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What this FT article nails (and what it completely misses)

Ian Leslie wrote an excellent article in the Financial Times a couple of weeks ago that absolutely nailed a lot of the shifting sentiment the ad world is feeling right now. It’s a long article, but one that you should definitely read if you have any personal or professional interest in the media or advertising.

In case you haven’t read it, my summary would be:

  • After an early history as an adjunct to sales, Advertising enjoyed a golden age from the 1970s to the 1990s. Anyone who remembers the Levi’s, CocaCola or Apple ads from this era will remember what this looked like. Emotive, brand-building stuff that was deployed primarily on TV.
  • But advertising has always suffered from bean-counters saying ‘sure it works, but I can’t measure it or understand which bits work and why’ and so, when digital advertising with its targeting, measurement and attribution came along it seemed like a real panacea to the ad agencies perennial problem of self-justification
  • As a result, advertisers jumped onto this bandwagon and, from clients (like Pepsi and Diageo) to agencies, moved budgets towards digital.
  • But, in the last 12 to 18 months, serious questions have started to come to light. Controversies around viewability (that have, in the interest of transparency, hugely affected the company I founded and the market it operates in), the ad-blocker wars, and the fact that the results aren’t always there (the article quotes Pepsi who moved its TV budget entirely online one year and suffered a near-catastrophic 5% market share loss) have all added to this.
  • And the theory backs this too. The article points to research that shows brand ‘fans’ don’t move the needle on sales – the guy who buys Coke every day is not the one who makes that company so profitable; it’s the rest of us who buy the drink a couple of times a year. In other words, targeting and re-targeting, those mainstays of online advertising, have limited value. On the other hand, brand advertising on TV – passive, mass-market and emotive – gets those of us who are occasional buyers to subliminally pick Coke over the supermarket brand next time we need to choose and, on aggregate, push the needle for the company.
  • The article concludes with a sense of a growing backlash. The doubters who were previously castigated as luddites are coming home to roost. The numbers in TV aren’t actually all that bad – most people still watch it, live, without skipping ads. As a result, it suggests that creative brand advertising of old is making a comeback and TV is going to be the media of choice for it.

I agree with about 90% of this. Rather than re-state the things I agree with in less-eloquent and relatively data-poor prose, let me focus on the two things that I think are missing:

  • Demand Satisfaction Matters Too: A lot of successful advertising online today is actually Demand Satisfaction. As the article says (only too briefly), when people want a plumber, they know they want a plumber. They also know they want one in their town, who is available in the next 4 hours, is based within three miles of their place, and who is loved by 90% of her recent clients. No offline media can deliver this. Online can. This market is huge and is never going back to newspapers, direct-mail, telephone directories, local TV and the rest. Even if this is all digital advertising is, it’s here to stay and there are still plenty of massive companies to be built delivering on it.
  • Demand Generation Will Be Online Too: If Demand Satisfaction is what online advertising has already taken from its offline siblings; Demand Generation is what the article focuses on. It is true that today TV is still the biggest and best medium for this. However, TV has always only been one part of the equation. I would argue that print and outdoor advertising have also always been key players. All those iconic branding campaigns of the 80s that the article lauds were on billboards and in glossy magazines as well as on TV. In the future, some portion of this will also occur online. Why? Simply because of attention. Forget targeting, forget measurement, forget attribution. What you simply cannot get away from is that more and more of us are spending more and more of our time online and, as a result, less time in front of traditional television. If we are younger, we are only more likely to do this. This means that at some point, passive, mass-market, perhaps (ironaically!) not that well-targeted brand advertising will also have to come online, if only to be seen by the people who need to see it. Again this means there’s everything to play for – billions and billions of dollars of budget will shift over time, and some of the winners will be companies that have yet to be founded.

Are there massive challenges in building successful companies in my two categories above? Abso-fucking-lutely.

Group 1) This group of companies will need to battle against the huge negativity that has been created around their activity. They will also need to navigate the escalating war of words and actions between Apple and Google (perhaps best summed up as Privacy vs Free: you choose, you lose). And, of course, they are in a more mature market: more often than not they will have to kill as well as create.

Group 2) This group are in an early space. Early players are rarely winners. But somewhere, in some nexus of local, native and video, there’s an advertising form factor and a medium or setting that will allow us to create the kind of advertising that TV, Outdoor and Print Brand do so well today. This is a huge challenge, but a fascinatingly creative one that’ll require people from both sides of the divide to be conquered fully.

And this is where I fundamentally disagree with the article. It basically heralds a return to the past as the solution. As though online was a ten year experiment that turned out to be entirely wrong and that will be shuttered off for history. I disagree, there’s plenty left out there, plenty of mountains to climb, and companies to build; whether you’re an older company struggling with the recent market events or a start-up just setting out: it’s time to play ball.

Pitching Investors is a Team Sport

This post was inspired by a recent Board Meeting and an answer I gave on Quora earlier this week.

I am a big believer that CEOs, and other relevant people in a company, should keep an open dialogue with potential investors — all part of investing in lines and not dots. Many of these informal conversations will be one-on-one.

However, in a recent Board Meeting, we discussed a company’s plan to accelerate a funding round and go on a ‘roadshow’ in order to meet with multiple, interested investors in quick succession. One of the key discussions we had was around who this company should take to these meetings. We had a good conversation that unearthed multiple viewpoints that I thought would be worth sharing more widely:


1) Have more than one person in meetings if you possibly can. It helps to have someone reading the room while the other is talking. It is hard for one person to do all of this on their own.

2) Make sure everyone you take owns a substantial piece of the presentation. It’s just plain weird when four people troop in and three just sit there in silence.

3) Change it up. I’ve seen teams that pitch the first time with just one or two people and then bring different people to future pitches (although you should always have consistent presence of the CEO). This shows depth of and confidence in your team which is a powerful indicator of success.

4) At least for Seed, Series A and Series B companies – one person is probably too low, two or three is perfect and four or more starts to feel a bit odd.

5) Definitely avoid taking an ‘advisor’ or a Chairperson (unless they are really an actively involved Founder who just has an odd title).  Reasons why are worth a blog-post on their own, but primarily it’s about upsetting the balance of what should be a conversation that you want to become close relationship.


1) Do anything if you’re the person not currently talking. It’s rude to catch up on Facebook or doing a quick bit of Amazon while your CEO/etc is talking. It’ll put investors off, because a key thing they look for is how well they think the team can continue to raise money.

2) Take someone who is generally bad at presentations, just for the sake of having them there.  Some people are needlessly argumentative, others very nervous and create a lot of tension. Don’t take them.

3) Take everyone if you’re busy.  Fund-raising is important, but it can’t get in the way of running the business or building the product.  It can also take a long time, so beware of tying up your entire team in this process for months on end.

“We choose to do [these] things not because they are easy, but because they are hard.” – Leading with Vision

I spent a couple of days in Houston for the first time in years this week and managed to visit both the Rice University campus and the Johnson Space Center. Both locations reminded me of the space race — marked by JFK’s famous speech, made on Rice’s Campus on 12th September 1962, and arguably won by the America putting humans on the moon, just seven years later.

The thing that strikes me most, is Kennedy’s use of the speech to lead from the front with an audacious vision. The speech was made at a time when the US was significantly behind the USSR which had recently put the first person in space. At the time, the US had little progress in the area of space travel with historically relatively little funding in the area. Nonetheless, Kennedy sketched out a grand vision of what had to be done, said it had to be done first and then got out of the way to let America do his bidding. As we all know, it worked. The US met JFK’s goal (sadly after his untimely demise), putting the first human on the moon and striking a blow for Soviet confidence.

In companies, most management occurs in a very different way. It’s ground-up, technocratic, and led painstakingly by a manager who engages in all the detail and actively negotiates with his team on what is achievable and by when. But there are well known cases where ‘Leading With Vision’, if I can call it that, works exceptionally well. Beyond Kennedy, think of Steve Jobs throwing down the gauntlet to the original Mac team. Closer to home for me, I will never forget product strategy meetings at Autonomy. After long discussions on new product areas, CEO and Founder, Mike Lynch would draw a line under his involvement by simply smiling, folding his arms and saying, ‘make it so.” Everyone else in the room knew this meant it was time to leave and start work.

So when does Leading With Vision work and can you use it? I think it is really about three things: Belief, Motivation and Facilitation. Here’s what I mean:

1) Belief 1: The team has to believe that the leader knows what she is doing. This is typically derived from historic success and some form of reality distortion field. Kennedy was already an iconoclastic President and one of the great orators of the last century. In the case of Jobs or Lynch, the team had seen the leader achieve great success before and they were on the team because they believed it would strike again. Why is belief in the leader important? Because if the team doesn’t believe then it’ll spend too long bickering about whether it’s doing the right thing.

2) Belief 2: The leader also has to believe in her team. Leading With Vision requires the leader to set her audacious goal and then let people get on with delivering on it. Why? Because, the more they descend into the detail, the less perfect and more compromised the vision becomes and the more things get mired. This destroys focus, energy and motivation. To stay out of the detail the leader needs to genuinely believe that her team can pull this off. Great tech CEOs obsess over building great teams (see Jobs’ comments about A, B and C players) and Kennedy had unfailing patriotic confidence that America could rise to his challenge.

3) Motivation 1: Leading With Vision requires a Big Vision. If the leader is to stay out of the detail, the team has to self-motivate. Paradoxically, for great teams, Big Hairy Audacious Goals motivate better than small ones.

4) Motivation 2: Share a little Paranoia. Most great leaders enjoy a healthy sense of paranoia — sharing this is a powerful motivator. Why does this work? This is not, as you might think, about scaring people. It’s actually exactly the opposite. You give people huge confidence if you share a terrible potential outcome but, in the same breath, tell them that you have unfailing confidence in their ability to save the day. If you anoint a hero, they’ll walk like one. Kennedy does this to great effect in the speech, “Whether [science is] a force for good or ill depends on man, and only if the United States occupies a position of pre-eminence can we help decide whether this new ocean will be a sea of peace or a new terrifying theater of war.”

5) Facilitation 1: Get out of the way. Once the bar has been set, the leader needs to get out of the way. This was arguably easier for Kennedy, who probably did not harbour any belief in his ability in rocketry, but it can be tough for technology CEOs, many of whom are expert practitioners in the art. This is, however, key. You can’t tell someone you believe they can achieve the impossible and then interfere constantly.

6) Facilitation 2: Provide resource. The leader’s already done the most important thing by having a great team, but other facilitation is also key. Jobs often secreted away entire teams in different buildings, Lynch had a cost-is-no-object approach to getting the right tools or flying in the right experts. Kennedy, of course, secured the land to build an inspirational campus just outside Houston.

You need the right leader and the right team, but done right Leading With Vision is a thrilling way to work and delivers results … it did put humans on the moon after all!

Founder Mojo — the Good, the Bad, the Ugly

I was on Bloomberg today, discussing the recent (great) Facebook results and the (not so great) Twitter ones. I have a bunch of issues with these two companies being compared as they are very different. I have even more issues with the extreme boom/gloom reaction the Street and the City generally have to public market reporting that I suspect comes from companies being judged on timelines based primarily on banking bonus cycles. But the most interesting bit of the conversation for me was when we talked a bit about the effect of a Founder being the in the driving seat.

My fellow panellist Eleni Marouli from IHS backed Mark Zuckerberg strongly saying that he’d earned the right to ask for patience. She pointed to his record of running the company in a flexible way that has seen, for example, mobile revenues go from 0% to 75% in about three years.

Not great for live TV, but I couldn’t agree more. Technology moves so fast that even companies with an insane volume of momentum (Facebook has 1.5 billion monthly users!) have to remain agile and reactive. Sometimes that means foregoing short term profits and sometimes it means admitting missteps before quickly correcting them.

Founder Mojo — the Good

And this need for agility, is why we at Balderton place a lot of focus on the Founders we work with. Successful Founders start companies from a very personal place. At the heart there’s a passion for a new idea, in every step there’s an obsession that drives every day. This passion and obsession means great Founders do more than run a company — they live and breathe it and its market. They are viscerally in tune with what they think comes next. And, especially once they have the confidence of a few early wins behind them, they develop a conviction in those opinions that allows them to lead with confidence and purpose. I call this state of mind Founder Mojo and I think it is really important.

It isn’t impossible, of course, but I think it really is very hard for the MBA brigade to capture and recreate Founder Mojo. Professional managers do do a great job of optimizing what you already have, but they rarely have the vision and the guts to take the big leaps that allow you to survive a major disruption. For Facebook, mobile was that disruption at IPO and Zuckerberg has now emphatically turned that into a huge opportunity and he’s learned from that — he saw image-centric social conversation (Instagram), direct chat messaging (Whatsapp) and, more controversially VR (Oculus Rift) coming and made his moves quickly and decisively. How many professional managers would have the credibility or sheer gall to buy Instagram for $1BN or Whatsapp for over $20BN?

This is the Good about Founder Mojo, but there’s more.

Founder Mojo — The Bad

The primary Bad with Founders is that the focus that makes them so good at some things makes them really bad at a bunch of other things. Speaking as an ex-Founder CEO myself there were plenty of things that I was terrible at (I’m not going to embarrass myself with details here yet — for a future post!) and so for every thing we did right, we did lots wrong too.

The clear, simple solution to this is to try and find a Founder who recognizes their short-comings and works hard to plug the gaps with others who excel in those areas. Reading about how keenly Zuckerberg pursued Sheryl Sandberg in Lean In shows this …. he knew she had something he didn’t have and he was willing to do whatever it took to get her on team. A few years on, I’d say he’s been proven right — she’s clearly awesome at what she does and has been an incredible partner for him. There are plenty of other examples — Tim Cook, Eddie Cue, Jonny Ive and others filled the gaps around Steve Jobs; Steve Ballmer and Nathan Mhyrvold around Bill Gates and of course the Google Triumverate of Brin, Page and Schmidt.

We work hard on this with our companies at Balderton. We don’t turn up and tell Founders what to do, but when they are ready, they work with Gilles and our talent team to extend their capability by adding the key hires that fill the gaps they have and help them grow while maintaining the focus and culture that’s been the secret of their success to date.

Founder Mojo — The Ugly

The other problem one sometimes encounters with obsessive, focused CEOs is a personality type that can make them very hard to work with. Some are narcissistic, others adept manipulators. Again, not a topic that I want to cover in huge detail today (it’s a series of posts in its own right), but the Harvard Business Review captured this well a decade ago and what Michael Maccoby said then still holds true today in some of the highest profile successes in tech. Again, the key is self-realization and the building of a team that balances the potential negatives of these character traits.

It takes all sorts to build a successful company and, just as hard, keep a successful company successful. Employees, experts and yes, even MBAs, all play an important role in that but if I have to pick one thing I want, it’s a strong Founder who’s still got her Mojo and is as obsessed today as she was the day it all began.

Why you shouldn’t care about NDAs (and why we don’t sign them).

I connected with an entrepreneur a few weeks ago who I had heard was working on something exciting and, after engagement, she told me she’d get back to me with a summary in a few weeks.  I waited and, earlier today, got an email from a small advisory bank saying that they represented the entrepreneur and, if I wanted to learn about the company, I had to sign an NDA.

Unfortunately, like all leading VCs, we simply don’t like signing NDAs at Balderton, so I had to say I couldn’t proceed. This whole situation made me frustrated enough that I thought it was worth a post!

NDAs: Gone from the US, let’s banish them from Europe too

In the almost 12 months since I’ve been back in Europe I’ve been amazed at how many companies have suggested I sign an NDA.  To be fair, most have relented when I’ve explained we simply don’t do it, but in the Bay Area it was an incredibly rare request.  It reminds me that, for all the flat-world theory, sometimes people don’t learn from other ecosystems so, let me link to a bunch of good posts written in the US about why VCs don’t sign NDAs.

If you want the summary quickly, here are six really good reasons to understand why VCs don’t sign NDAs:

  1. The Logistical Nightmare: If you sign an NDA, you need to check it (and have your lawyer check it).  It’s never quite right so you need to negotiate it (and have your lawyer and the VC’s lawyer involved). That means money, time and friction. Once you’ve signed it, you have to keep track of the document and abide by various clauses for a decent period into the future (again, more lawyers etc).   By the end of this, you’ve spent real money that could have been invested in the company.  And spent time that could have been invested in the company.  Stupid.
  2. The Inspiration vs Perspiration argument: I know it feels as though your idea is super-unique but, unfortunately, it’s rarely entirely so.  In reality, execution is often the decider of success – not the initial idea.  Also, by their very nature, ideas are inter-related and broad … many companies we’ve already met, will meet, and might already have invested in, will have ideas similar to whatever you’re thinking about. If another company has a similar idea to yours, and you discover that they have met the same VC at some point, trust me: the VC probably didn’t tell them your secrets – you almost certainly simply had the same idea at the same time.
  3. They don’t ever seem to actually get used:  In about 17 years of being an engineer, entrepreneur and investor, the only times I remember NDAs actually being used was during large scale M&A and strategic partnerships between competitive companies. In these cases, the direct stealing of customers/etc is a real issue and NDAs can have a role. But, in other situations, the reality of the matter is that NDAs often never see the light of day. So you’ve spent all that time and money on something you’re likely never going to use anyway.
  4. Reputation is worth way, way more than legal defence: At the end of the day, venture investing is a very human business that involves networks, relationships and, above all, trust.  If someone actually lets you down in a confidentiality situation, they lose all of those. That hurts the VC firm’s and individual investor’s brand and standing much more than any legal recourse you might have. Dirt spreads and because VCs rely on these networks, they avoid these traps … or at least the good ones do!
  5. It doesn’t say flattering things about you: While things are never black and white, I honestly find that most people who ask for NDAs are asking for them because of (poor) advice.  I think this is probably the case in the example I gave at the start.  Unfortunately, if you’re listening to and acting on poor advice, that’s going to raise questions about your judgement.  I try hard not to let this get in the way (especially when, in many cases, I find the entrepreneur steps in and relents anyway), but it isn’t a great way to start a relationship in a business that, again, is all about trust.
  6. If you do need one, save it for the end: There are some things that may sensibly be needed to be covered by an NDA.  Examples would include absolutely central technical innovation or sensitive sales or customer data.  These, however, are generally not required for the first few meetings with a VC – you should be able to convey the value and importance of all of these before you actually reveal the details (if not, your pitch might need a bit of work!) and are more sensibly entered into once you have definite interest and are entering diligence – perhaps even after a term sheet.

I don’t want to come across like Statler and Waldorf in the Muppets – shouting advice from the sidelines. I can say with some confidence, that taking heed of the six points above will improve your chances of getting invested. And, ask yourself this question: would you rather have a relationship with an investor that is built on trust and mutual, professional respect; or one built on complex legalities, friction and frustratingly protracted conversations? 

“We’ve hired 13 but I know I’ll lose 4” — the importance of firing fast.

Hunter Walk just wrote a good piece on the often discussed topic of firing fast.

His post really resonated with me because I was at a Board Meeting yesterday when the CEO was talking about their imminent launch into a new market. She’d just negotiated a lease on a building and, in describing her sales team, said “I’ve hired 13, but I know I’ll lose 4 by the end of the summer — I’m just not sure which ones yet.”

This could sound cruel but it really is not. The reality is that turnover is high in start-ups. Both the company and the employee often come together quickly and test each other out in the first few months of work. It’s ok to say that it’s not the right fit, it’s ok to walk away and, as long as you do it the right way, there’s no reason why it can’t be a positive experience for everyone involved. As Hunter says, firing faster usually benefits both the employee as well as the company. Procrastinating wastes time on all sides, builds resentment and is utterly poisonous to the rest of the team.

What I particularly like about Hunter’s piece is that he walks through common reasons people don’t move faster on these decisions. If you’re in this position, it’s worth reading his reasons — if any of them sound familiar, ask yourself if you’re falling into the trap.

The CEO at yesterday’s Board Meeting may end up firing no people or six, but being open to the reality that she will likely lose a decent number of them (through her decision or theirs) is realistic and smart.

We need to stop complaining about having to say no

This post was inspired by a question on Quora.

When I was an entrepreneur everyone always said no to me. Potential investors, potential customers, potential partners, potential employees… Running a startup was just one long stream of no, no, no and further no. A brief, occasional yes would make you jump for joy. At least until a couple more ‘no’s put you back in your place.

Given that experience, I really don’t understand people in venture who complain about having to say no. It is a great privilege to be the person who is able to say no. I realise that, of course, you feel bad for the entrepreneur, but try being the person to whom the no is said… it sucks way more!

But having said that, saying no isn’t a walk in the park, so it might help to do what I do and channel those negative feelings into something positive for the entrepreneur:

  • Do it quickly: Although I didn’t enjoy the nos of building a company, entrepreneurs always have so many questions ‘out for answer’. At any one point, startup founders are checking for an email, or waiting on a phone-call that might deliver an illusive yes. Even if an entrepreneur receives a no, being able to strike another unanswered question off the list offers a huge amount of clarity. As a VC, be honest with yourself. Are you ever going to be able to say yes to these guys?  If not, say no fast.
  • Be transparent: If a decision needs to take longer due to the complexity of the decision-making process, be honest and explain it all to the entrepreneur. You will get the occasional person who will try to ‘close’ you through the stages, but you can ignore that. For everyone else (the majority), this level of transparency will help them value how far down the pipe you are and, therefore, how close you are to a yes. This is super-valuable for founders. It helps them juggle all of their unanswered questions, and enables them to prioritise.
  • Explain why: I’m staggered by the VCs who write two sentence ‘pass emails’. This is fine if you’re delivering a ‘no’ to someone who has inappropriately cold-emailed you, and they clearly don’t fit your thesis or stage or focus or whatever. But let’s say you’re saying no to an entrepreneur who’s pitched you in person. An entrepreneur who has gone through the hell of building a product, starting a company, getting a meeting with you, flying at the back of the plane, staying at a crummy hotel, and waiting outside for an hour in the rain to be on time for the meeting. Then, they had to compress years of blood, sweat and tears into a 60 minute meeting with you. You know what you should do? Write them a proper rejection. Explain what you liked, what you didn’t like, what you think they could work on and, if you can, be helpful by making introductions to others who may be able to help.

“I hate having to say no.”  Come on! Despite it being hard to always find the time to do so, I’m trying hard to do all of the above every time. I hope you do too.

Why Equal Partnership VCs are better for Entrepreneurs

An entrepreneur I met earlier this week asked lots of insightful questions about how we work as a team at Balderton.

I think he was driven partly by personal curiosity, but also by (smartly) trying to figure out how to derive the most value from any potential relationship with us or another investor.

What I realised when I walked away was that most of my answers boiled down, fundamentally, to the fact that Balderton is run as an equal partnership. My conversation with this entrepreneur got me thinking on just how much I like this fact.

What is an Equal Partnership in VC?
An equal partnership in VC is exactly what it sounds like. All of the partners (in our case there are five of us) equally own the firm, and therefore have the same say in any decision and enjoy (or not enjoy depending on performance!) the same economics regardless of the company invested in, regardless of which of us found or lead the deal, and who sits on the board etc.

Apart from with first-time firms, which sometimes start equal and then change over time, Equal Partnerships are relatively rare in VC. The most famous case probably being Benchmark Capital in the Bay Area. Benchmark, by any measure, is one of the greatest venture capital firms of the last twenty years and Balderton started as a sister firm of Benchmark, so it isn’t surprising that we were originally set up as an equal partnership. The structure has endured now for around 15 years, surviving multiple generations of partners, and the eventual split from Benchmark itself.

But, I hear you ask, why should an entrepreneur care about whether their investor runs an equal partnership?

1) Better Diligence: While we all see lots of companies on our own, once we start to take a potential investment seriously we work like a pack. The dynamic of an equal partnership ensures that there’s no ego around who did the deal or who will ‘own’ it.

Example: Recently my partner Tim found a fascinating company in the Know Your Customer (KYC) space. His background in banking means he has a better grasp on the commercial value attached to this problem, and how to position and sell it, so he met with them first. It soon became obvious, however, that the company’s approach depended on unique technology based on probabilistic analysis — an area that I know well from my background as an engineer — and so he looped me in. Together we came to a better answer than we would’ve done on our own.

Maybe you think it would be better to hoodwink a less knowledgeable VC into a deal, but I would disagree: if you set up a fundamental misunderstanding at an early stage, it will only grow. You want your investors to have done the best possible diligence and believe in the company as strongly as you do.

2) No Funding Politics: Let’s say there is a hypothetical fund that runs as an unequal partnership, and they have just recruited two, new ‘junior’ partners. Due to the nature of the fund, both are effectively competing to get a bigger slice of the pie and due to unequal partnership dynamics, they get more carry (=money!) if their deal does well. Let’s say your company gets invested in by one of these guys. Unfortunately, things go wrong and you need emergency funding. To be clear, every partner in the firm loses out if the company goes under, but note that the junior partner who did not lead the deal a) loses less than the rival who did do the deal and, b) may help stymie their rival’s progress as doing so perhaps improves their own (relative) position.

Ah, politics. With an equal partnership you know what you’re getting. Everyone is the same. Everyone voted for the deal or agreed to do it. If one investor ever blocks something that may have helped another, it’s because they genuinely think it’s a bad idea and, as painful as that might be at the time, it’s probably the right thing to happen.

3) Better Support: Start-ups take time. The average successful company is often in the portfolio of an early stage VC for around eight years. In that time, you will confront different kinds of problems. If all the partners in your VC are equally incentivized, you can call on different people at different times to get the help or attention you think you need.

Trying to scale enterprise sales and build the right incentive plan? Talk to my partner Bernard, who did this at Business Objects from 0 to a $6.8BN exit to SAP. Trying to understand what to focus on first when building an ecommerce fulfilment process and facility? Talk to my partner Mark, who was on the Board when Yoox did it. And The Hut. And at Medicanimal. And at Worldstores. And at Lyst. And more. Thinking of taking your company public? Talk to… You get the idea. A start-up needs a team and an equal partnership delivers not just one partner, but a team of partners.

There are some potential downsides to Equal Partnerships (perhaps a topic for another day) but they are mainly associated with the firm itself, and how it has to manage itself and its processes. From an entrepreneur’s perspective, I’m yet to find a reason to fault it.

The Technology of Motivation

We aren’t really in the education business; we’re in the motivation business

– Evgeny S, CEO and Founder of Makers Academy (an education start-up)

Motivation is hard.  Despite having a rational grip on the importance of pacing myself, every end of year at school and university was a mad dash of cramming for me.  Similarly, despite knowing (and being told) that I was heading for an early grave with a bad diet and lack of exercise when I was a startup CEO, I found every trick I could to avoid morning runs, gyms and salads.

Interestingly conversations I’ve had in the last few weeks have started to convince me that two of the key technology waves of the last few years – mobile and cloud – can play a big role in solving the problem of motivation.

Motivation isn’t an obvious feature focus for technology.  It’s a very human thing – intimate and social.  Peer pressure plays a big role (people don’t miss team sports because of the social negativity of letting the side down), as does relationship intimacy (a friend, overweight his whole life, changed diet overnight when he realized his five year old was convinced he’d die young).  So can tech do intimacy and peer pressure?

Intimacy via Mobile

Today, the way technology does intimacy best is, of course, through your phone.  Phones are insanely intimate devices. You sleep with them, you have them in your pocket at all times, you whip them out when on the loo, they are your best friend when you’re bored waiting for a bus, etc, etc.  When we recently met Pablo and the rest of the 8fit team – an app that helps you get fit by changing both your diet and exercise regime – a lot of the focus was on all the amazing content they’ve created, the nature of their exercise regime, the science behind their approach to weight loss and other more complex topics.  When I used the app, however, the thing that struck me the most was the motivation.

Put simply, 8Fit embarrassed me into action.  I’d tell it that I was thinking of working out on Tuesday morning and, on Tuesday morning, as I actually sat down to an indulgent breakfast, my phone’d vibrate and I’d get a “You should be exercising now” notification.  If the app was forcing me, it’d be obnoxious, but it wasn’t – I’d explicitly told it to tell me this.  It even gave me the opportunity to change the schedule, reduce my commitment, etc – all that control meant I ran out of excuses very quickly.  After a while I gave in and started to exercise when it told me to exercise.  Predictably, I’d feel good after working out and so, in time, I learned to look forward to the app’s nudges.

Social Contracting and Peer Pressure via the Cloud

Less obviously, I think the immersive connectivity of the cloud can also provide social and peer pressure.

Last week I was catching up with Evgeny Shadchnev, a co-founder of Makers Academy.  Makers has been teaching people how to code for two and a half years now and has successfully graduated over 300 people, with only 9% who want a job in software development still looking.  Makers has historically run as a physical ‘school’ with a batch of students at a time coming to a classroom and going through an intense period of working together on projects that leads to them learning to code.  Evgeny is proud of what his team have done, but worries about the sheer number of programmers the world will need in the next few decades and how scalable a physical school can ever be.  As a result, Makers recently completed their first fully virtual, cloud-delivered program.  8 students, all in remote locations with tutors based at Makers’ HQ in London.

Going into the test, a key observation byt the Makers’ team was that the information one needs to learn to code is all already available online. Yet, left to their own devices, at home, with no real imperative most students fail to focus with the necessary intensity to really learn the subject matter.  The team believed the social setting of their program (vs just the content itself) was the real key to their success. Using a variety of cloud-based tools, they set about creating a classroom atmosphere (Cloud Makers students log in using Google Hangouts at 9am every day and stay connected till the evening and use Slack to maintain constant inter-team communication).  Through these and other measures, the Maker’s team captured that mix of social inclusion and the peer pressure that drives motivation.

The experiment appears to have been a success.  Results are near identical to a regular class – similar graduation and satisfaction rates and, although early, Evgeny believes the employment outcome of the group will also be similar.  While discussing the success he neatly summarized their key learning for me: “we aren’t really in the education business; we’re in the motivation business.”

The Hidden Co-Founder

(This post was originally published on Techcrunch.  If you’re coming from there and have already read it, you will probably like this post on the hardest HR decision a founder has to take: firing herself).

It was Valentine’s Day last weekend and that reminded me of a story I often share with the founders we work with, here at Balderton.

One Friday in Cambridge, a few years ago: a tech guy and his fiancée are planning their wedding, which is due to take place in the city a few months later. Scheduled that day were: checking out the wedding venue, meeting people involved with the service, choosing the flowers and the food and wine, and perhaps being a bit romantic. However the tech guy didn’t do any of that, because he was six weeks away from the IPO of his company and spent all day dashing into corners to call up lawyers, bankers and his team in San Francisco.

That guy with the big phone bill was me and the fiancée is now my (still) very understanding wife. Despite the chaos I wreaked on our personal lives around the time of our wedding (note to all: never get married and IPO within a few months of each other), she let me focus on my work when I needed to, quietly catching the balls that were very important to us both as fast as I dropped them.  Afterwards, holed up in a hotel for (finally) a romantic dinner, she didn’t let up, leading the conversation to go over everything that was going on in the IPO process and interjecting with support and advice at every juncture.

I’ve found that ‘hidden co-founders’ – husbands, wives, girlfriends, boyfriends and even parents – are often a crucial factor in the success of a start-up.  Why?  Because being a founder and entrepreneur is not like a regular job. Start-ups are under-funded, under-connected and under-resourced compared to their competition.  The way you beat these odds often requires super-human effort and commitment.  This places you under strain and the primary nature of this strain is physical.  You have to travel, with no notice and at inconvenient times, often around the world.  You have focus entirely on the company and its mission, often pulling all-nighters, usually working through weekends.  But, even more draining than the physical strain can be the psychological strain.  As the leader of your under-resourced crew, you must maintain a 24×7 game face, never losing your positive frame of mind, taking the weight of fighting the fight onto your shoulders so that your team can remain clear-headed and get on with what they do best (build product, sell product).

All of this strain takes it toll.  You will extract time and energy from some other part of your life and that probably means your family.  Having someone else who can change their schedule at the drop of a hat, keep the trains running at home and go that step further to provide unconditional support, understanding and advice (after all, who you better than your life partner or spouse?) is key in allowing you to perform at your best.

To make this relationship work in the long term, however, I believe founders need to be fully aware of the (often quiet) sacrifices thesehidden co-founders are making and work to balance the effects of these contributions.  Every relationship does this in its own way, but in my experience, key tenets include:

  • Respect.  Respect what is important to your hidden co-founder (their own career is often overlooked) and commit to supporting them spend time on that when you can.  Respect can be demonstrated through time given or level of commitment.  Given you will rarely have the former, give with the latter – when you’ve committed to (for example) doing the school run for a week so they can travel to a conference, do not renege.
  • Share.  Share your team with your hidden co-founder and do the same in reverse.  Some of the people I worked with at blinkx became family.  We spent way more time together than many families do and we went through huge highs and lows.  When people are this important to you, don’t create artificial boundaries between them and the others who matter – in particular your hidden co-founders.  Make sure they know each other and understand the different sides to your life.  When you work overtime, it helps to know who that’s with and if you have to step in to cover for someone, your hidden cofounder will find it easier to support when it’s someone they know and care about too.
  • Balance.  I don’t think true work/life balance is possible in the day-to-day reality of start-ups but I think you can achieve it over longer periods (and certainly a life time).  My wife and I have never managed the Sheryl Sandberg schedule of being home for dinner every night. So we balance the times when one (or sometimes both) of us is at the mercy of company-driven deadlines and pressure – often stretches of more than a year – with periods when one of us, or both of us, are playing the support role, or doing something else we are passionate about.
  • The Good.  It’s very easy to dump all that is bad at work when you come home.  The hidden co-founder will be used to this and often be adept at helping absorb the negativity and talk you through the tough times.  But, for some reason, founders often forget to, equally, share the good times – those moments when it all just clicks and things are moving upwards and to the right.  You’d never forget to remind your team or investors of these moments, don’t forget your hidden co-founder either.

Starting and running a company is never easy.  Realize that the one thing that may help you through it is the support you have around you and, when you receive that support, be sure to respect it and pay it back: it might just be the most important investment you ever make.