasters however, need to truly embrace social TV in a way that they probably have not yet done, in order to truly benefit from social TV.

A critical part of the value chain is content discovery of course, and here is where social TV plays a trump card. The EPG has been an anachronism for a while now and suffers from being driven by a number of interests most of which have little to do with improved user experience. The impact of social networks on the EPG will be seismic. The ability to select shows based on friends recommendations, or to see who is viewing what in real time will dramatically change how we select shows to watch. Needless to say this is a part of the Zee Box concept. TV Genius, who have recently been bought by Red Bee Media, have also integrated Facebook into their EPG & recommendations model.

There was also a perspective shared by a number of people, that the player who owns the interaction will corner disproportionate value in the marketplace. This could well be through gamification initiatives, or newer and emerging forms of interaction.

Winners and Losers?

 On the one side you have incumbent broadcasters, platforms and production businesses all trying to get their heads around social media, but effectively just dipping their toes in, for the most part. On the other hand you have major players on the Internet – such as Facebook, Google, Amazon and Twitter, who are all reshaping the content value chain in different ways and arguably have the financial clout to launch a TV proposition. As we’ve heard Facebook has started streaming content in partnership with rights holders, Google has launched a TV framework and Amazon have bought Lovefilm. It would appear therefore that the Internet giants have jumped ahead in the race. However, this is just the start, and TV incumbents have plenty of time to embrace social media.

This is easier said than done, though. The changes can be very deep and difficult. They are not just technology details or adding features to websites. It’s rethinking the very essence of the content and the experience. It’s getting off the “how cool are we!” style of thinking that Jan Gilbert spoke about. It’s making the very brave move of handing choice back to the consumer – the choice of what to watch, how to watch and even whether to watch. It means understanding truly that the “meaning” of the social experience that TV used to represent may have changed. And that people will follow the new meaning, whether or not it involves a TV screen.

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Many thanks to Anthony Rose, Edd Uzzell, Richard Kastelein and Irwan Owen, for leading the discussion, to everybody in the audience for being there and so many cases contributing valuably and to Intellect for hosting the event.

With the Football season now just days away thoughts must turn to first teams, formations and squads. And since we had a great Start Up Conversation 2.0 on the 2^nd of August, let me stay true to both traditions and share with you 11 tips for the first 200 days of your start up.

1.     Know your runway

A wonderful metaphor for any start up: you must know your runway. In other words how long can you sustain yourself before you need the business to take off? This is obviously to do with money, but it’s also important from an emotional and personal point of view. How long can you sustain yourself emotionally? How about your family? How long can they support you? What sacrifices will they be making and for how long? It’s quite critical to know very clearly the answer to this question. Metaphorically speaking, if you’re out of runway and you haven’t taken off yet, the results are obviously going to be painful.

2.     Do Your Homework (research/ resources)

Michael said he spent many months walking around with a notebook and pen, making notes wherever he went. Aniko translated that into “doing your homework”.  No matter how great your idea, you can rarely do too much homework. Most entrepreneurs do far too little. Mostly this includes getting to the heart of your problem domain and really understanding what your customers will pay for, not just what you think they’ll pay for.

3.     Team

We covered this extensively in our note on forming your core team, but of course, one of the first things you need to do is put your team together. The question was asked “how much equity should you offer a CTO” and the instant consensus among the speaking panel was equal stake if you’re doing anything that depends on the technology – i.e. either building a tech product or a tech platform based business (such as an ecommerce or any online business).

4.     100% or part time?

There is certainly a school of thought which says you should do a job, save enough money, and then commit yourself 100% to your start up. Clearly this is the typical thinking in Silicon Valley. There are no half measures there. But of course, it’s also a much more supportive environment – both in terms of your business and managing the rest of your life. The reality for most people is that you probably need to balance your start up work with a job that pays the bills. Just be sure you’re not short changing both and ending up in a situation where neither will give you the rewards you need and seek.

5.     Business Design

Alongside the research and team building, you definitely need to clarify your business design. This is not the same as your business plan, which is largely a set of numbers that reflect your business design financially. But the design of your business includes a lot more than the numbers – it addresses how exactly the business will work, what people will pay for, how they will transact, what moving parts will need to work efficiently  to make your business work seamlessly? Note: there is every chance that your business design will change, dramatically, more than once, as you discover things about your market, product, customers and competition. No matter, make sure the current one is clear.

6.     Product

Along with your customer, your product sits at the heart of your business. Or any business. This is probably the one area most entrepreneurs spend the most time thinking about. And the problem here often tends to be overdoing, rather than under-doing the product. The magic words are “minimum viable product” – what is the most basic set of features that allow your product to exist? If you’re designing an ecommerce site, fulfilment is not an option, but a recommendation engine might be. Can you strip your product back to its minimum feature set so that you can get it out of the door?

Here you might encounter a fork between two philosophies. One says “think big, change the world”, the other says “think realistically, solve a simple problem”.  This is a big argument by itself, but whichever road you take (and may you always take the road less travelled!) you still need to focus on your minimum viable product, else you’ll be in the garage building your product for years and years.

7.     Shortest Path to Revenues

For idealistic entrepreneurs, this is probably worth framing and putting on the wall. Focus on your path to revenues, ideally, your shortest path to revenues. It picks up from the idea of the minimum viable product and helps you define when exactly your business is going to start paying you back. However small and however minimal, when do those revenues start coming in? Another quote from last evening: “A business which doesn’t have a revenue plan is a hobby” – what’s yours? Now it’s possible that you have specifically chosen to defocus on the specific revenue plan because of the nature of your project, but there’s a difference between thinking through this and putting it aside, and ignoring this altogether.

8.     The Ticking Clock

I personally believe that the day you had an idea and decided to do something about it is the day the clock started ticking. Some ideas have long shelf lives. A cure for cancer or for balding, a new transport system, a breakthrough fuel, or even curing the common cold is probably a problem you can dwell upon for much of your working life. But many ideas have a shelf life in months if not weeks. There are loads of smart people out there, being exposed to the same problems, technologies and somebody or the other is putting their mind to the same problem.

I remember telling Karuna, my wife, sometime last year, while visiting a museum, that audio guides could and should be made available as a smart phone app so you can download and customize your guide for any museum (or city) you want to visit. Yesterday I read about Sparkatour, a company that has built the app and a B2B model for selling it to museums.

The shelf life of your idea could depend on the size of the problem or the structure of the industry, external / regulatory constraints, or many other factors. But for that product, there is probably a race on. You might do it in 10 years and beat a competitor who takes 11, to get to market.

9.     Using exceptions as role models

One of the most dangerous things people do, is use exceptions as role models. And some of the biggest names to be wary of are Google, Facebook, Youtube, Twitter and Foursquare. It’s disingenuous to look at them today and suggest therefore that you can build the business and the revenues will take care of themselves, or that you can think about revenues later. To clarify, I don’t think following these examples is wrong, but they are very dangerous. Fundamentally because a) most of them did not explicitly start out to be where they are and b) each of them has found success in markets where dozens of others have failed. Therefore if you’re going to follow Google or Facebook, don’t ape the model, look much, much more closely at why they succeeded where their peers failed.

10.Funding

By now you must be wondering why funding hasn’t found its way into this discussion. Yes, funding is important, but by all accounts, it’s not the first thing you do, unless you want to give away much of your business. Let’s elucidate: you need seed funding for which you should ideally have saved up or organized from “friends and family”. Once you have a product and a demonstrable solution, and ideally a community of users and paying customers, you should be looking for external funding. An angel might fund a prototype but there is a lot of myth around Angel networks and what they’re looking for. The best advice seems to be to aim to build your minimum viable product using as little external funding as possible. And if you’re out looking for funding, here are our nuggets of advice.

11.Buying vs Popularity

I can vouch for this one because I’ve been there. This gem from Aniko is worth repeating. At some point, you have to stop building popularity and start building customers. As entrepreneurs, we’re always looking to share our ideas and seek validation. Few things turn us on as much as somebody telling us “what a great concept!” or “I love the idea!” This is good, up to a point. But this is popularity. It’s not customers. There will come a time when “I love the idea” will not be good enough. What you’ll need is “here’s my money, sign me up”.

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Remember, “the first 200 days” isn’t literal. To go back to the first point, it’s your runway. It could be 2 months or two years. But it perhaps marks the phase 1 of your Start Up, from zero to the point where you probably have a prototype product out.

Many thanks to Dreamstake and to Aniko Zagon(Entelliz.co.uk) and Michael Edge (Flup.com) for sharing their thoughts and experience, and to all the entrepreneurs and professionals in the room who contributed to the discussion.

At this week’s Connected Home Summit, organized by Informa, where I had the privilege of chairing Day 2, one of the panels on the day had Google, HBBTV, BBC and MgMedia. Consequently, 4 distinct perspectives of the connected home emerged, which was quite fascinating. Because whatever you’re doing, it’s probably a good idea to look at all 4 to see if your idea makes sense.

The data perspective, from Google

In the super-engineering world of Google, the problem is broken down into its constituent parts. Data, processor, connection, network and the ability to bring these together to solve specific problems. In fact Kevin Mathers, from Google argued that the “home” was just a construct, and it could apply just as easily to the car or any other context. The problem would still be the same and would be addressed the same way.

The brilliance of this approach comes from the disaggregation – it allows you to look at different groupings of these elements to create the multiple contexts. And mastery over the elements means you can quickly create any context you choose – home, car, retail, etc. However, exclusive focus on the parts can create a danger of missing out on the importance of the ‘whole’ – the context. After all, Google has in the past been accused of being less good at the softer (social, consumer & design) aspects of the business than the engineering side. Here too, the question issue might well be that the understanding of the home as a context is as important as getting the engineering right. Therefore such a strong engineering oriented approach might need coupling with product and usability thinking.

The device perspective – BBC iPlayer

Gideon Summerfield works with the iPlayer and so his big challenge is about getting it to work on a plethora of devices. Unsurprisingly, his view of the connected home is a device centric one. It’s about getting devices to talk to each other, and be able to seamlessly share and play media. The TV is clearly the centrepiece of this view of the connected home. But there is significant growth across connected devices.

Informa suggest that 33% of all video playback devices will be connectable by 2016. The charge will be driven by connected TVs which are set to go through almost a tenfold growth to about 900 m by 2016. Other connectable devices will include blu-ray disc players, media streamers and games consoles.

By all accounts DLNA is still not as seamless as we’d like it to be, but there is near universal agreement that it’s the right way to go. The DLNA/ UPnP approach is being adopted by more and more devices. And an increasing number of services, such as media sharing service Zappo.TV are implementing DLNA. Other major initiatives such as Ultraviolet, from the DECE are going to find their way to market later this year, to provide another fillip to streaming content. The much heralded YouView devices should also help the market along.

The network perspective

David ‘Boris’ Felt from HBBTV took a more network centric view of the connected home. The home network is an area of huge innovation and change. Wired and wireless, new and old wires and any number of technologies ad standards abound. It seems like consumers ideally need a high speed network for content and possibly a low-speed network connecting many more appliances – for control, automation, energy management etc.

This informative piece from the Hidden Wires magazine cites research pointing to how the lower end DIY segment and the high end custom-install segment are both moving towards the more central mass market, through the no-new-wires approach. Key to this are PLC, G.hn, Zigbee, ZWave and the role of KNX.

Boris also pointed out the importance of distinguishing between the physical and virtual network, and also, the internal versus external network, for delivering information/ data / voice/ video solutions. I can set a program to record on my PVR, using my mobile phone, with no direct physical connection between the two. It’s the external network at play here, that is enabling this, and in a sense this is the virtual network of the home.

The content perspective

Jeronimo Macanas from MgMedia felt the connected home should be about content being streamed around the house. A slightly broader definition of content of course would suggest that any kind of packaged information – including healthcare or energy information is also content. While this is slightly limiting because it can exclude automation and control, it is certainly an important driver of connected homes. 

Of course, in the content space, a lot of the excitement is about the impact of connected TVs. The Strategy + Analytics presentation at the recently concluded Connected TV Summit suggested that there will be a significant value shift the gate keepers in the current model (PayTV providers) to the content creators and aggregators, as and when connected TV numbers shift. Of course, this is still under 10% globally, so the change is yet to come. But between connected TV sets, new set top boxes and every increasing broadband speeds, this is a reasonable surety.

Which is right?

The point is, ignoring any of these perspectives would be a mistake. If you’re planning a connected home service – either as a telco, a TV platform or an external service / content provider, you need to evaluate your service from each of these perspectives. Evaluate it from its modular data, processing and context perspective to ensure that it’s extensible and malleable enough. But also, understand very clearly the device, network and content/ data perspectives and ignoring any of these aspects will limit your service capability.

It was a great privilege to listen to the professionals on the panel and I certainly took away this idea of 4 distinct perspectives which are complementary viewpoints of the connected home. I hope this helps you too.

This note comes from the Start Up Conversation 2.0 event on the 5th of July, organized by ThinkPLANK & DreamStake. 

1. Do you really need the money?

This is the first question any start up needs to ask itself. Do you really need the money? Ask it again. Don't fall into the trap of thinking that you should start your business by going out to raise a big wad of capital. How far can you go without the external investment. Can you get a loan? Against your mortgage?Credit card? Have you explored all the other options first?

2. Why do you want to raise money? 

Do you have a very clear idea about why you need the money? If it is to pay yourself a salary, don't. Just get a job instead. Explore very clearly your need for funds and be prepared to defend them against revenues and your business plan. 

3. The valley of death

The reality is, you will have to cross the valley of death - the time when entrepreneurial funds will run out and you won't yet have revenues and possibly even a product. This is when you really need to be creative about funding. External investors will at this stage take an arm and a leg for your business. To address this, create a stripped down version - a minimum viable product which you can use to create interest, and if possible, some paying customers. 

4. Angels

Everybody knows about Angels, but not surprisingly, many entrepreneurs have no idea how to get to one. What you shouldn't do is pay for this information or pay somebody just to introduce you to angels. There exist entities such as the BBAA (British Business Angels Association) and plenty of others you can reach out to. But perhaps more critically, you can network your way to the right angels. 

There are broadly two types ofAngels (thanks Michael) "financial angels" - high networth individuals who are looking to do something with their cash, and "industry angels" who are trying to create ecosystems within an industry that they understand and possibly have experience in. 

5. What about VCs? 

Obviously, this comes later, but there is plenty of crossovers between Angels and VCs. Keep the VC on your radar, but probably a much later discussion. VCs will give you money when a) you can establish that you don't need it! and b) when they can clearly see a 5x-10x return in a defined timeframe. 

6. Incubators 

Fortunately, the European incubators are now coming to the party - now there are entities such as Oxygen, Seedcamp and StartUp Bootcamp - who are using the well publicised YCombinator and Techstars models to put entrepreneurs through a 2-3 month intensive session to sharpen the business and even provide some initial seed funding. 

7. Advisors 

Be wary of advisors who promise to get you "investor ready" for a fee. Instead go with those who are willing to work for a share of funds raised, on a no win no fee basis. Although there are some reputed ones run by well known accounting firms, and providers such as Clean Capital. 

8. Grants 

The great things about grants is thaat they are giveaways. Not loans or investments, the money is yours, subject to your meeting specific criteria, of course. The bad news is that they tend to be very arduous processes for getting them and can be a big drain on effort. Often they're also quite competitive and might have specific requirements which don't actually fit your business model. For example it was mentioned that some European grants require a university research collaboration and 3 companies from 3 different countries involved! On the other hand the TSB does some tech grants in the UK which are well known. 

9. Racheting 

Some investors will want to offer a racheting structure where the money will be available against specific milestones or a fixed amount of money will convert to more shares for the investor if the business misses its milestones. My basic discomfort with this model, is that it creates a conflict of interest as it is then partly in the investors interest for the business to miss the milestones, so that the investor can get a bigger share of the company. Doesn't make sense to me. 

10. Convertible loans 

Convertible loans are often preferred by investors to protect their interest in the business and create a vehicle which has a higher security than a pure investment. The investor typically has the option to convert the loan into equity if certain milestones are not met. This also has the problem as above, but this is a good model for funds collected from friends and family. 

11. Crowdsourcing - Crowdcube

This is a brand new model, initiated by Crowdcube, which allows you to raise moneys through a crowdsourced model. Crowdcube have done all the hard work to ensure that it is compliant with FSA regulations (2 years on the drawing board!) to create a model whereby individuals can invest small amounts (from £10 upwards) into a business. This model works for small to medium size of funds - say between fifty to hundred thousand. But also, remember that Crowdcube is just the platform, you still have to do the hard work of working the crowd, your friends and family and driving people to the model. The beauty of this model is of course that it's similar to doing a public offering. On the downside, it involves bringing a large number of investors on board so investor management can become a challenge very early in the life of the business. 

12. High networth individuals 

A useful tip is to search Linked In and your other networks for recently retired Chairmen or recently redundant senior executives, who typically will be looking for alternative careers and will typically have funds available, as well as a good network. These are people who might want to do something entrepreneurial but may not have a specific idea of their own, could be a great match for somebody with the idea but lacking resources. 

13 Invoice discounting 

An option available for growing companies is the invoice discounting offered by players such as Gener8 Finance. They will pay you against invoices raised, to ease cash flow challenges for growing companies. Generate charge a fixed monthly fee over and above a basic interest, while some others charge on a % of company revenue. The danger with the latter is that you pay a greater price for success. You can also explore factoring, which differs from invoice discounting in that in factoring, the provider participates in the collection process. In either case of course, the entry criteria is that you are generating invoices, which automatically means it applies to certain types of businesses and not others. Not an option for the garage start up looking to build a product. 

14. White labeling 

For some types of technology companies, it may well make sense to find a client at the early stages, give them a great deal and white label the product with them. This will enable you to build the early product using revenues from clients. It also has the benefit of actually registering revenues early in the game. However, the task of convincing somebody to buy/ whitelabel your service very early in the game may well be a tough sell. 

15. Mutual Selection

Whatever you end up doing, be aware that the investor-company relationship is a two way street and there should be selection on both sides. You should select the right investor for your business, depending on their funding strategy, expectation match, track record, exposure and expertise in your business, non financial help and network strength and overall comfort in the relationship, to name a few criteria. Some angel networks set up speed dating services. This might be a good start, but more than a few minutes might be required to establish a match. 

16. The Team

In all the discussion around funding, remember that most investors back the team, more than the idea. Don't go out there as singleton looking for funds. Make sure you have your core team in place. Here are some thoughts on the core team, based on our previous conversation. 

17. Location/ relocation 

Should you be starting out in London? Or in Silicon Valley? If you're a high-tech start up, the chances are significant parts of your ecosystem are in the Valley. And it is generally felt that angels and VCs in the Valley understand tech investment, many of them having been entrepreneurs in the past. Consider the ideal location for your start up, it could have a signficant bearin gon your funding. 

18. The business plan

Theres a reason why this is at the end. Nobody funds a business plan, but you have to have it and be prepared to defend it. In short, it's a necessary but not sufficient aspect of the funding challenge. Most importantly this answers the first to points we spoke about and gives you the discipline and detail required to answer those questions both to yourself as well as your investor. 

Many thanks to Darren Westlake from Crowdcube, Joe Waters from Gener8 Finance and Michael Braga from Motiv Marketing 

Got more tips to share? Let us know! 

PS. The next Conversation 2.0 Event will be on the 2nd of August and we'll be talking about "The First 200 Days". See you there! 

It’s not every day that I get to call Google out for making a mistake.

At the end of last week came two rather unexpected announcements. Google announced that they would be shutting down both their Google Health and PowerMeter services.

The primary reason in both cases seems to be the “inability to scale” as mentioned by Google.  This by itself is strange. Consider the Power Meter situation. There are now five million smart meters in the US.  Not even 5% of the number of homes in the US. In the UK, the smart meter rollout hasn’t commenced yet. Most countries in the Far East are focusing more on the smart grid than the smart meters. Deployment is yet to commence in any significant form. So there is no scale possible in the market yet.

It’s possible that even within the 5m smart meters in the US, Google has very low market share. But these are surely just opening moves in the market. The smart meter data management market is predicted to grow from around $ 50 million to $ 500 million over the next 7 years, so there’s still 90% of the market to play for. There isn’t much that Google could have done to accelerate the market given the challenge of bringing together policy, standards, manufacturers, utility companies and creating and executing a significant national roadmap, for each country.

Certainly the early commercial movers in this space in the UK, such as First Utility, have already been using the Google Power Meter. So it’s not as though Google have no traction in the market. First utility, like others, are building their own dashboard now.

A similar argument can be extended to the Healthcare market. Telehealth is nascent at best, wherever in the world you look. The idea that medical records should be held by patients is still a novel idea. The devices which will create a healthcare data stream are not really widespread either. So it’s too early to call really and scale is a long way away. The Google announcement points to the Direct Project initiative, but that is really a standard, and not a repository.

On the face of it, this seems like an opportunity lost, for Google. We believe that across a number of vertical industries including health and energy, there is an emerging and key role for data intermediaries. Increasingly this will become valuable both as a gateway for data use as well as mining for aggregation and insight, into consumer behaviour. Especially, as this space is set to get very exciting with the Internet of Things, M2M communication and a tidal explosion of data which Google are extremely well placed to exploit.

But surely, this is all too obvious for Google. Should we be reading in between the lines here? What kind of hypotheses can we draw about this move?

Well, first, Google might know something we don’t. They may have done enough homework to suggest that collectively this will never be a big enough market for them to go after and they simply have much bigger fish to fry. This is a plausible argument, but it smacks of determinism, and ignores the possibility of explosive growth in this segment.

Or it could be that Google foresee a lot of legislative implications in this space and being embroiled in a number of scuffles already, with respect to consumer data, privacy etc, want to steer clear of an area so fraught with legislative risk.

Or, very likely, that with Google’s recent change of guard, there is a directive to refocus on some key areas – including, as we know, the social networking and intelligent automobile parts of the business. PowerMeter and Google Health are just implementation and marketing challenges. There is no great engineering feat required in the health and energy markets, and may simply not appeal to Google’s founders, or to its ingrained engineering culture. This may just be an Eric Schmidt legacy which was doomed when he stepped aside.

Whatever it is, it’s likely that consumer behaviour will change over the next five to ten years and Google may have missed out on significant revenues and potentially a leading role as a gateway to the home. Microsoft, which owns Hohm and Healthvault, will certainly be pleased about this.

Of course, there remains the likelihood that creating this kind of business from inside Google is much harder given their size and cost base. And Google could simply buy its way back into the market if it gets interesting.

Google’s track record in areas where skills beyond great engineering are required has of course been limited. Their record in social networking with Google Buzz, Google Wave and other initiatives is spotty at best.

In sum, I suspect that Larry Page looked at all the projects when he took over and decided that he didn’t like the Google Health and Power Meter projects, presumably for very valid reasons, including their current lack of scale and decided he wanted the resources focused elsewhere. I do expect though that there is every chance that Google will buy a company in this space in the next 5 years once the market grows and some new innovative service does reach the scale that Google seeks.

The Connected Home concept is starting to snowball. Suddenly it’s all around us. Next week, the Informa Connected Home World Summit promises to be a sumptuous forum for exploring all kinds of directions and ideas. I’ve been asked to chair the day 2 of the conference and I can see I’ll have my hands full trying to discharge my duties whilst taking furious notes from the sessions. One session I’m really looking forward to is a one on one discussion with Sasha Kramar, Chairman of the Board and CEO of Iskon Internet, Croatia.

And if the 2 day bonanza of Connected Home discussions wasn’t enough, the CEDIA Home Technology Show is on as well and I’m delighted to be joining the panel discussion on the 30^th with BSkyB, Wired and Design Logistics. 

There’s even the TEN Networks Digital Home event, on the 27t, but sadly, it’s one event too many for me.

Meanwhile, there have been a few interesting announcements in the past few days. Following on from Google’s launching of the Android @ Home platform, we had Motorola & Honeywell announcing their connected home security solution. Aimed at Telcos, this puts Honeywell home security hardware together with Motorola’s software, which has open APIs for billing/ CRM integration.

There was also an excellent story in the Economist – Saving Britain’s health service, which points to some of the institutional challenges involved in bringing in telehealth and other technological innovations into the NHS, even though they have been widely implemented across the world. Delivering care into the home, across age groups, will become a commonplace idea in a few years time, but some organisations will be carried into that world kicking and screaming, obviously. The problem is, each of these pieces either accelerates or holds back the connected home environment. Multi-room streaming music and television is all very fine, but there will be a significant jump in connected home environments once healthcare services come to the party.

And an interesting development in the US, where some 5 million smart meters have now been deployed. One home owner refused to allow the smart meter to be deployed in his home. This led to a stand off between PG&E and the home owner. But it begs the question – how will the rollout in the UK progress, if somebody here takes the same stance? Will they have to choose between no electricity and a smart meter? Does there need to be much better communication and education about the smart meter program?

Incidentally, the Smart Meter data management market is estimated to be $52 million currently and set to grow almost tenfold, to $ 490 million by 2018. You can well imagine how valuable the sum of connected home data management will be.

Small wonder then that the start up iControl has been funded to the tune of $50m, bringing total investment in the company to $ 100m. IControls platform “OpenHome” allows consumers to connect and control their home devices over a mobile or web connection.

And yet, Telcos across the world are still rushing over the mirage that is content based strategy. Video is the most infrastructure intensive service, in a uber-competitive space, where Telcos are usually fighting well established incumbents. But IPTV is clearly about TV, and this is the problem. My co-conspirator Geof and I have written a 3 part article in response to this myth that “content is king”. The first of the 3 parts is here, on Videonet.

The fun, as they say, is just starting.

Yesterday we did our first Connected Home event with the University of Westminster, focusing on understanding the connected home consumer.

Georgina Voss presented on the HomeSense project, an effort aimed at putting technology into the hands of consumers without prescribing solutions or pre-supposing problems. The idea is to let homes work with experts to identify specific problems they would like to solve, given the technology. Each home was given some basic and relatively easy to use technology – including sensors and open source hardware. The project was sponsored by EDF and some of the work will be displayed at the MOMA, New York.

The need to rethink technology from the perspective of social context has been argued before. This book edited by Richard Harper has a number of excellent essays. But the HomeSense project brings it all to life. The way a home with a family including children will use technology will differ fundamentally than that which is shared by flatmates. Their work styles, problem solving and issues will vary. And so will their technology and solutions. Of course culture, local issues and the physical infrastructure play a part as well. You can’t make holes in the walls of rented homes. People in Switzerland are more concerned about their noise levels disturbing the neighbours. People in London want to know whether there are cycles available in the nearby Borris-bike stands.

Of course, one of the biggest stumbling blocks is the ability of the people and their level of expertise. This was not a constraint for Bryan Sharp. Bryan was building a new home and decided he wanted to make it a smart and connected one. The key was, he had the ability and knowledge to put it together. In Bryan’s home, there are 3 key layers. There is infrastructure – with Cat6 cabling around the house and termination points in each room, with a communications cabinet where the servers can be found. There are all the gadgets and connected devices, which do the clever things. But there is also a level of programmability – where Bryan has been able to make things do what he wants them to do.

As a result, in Bryan’s home, the music can be controlled by zones, but guests can be listening to their music from their own iPod piped into the guest room. All lights can be controlled from the iPad by the side of the bed. Lights go on at a dimmed level after midnight. While watching TV, if Bryan receives a call and has to step into the kitchen, the TV in the kitchen will start to play the show, but on low volume. Bryan can even use his iPad to start running a bath, 2 floors up, and decide what temperature he wants the bath at. And no, Bryan is not a science fiction invention or a billionaire. He has done all of this at a relatively manageable budget.

Critically, Bryan is aware that the technology needs to work as reliably as the traditional light switches. This has been factored into the design and choices of technology. And also, that at the end of the day, the technology should increase and not lower the house price.

Rufus Greenway does this for others, for a living. His company, Sound Environment limited, is a specialist custom installation company for home technology (Audio-visual distribution/cinema's/ Door entry/ CCTV/ Data distribution /IT support/ Lighting and HVAC control, and all sub systems  installed in connected homes). Among other things Rufus was keen to point out that the energy management issue is a ticking time bomb. As energy prices have consistently risen faster than inflation and continue to do so, the energy cost will become a major consideration for people.

This was a point our panellists agreed on – people need to see real cost savings. Not too many consumers are all that concerned about saving the planet, when it comes to actually buying something. It was also a common refrain, that as consumers we like to play with any technology we are given and the chances are, of course, that we will break it. So the connected home technologies need to be more tamper proof and better supported than they probably are, at this point.

My personal bugbears remain in this area – why aren’t simple things like extension boxes and cords better designed for the living room? Must we rip up the floors and walls if we don’t want the proverbial snake-pit in our living rooms? And why are all the TV connections still behind the TV if they’re supposed to be wall mounted devices?

And who is going to make it all work together, if we have neither the ability of Bryan nor the resources to use Rufus’s company?

Meanwhile more and more services will be delivered straight into the home – 47 million smart meters will be rolled out (2 per home) across the UK, over the next 5-7 years. And the overwhelming case for telehealth or connected healthcare is becoming obvious to everybody. A large percentage of TVs sold today are “connectable” i.e. to the internet, directly, and companies like Samsung have even set up their own content portals. Whether we think of it as a connected home or not, we will definitely be consuming a whole lot more connected services soon. As consumers, can we get smarter about it? Or do we risk  being left behind by our devices and our homes.

The Start Conversations 2.0 yesterday, on Finding the Perfect Start Up Team, was a great event, even if I did have to lug bottles of wine and water from Farringdon to Clerkenwell! 25 Entrepreneurs, including some would-be-entrepreneurs, and advisors knocked around the subject of constructing that core team of co-founders. We talked about everything from chemistry to contracts and I for one left with a lot of interesting and new thoughts.

Here is a summary of the evening’s best advice in terms of forming your core team. I suspect if anybody follows all of these, they’ll do quite well!

(Note: this is all about the first 2-3 or 4 people in your team. The co-founders. This is not about “hiring”, it’s about putting together the starting team.)

1.       Go with your instinct: when selecting people, listen to your gut. Don’t hire the most impressive candidate if something’s bothering you and not quite right about him/her.

2.       Give it your best shot, and then some: Hiring your core team is the most important decision you’ll make. Give it your utmost attention.

3.       Better than you: The trick in entrepreneurship is hiring people better than you. This is probably the biggest difference between hiring for a start up and hiring in a corporate environment.

4.       Co-Founders: One of your first challenges as a founder is to actually sell the idea to people to get them interested. Enough to spend their time and effort, for very little initial returns. If you can’t get a co-founder interested, your chances of getting customers and investors are quite low. 

5.       Start Up Weekends: Plenty of businesses use the model of creating an intensive weekend in order to come up with a start up concept, team and plan. Launch 48, Start Up weekends. I’m not a fan of this model, as it seems a bit like manufactured pop bands, but I’m sure it works excellently for some. I haven’t been through one of these, so I can’t really say I’m speaking from experience either.

6.       Don’t ignore the science: Don’t completely ignore the science of hiring and performance management. Usually you have neither the time nor the resources to consider Myers Briggs tests and other “corporate” tools. But give yourself time to occasionally read what you can and explore what you can implement.

7.       Create Culture: Creating a strong culture at work, is a very good way of attracting the right kind people. It might be as simple as doing non-work stuff together, or creating a friendly office environment. But don’t ignore it.

8.       Go to parties: Not just parties, go to meet ups, tweet ups and all manner of groups where entrepreneurs and people with ideas hang out. Don’t try and find a co-founder through a head-hunter, or through overly structured channels. Used tools like Linked In, have coffee with people. 

9.       Do the paperwork: Don’t get carried away by all the excitement and positivism around the start up. Make sure you create the right contractual frameworks. Create checks and balances in the memorandum and articles of association. It’s your business. And it’s not a game. Use an accountant or lawyer if required.

10.   Get the skill mix right: Make sure you have the right skill mix. A CTO is essential if you’re doing anything on the internet. And he/she needs to own the business just like you do to really make it work.

11.   Look to the future: your core team will all be leading bigger teams as you grow. Make sure you’re core team is capable of that growth. Or you’ll end up needing to replace them early.

12.   Difficult Conversations are good: if you’re not having arguments or difficult conversations, you’re doing something wrong. Sometimes you need to take a hard call. Somebody might not be pulling their weight. Be ready to have those conversations early rather than leave it to fester – they just get harder.

13.   Consider Inter-company deals: If your potential co-founder runs his/her own company, consider doing a deal between the two companies, exchange stock, perpetual licenses, and other inter-company tools, which can give you an option to diluting your stake.

14.   Use Options: Don’t give away all the shares up front. There’s nothing you can do unless you’ve made provisions in your memorandum & articles. Ideally, let your cofounders earn their share of the business over time.

15.   Fix a Strike price: this is the price at which your co-founders will be able to convert their options. Often at the point when they will also be selling some part of their shares to new investors or acquirers. Agree the conversion price in the options contract.

16.   Think “relationship”: it’s not unlike a girlfriend, boyfriend, or a spouse. You will end up spending a LOT of time together. You will have a honeymoon period. You will need to work through many issues. And you will need to have a basic chemistry that is right, else it will fall apart very quickly.

And a few points about a Board of Directors: a) be clear about what exactly you want from a Non Exec Director b) remember to draw up a terms of agreement, even if it’s just a sheet of paper and c) be prepared to change, if required.

Many thanks to Andrew Scott (@andrewjscott, http://www.magicaljaguar.com),  Diana Proca (www.workinstartups.com), Bernadette O’Reilly (www.lucamedia.com), for sharing valuable experience and also to Dreamstake, Workspace and all the participants from the Start Up Conversations 2.0

Anybody who’s been following Google knows the 3 names, Brin, Page and Schmidt. Those with a little more interest might know about Marissa Mayer, Vic Gundotra and the rest of the people who make Google run on a day to day basis. Jack Dorsey, Biz Stone and Evan Williams make up Twitter. Dustin Moscowitz and Chris Hughes might not be household names, but they were the first 2 people employed by Zuckerberg while building Facebook, long before Sean Fanning came onto the scene. Ronald Wayne is another name that might elicit a blank look, but he’s listed as one of the 3 people along with the 2 Steves (Jobs & Wozniak) who founded Apple. Even the reportedly uber-individualist Bill Gates had a co founder (Paul Allen). Bob Miner and Ed Oates were Larry Ellison’s partners in Oracle. Jerry Yang and David Filo were among the first poster boys of the Internet when the started Yahoo.

The point is rather obvious. Some of the greatest businesses in recent times were built by teams, not single individuals. The greatest and brightest people known to us felt the need to create a team around them before embarking on even the first step of building a company. They didn’t start the business, wait till it had a few million or a few thousand dollars in revenue and then go looking for employees. The reasons behind this are many and most of them are obvious.

The more interesting question perhaps, is how were these teams selected? For many of these businesses, they were people who met before they started building a company. Many were college mates. Some were colleagues. In most cases, they had some kind of relationship before they started a company together. It could have either been a serendipitous choice or a deeply considered one. But either way a critical factor in the success of these businesses.

For those looking to start a company today, the big question often is, what’s the perfect team? How many people? What skill sets? What similarities and what differences? And even with the best of diligence, how can you be sure you will not make a big mistake? That your so-called partner will turn out to be unprofessional, or disinterested, or perhaps through other reasons unable to play the role required? And what if some critical skills are missing from your team? Who makes up for that?

It’s now folklore that when the Beatles arrived to record their first song, they found that another drummer had been organized by the studio. History tells us that that drummer was not really considered the best in the world by any means, and that in the opinion of many, he was quite limited, but he went on to become a key part of arguably the most iconic and successful band in history. Can you rely on such serendipity? Or can you engineer it?

History has a cruel way of bestowing fame on some at the expense of others. 3 men defended the Pons Sublicius bridge from the attack of the Etrucians, in the 6^th century BC. 2 of the men were commanders. Spurius Lartius and Titus Herminius. And yet, the statue erected in Rome and the centre of the legend is the one-eyed and more junior officer – Publius Horatius. In fact the former two names will evoke the same response as Ronald Wayne, co founder of Apple.

So as you set out to build or grow your start up, the question you must ask is: do you have the right team? Do you collectively have the skills and capability to over-achieve like Gates and Allen, or like Horatius and his colleagues? Or have you left a critical gap in your armoury? Speaking from personal experience, I know I’ve made the mistake in the past and am working to correct it now.

We’ll be discussing all this and more in the Start Up Conversation 2.0 tomorrow, at the Clerkenwell Workshops, from 6:00 PM onwards. Details here. The event is organized by ThinkPLANK and Dreamstake.

Time: June 7, 2011 from 6pm to 8pm
Location: Clerkenwell Workshops
Street: 27/31 Clerkenwell Close
City/Town: London, EC1R 0AT
Website or Map: http://bit.ly/joKd5z