Playfair Capital

We are a London based seed and early stage fund interested in disruptive technologies. Our investments range from £30,000 to £300,000, with our average being £100,000. We also own and manage Warner Yard, a co-working and incubation space home to an entire floor of investors, some awesome start ups and the accelerator TechStars.

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My thesis on startups in the delivery space and why Playfair backs Addy

Now, for a bit of background

The market for consumer facing startups that offer on-demand or scheduled delivery of products and services is clearly hot right now. There are apps that connect retailers/restaurants with customers, courier networks that move products from merchant to customer, and software providers that power different steps in the process. Some startups also operate central kitchens along with delivery networks to create a vertically integrated business model. As reported by CB Insights, close to $486M was invested across 109 deals within the food and grocery e-commerce and delivery industry alone between Q1 2013 and Q1 2014. To put this into perspective, that’s a 51% YoY uplift in aggregate investment dollars and a 55% increase in deal numbers. What’s more, 51% of these deals took place at the angel/seed stage in the past two years, suggesting that this particular segment of the industry is still in it’s infancy.

And it makes sense because mobile is eating the world. Over 300M smartphones are shipped around the world each quarter now. Two times as many 3G/4G phones were sold in China, India and Latin America in 2013 compared to three years prior. We’re shifting towards accessing the web on mobile vs. desktop, in part due to enhanced 3G/4G connectivity and serious progress in mobile UI/UX engineering. The convenience factor of browsing and ordering in a few taps on our mobile devices is huge and, I believe, has contributed to the growth of this industry in a meaningful way. Indeed, there are close to 2,000 startups on Angellist in the mobile consumer e-commerce space, including Shortcut, Zesty, and DoorDash.

From my perspective, what’s happening here is a voracious landgrab for consumers and suppliers fuelled by massive amounts of venture dollars. I’ll outline the thought process behind my hypothesis here, taking food delivery apps that don’t operate their own central kitchen or logistics network as an example:

From the consumer standpoint

As a consumer, I care most about the restaurant from which the food I order is procured. This is because the product I am buying is the food, not the delivery. In fact, there aren’t a million permutations of delivering a good from A to B in terms of the experience felt by the consumer. So if my favorite pizza restaurant features its products on app X today, but decides to move to app Y tomorrow, the cost for me to switch gateway is negligible. This assumes the app does not use artificial intelligence to erect higher switching costs. For example, the app could personalise the menu to fit a user’s eating habits and dietary requirements.

Consumers like to discover new restaurants to expand their horizons, especially when they move geographies. But I believe this tends to occur in transient bursts. Ultimately, taste loyalty establishes itself within food types to the point where I know which restaurants I like and I stick to those.

Thus, I don’t see much lock-in from a consumer standpoint in food ordering apps that connect restaurants with hungry people. This is especially true when any given restaurant pushes its inventory to a multitude of competing apps.

From the restaurant standpoint

As a restaurant, my primary concern is generating revenue and ideally so with loyal customers instead of multiple one-time purchases. It’s therefore in my best interest to be promiscuous with my choice of channel partners, i.e. food order apps. Each app can potentially provide me with a source of mutually independent customers and increase the probability that I recognise repeat revenue to grow my business.

Running multiple apps in tandem therefore ensures I have maximum coverage of my potential client base. By not wedding my restaurant to any single food ordering app, I can be nimble in the market and move first to adopt the next best technology that will give me an unfair advantage over competitors.

If this holds, it therefore follows that no one food ordering app can win in the long run.

From the delivery provider standpoint

As a courier, I want to run as many jobs as possible to maximise the utilisation of my workforce. This ensures that I extract as much revenue from my cost base as I can. To do so, I must most likely work with more than one merchant to achieve volume.

Building a private delivery network from scratch is onerous and expensive. Unless the restaurant (e.g. Deliverance) or food ordering app (e.g. Deliveroo) embarks upon this added mission, merchants and consumer apps need to source drivers from third parties (e.g. Postmates) or contracted drivers paid on an hourly basis with flexible contracts. These network providers are a prized resource for obvious reasons. As the on-demand and scheduled delivery space is heating up, more drivers will enter the market. I wonder whether there will be a point at which we’ve exhausted the supply of individuals willing to become drivers such that salaries will go up due to continued demand for their services. Drivers will gravitate to players that pay more and offer more business, just as taxi drivers have migrated from small private hire firms to Uber.

Thus, logistics providers appear to become the limited resource that market players will fight over.

Why Playfair Capital invested in Addy

So this leads me to the thesis driving our recent investment in Khaled, David, and Mikel and the team behind Addy. As I’ve written elsewhere, we’d more often than not opt to invest in the spades that support a gold rush rather than take a punt mining for gold ourselves. This is especially true in hyper competitive markets where acquisition costs of both ends of a marketplace are likely to escalate. Instead of picking a vertical winner at the early stage in this frothy market and fight to retain customers, merchants, and drivers, our approach here is to invest in software infrastructure that enables this ecosystem to blossom for the benefit of all.

And that’s where Addy comes in. Their product, Trak, is changing the way products and services are delivered. They’ve built a sleek and powerful delivery management solution for merchants to coordinate their delivery operations with multiple providers and with their customers.

The Trak web dashboard. I’ve created a team (Playfair Capital) and added a driver (Nathan). In a few clicks, Nathan (green dot) has been assigned a job (purple pin).

Driver app showing the destination, contact details and description of the delivery to Fede (customer). An ETA notification is received by Fede when the driver is on route. (Note that I used the same number for both driver and customer, hence why the notification is on the same device).

The suite includes a visually and intuitive web dashboard (above), driver apps with easy access to navigation and customer contact details (left), APIs for programmatic integrations, and real-time driver tracking with automated SMS notifications for the customer (left).

Having signed up, created a team, added drivers, assigned and completed tasks through Trak, I can vouch for the experience being quite literally delightful. What’s more, pricing is simple as it scales up and down with business volume.

Not only are the applications for this software diverse, ranging from food ordering to home services, but there are clear network effects in play. As merchants scale, they’re likely to require more than one courier to service their different product categories or geographies. Doing so will allow them to deliver products/services faster and cheaper than using a single delivery partner.

On the other end of the equation, couriers tend to work with more than one merchant, as discussed earlier. Thus, if our thesis plays out and the product delivers a return on investment swiftly, we envision the creation of a real-time marketplace built on a network of merchants and couriers. In this network, it will become clear which providers (both companies and independent drivers) are most reliable and cost effective for any given product type in a specific geography and time of day/year.

Any new merchant joining the network will immediately see more benefit than the one who joined before, and could access a rich dataset to figure out which courier is best given a set of input variables. By the same token, delivery companies or private drivers could access a thriving marketplace of jobs they can bid to fulfill. Given that the delivery market in most cities is still very fragmented, this marketplace has a clear value proposition. If a dominant player emerges in a given vertical because they have built their own network from the ground up (e.g. Uber), it may be less compelling for them to join. It will certainly be fascinating to see how this plays out. In the meantime, we look forward to building a more delightful delivery management network that will power an entire ecosystem for the benefit of both consumers, merchants, and logistics providers.

If you like what you see, the Addy team are hiring! They’re based at Galvanize in SF, along with another Playfair portfolio company, Good.Co.

Ping me on @nathanbenaich with any comments or criticisms ☺

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Reflections on Things a Little Bird Told Me

Confession: I’m a Twitter fan. But that’s not always been the case. Up to the time I joined in November 2011, I was locked in the mindset that Twitter was where people went to share what they ate for breakfast. While I am a foodie, I’m also fascinated by how technology is changing the way we conduct our professional and personal lives. Once I configured my Twitter feed into a personalized news source curated by thought leaders and friends whom I trusted to hunt down great content, I became hooked. Extrapolating to a macro level, I finally understood the value of Twitter as a tool to instantaneously disseminate information from one-to-many. What’s more, one is able to inobtrusively engage with people outside of one’s ‘real-world’ social graph. Now that’s powerful.

  Armed with an appreciation of this impactful product, I picked up Hatching Twitter by Nick Bilton and came to appreciate how Twitter was born, how the vision evolved, and how founder feuds were present from day 1 through to IPO. Reading this story gave me a window into the minds of its four co-founders. And when Biz Stone, one of the co-founders, released his new book, Things a Little Bird Told Me, I dove in to discover what makes him tick. Here are some nuggets I discovered and my reflections on them:

  Opportunity is manufactured, not awarded

Within the first few pages, Biz describes opportunity as “a set of circumstances that [are created to] make it possible to do something”. His view contrasts with those who take a back seat approach and consider that opportunity is something only the “lucky few” are graced with. The most driven entrepreneurs don’t wait idly for the right conditions to materialise before going for the gold. They create the set of circumstances (i.e. the opportunity) on their own and act upon it immediately. An example of this is when entrepreneurs build products or services that require a change in consumer behavior that deviates significantly from what people are used to. This visionary, proactive attitude is one of the qualities we at Playfair look for in entrepreneurs that we bring into the family.

  Here’s a historical anecdote to illustrate this point. In 1994, Jeff Bezos of Amazon saw that data transmission over the world wide web had shot up 2,300-fold in one year. He hypothesized that consumer retail could conceivably occur over this emerging medium. When Amazon opened its e-commerce business a year later, consumers were still cautious about conducting credit card transactions on the web. What’s more, they questioned the quality of the products they could purchase and whether an online store could be trusted to actually fulfill the order. While the majority of consumers would still go down to their local Barnes & Noble, the Internet’s early adopters jumped onto Amazon to place $12k worth of orders in its first live week. A month after Amazon launched, the producer of the world’s first popular web browser, Netscape, went public and put the potential of the web in the spotlight of people around the world. E-commerce penetration has since grown 17.5% YoY to breach 6% of total US retail spend today (stats). Moral of the story? Create an opportunity, be the first to capitalise upon it, and in doing so increase your probability of building company no one can ignore.

  Creativity is a renewable resource

Looking back on his job as an art director designing book jackets for Little, Brown (the job he dropped out of college for), Biz shares this quote:

  “Graphic design is an excellent preparation for any profession because it teaches you that for any one problem, there are infinite possible solutions.”

  If I take a step back, the moral I read into here is that problem solving requires intellectual flexibility for ideation, courage for stepping off the beaten track to challenge established dogma, and iteration of a solution you’ve found to meet the evolving needs of those who suffer the problem you’re fixing. Combining creativity with life experience and curiosity is a recipe for innovation. It’s also a recipe for capitalising on new opportunities that emerge down the road. For example, once you’ve launched a product, you might observe unintended engagement behavior of your user base and decide to focus on this different, more compelling use case to encourage habit creation. Indeed, Biz went through this process at Twitter:

  “...by being open to the unknown, by not forcing our will or vision just because it was ours, by watching what people were doing and looking for patterns, we were able to build a service whose function matched the way people wanted to use Twitter. The ability to listen, watch, and draw lessons from obvious and unlikely places breeds originality and growth.”

  The history of famous tech companies including Instagram (born as a location-based check-in and photo sharing service) and Pandora (began as a B2B music recommendation engine) is filled with evidence that commercial and technical creativity breeds defensible companies in the long run. Irene Au of Khosla Ventures recently published a compelling case for creativity and design being as core to technology companies as the underlying technology itself. The sooner one realises that creativity is renewable, the sooner one can be on track to building truly game changing companies.

  Constraints enhance productivity and creativity

Let’s now move on from resources that are renewable to those that are scarce. I’m thinking of things like time, money, access to human capital, access to customers, and the medium via which your product is delivered (mobile vs desktop). Biz cites a conversation he entertained with Hermann Hauser, whose company (Acorn Computers) collaborated with Apple to spin out ARM in 1990, a Cambridge-based company that’s produced 50 billion processors as of 2014 to power the majority of smartphones globally. Constrained by time, financial and physical resources, ARM designed a low-energy microprocessor that turned out to be ill-suited for computers, but just about right to power the burgeoning smartphone market.

  As smartphone adoption grows, consumers favor content consumption on mobile vs. desktop and prefer to use native apps vs. mobile web. This means that the physical characteristics of the smartphone held by the consumer is a constraint entrepreneurs in this space have to work with. That is to say, if you’re designing a product to be enjoyed on the go, you’ve got to design a minimalistic experience that gets the job done on a 4-inch screen. Moreover, you can’t be draining the poor old iPhone’s battery - it’s bad enough as it is. Mobile-first forces designers to distil their ideas down to a core feature set that swiftly returns intended value to the consumer. And that’s a great byproduct of the mobile constraint. Overcrowded and convoluted UI motivated by a need to fill white space leads to poor UX, which impacts conversion, repeat usage, spending, and all the rest of it.

  Amongst the many designs you’ll find on mobile (see this database), my favorite has got to be YPlan and Uber. Both have a crystal clear value proposition, finding things to do tonight and getting you there, respectively. YPlan features a visually delightful feed of events while Uber gives you a real-time view of cars in your area. Best of all, both apps ask only two interactions of the user with the UI to complete their journey and get on with life. By working within the constraint of mobile screen real estate and the potentially greater distractions people encounter while playing with their phones compared to staring at their desktop monitors, YPlan and Uber have (dare I say) nailed a seamless user journey that works.

  Be emotionally invested in what you’re building

It goes without saying that feeling connected to the work you’re producing makes you more efficient because every ounce of effort injected is reward you and others reap. This is part of the motivation for talented individuals to leave the corporate ladder to build our their own dreams. Working to produce something you care deeply about is the way forward. I experienced it during my PhD. Going to the lab would hardly feel like an obligation because I had an emotional connection to the bigger picture into which my research fit: halting the spread of cancer around the body to combat the cause of 90% of human cancer-related deaths.

Emotional connection comes in different flavors. Either you’ve felt the pain you’re fighting first hand (while interning at a hedge fund, Damian of DueDil was appalled at the lack of data on private companies made available in the public domain). Or you believe that unreasonable roadblocks exist to prevent citizens from accessing basic infrastructure (Joel of Mobius Motors has built a circa. $10k off-road car in Kenya using 40% locally sourced materials). Or you’re adamant that new technology approaches can revolutionise the way we undertake repeat behaviors (Tom and Raz of PeopleGraph believe that searching for people online hasn’t advanced past a 1990’s style web search and graph technology can change this). Such infectious commitment to using technology and a clear operational strategy to change the world, however cliche as it may sound, is what we look for at Playfair. And it’s something that I believe strongly in. Back to Biz:

  “If you don’t love what you’re building, if you’re not an avid user yourself, then you will most likely fail even if you’re doing everything else right.”

  Use your creative mind to ideate something new. Create circumstances in which you have an unfair advantage to get going. Embrace constraints to refine your vision. Nurture a symbiotic, emotional relationship with what you’re building, for whom, and why. These are the nuggets I learned from Things a Little Bird Told Me.

Penned by @nathanbenaich

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Things I'm Into

Entering into my 8th month in VC world, I'm beginning to find my feet. I've evaluated (to varying degrees) a couple hundred businesses via proactive sourcing (Angellist, reading, trawling the web, being an early adopter myself), F6S applications, our Warner Yard investor floor, VC/entrepreneur/operator referrals and word of mouth, events in the ecosystem, and conferences (Playfairs SXSW trip!). And I'm always looking for more sources of deals. This exposure and mass of data points on founders, markets, pros/cons of technology approaches, customer acquisition strategies, and product value propositions has refined a set of four "technology themes" that truly excite me. In the spirit of openness and collective learning, I've set out to pen these ideas here. Should anything ring true/false with you, or if you're building a business within/around these themes, please do reach out to me, I'd love to hear from you!

  1. Large scale data-driven software

I constantly think back to the analogy used in Reid Hoffman’s LinkedIn’s Series B pitch to Greylock. It goes something like this: web technologies in Internet 1.0 were about searching and transacting via flat directories (e.g. a phone book). It’s obvious to us that this approach is now archaic because it’s inefficient in terms of speed, scalability, and accuracy. In a world where close to 3 billion people are online, web participants aren’t lone wolves, but instead are members of an interconnected community with varying degrees of information available to qualify their identities. These networks drive today’s Internet 2.0 technologies, in which searching and transacting occurs via networks.

The interesting bit for me is the theme of collecting a mass of input data signals (e.g. on people, transactions, news) and using computational approaches (machine learning, artificial intelligence, statistics, natural language processing...) to find patterns in the data and surface intelligence that would otherwise be challenging to reveal. These results ultimately spawn new hypotheses that inform the evolution of your product and value proposition. This harkens back to my past experience in cancer research, in which hypothesis-generating (new school) genome-wide experiments are accelerating the pace of knowledge creation faster than traditional hypothesis-testing (old school) experiments.

My team and I at Playfair are bullish on this theme, having backed DueDil (the data backbone of business) and OP3Nvoice (the API to search for audio/video). We’re excited about companies building products utilising highly connected, exponentially growing datasets and thus championing the NoSQL movement with graph databases such as Neo4j, for example, or others that are suited to the challenge at hand (more on this topic). One particularly intriguing application of this technology is led by the guys at 3Sourcing/PeopleGraph (known on the street as Project Whoogle!). In my mind, this is a direction for Internet 3.0: while many 2.0 networks now exist (Twitter, LinkedIn, Facebook, Quora), they remain largely siloed and don’t talk to one another enough to add significant cross-platform value to the user. This is set to change.

  2. Enterprise productivity tools

As startups find product-market fit, gain traction with their customers, and raise venture financing to capitalise on growth opportunities, founding teams expand and eventually subdivide into product/tech, sales/marketing, finance, HR, and customer support teams (amongst others). With this implementation of organisational structure comes the need to remain nimble in pursuing gaps in the market, iterating and shipping quality code faster than competitors, and keeping customers happy. My view of enterprise productivity herein is a tool that facilitates or increases the efficiency with which employees can do their jobs to build value for their company. We’ve seen multi-hundred million to billion dollar companies created within this theme, including Yammer, Huddle, and Slack in the communication/collaboration vertical; Trello and Basecamp in in project management; Dropbox (a personal favorite), Box, and Evernote in file/content storage; Zendesk in customer support; and GitHub in software development/iteration. I believe that as more entrepreneurs dissect the pain of legacy systems in enterprise, hopefully fueled by their own experiences wishing for something better, we’ll see continued evolution of software solutions that will help companies improve financial and operational performance to ensure customer satisfaction in the long-term. I’m on the continued lookout for startups in this space.

  3. Infrastructure-as-a-Service software

I’ve been playing around with the following analogy recently: Say you’re building a new city. What’s required to make it rise from the ground and mature into a functional operation? Concrete to construct buildings, a power and water grid to supply homes and offices, roads to enable efficient transit, and tons of money, amongst other things. Now, if you’re an investor, would you rather invest your capital in constructing the single most badass building in the city (and hope that it remains so for eons) or would you instead invest in a core infrastructure provider that has the potential to service every building in this new city? I’ll bet on the latter, otherwise known (in my book at least) as Infrastructure-as-a-Service (IaaS).

I’m extremely bullish on this theme due to the significance of the operational scale at play in the software world. Just look at Amazon Web Service (AWS): launched in 2006, AWS now powers the technology infrastructure of household names including Airbnb, Netflix, Pinterest, and even the CIA. AWS claims a 35% market share of IaaS to pull in over $3bn in annual gross revenue representing >50% YoY growth (note $74.5bn consolidated gross revenue for Amazon in 2013). Wow. And the size of the IaaS and broader cloud computing market will continue to grow several fold driven by a need for massively scalable, fast, and cheap solutions to power complex systems. What’s more, we’ll see a 22% growth in the number of software developers over the next 10 years in the US. These developers will go on to build more cloud-based software, creating larger companies, employing a greater number of developers, and thus reinforcing the growth story through a positive feedback loop.

Another flavor of IaaS that I am a fan of are payment gateways including Paypal, Braintree, Stripe, and Klarna, which collectively processed >$200bn of transaction volume last year along with double digit growth. Along with their competitors in the physical world, Stripe and iZettle, these innovative behemoths are providing next generation plumbing (the infrastructure) for online and offline commerce (the city). What other flavors of IaaS might blossom in the next 5 years? I’m looking for them.

  4. Consumer propositions that remove unnecessary friction

We’re now in a world where almost every product/service is up for Uberification - the process of (often mobile-first) procurement in seconds. I’m a massive proponent of this approach in industry verticals such as delivery and logistics, home services, entertainment, and travel. It’s important to realise here that consumers can be fickle with their choice of product/service provider, while trends (i.e. what’s the new cool thing to do) in society can change quickly. This makes it challenging for investors to pick the true winners that will perdure from the false positives that appear hot in the short term but will ultimately become forgotten. As an entrepreneur, it’s therefore incredibly important to strive to build habit forming behaviors into consumer products to keep users hooked. Nir Eyal dives into this topic in a book by a similar title, which is definitely worth a read. What it boils down to is user psychology, and I vouch for this being paramount to success. In fact, I wouldn’t be surprised if a new role were to emerge with a title along the lines of “Chief User Psychology Officer”.

Here are some key considerations on this point: do you understand in what circumstances/mental state your users ideate the desire to consume a product/service you are offering? Have you an idea of the hooks to build into your product to encourage this behavior? How can you offer maximum reward (gratification, things/money/information, competency) while minimising the need for your users to expend their most prized resources (money, time, brain cycles)? Teams that have done this extremely well include the usual suspects (Facebook, Twitter, and Uber) but also include fast-growing newcomers such as London-founded YPlan, which focuses obsessively on user experience to achieve coveted retention. What could possibly be more appealing to a consumer than being two taps away from the product/service they’re in the market to consume? Well, maybe cutting it down to a single tap :)

All in all, I’m bullish on this theme of using technology to remove friction for the consumer’s experience and bang on about it around the office enough for my partner in crime @victoriadomalik to make it glaringly obvious that I should stop chewing her ear off about it. Enough said!

Penned on a rainy Saturday at Warner Yard by @nathanbenaich

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Lunch with Peter Cowley

Sometimes, the only thing you get to know about angels and investors behind the deals is just the deals themselves. Maybe if they happen to be a bit naughty you get to hear about other bits… This is not that kind of interview.

A while back I had the distinct pleasure of sitting within close proximity of Peter Cowley; not only is he one of the investors that call Warner Yard home, but he has also managed to fit in some other cool stuff. Here is a brief synopsis that has been completely lifted from his LinkedIn profile…

Peter Cowley has a Cambridge University degree in Engineering and Computing Science, lived in Bavaria for five years and owns technology and construction businesses. He returned to Cambridge ten years ago. In total he has founded twelve businesses, since the first in 1981 in Bavaria.

Peter has personally been investing in high growth start-ups for many years and is a board member of the Cambridge Angels. He is the Investment Director at Martlet - the Corporate Angel division of Marshall of Cambridge (a £1.2bn sales, 4000+ person engineering company). He has run the Computing Laboratory Ring mentoring scheme for 10 years and is chair of the ideaSpace supporter group.  Peter has over 30 angel investments in the biotech, medtech, ICT, web, fire safety, electronics, mobile data, aerospace, printing and instrumentation sectors. He is a non-exec director or board observer of eight of these. Over the last 14 years, he is and has been treasurer and chair of several charities in the advice, healthcare and education sectors.  He has also undertaken several property development and construction projects. Peter was considered one of the 10 Business Angels all entrepreneurs should know by AngelNews as well as one of the 21 Business Angels you need to know about by iBusinessAngel. He is one of the top 100 Global Corporate Venturers. Further information and full portfolio plus investment criteria at www.petercowley.org

Pretty darn impressive, also has impeccable manners. Here are 11 things you may not have read about the man:

1. Did you think you would get to where you are?

My life has changed in so many ways over the years, I can’t answer that question. I haven’t been asked that one before. I haven’t got a straight answer for you. I think I disappointed my parents, but impress my kids.

2. When you made your first million, did you want to slow down?

Not at all, it’s too much fun. It’s not for the monies’ sake. I just love what I am doing; the people, the innovation, the challenges…

3. What do you think is the best preparation for business?

Not necessarily an MBA (even though I am a fellow of the Judge Business School), work experience can be more relevant. Get a good degree, spend two to three years in a corporate and then start a business after that, as it happens that is exactly what I did. I definitely think that experience of corporate life adds some structure, it's also helpful to have great people around you, and learn from your mistakes. In business you are always going to make mistakes, you just have to try and limit the number and learn from them quickly.

4. Do you have time for financial planning?

Yes, because I am getting to that sort of age where it’s important. I don’t spend much time on it, but I do spend some time on it. Probably less than half an hour a week.

5. Do you want to carry on untill you drop?

Hopefully I won’t drop too soon, I am in my late fifties now and I certainly hope to be doing this in my seventies - not in the same intensity, but the same sort of thing.

7. Have you made a pension provision?

That’s a really strange question! Why do I need a pension if I intend to do what I am doing till I drop?

A pension is income from the point where one stops generating cash and changes into money spending mode and if I was going to drop on the job then I wouldn’t need that.

When you have made your first million and you don’t use private jets too often, a million quid in the bank once you get to seventy-ish should last you forever.

8. What is your commitment to charity?

Quite a lot, I mean for the last 14 years I have been involved on the trustee boards of charities in three sectors: Citizens Advice Bureau; Focus12, a drug and alcohol rehab charity, which has Russell Brand as a patron and recently an education charity in Cambridge. I have given a huge amount of time. Saying no to an interesting opportunity is a huge issue for me!

9. Do you allow yourself the odd indulgence?

Yes, I have already been skiing twice this year. Last year I spent 3 months out of the country and this year I intend to spend four. Some of it is business but mostly its pleasure, I have a nice car, I have a motor bike, I have a nice house, are those indulgent? I enjoy good food when possible so yes, I would be wrong not to indulge sometimes

10. Do you believe in leaving everything to your children?

Between Alison and I, we have five children. It’s a difficult question, the answer in principle is no, but it depends on the point of death really.  At the moment planning the date of one’s funeral is classed as suicide, and no one can estimate the cost of care of the 2 to 20 years of ill health we are all expected to have at the end. No the money will not just go to my children

11. What is the most you have ever paid for a meal?

I haven’t quite spent £200 a head, but it’s heading that way.  

Penned by @VictoriaDomalik without the consent of @NathanBenaich with glaring typos subsequently fixed by detail-obssessed @NathanBenaich

[playfaircapital-blog]

I WENT SO YOU DON'T HAVE TO - SXSW

Editors note: this was supposed to posted weeks ago, you could have gotten through the entire first season of Games of Thrones* between the time this was supposed to go up and now. For this, Nathan and I are sorry. The only solace I have is that it reminds me of last summer when I absentmindedly walked into a meeting room that contained a frustrated David Cohen (He came to stay at our London co-working space Warner Yard during the first TechStars London cohort and we have missed him since) stating ‘I just need to finish this entry’. This strikes me as a common theme in our hyper connected world, the need, and then the lack of resolve/time to post the thing you wanted to discuss. I might write about that...eventually.For now and without further delay I present to you this wonderful post about SXSW expertly written by my favourite partner in VC crime @nathanbenaich and part of our series, I went so you don’t have to

OK, I know what some of you might be thinking. No, this post won’t be another re-cap post about what you missed by not attending this year’s edition of SXSW, the now famed tech-music-film festival in Austin, Texas. Instead I’d like to reflect on a talk about the one of the largest opportunities in the global software economy: platforms and APIs. Of the several fireside chats with founders (Sophia Amoruso of Nasty Gal) and investors (Mark Cuban, Ben Horowitz), SXSW Accelerator pitches (congrats to our very own OP3Nvoice!), and mega sessions with Edward Snowden and Julian Assange, one session stood out for me. Entitled “A Global Economy Driven by Platforms and APIs”, this conversation featured industry heavyweights Werner Vogels, longtime CTO of Amazon, and Khris Loux, co-founder and CEO of Echo.

At Playfair Capital, we’re long connected software and big data, having backed the likes of DueDil, BirdBack, OP3Nvoice, and Good.Co. These companies, amongst many others, are using or building APIs to enable developers to source/share data directly from existing web services or their own, with the goal of facilitating and empowering new products and services without needing to reinvent the wheel. More than 11,000 APIs exist today, demonstrating significant interest from new and incumbent businesses to share their previously siloed data to power other products and services. In doing so, new business models are being created whereby companies compartmentalise their internally facing tools, package these a standalone platforms, and build access pipes for the public via APIs. This approach, successfully championed by several large players including Amazon, was the focus of the discussion.

I buy the thesis that companies building platforms that form nodes within large networks will thrive in the long-run within the software economy. Indeed, what’s most appealing to me is software that facilitates the procurement of products/services/information in one’s personal life (Uber, Amazon, StreetHub) or renders professional workflow more efficient (Dropbox, Salesforce, Yammer, DueDil), and these are more often than not integrated within larger software ecosystems.

What’s always been key for the innovator is to understand competitive advantage, i.e. the ‘core’ components of your business that render its product or service indispensable to clients. While this unique selling proposition differentiates your offering from others vying for market share, it’s important to abstract from the innovator’s dilemma of weighting your focus too much on the requirements of your present day clients vs the longer term. And here’s where Werner’s punch line comes to life: “create a business around things that you know how to do really well, even though you’re powering your competitors”. To do so, you need to “expose the core competencies of what you do [to] help others become extremely successful”. Thus, while you may be operating in a market where both you and your competitors are sourcing data from the same locations (be it e-commerce inventory or private company information) to build a differentiated product, there is a significant opportunity for you to break away from the pack to offer a platform-as-a-service to your competitors. Working with your competitors-turned-clients can accelerate product improvement by providing each player with higher fidelity data and scale than could be achieve individually. Indeed, Amazon realized that building the world’s largest catalogue of books (and now much more) was an incredibly lofty goal to achieve on its own. Instead, the company opted to open up its platform to 3rd party retailers who could populate the former with their own inventory and sell to a much wider audience than before. Together, Amazon and its partners achieved coverage of the world’s book catalogue at an exponentially quicker pace with economic incentive for all parties. Not a pitch goes by these days that doesn’t fail to mention the building of an API as a key product milestone or business model. I’m excited to follow this space and encourage founders building businesses with this ethos in mind to reach out to us!

Written by @nathanbenaich and snubbed and ignored by @victoriadomalik

*haven't actually seen this program but am told it is nice. 

[playfaircapital-blog]

I WENT SO YOU DON’T HAVE TO - Recruitment

Let’s start a series!

When you live in startup land, you go to A LOT of events, you could (in theory) be fed every night of the week simply by attending the numerous gigs that fight for your precious time. After spending some time on the scene, you begin to find your feet, you’ve made some important connections, your startup is more than an idea on a napkin, you might even have some funding, and maybe, just maybe, you meet someone outside of this coworking space/incubator world of ours. This necessitates dates, friends and not talking about your startup (again, in theory).  

So you start going to fewer events and you fear missing out on worthwhile content. Don’t beat yourself up, it happens. And this is where I come in. I will go to things, so that you don’t have to. A digested read of the happenings of coworking space events in London! Oh yes.

Last week I spent my Friday night at a recruitment talk…I would like to thank the GA and the lovely Gillian Davis for illuminating the dark, dark world of recruitment for your startup

I WENT SO YOU DON’T HAVE TO - part of a series

How to recruit for your startup.

1. Initial stuff you should think about:

Stand out - Ditch the ‘we are new and amazing’ schpeel, you are about as new and amazing as everyone else. I am sorry I had to be the one to tell you this…

Start ups tend to hire their friends - This can turn out to be a disaster, take the time to recruit properly.

What is the ONE skill that you need to get the job done?

Make sure you plan ahead - Search for the candidate BEFORE you need them.

Why are you hiring? Is this a new role or are you replacing someone? If the latter, what did you learn from this former team member and how can this shape your view of who’ll come in next?

Be realistic about your needs and your wants - They are distinct.

Figure out which skills must be mastered by the candidate prior to hiring, which can be acquired through training, and which are innate.

Can your potential recruit get the job done?

2. So you have decided to hire:

Know the candidate before you go out to find them -  Essentially, imagine what kind of person you need.

Find someone who compliments the team - You don’t all have to be the same, you know.

Know your audience and tailor your value proposition - An awesome person needs ‘an offer they cannot refuse’ (read in Godfather voice)

How much can you afford to remunerate them? -  Remember, firing is more expensive than hiring. What’s your plan B? Job boards? Agencies?

Before you start hiring, decide what the true cost is? -  If you don’t have a dedicated recruiter, to what extent will recruiting someone take the designated team member (or you) away from your actual role? Weigh up this opportunity cost carefully.

Referral schemes can be great - But don’t let money be the incentive.

Keep your team in the loop - You are a small family, everyone should know (and hopefully contribute to vetting candidates, on that note, Good.Co is massively helpful to figure out whether a candidate will fit within your teams workplace culture).

Try not to be too clique-ee - There is a fine line to walk when hiring for ‘cultural fit’, culture isn’t the same as values.

Have an elevator pitch - But don’t be that guy, be natural, don’t pitch candidates at EVERY event. Make them think that you are cool and worth speaking to.

Put CVs aside -  Don’t look at them as they come in, you’ll quickly develop snow blindness.

Create a three level system - Sort your candidates into Good, goodish and ok piles, don’t disregard CVs that don’t quite fit. They might be good for another role at a later stage.

ALWAYS have a reciprocal email after your interviews - It’s just polite.

Manage expectations - In other words, play it cool

3. The Interviewing process:

There are really only three questions for which you need answers:

Can you do the job?

Will you love it?

Can I stand working with you?

What part of the project did you play? - Often Candidates will wax lyrical about a project that they were ‘an invaluable part of’ The question is, ‘What did you do exactly?’

Don’t try and catch a candidate out - What will that help?

Don’t say anything illegal - Seriously, brush up on your law skills before hand.

Don’t do interviews back to back! - Its really not nice for anyone, candidates shouldn’t see who they are up against, especially at higher levels.

Don’t judge - Be cautious of extraverts.

Do some social media stalking.

If someone great says ‘no’ walk them through the role, perhaps someone has miscommunicated at one point. Just don’t be desperate though…

4. Onboarding:

Your new hire shouldn’t be greeted by an empty desk

Have business cards ready for them

Make them feel welcome - If you are unable to be there, make sure that someone else is there to greet them.

ALWAYS BE SOURCING FOR NEW TALENT, oh and in case you are wondering, yes, those are my notes. 

Written by @victoriadomalik, lovingly edited by @nathanbenaich 

[playfaircapital-blog]

Over pitching the pitch and the value of holding your tongue.

I love to hear bold and bright ideas, but I don't often sit in on pitches. Being one of two women on our investor floor, however, I was recently called to sit in on a pitch for a company operating in a segment targeting women. In fact, I believe the call to action was ‘do you have a woman on this floor?’, almost said in a whisper. ‘Yes, I think we do’ was the answer, much to the relief of everyone involved. Although I am not sure as to why my status as a woman might be ambiguous...A blog post for another time perhaps: ‘power dressing and why I dress like a man in this cruel cold world.’ Title is a work in progress, but let’s move on shall we?

I diligently took up a pen and paper, put a smile on my face, and headed towards the meeting room with an open mind thinking to myself ‘remember, firm handshake’. Needless to say that was the high point of the meeting.

Here’s what I learned from the experience that I’d take on board as an entrepreneur:

1) Know your customer inside-out: Just because you met with 100 potential customers, does not mean you’ve extracted insight that is truly reflective of their psyche, purchasing behavior, honest thoughts about product utility. Find your early adopters, incentivise them in whatever way you must to drill down to the core of their pain point(s), watch them interact with your product, and design to their needs.

2) Try and solve a real problem: It’s easier to build a product with passion when you’re tackling a problem that you and others care deeply about. This comes naturally if you’ve felt the pain points that your product solves and you persuade investors that this adventure is worth supporting. Don’t just just fill a space you think shouldn’t be void. Styrofoam fills space, you don't see anyone getting excited about that.

3) Don't gratuitously name drop: It’s not flattering to you or the person you happened to corner in the lift. Experienced and respected advisors and investors do provide tangible value to your startup, as well as positive signaling, but be humble about their involvement.

4) Make sure your team is relevant: If you’re tackling a customer segment that is predominantly constituted of women, make sure that your management and/or client facing team includes women who can relate to your customers.

5) Know your interlocutor: No one likes blind introductions. Use your time wisely and read up on the investors to whom you are pitching. We all have social media profiles and websites, we speak at conferences and small meetups, and the tech community is tight knight and sociable. You can learn a great deal about our approach to evaluating new ventures, the factors we consider to be essential to building lasting businesses, and markets that we’re particularly excited about. Armed with this insight, our conversations will be all the more valuable and tailored to points that we’ll most likely want to cover during your pitch.

Hold your tongue: Ever heard of the phrase ‘we invest in people’? I bet you have, and it reigns true. There have been occasions that I have heard of, and perhaps witnessed, where a founder will come on to the floor, a floor, not just our floor, and rub everyone up the wrong way. Needless to say they leave without investment (disclaimer if the idea was INCREDIBLE then a bit of bravodo will go down nicley, but frankly, there’s no downside to always being agreeable). As investors, we should and will ask the tough questions. We simply have to.

Written by @victoriadomalik, lovingly edited by @nathanbenaich 

[playfaircapital-blog]

Growth and Growing.

Growth

Having crossed the 20 portfolio company mark at the beginning of 2013 Federico decided that his team of one, needed more people. With a bit of luck, and some chance encounters, the team first grew by adding two Partners, Joe (Financial Director) and Georgia (Legal Director). Within a few months they found Victoria, who heads up media for Playfair and Warner Yard, and Nathan, who joined to help us find and analyse new investments. Our Warner Yard community manager, Talulla, came on board and before we knew it, we looked around the table and saw a team.

The same mix of happy chance, hard work and passion came into finding our amazing group of portfolio companies and founders. Exuding an infectious dedication to building products and services that solve bona fide customer pain points, our founders are obsessed with delivering the very best experience to their customers and strive to iterate and improve until its achieved. Early-stage investing is as much about the people as it is the product and market, not only it seems for start ups but for investors as well.  With this in mind we’re thrilled to welcome Good.Co, StreetHub, OP3Nvoice, AppearHere, Festicket, F6S, and ToucanBox to the Playfair family, and  we look forward to rolling up our sleeves to help our companies bring a competitive edge back to brick and mortar retail, revolutionise human resources using big-data approaches, and endow enterprise clients to efficiently filter relevant information, amongst many other challenges.

Growing

We’re bullish on the future of software and hardware. While technology startups traditionally segment into one of these two generalized buckets, we’re excited to witness the creation of multiplex bridges between them. It’s now becoming simpler and cheaper to create networks of connected hardware devices that communicate with one another and the end user via a secure cloud infrastructure. This enables the proliferation of flexible, data-generating hardware platforms upon which to build (open-source) software that significantly enriches a user’s experience. Along these lines, Google’s recent acquisition of Nest Labs should inspire a wave of innovation to reimagine devices that have otherwise occupied a passive, yet important role in our personal lives and workplaces. On that note, if anyone is developing a device that non-invasively monitors and analyses key vital metrics to generate actionable intelligence on the health status of the user, with the aim to prevent fatal conditions being caught too late, do reach out to us!

We’ll also be following how the greater accessibility of 3D printing* both in terms of lowering price points and the proliferation of machines are accessible in the public domain, will contribute to accelerating hardware innovation. Ultimately, we hope that these developments will deliver the same value to hardware startups than what rapidly scalable and inexpensive computing infrastructure has done for their software counterparts.

As software continues to eat incumbents in the consumer and the enterprise space, we’re actively looking to support entrepreneurs pushing the envelope of this secular trend across new market verticals. We’re seeing SMEs empowered through access to powerful SaaS tools; API-based platforms cracking open and distributing previously-siloed financial and socioeconomic data; mobile-first apps that delete painful hurdles sitting between a user and consumption of a desired product/service; and technology platforms that tackle anything from the discovery of content in previously opaque markets to streamlining online transactions between merchants and customers.

In short. Welcome, we are Playfair Capital. We hope you enjoy following our ride.

*we also like to play and are proud owners of a Makerbot in the Yard...

By @nathanbenaich and @victoriadomalik

[playfaircapital-blog]

StreetHub announces $1.2 million funding and launches same-day ‘Emergency Santa’ delivery

StreetHub, the local curated marketplace for independent shops, today announced a $1.2 million (£750k) seed round, alongside the launch of a same-day delivery service for Christmas. The investment will be used to expand the team and grow the StreetHub network, which already includes 150 shops across London.

StreetHub helps shoppers discover unique homeware and fashion items from the very best independent retailers in their local area. Customers can browse from their mobile, tablet or laptop and purchase items to collect later in-store, meaning that independent retailers can access the commercial benefits of Click & Collect. Now, for Christmas, StreetHub is also offering an ‘Emergency Santa’ service, allowing customers to book same-day delivery on last minute gifts, making it even easier to find unique presents from local independent shops. StreetHub launched in Central London last month and plans to roll out across new areas next year.

Mandeep Singh, co-founder of StreetHub, said:  “We’re very pleased to have some of the most successful investors from the crossroads of tech and retail joining us. Since we launched last month we’ve heard great feedback from our retailers who are now being discovered by new customers from across London. The majority of customers now research online, and buy offline, but independent shops lack the scale and technology to take advantage of this trend, which is why we set up StreetHub.”

[playfaircapital-blog]

On Device Research Hires Managing Director For Its South-East Asia Operations

Playfair Capital are very happy to announce that one of our portfolio companies On Device Research have Hired a Managing Director For Its South-East Asia Operations

Mobile research and sample specialist On Device Research has hired former Research Now Client Development Director Martin Tomlinson as the Managing Director for its Singapore office, in charge of the south-east Asia region.

On Device Research specialises in growth market research via mobile devices. The company has conducted over 12 million mobile surveys in 58 countries.

Tomlinson joins with over a decade of experience having started in New Zealand with Colmar Brunton Research before joining TNS to head up sales and development of the country’s only online panel at the time.

He then set up Research Now in New Zealand, SEA and China and has been a key figure in the local online methodology leadership for the past 6 years in APAC.

In addition to managing On Device Research’s Singapore-based operations Tomlinson is also the Vice President of the Market Research Society of Singapore and has been the conference chair for 2012 Asia Research Conference and former treasurer of MRSS.

CEO and co-founder of On Device Research Alistair Hill comments: “Martin is a key addition to our team at a time when mobile research has really started taking off in the region. His long record of accomplishments in APAC makes him a brilliant choice for this key position."

Website: www.ondeviceresearch.com

[playfaircapital-blog]

Lords in the Yard

Last week, Lord Green, the Minister of Trade and Investment, spent the afternoon visiting one of Tech City's newest co-working and incubation spaces, Warner Yard.

Lord Green toured Warner Yard and engaged with start ups such as Appear Here and Warner Yard residents including; Duedil, The Tab, Osper and Moni Technologies. After which he fielded opinions of angels and seed funds at a round table in order to ascertain what policies could be implemented to facilitate smoother deal flow for entrepreneurs and investors alike and thus bring growth to the UK economy.

Lord Green said:  "Warner Yard is an excellent example of the growing entrepreneurial activity that is happening in East London, and more broadly through out the UK."

"There are some excellent, innovative ideas being commercialised, which will challenge the way businesses operate."

“The dialogue on Government support for Seed and Venture Capital funding was encouraging and a continuation to the relationship Playfair Capital have with the UKTI, and specifically the Venture Capital Unit, whom have been welcome residences of Warner Yard since it opened in June, further developing the space as an ecosystem for startups, accelerators and investors alike.” said Georgia Taylor Foster, Partner, Playfair Capital

The seed funds and angels that participated in the round table included:

Connect Ventures, Passion Capital, Martin Bruncko, Dawn Capital, Raj Ramanandi, Peter Cowely, Russell Buckley and Playfair Capital..

The event was hosted by Warner Yard, an incubation and co-working space launched by Playfair Capital earlier this year and based in Clerkenwell, London. Warner Yard is home to Angels, Seed funds, start ups and the accelerator Techstars. Playfair Capital is an early stage Seed fund that invests primarily in disruptive technology companies and is an active contributor to the growth of the London start up community.