Two weeks to go…



Personally, the last year has been a very exciting one – full of changes, opportunities and good health. One of my close friends and colleague, Fergal, had an altogether more turbulent year as unfortunately Jane, his wife, was diagnosed with an aggressive form of cancer. As Fergal puts it, “She was at war with this thing for most of the year, she stared it down, and prevailed”. Around 6 months ago I decided to join Fergal in running the Boston Marathon on April 21 and raise funds for cancer research. 1,147km of training runs later it is now just two weeks to go until the marathon itself.

The fundraising is going well – around $3,500 raised so far. We are raising for the Dana Farber institute: by participating in the Dana-Farber Marathon Challenge (DFMC), we are supporting Dana-Farber Cancer Institute’s goal to find better therapies and, ultimately, cures for cancer. DFMC directs 100% of the funds it raises to the Claudia Adams Barr Program in Innovative Basic Cancer Research at Dana-Farber, which fosters scientific breakthroughs by advancing the work of gifted researchers in a variety of basic research disciplines. These funds enable scientists at the leading edge of discovery to achieve better cure rates and to enhance patients’ quality of life.  

If you would like to support this fundraise this is the link to use:

Ecommerce: Hot or Not?

VC interest in Ecommerce companies seems to go in waves, one moment being the hottest space with sky-high valuations, the next being a basically toxic sector to investors. As always, the truth is somewhere in the middle and the thing I like about these kind of cycles is that it presents some great opportunities to be a little contrarian and back some disruptive companies when they are not over-hyped.

Broadly, the cases for and against are straightforward:



  • Macro move to online
  • Social media lowering marketing costs
  • Mobile shopping coming up
  • Innovative ways of engaging customers
  • Content and commerce convergence
  • Amazon will crush you
  • Google is the gatekeeper and makes all the profit
  • The new models (e.g. flash, subscription) are fads
  • Price competition kills margin // No-one is making money

I’d say all the points above are true to a greater or lesser extent. The devil is in the details.

Stripping it down, the ways in which you can win are pretty simple:

  1. Get more customers cheaper than competitors
  2. Make more margin on what you sell than your competitors
  3. Operate more efficiently than your competitors

Amazon does pretty well across all three: the brand is well known so customers go directly to Amazon, they have huge buying power so can source goods at great terms, and have a ruthlessly efficient logistical operation to fulfill these orders. In different verticals you can substitute other behemoths for Amazon, be it, eBay or increasingly firms like ASOS and Zalando. So what strategies are left for an enterprising ecom startup? Three of my current favourite strategies are:

Sell unique products

To state the blindingly obvious, if you are the only one selling something, customers have to shop with you – if they want that product and can find you.  Making your own products is one approach but not the only one. Building relationships that allow you to source unique goods, aggregate suppliers who do not have the reach you can offer them, be amazingly focused on a customer niche that is not well served and amaze them…

Do dirty work

The behemoths are incredible execution machines. Generally this means that what they do, they do ruthlessly well.  However by definition there will be many things they actively decide NOT to do, typically as they are not scalable/efficient in their model.  As a startup, this is fertile territory.  And technology changes rapidly enough that what was not possible last year can become a commodity next year. People want to speak on the phone? Better still see someone live? People want better advice? Less choice? To pay by cash? Delivery at 13:23 on Sunday? Try before they buy? Have someone else tell them what to choose?  Unpack the boxes and install for them? To feel like a rockstar? To rent rather than purchase? To build rather than buy? To smell, taste or hear a product/experience?

If you find the right product / price / service combination you can build very efficient processes which are diametrically different from what an incumbent can provide. Some of the above are old news and well served. Some are possible in some industries but not others. Some are just silly. But go the extra mile in a unique dimension is the take-away.

Be more than a shop

The average online shopping experience is a chore as much as a pleasure. Make it as much as possible a fun, informative, entertaining, engaging use of time. Don’t get me wrong – it still needs to be a shop and customers should feel in no doubt about this. But the experience should be such that customers want to come over and hang out even if they don’t have any intention whatsoever of buying anything.  Instead of playing Jelly Splash on the bus home. Instead of channel surfing on Youtube. Instead of chatting on whatsapp or Snapchat. Instead of flicking through Facebook or Twitter. Why should customers only think about you when they search for your keywords on Google?

Each of these strategies can be applied to get customers, margin or efficiency – at least in a particular niche – in a way a generalist shop cannot. And in each case, they key is having unit economics which support your strategy overall.  And in general the higher the margin on what you sell and the less you have to hand over to Google and Facebook to acquire your customers, the more you can spend on ensuring they have an amazing experience and the more they will come back and tell their friends – building this virtuous cycle is what distinguishes the future winners.

VC’s first impression of Dublin

Feels like a good chunk of the tech start-up world is descending upon Dublin next week for Websummit, so thought it might be a good time to share my initial impressions after my first six months as a “local”.

There is no question that Dublin has taken a hard knock, and talking around town the feeling is palpable. Following the so called “Celtic Tiger” years, the banks went bankrupt and were nationalized, the construction boom came spectacularly crashing down, again leaving a trail of bankruptcies and unfinished projects, leading to the creation of a nationalized landlord. And, as no Irish person will fail to mention, property prices dropped 50%+ from their Manhattanesque peaks. There was talk about the whole country going bankrupt. My guess is that all these aspects will not be too visible next week: the tech scene is living a different life than the rest of the country, and the added enthusiasm from the summit will completely hide these macro factors I suspect.

I can’t claim I knew much about the tech scene here before moving. Since moving, I think I understand why. The Irish have been methodically building a pretty exciting tech scene brick by brick, but many of the most successful companies have remained low-profile. And while they won’t be screaming it from the rooftops in fear of jinxing it, it is fair to say that over a pint many people will admit satisfaction over the direction things are going in for this sector and share very ambitious visions for the tech industry going forward. It had better be: tech is already 25% of the country’s revenue and growing. I think it is fair to say Ireland has bet the farm on tech. Is this craziness, coming from small bankrupt country on the edge of an island itself on the fringes of a decaying Europe?

Other than the sheer motivation and willingness to try, one thing that makes this vision more than a pipe dream is the incredible proximity and relationship with the US. Not only is it the closest European country geographically (sorry Iceland J) and the language is the same, but 37 million Americans consider themselves to have Irish roots – for context that equates to 8 times the population of Ireland. The Kennedy clan is a well known example, fewer people know that Barack Obama also has Irish roots. This cultural proximity has two important effects: US companies feel comfortable setting up here for their European operations (with a little help in terms of favourable taxation) and Irish entrepreneurs and companies are well received in the US and elsewhere – they have to be selling internationally from day 1 as the domestic market is so small.

However, just being a friend of the US is nowhere near enough. American behemoths like Google, Facebook, LinkedIn and many others now employ thousands of skilled folk here (9 of the top 10 tech companies have operations here in Ireland) but this is only one ingredient in the local mix. Smaller companies like Engine Yard and 10gen are very active in getting the developer community together exchanging ideas and know-how. There are enough good exits in the last few years to show the way, companies like WRI, Fleetmatics, Curam, Havok and Norkom. This year The Now Factory has an excellent exit to IBM. There is a good base of established leaders such as PCH International, Ezetop, Realex and Openet.

I’ll pause there because I can already hear everyone complain: who the hell are these guys? It is not by accident: I would argue many of the more successful Irish companies have been great at finding unsexy, B2B niches and executing extremely well. deserves a mention in a category of its own as fantastic success story, definitely tech enabled and a rare great consumer brand. The government is a rare beast in that, mostly, entrepreneurs will consider it a helpful influence rather than a hindrance, although the recent budget caused more than a few complaints over tax treatment for entrepreneurs. Other key ingredients in the mix are availability of talent and capital. Great talent is hard to find everywhere, but Dublin is pretty well served by universities and the scene is now full of foreigners who are discovering it is a pretty cool place to live, as well as Irish nationals that cut their teeth in the US tech scene coming back. As for capital, particularly at a seed stage the density of incubators/accelerators is pretty unique, from Propeller, Wayra, healthxl, dogpatch, NDRC, NovaUCD, Fusion, Launchbox, scalefront and several more. Great local venture firms such as Frontline, Delta, Atlantic Bridge and foreign fund brands like DFJ Esprit, Polaris, SEP, Arch Rock and Highland are all active. Enterprise Ireland provides matching funding. And finally another special mention to Paddy Cosgrove and the WebSummit team of course… looks like an amazing series of events coming up.

Shaking up all the above ingredients together (with those other startup essentials of great coffee shops, hipsters on fixies, converted old warehouses and quality pubs) has resulted in a whole batch of startups which are able to access know-how and talent from some of the best companies in the world, and can also access mentorship and board advice from people who have been there and got the t-shirt. They are proving capable of getting started, getting traction and rapidly accessing the European and US capital markets. A few great examples  from the last 12 months are Intercom (financed by Social+Capital), datahug (DFJ and Salesforce), Swrve (Intel), Fieldaware and Trustev (these last two have not announced what I believe to be investments from other brand-name firms). While many of the hundred plus companies getting funded each year will not make it, I am feeling good about my wager that a handful each year will emerge as winners.  In the meanwhile, enjoy the craic and a pint or two of the black stuff!

Why do I run?

I started a bit of running only after I moved to Geneva in 2002. Up to that point I had not seen the point in any of these endurance sport thingies. Cycling was a means of getting from A to B. Running was ok, but only to try and get past defenders and score a goal,  score a lay-up or tackle someone.  Sure, I knew of the “virtues” of training, getting fitness up and so on for the other sports I played. But this was a chore, and honestly not one I was very diligent over.

A couple of things changed with the move to Geneva, both in terms of the scenery at the foot of the Alps as well as my available time to join any kind of organized team sport. The start was really signing up for the Escalade, which is a very popular 7.5lm run through the Geneva old town. I surprisingly found that I enjoyed it and wasn’t too bad timewise. I participated regularly, and upgraded to several other events like the Tour du Canton, the Morat-Fribourg, the Course du Duc, the Geneva half-Marathon and others. I deviated into triathlons in Nyon, Geneva, Lausanne, Annecy and Aix-les-Bains. That got me hooked to cycling as well (no, not swimming yet J.) and into events such as the Leinster Loop here in Ireland earlier this year. And competitions are a small part of it, mainly it I just going out on my own, with my wife or with friends.

There are many “rational” reasons to do it…. generally related to health in one way or another. But I think this is not the key – it might be a silver lining or a superficial excuse. There are way too many unhealthy but fun things I do. I think the real reason is twofold. The first half of the story is that despite the pain, the time it takes and the blisters, I enjoy it. Depending on how hard I push myself it is either an all-consuming endeavor, where any other worries pale into insignificant and you achieve a full focus, or a moment when I am disconnected from phones and emails and can just let my mind wander between tasks at hand. In either case I feel better for it after the event. But the main reason is one of pushing limits. Doing things which seem daunting and impossible. As a responsible grown-up, there are few areas left where this is possible. Setting arbitrary goals in runs is definitely one way. The current challenge is to run my first marathon early next year in Boston, raise a bunch of money for cancer research, and achieve the qualifying time for the marathon which is 3 hours 10 minutes. Tough? For sure. Possible? Probably not, but would love to!

I think this is one of the aspects of my job which means I think it is the best job in the world J. We are constantly exposed to impossible challenges that we are facing in raising a fund in Europe, or helping a bunch of geeks to hunt and topple giants. There is no comparable feeling to planning the extraordinary, working hard, and experiencing successes and failures on the way.

Delighted to be working with TalentSoft!


I am delighted that today we announced Highland Europe’s investment in TalentSoft. This is my first investment since joining Highland in April, and therefore doubly special.

TalentSoft is based in Paris and has developed a suite of talent management products, which help businesses manage a bunch of related activities such as recruitment, internal mobility, career planning, competences, training, assessment and evaluations. It won’t be a surprise that this is a completely cloud-based solution. In this blog, I have already discussed what kind of businesses I like to invest in, and TalentSoft ticks every box.

The founding team is one of the most complementary I have ever come across, spanning the management, technology and product dimensions. Jean-Stéphane, the CEO, knows the software industry inside out, having worked with leaders such as Siebel and Oracle.  A little unlike some other companies, he really practices what TalentSoft preaches.  The inspiration came to him while he was running his prior organizations and he was looking for tools and methodologies for really getting the best from the employees and helping them develop to their full potential. He has definitely taken this philosophy with him and does a great job at breaking down silos within the teams. He is also a very experienced and effective sales executive, who knows how to listen to customers. Both Joel (CTO) and Alex (Product) are remarkable as they excel in (at least) two dimensions. Joel is not only an accomplished technologist but has also run business units in the past, understanding management and P&Ls.  And then there is Alex.

Alex’s two super-powers are IT and HR, in that he has a PhD in Computer Science focused on key competences within the Enterprise.  It is pretty rare for a star IT grad to even know what HR stands for. He has continued expanding this domain of talent management working with some of the largest companies in the country, as well as by publishing books and writing one of the most followed blogs in this domain. His understanding and passion about what TalentSoft can do and will do was probably the single most important factor for me. Well, I might have over-stated that slightly, as the fact they were kicking some serious ass and winning all the most important deals in France was also pretty influential….

On to the “controversial” aspects here. The two reasons not to do the investment were that HCM is a space with huge players already fighting aggressively (indeed already considered a bubble by some) and this is a very French company.

Unquestionably valuations of twenty or even forty times sales (and yes, I mean sales rather than earnings!) are aggressive. Eventually there is bound to be a correction to the multiples, even if the companies continue to perform well. But the underlying opportunity is massive and not well addressed by the old giants who have too much to lose in the transition from complex on-premise products to powerful products that anyone can use and do not require multi million consultancy projects to get anywhere.

Where TalentSoft is unique is that it is the only one of the “new” companies which has a purely European heritage.  Does this matter? For once I think it does.

HR at its core is about how you manage the talent in your organization. There are both cultural and regulatory aspects here that can differentiate a European-style company from a US-style company. At the risk of falling into great generalizations, an example might be that in markets where it is difficult to fire employees there may be a different trade-off between redeploying and reskilling an existing employee and hiring someone new.  Some companies will have a very strong culture of striving to achieve individual objectives, some will have a more holistic approach towards the company’s aims. It is not a one-size-fits-all market, and there are many companies for whom the Talentsoft fit will be the right one.

High hopes for the new Nokia?

In many ways this was not a surprising move. Stephen Elop’s obviously has all the MSFT relationships and DNA. Nokia already accounted for over 80% of Windows Phone shipments. Nokia on its own was only going one way, even though they had managed to stem the losses to some extent.

Integrating such a large deal is always a challenge. Rumour has it that MSFT will keep Nokia reasonably independent, which makes sense, and the teams are already used to working pretty tightly together. The products are definitely good enough to be competitive, and not having anything to defend has allowed Nokia the freedom to launch some pretty far out products.

I actually think the biggest potential obstacle to a successful integration is that  MSFT will need to resolve the Ballmer succession issue pretty quickly. Stephen Elop is given by many as the frontrunner now, but if the issue is left to fester I think the internal politicking risks slowing down progress. In a sense I don’t think it matters who gets chosen as long as the issue is resolved quickly and people get on with it.

What could come out of this marriage is pretty mouthwatering. On the consumer side, combining some of the know-how from Skype, Xbox, Kinect with a genuinely world-class handset and OS could be brilliant. It could also be a ROKR style disaster, but generally I would say the Nokia teams have been pretty good on the UI and usability side of things, and Microsoft has definitely understood the need to be receptive to this. Similar argument could me made with some of the enterprise-side building blocks they have (office, exchange, azure, dynamics….)

Strangely, the competitive position is also favourable to Microsoft. I think the competitive focus of Apple and Google is principally on players such as Samsung, Facebook, Amazon. It seems paradoxical but Microsoft/Nokia could actually have time to fly under the radar for a while. While we are at it, a quick look at where the competitors are at:

Apple has a big release coming out, but I personally find it underwhelming if the leaks are to be believed. A low cost iPhone. Different colours including gold. The iPhone 5 and iOS 7 were also not really game-changers. My sense is they are suffering the typical pains of market leadership and a huge established global base which makes innovation and disruption more difficult from within: someone has to step up at some point and say that what the next 2 billion customers are going to want is not the same as what made them the world’s most valuable company, and I don’t see that coming from the current leadership. I don’t see their position being threatened yet, but do expect a sloe decline in their dominant position. Especially if they loose the monopoly on monetization which they had until recently and focused all developers to an “iOS first” strategy.

Radical innovation is not going to be coming from Samsung and LG.  I may be harsh in that they build great products (such as my current phone) but I see them as good followers and executors. At the moment they are on Android but they would have no qualms about pushing back toward Microsoft Phone should that make commercial sense again.

I am really looking forward to seeing what will come out of the Chinese houses. ZTE, Lenovo, Huawei all have talented engineers and significant volumes, although very little in the west. I would put them in the Samsung/LG category at the moment. Xiaomi is one to watch. Clearly they have huge ambition and resources, and hiring Barra over is a strong statement of intent. My sense is that it will be a long time until in Europe we get the privilege of their attention given that in the priority list my guess is that we will come some way behind their local market, the US and even the other emerging markets.

So overall feel it is a good step for the industry, some real innovation could be coming from this corner, especially as both Nokia and Microsoft are really hungry, have access to great talent and resources, and have nothing to lose. A long hard way to go for it to become a success – some ruthless execution required. And the problem of getting developers excited about the platform need to be solved. I tend to agree with Joel Spolsky… enabling Android apps to run natively would be a real winner, but another big decision to make. Would be great to know who is going to be calling those shots….

The investments I like to make

In sourcing new deals, VC investors typically are all looking for a great team, great product, great market and a great potential return.  Easy! But beyond these debatable generalities everyone has their own filters as to what defines “great”.

Team remains at the top of my list. Flawless CVs are all very well, but my bias is towards how engaging and passionate the team is. If I enjoy the discussion and find the entrepreneur inspiring odds are that the team, customers and potential hires will do so too. The opposite is almost certainly not true: there are lots of successful folk I have never clicked with. However given that we should plan to be working together for anything up to 10 years, if it does not feel right just forget it. The passion is normally what wins me over, and I want to actively look forward to working with the team. I like to dream, and a passionate team who really believes in what they are doing and clearly love it can make the most mundane of industries exciting.

Product is an interesting one from a growth-stage perspective. For us growth stage means at least €10M in revenue run rate, so by definition the product needs to be out in the market and getting used by customers. I want to touch, test and play with the product as far as possible; but it is relatively rare that I am the target audience. So talking to customers, reading reviews and seeing what people are blogging or tweeting is key to me to understand what is going on. I love irrational customers, who love a product to a degree they become advocates, ambassadors, almost brand owners. I can’t confidently distinguish a great product from a merely good one. But I can definitely spot users who are crazy about something. Additional bonus: these are guys who are generally not buying because of price but because they love the product, hence this can often translate to good unit economics.

Onto the market and the exit. I don’t think market size is particularly relevant metric for a tech startup. And I don’t think a company should be planning its exit from the start. If a company is large enough and growing fast enough, my bet is that the market either is or will be large enough. Exits are clearly vital to VCs, but my philosophy here is to back entrepreneurs who focus on building a company to be great rather than focus on exiting ASAP.

If this sounds a little contrarian – good. Contrarian is the final X-factor I like in investments. The technology scene is remarkably guilty of groupthink. What was hot yesterday (e.g. consumer web, ad-tech, coupons, flash sales) can rapidly become a no go-zone and viceversa hot current trends (e.g. hardware, enterprise, SaaS) have all had their moments in the dog-house. It is pretty rare to find the “sure winner” that is executing flawlessly in the right industry at the right time. If this seems to be the case, you are either wrong or everyone else can see this too making valuations sky-high. If I like the team, the financials are right and customers love the product, I actually like it when there is something to still be improved. If the sector is out of favour for example. If the company needs a couple of killer hires. If the company needs to expand internationally. If the company needs to add a small brick to an existing product to become a real killer.  In some way, this is where I want to feel that I can bring something other than cash and become part of the success story.