The deadline (midnight, 6th April) for applying to Mini Seedcamp London is rushing up quickly (where does time go?) and for any budding entrepreneurs out there with a company up their sleeve or in their garage, I can think of no better place to start ‘growing innovation’ than in the seedcamp community.
Mini Seedcamp London aims to connect the UK and Ireland’s thriving startup community, but the buck doesn’t stop there. If you are a startup team that is ready to wow us and you hail from anywhere in the EMEA, don’t hesitate to apply.
Mini Seedcamp London will be bringing together 20 of the best seed stage web tech startups with experienced entrepreneurs, investors, and developers from the UK and all over Europe to participate in a day of intense mentoring, panel discussions and presentations at NESTA’s HQ in central London.
London is increasingly becoming the hub of the European entrepreneurial ecosystem, with a high concentration of investors, startups and talent and we’re exciting to see what teams and ideas emerge on 20th April!
Of course as founding investors in seedcamp we have a particular interest to encourage the best and brightest and most energetic entrepreneurs and engineers to join the community but I think you’ll find that it is worth it. We’d especially like to see more companies focused on disrupting financial services and markets. Media and consumer internet are fascinating sectors but there is more to life and if an industry ever screamed out to be disrupted, it’s finance in 2009…So what are you waiting for? Apply now!
A few weeks ago, I issued a call to action with respect to creating a W3C working group focused on advancing the implementation of semantic web technologies and approaches in the financial services domain. Chris kindly responded, and in particular took issue with the usefulness/appropriateness of using (the existing) semantic web toolkit (RDF triples, OWL, etc.) due to their innate complexity. He writes:
At the moment though it seems that you have a problem if you need somebody that understands derivatives OR XML schema, and a real headache if you want somebody that understands derivatives AND XML schema.
Two thoughts. Firstly, I’m not a developer and so my enthusiasm for any particular solution or outcome with respect to software and code is necessarily (due to my lack of knowledge) more conceptual than practical: ie it is hard for me to have a robust opinion on the underlying path taken to achieve a certain result. What excites me and I think is important, is to build on the technologies of the web and ultra-cheap storage and bandwidth, to create rich, linked, open data and metadata sets in finance. Much of course already exists as Chris correctly points out, but so much more remains to be done. Secondly, it might be ‘a real headache’ but what 21st century finance needs is exactly people that understand derivatives and XML schemas.* I’m sorry but it isn’t that hard to develop these kind of people, and in a nutshell encapsulated the vision we had for Digital Markets at DrKW several years ago. I suspect that many Digital Generation finance professionals already (or could easily) fit this criterea. (The barriers however are cultural. When we built Digital Markets, while I knew there would be many challenges, I completely underestimated just how threatening such a vision was to the status quo: in particular, the very idea of calling into question the distinction between front and back office staff, even if just a subtle blurring of the line for a few dozen employees, caused the corporate anti-bodies to go on full alert. Removing the distinction between star-belly and plain-belly Sneetches was not something the organization was ready to condone.)
Indeed one of the most important and valuable objectives of setting up such a working group (whether or not it is under the auspices of W3C, although I lean toward not reinventing the wheel and building on the existing infrastructure of such a collaborative industry forum and think there is a better cultural fit with the objectives of such a project at W3C than say at any financial sector industry association…) is to create a focal point – not a gatekeeper (!) – for the community to innovate around a common theme and purpose. Another is to cultivate a shared respect for and understanding of the value of open standards, something that is taken for granted in many other industries but is still anathema on Wall Street and in the City. Of course there are glimmers of light to be seen in things like the FIX Protocol, but even here the underlying cultural mindset was more Microsoft than Unix… Way back in 2003-ish (?), when I was running syndicate at DrKW, we published (on the web) an XML schema describing a new bond issue, with the goal being to help others create e-bookbuilding platforms that would be able to communicate with ours. (I tried to find the link but was unable, any current DKIB folks know if it is still live?) Pretty tame stuff right? Well suffice to say the reaction of our/my peers was various combinations of:
what the hell is XML and what are you guys on about?
you guys have the best e-bookbuilding platform, why on earth would you give away your data structure???
is this some kind of trojan horse? what are you trying to pull?
I no longer work day to day in a big institutional banking environment, so it’s hard for me to judge how much, if at all, these attitudes have evolved over the past couple years. I may be naive but I don’t see why we assume finance and derivative professionals can understand (and apply) concepts like convexity, but balk at expecting them to understand ontology and its implications. I thought these folks were supposed to be clever. In my view it’s about leadership. If the folks in the corner office think ontology is important, so will the rank and file.
So maybe semantic web tools aren’t the only – or even the most important – path to enabling my vision; I’d still think it would be useful to catalyze a more formal community of interest around creating a truly rich set of linked data in financial services and markets. And I hope Chris, and others like him, would be keen to get involved.
* If a few more of these kind of people had populated the top of securitization groups of the last several years, we may have avoided some of the worst excesses; securitization is nothing but managing vast and complex sets of (inter-related) data. Data quality is more important than credit quality: garbage in, garbage out…
Yesterday – in response to an earlier article – Gillian Wilmot makes a claim on the FT’s editorial page for more women in senior executive and Board positions in the UK: “Men have messed up. Let women sort it out.”
The more worthy the task the more women, and the more financially rewarding the task the more men. So the public sector and charities, where work is pro bono or modestly paid, have far more women directors than private equity houses, banks, city firms and hedge funds, which are dominated by the “white, male accountant”.
“So what? Why should I care?” Because it is in the financial institutions where the big decisions and risks are taken and where all our pensions and savings are invested. The testosterone-packed “winner takes all” approach does not sit easily with looking after the interests of all stakeholders (shareholders, employees and customers) and managing the downside risk. A lethal combination of testosterone, complexity and greed has brought UK plc to its knees.
The City knew by 2006 that their seven times debt-to-profit deals were unsustainable. They did the deals to win the game and get their bonuses – the individuals cash out, the rest of us lose out.
Would it have happened with more women on these boards? Not if those women had been in the powerful roles of executives, chief executives and chairmen at big financial institutions.
Well, she’s right. Although I can’t say I agree with her claim that quotas are the only way to redress the ridiculous situation of having a homogeneous group of old white guys running everything. I think that generational change, the enormously compelling arbitrage which exists (pound for pound hire women rather than men and you’ll beat the competition hands down – more talent for the price, what’s not to like), and the blindingly obvious fact that heterogeneous groups of people are smarter, more creative and robust than brittle monocultures will ultimately lead us to a more balanced executive suite rather sooner than most people think. I especially think ubiquitous broadband and mobile computing and communications technologies will allow us (as a society) to keep the interest of bright women who heretofore were pushed out by the need to choose between work and family. (By the way, it will also allow men to maintain a more intelligent balance and in so doing not only result in happier families and children, but smarter, better adjusted men in the Boardroom.)
But ultimately the only way real change will be effected in the boardroom is quotas, as in Norway. These can be done in a staged way but there must be targets for executives, chairmen and non-executive directors.
All female shortlists can work well and it is highly successful companies that have led the way. Admiral, the FTSE 100 insurance company, ran an all-female shortlist in 2005 when I joined the board.
Men created the current financial mess; they need women to help them clear it up and restore everyone’s faith in the system.
I’m not against quotas per se, just that they shouldn’t be imposed by the government from above – if companies are too stupid to see the competitive advantage inherent in a balanced executive team, let them suffer the consequences. Except perhaps for the banks (or any other industry that the State cannot allow to fail catastrophically…) But now that the government owns 60% of RBS they don’ need to pass a law to get more women on the Board, just a shareholder’s resolution, or a quick call to Mr. Hester.
I’m not sure how many emerging entrepreneurs are amongst my readers, but if you are in the midst of starting up the next great disruptive soon-to-be-huge (don’t worry we’ll give you 2-3 years to get to the huge part…) then perhaps you should be considering throwing your hat in the ring to try to win one of the highly prestigious and extremely valuable invites to seedcamp 2008:
Seedcamp is where Europe’s top young founders can come together in one place.
From securing funding to developing the right network, young entrepreneurs in Europe face challenges in building globally competitive technology businesses. Through the provision of seed capital and a world class network of mentors, we want to provide a catalyst for Europe’s next generation of entrepreneurs.
We’re now ready to accept applications for Seedcamp Week 2008, have opened the gates to our online application system, and are anticipating another great pool of entries. For additional information, and to review the questions prior to applying, you may download our 2008 application guide. We’ve also posted milestones on our key dates page. We encourage you to think through each question carefully and also to apply well before the August 10th deadline. You really don’t want to be trying to submit the application at 11:59pm with 100 other people!
As noted before Seedcamp Week is set for September 15-18 2008 in Central London at UCL.
For those of you that are unaware, seedcamp was launched last year to provide a focal point for the start-up community in Europe. Realizing that one of the key strengths of Silicon Valley is the broad and deep ecosystem supporting start-ups and new ventures – human capital, specialist financial capital, legal and other operational support, etc. – and that all these elements existed in Europe but tended to be geographically dispersed and somewhat ‘hard to find’ for an aspiring entrepreneur, Saul Klein came up with the brilliant idea of creating seedcamp. Last year was the first year, and despite an extremely short gestation period and steep learning curve, the week was extremely successful and enriching for all that attended: investors, mentors, suppliers, and of course entrepreneurs. This year I’m sure it will be even better, building off the lessons learned last September and a year of hard work by Saul and CEO Reshma Sohoni and her team. To give you an idea of what goes on and why attending is actually more important than winning (seedcamp invests in a small number of the start-ups judged ‘best in show’), think of it as an extremely intense 5 days of Entrepreneurship University: if you go in with an open mind (and no fear of sleep deprivation) you’ll come out with an education and network worth (dare I say) more than a year at Wharton or LBS. My company, Nauiokas Park LLP, is proud to be a founding investor in seedcamp alongside some of the giants of European venture capital – and as a start-up ourselves, it’s even more fun to participate – one minute giving advice, the next minute taking notes!
Last year saw a predominance of consumer-oriented internet business ideas, I know one of the hopes for this year is to garner a broader and more heterogeneous group of applicants. Speaking selfishly, I’d love to see one or two killer idea in financial services, markets, data and identity fields.
So what are you waiting for? Dust of that business plan, spruce up that website, and hopefully we’ll see you in September! And to whet your appetite, here is just a tiny taste of the profound advice that surrounds you at seedcamp(!):
Unfortunately conflicting travel plans meant that I couldn’t attend Reboot 10 – although I’m sure JP will fill me in on some of the more interesting themes that emerged – but like most interesting conferences much of the material discussed is made available, analyzed and discussed on the web. And so it is that I am reading Stowe Boyd‘s notes for the presentation he gave in Copenhagen – Web Culture: Identity, Belonging, And Scalar Freedom – while thousands of miles away on a humid Sunday morning by the lake…
On the ‘long-tail of human relationships’:
This long tail of relatedness and relationships changes our sense of identity and belonging. We can meaningfully belong to many groups, and invest ourselves deeply — in parallel — in their purposes.
Those of us who become most adept at this may become the most important and respected citizens of the post-everything world: the bridge builders that can arc from one to other groups, and act as arbiters and mediators. Remember that reputation-based authority and the belief in mediated settlements of disputes are universals. So this suggests a future role for the most connected, as people worldwide begin to lose faith in mass organizations to solve our disputes, or to even come up with workable compromise.
On ‘tribes’:
The bonds of trust and friendship that we are building at the Edge, today, may become the initial bridges that connect the tribes of this post-everything future.
We have learned that trust and reputation is personal, non-transferable. That obligation is between individuals, and that any group — elected officials, criminals, prisoners in jail, slum dwellers, and web edglings — will attempt to use whatever power they have to attempt to benefit their own, potentially to the detriment of ‘others’. So we need an ethical system — like that which is emerging on the web — where abuse of power is not tolerated, where rank and office is irrelevant, but where one’s reputation and honor is everything.
I don’t think I agree with everything Stowe writes about but I definitely think it is worth reading as it frames some of the fundamental – tectonic – social and cultural shifts shaking our current dogma to its core. And I continue to be an unapologetic fan of his centroid/edgling meme.
You could be forgiven for thinking – based on my writing here – that I think investment banks are full of unenlightened dinosaurs, and so not fit for study if one wants to ‘see the future.’ In fact this is quite far from the truth – sure there are lots of reasons to pull your hair out if you love change and disruptive innovation and work in an investment bank. BUT there are lots of reasons not too as well; indeed I think much of my passion for accelerating such innovation comes from my many years of first-hand experience of seeing the power of it on the front line in investment banks. Yes, they can innovate (although often they are most succesful when they don’t realize this is what they are doing.) Traders in investment banks invented and nourished social networking 20 years ago. (And they figured out how to make money from it – I’d take Bloomberg’s bottom line any day…)
Anyone who has ever worked on a trading floor also had to manage to live with and remain (ideally improve) their productivity while working in a state of continuous partial attention. This excellent commentary by Stowe Boyd got me thinking about this, I love his ‘Law’:
Connected people will naturally gravitate toward an ethic where they will trade personal productivity for connectedness: they will interrupt their own work to help a contact make progress. Ultimately, in a bottom-up fashion, this leads to the network as a whole making more progress than if each individual tries to optimize personal productivity. (Trust me, its provable. I studied queuing theory in graduate school.) I call this Boyd’s Law, by the way.
While (big) investment banks suffer all the normal pathologies of command and control endemic to large hierarchical organizations, the trading floor – at least on a day-to-day basis – has a parallel life free from this institutional prison. Sure the two collide from time to time (bonuses, promotions, seating plans…) but even power-hungry, centralizing managers in these firms are smart enough that you don’t kill the (ahem…usually) golden goose: working on a trading floor is all about connectedness and continuous partial attention – it wouldn’t work any other way.
Stowe concludes:
The old school thinking is about individual productivity: but the social revolution has moved past that into network productivity, which entails connectedness and social meaning. The personal hit on productivity is real, but it’s not a cost: it’s an investment; and the juice is worth the squeeze.
Although they wouldn’t articulate it in the same terms (they probably wouldn’t articulate it at all!), the denizens (and managers of) the trading floor are somewhat past the ‘old school’ thinking and have been for years. I say ‘somewhat’ because at bonus time the decoherence collapses as everyone scrambles to appropriate ‘individual productivity’. The best groups of traders however – for example the top hedge funds and a certain boringly successful Wall St. firm starting with a ‘G’ – don’t and instead manage for network productivity (almost) exclusively (leading to most members of these networks to be rewarded individually exceptionally well.) It really boils down to trust in the end.*
I bang on about “Wall Street” needing to learn from “the Valley”, but wanted to underline my conviction that there is much to be learned from “Wall Street” for others. Indeed that is why I find my new situation so exciting, sitting at the heart of such a potentially fertile cross-road.
* Which btw is why I’m suspicious of any service organization of more than c. 150 people (Dunbar’s number); although I’m inclined to believe that the internet age and its associated tools will give us a new node on his scale that is perhaps up to an order of magnitude bigger. But beyond that, I don’t buy it. Maybe that’s why no one has offered me the job of running one of these behemoths…first thing I’d do is take their 150,000 people and break them up into “A thousand tiny pieces”…
Working to bridge the disconnect between the socio-institutional paradigm and the techno-economic paradigm, which as Carlota Perez so eloquently writes will lead to a golden age for the emerging digital generation:
Metro reports this morning that 6% of adults in the UK – a million people – regularly use their credit cards to make their mortgage payments:
More than 1million people use high-interest credit cards to cover their mortgage or rent payments, debt experts say. Six per cent of householders have turned to plastic to pay for the roof over their heads during the past year, according to housing charity Shelter.
Young people struggling to stay on the property ladder are most likely to use the ‘rob Peter to pay Paul tactics’, despite risking long-term ruin. Many credit card companies charge interest between 15 and 18 per cent – up to three times higher than typical mortgage rates.
Clearly – and I would expect all my readers to understand this – borrowing at 15% to pay off debt contracted at 6 to 8% is financial lunacy. (It’s called negative carry and you have to have a damn good reason to hold a position like that for any length of time.) There may be an argument to do so occasionally for one or two months if you are facing an exceptional and short term liquidity shortfall as the ease and convenience (ie opportunity cost) of using an existing committed line of credit (ie a credit card) offsets the extra interest cost. Indeed this may be the case for some of these people. However for most I suspect it reflects two failures that should be addressable: firstly it reflects a basic lack of financial (mathematical?) literacy among a substantial proportion of the population, secondly it reflects a lack of appropriate basic banking (lending) products, or awareness of those that do exist.
A cynic would say that it is easier for a lender to price (and thus provide) ‘credit card’ debt and so this is what is offered. It is true that credit card risks – being very granular, and widely distributed, and having a relatively long history (through various economic cycles) – are more easily modeled using statistical techniques. Indeed this is why you haven’t seen distress in the market for credit-card backed securities as opposed to mortgage-backed securities: they tend to behave as modeled and so the stress tests used to structure these securities tend to reasonably accurately represent real life losses under economic stress. Indeed, the high interest rates reflect the probability of high expected losses. Looked at from a portfolio point of view, credit card receivables are less ‘lumpy’ and losses more normally correlated and distributed than most other kinds of lending. Of course one of the reasons that mortgage loans cost less and are typically seen as ‘safe’ (or at least safer) assets is that they are secured on real property (and in the case of a primary residence, seen as the first in the queue for repayment as people are loathe to lose their homes.) The problem with this (as is being brought home in spades by events in the US) is that the lender faces two residual risks – one the value of the underlying real property can change (go down) and the transaction costs involved in ‘realizing’ (ie foreclosing: taking ownership and liquidating the property to repay a delinquent loan) are typically very high (it depends on the legal regime and labor costs but these can often be as much as 20-30% of the value of the property, especially for lower value homes.)
So what can be done? Schools, but also financial institutions, need to do a better job of educating their citizens/customers. You need a driver’s licence to drive a car. Perhaps you should have a borrower’s licence to take out a loan? Ok perhaps not – I’d much rather see a market solution, and I suspect there must be a long term commercial benefit to financial institutions who take this responsibility seriously (and not just as a box-ticking exercise under regulatory duress.) Perhaps new innovative start-ups like Kublax will start making a difference in this area.
Next, financial institutions need to pro-actively offer better overall financial solutions to their customers. For most high-street banks however there may be a inherent conflict of interest in promoting more intelligent solutions to credit cards. (Don’t misunderstand me, credit cards are a fantastic product when used appropriately – ie for 20-40 day ‘working capital’ rolling credit, but they should always be paid off in full, or at worst used for very short term cashflow smoothing as per above.) Ideas like the various ‘One’ accounts, which automatically offset deposits with mortgage debts should be extended to consolidate all assets and liabilities. An idea I’ve been thinking about for several years is to create a company that would help individuals manage their personal balance sheet in a professional way. I suspect that the vast majority of people don’t really know what a balance sheet is, and amongst those that do, few think of their own finances in this way, other than perhaps momentarily when applying for a mortgage or writing a will. Perhaps I am naive but I believe the concept of a balance sheet – stripped of jargon and intellectual snobbery – is one that the vast majority of people could grasp if presented in a friendly and clear manner.
Finally, if banks won’t help their customers contract more appropriate debt, I hope more people will make recourse to markets like Zopa for unsecured financing. Aside from getting better rates, participating in a market like Zopa forces people to spend a little time thinking about their balance sheet and how credit markets work (even if they probably wouldn’t articulate in this way.) Zopa is user friendly and welcoming in a way that banks – despite I’ll admit some efforts to improve their public perception – just aren’t.
Of course none of this will help anyone who is bound and determined to spend more than they earn (or more accurately will earn), but I suspect that many of those struggling with managing their finances would welcome a helping hand in having a better understanding of their financial situation and the options available to them.
If you’re not a geek or early adopter or part of the digital generation and you are looking for an introduction to why social networking and virtual worlds are relevant for business, this is probably not a bad place to start. Roo Reynolds is a ‘metaverse evangelist’ for IBM. For those of you that already get it, you can probably take a pass as it is pretty basic stuff with really no new insights. Nonetheless it is a good overview and engaging presentation (although I wished he would speak a bit faster – the same content could have been delivered in 20 minutes I think.)
Just over a year ago, I wrote a post panning the proposed business model of announced-in-a-blaze-of-hype SpiralFrog:
Obviously I could be completely wrong, but I don’t think this will fly, ‘cool name’ or not (I think even this goes in the ‘trying just a bit too hard category’.) Everything about it smacks of a bunch of middle aged executives and their backers getting together and – looking through their 20th century prism – completely missing the point of what made things like myspace, youtube and even iTunes successful. I can just see the initial pitch: think the Orange film funding parody ads… If they had sent out their press release on April 1st, there is a 50/50 chance that people would have thought it was a spoof. How long until someone does a YouTube video in the Orange genre above parodying them?
Quite frankly, I had forgotten about them but I saw a headline on my netvibes today that announced they were finally launching. Apparently it hasn’t exactly been smooth sailing over the last 12 months. CNET reported in January:
Few at the digital music company were exactly sure who was in charge following the December 26 firing of SpiralFrog CEO Robin Kent, said former employees. Kent’s ouster created a chasm in the company’s leadership, the former employees said, and soon after, 5 of SpiralFrog’s 10 board directors and 5 company managers exited.
Just four months before, SpiralFrog was a media darling. The company promised it would launch a Web site that provided free music by the end of 2006, covering the cost of those tunes through advertising sales. Media pundits loved the idea. The New York Times dubbed the company an iTunes challenger, despite the fact that the site hadn’t even launched yet. The Guardian, a London newspaper, said Apple “took a knock” with SpiralFrog’s emergence.
Now, former executives and industry insiders describe a company reeling from a management shakeup, a missed launch date and a lukewarm reception by the major music labels to a business that supports free tunes by selling advertisements.
“The situation at SpiralFrog will certainly give ammunition to those who really never believed in the idea of ad-supported music,” said Gartner analyst Mike McGuire.
Well I guess we’ll all finally get to find out, but I’d still be betting against their investors getting any money back on this frog. I guess you could say, I don’t think it’ll be turning into a Prince. Spiral or otherwise.
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