Entrepreneurship, UAVs and Star Wars: A conversation with Daniel Sola, CEO of Archangel Aerospace

We caught up with Daniel Sola, CEO and founder of Archangel Aerospace, an aerospace consultancy specialising in High Altitude UAVs (aka HAPS or High Altitude Pseudo Satellites) and space.

 

This is my first interview with an entrepreneur for Rapid Innovation Group’s “entrepreneur’s viewpoint” page. I am excited to see where our conversation takes us.

Well I will try and give you an “entrepreneur’s viewpoint.” I find that if I describe myself as an entrepreneur I suffer massive imposter syndrome [laughs].  Maybe that’s because I’ve spent a decent amount of time rubbing shoulders with extremely successful founders in Silicon Valley or maybe it is the curse of British self-deprecation.  Who knows.

 

Considering it’s the dream of imaginative children to get as close to space as possible, I’m interested in how you got into this line of work?

Well, I studied engineering at University even though I’m not an engineer by instinct. I almost studied History or Classics. In all honesty I was a terrible engineering student for most of my degree and I even attended PPE lectures instead.  We did a solar-electric high altitude drone project in my third year, I got enthusiastic about it and suddenly I was an engineering scholar and doing pretty well.  I am most interested in outcomes of projects that can have a big impact so even if I did choose an arts degree, I think I would have got to a similar destination in my career by a different route.

I always intended to work for myself, but after University I looked at my debts and options and felt the tug of The City.  As many graduates do, I felt there was a painful choice to either earn lots now to build something special later or do good work now, utilising my engineering skills. That is one of the things I enjoy about Silicon Valley. They have shown this is a totally false dichotomy and doing valuable things pays.

I decided to spend a few months in The City whilst my security clearances were coming through. I had planned to just earn some cash whilst waiting for clearances but it was something I found difficult to leave. The people were bright and energetic, it was fun and I was looking at something like a 60% pay cut at the graduate level to go and do science or engineering.  The City often talks up competition for top talent to justify bonuses.  This really misses the point. London banks aren’t competing so much with New York or Paris for top talent; they are competing with productive British industries and startups for the pick of graduates.  I think we will see this trend reverse as technology continues to disrupt old industries and inefficiencies though, so I’m optimistic for a resurgence in UK technical talent getting on with doing productive things.

 

So after working as a trader did you set up Archangel Aerospace?

No I spent 5 years gaining skills and experience before that. I began working for QinetiQ on three main areas. Asteroid deflection, infantry modernisation and high altitude UAVS.

It was at QinetiQ I got involved with the development of Zephyr, a High Altitude UAV. The last we developed with QinetiQ was Zephyr 7 and Airbus are now working on the Zephyr 8. Archangel Aerospace was founded to support the World Record flights in 2010 and we’ve continued to be involved since.

 

Can you explain your involvement with Zephyr further?

The story behind Zephyr is an interesting one. At the end of the First World War, Royal Aircraft Establishment was banned from making airplanes, so the engineers there pooled their own funds to develop an aircraft which they called Zephyr.

Similarly, this project began as an internal start-up with employees at QinetiQ putting their own money and time in to get it off the ground. The first prototype was called Zephyr 2 in homage. The Zephyr programme is somewhat bigger today and has produced a High Altitude Pseudo Satellite powered by the Sun and is unique in its ability to stay in the air for weeks or months. It holds three world records for altitude and duration. It started as a hobby which many dismissed as “it will never work”. Soon enough there were people tapping watches and asking “where is it?”

 

Bringing things back down to earth briefly, given your involvement with solar and battery technology on Zephyr, what’s your view on these two technologies in meeting future energy needs?

I think with regard to solar, the efficiency of the cells and scalability of production will be key. New production methods for amorphous triple and quadruple junction solar cells are really interesting. Scale in supply is a significant gap which needs to be crossed in order to lower costs and lead to widespread adoption. A lot of energy tech faces the same catch-22: scale is the way to lower prices and lower prices are needed for scale.

What Tesla did with its home battery (Powerwall) was significant in pairing cars and homes to batteries. The more this technology can be scaled up the faster it can lead to mass adoption. The basic Tesla Powerwall is quite undersized but even if it was sold at zero profit it still makes sense for Tesla do it to drive up scale and drive down the costs for car batteries.  One of Musk’s other companies, Solar City, will install solar cells on your roof that make more financial sense with some home storage so it is an easy upsell.  Regardless of how effective this particular home battery is, it’s a smart business move and it certainly makes the market more credible for other suppliers.

We’ve been told that fuel cells will be important for a while now.  The date changes but the rest of the slide deck looks the same. For most cases, fuel cells don’t make sense to me as the round trip efficiency is too low. Unless you were immediately going to use a substantial amount of the energy stored for heat generation anyway, batteries are the answer for home storage.  For cars the rapid recharge was attractive but rapid charging batteries are coming and you still don’t want all that heat.  For some bigger solar electric aircraft, fuel cells may well make sense with specific designs.

 

What are the applications of HAPS? How do you see them as addressing significant global issues?

HAPS of course have a military use for surveillance and communications but the commercial applications are probably more valuable. HAPS are cheaper than orbital satellites and produce better quality imaging and communications with better spectrum reuse. In a commercial capacity Earth monitoring could be applied to pollution monitoring, agriculture, border controls and sustainable fishing to name a few. The potential to sample weather and atmospheric composition directly, something satellites can’t do, is great. That side is exciting but it can be difficult to find a customer with cash for global scientific missions.

 

 R+D in this area is often military funded. Given the commercial applications of HAPS, do you see investment diversifying?

It’s hard to see where funding in HAPS will go. We have already seen huge amounts of money being poured into it by Google and Facebook given HAPS applicability to enable internet connectivity throughout the developing world. I expect that just like satellites the first customers will be (and have been) governments followed swiftly by commercial communications, which will come to dominate.  The science missions will wait for the economies of scale to drive the cost right down.

 

Business is often about mitigating risk and shaping perception. What risks do you see in terms of perceptions of UAVs in getting HAPS funded and widely deployed?

Unfortunately, the word drone gets used a lot and often these refer to quadcopters used by amateur photographers and hobbyists. They can pose significant threats in civil aviation and when a bad enough incident occurs there will be a backlash against all Unmanned Aerial Vehicles.

Having said this, regulators have been very accommodating in the projects I have worked on, allowing special permissions to fly within busy airspace in Europe and the Middle East for example. The safe answer is always ‘no’ so I have been really impressed with some of the enthusiastic efforts by these regulators to help us get to a ‘yes’.

It has been significantly harder to agree arrangements for regular routine flights, which is likely to involve legislative change. Right now, a lot of regulators are inundated with requests for flying multi-rotors straight off eBay (and that’s the operators who request permission). That workload is only going to increase so I feel quite sympathetic towards them.

 

What’s next for Archangel Aerospace?

Well, we are moving offices to Oxford. We are going to set up shop in Harwell, a hub for innovative space technology. Using our expertise and knowledge we want to carve out our own niche in the emerging HAPS market, as well as working on some lower level UAV and payload products. We think we are onto something special and have a pretty clear vision for the future but the key for us is to rapidly get to a testpoint for each product as early as possible.

 

Lastly, what did you think of Star Wars (the latest film instalment, not Reagan’s Cold War defence initiative)?

I thought they played it safe to be honest. It’s the 4th time they’ve blown up the Death Star or something similar so some new ideas would be nice. It reminded me why I wanted a lightsabre as a kid growing up in the 80s. It’s hard to hate on a Star Wars film so long as there is no Jar Jar Binks so I think it’s a thumbs up.

 

A conversation with RIG’s founder

RIG Engagement Manager, Ffion Rolph, sat down and interviewed Founder and Managing Partner, Shields Russell, over a series of face-to-face meetings. Here, Shields shares his thoughts on RIG’s history, its evolution, and its future.

 

FR: Is it fair to say that RIG’s market focus has evolved significantly in the last few years?

SR: I think that ‘evolved’ is the key word. We have certainly increased our focus on energy, natural resources, and major industry. This was deliberate and we now have some portfolio companies with terrific technologies in this area.

 

FR: But you didn’t just stumble into these areas?

SR: No. In part, it has been a decade long evolutionary process of reflecting on where we have had most success and greatest impact.

 

FR: I assume that the emphasis around IP rich technologies emerged out of this process?

SR: Very much so. There are several sources of competitive advantage that are defensible to varying degrees: brand, business momentum and market dominance, business model, and intellectual property (IP). We strongly bias IP for the simple reason that proprietary technology is the most defensible advantage a company can possess. It reduces, if not eliminates, the threat of replication. Unburdened by the threat of commoditisation, it less susceptible to pricing pressure. In a B2B context, it is an asset that can be exploited exclusively by the ‘creating company’ or through that company granting rights to other organisations.

I would say that while we are attracted to IP rich technologies for these reasons, I am conscious that the technology must be decisively better than what it replaces. It must do a much better job. You can make money though delivering marginal improvement but you can make a whole lot more if your product is in a different class.

 

FR: What other factors have informed the current focus?

SR: In my case at least, getting older has also played its part. It’s the big, global, long run challenges that most engage me. These challenges have really important social and environmental dimensions. They really matter. And, of course, addressing massive challenges can offer huge economic opportunity.

I am never oblivious to the mission and political aspects of these challenges. My second job was as a teacher in Botswana. I earned about the same in a month as I had in a half a day in my first business in New York but the mission was more important. More meaningful. For me, commercialising a technology that directly contributes to sustainability is simply more motivating than building a sales operation for a B2B SaaS application that delivers greater efficiencies. Mission driven challenges have a great ‘why’ and I love that.

 

FR: The largest group of companies in RIG’s portfolio is focused on energy challenges. What has driven that particular angle?

SR: Energy is such a critical space as it lies at the heart of the climate change challenge. I cannot see any other way of tackling the acute energy challenges the world faces other than through adopting new, more efficient technologies. You cannot dispute the need but that is not the same as saying that new energy technologies can just turn up and the world will be their oyster. I think that is where a lot of the first wave of cleantech companies were wrong-footed. There was a lot of vision and a lot of big numbers but finding that market that could give the company traction often proved a bridge too far.

 

FR: So market discovery is a critical element of the process?

SR: That is the essence of the challenge and perhaps no less challenging than creating the technology in the first place. Finding high momentum applications and engineering adoption is a huge, often quite complex, challenge and that is where we can play a pathfinding or scouting role. In terms of building a market, innovators need to think small to get big. They need to identify and then offer a superior solution to a specific energy challenge. That is very much what we do. It is where we fit.

 

FR: Is it accurate to say that RIG’s more focused approach also reflects a broader trend in the venture space?

SR: Yes, that is a good observation. When I was first involved in what you might call the ‘start-up’ scene, entrepreneurial ventures where generally lumped together. Many start-up events reflected this. Now, of course, you have events for different tribes – those involved in FinTech, EdTech, or CleanTech for example. Many VC firms used to have partners focusing on investments in a several fields and, of course, many still do. But now you see much more focus which makes a lot of sense. I imagine that several VCs all with a focus on a single area, let’s say consumer internet, makes for a much better conversation and investment decision than a group of VCs each with a different specialisms. I think it is a reasonable assumption to say that the most successful Series A investors are the ones with the most focus and the most evolved investment theses. So in our way we are very much aligned to this trend.

That said, as a firm focused on innovative technologies, I think we must remain open to possibilities that lie outside our declared areas of focus. Those areas of interest we call our ‘column’. That ‘column’ is permeable with purposely ill-defined parameters. It is in many ways a tool that drives our internal discussion. What’s in? What’s out?  What’s happening out there? What’s emerging? What are the grand challenge that engage us? We have to remain alive to the non-linear developments and the emergence of new challenges that cannot be addressed simply by improving on the thinking and technology that can rise to them in the first place.

For example, we are working on a fascinating and important cyber-security project. It does not lie within ‘our column’ but we are totally committed. It ticks the interest box of one of our partners and that is always an important factor for me. You get the best from an individual when their ‘desire’ coincides with ‘opportunity’. So our focus will always in a sense be negotiated. We are that type of firm. We attract people to come and work for because of what we do and the areas we work in. Equally, we are influenced by how their interests develop. What interests people drives their development and when we work on things that interest us that gives us passion. There is nothing harder than doing a job that commands zero interest. It is like the class you hated at school.

 

FR: Does a more focused RIG mean the firm is becoming more specialised?

SR: We have made some choices that undoubtedly makes us not only a more focused outfit but also a more specialist one. Our future is very much centred on building out market practices where we can combine specialist knowledge and relationship capital with our more generalist ‘how-to’ knowledge. That combination packs a powerful punch. It is an approach that enables to us to codify our knowledge and utilise our contact network much more effectively. In terms of how we allocate our time, engineering licensing deals, building out networks of distribution partners, finding solution partners, or executing high value – and by value I don’t just mean revenue here – direct sales, consumes most of our time. Over the last ten years we have done a lot of business building. We will do a lot less of this type of work going forward.

 

FR: Why put the brakes on what is a valuable activity?

SR: We have accumulated a great deal of business building expertise over the last decade. This widened the scope of our operations to the extent that we had specific experience vested in individuals rather in a shared company-based capability. But the big question for me now is where we best apply this expertise. Helping a company find some product-market fit and achieve some early traction is without question valuable. It is the first staging post on the way to building a valuable business. Building organisational capabilities to take advantage of this is also undoubtedly valuable. There are lots of managers that are well qualified to grow an organisation. The know-how and experience required to build a revenue-generative organisational capability from its early evangelist stage to something that is more repeatable and scalable is fairly hard-to-come-by competence. As it often the case, companies with the beginnings of organisational capability believe that hiring a manager from a larger company in their space will help them navigate this stage. They are nearly always wrong. They have hired that individual too early. Building something from scratch is not what they do.

But for us the problem with this type of work has been one of value perception. Clients place a different order of value on securing first revenues and consequently we have the opportunity to make a healthy return on our efforts here. The same cannot be said for business building work which is time consuming and less glamourous. It is ‘airline’ work – it takes a lot of planning and organisation, creates a lot of value but is rarely profitable. But while we will do less of this type for clients, we shall look to apply this expertise in building more of our own ventures.

 

FR: Where does starting new ventures fit into the picture?

SR: I am agnostic as to whether we are working for companies that are client partners in the traditional sense or companies that we co-founded and part own. What is certain is that in the next five years we will increase the number of companies in our portfolio that we have co-founded and are significant shareholders in. To date, we have been opportunistic. Going forward, we will be much more systematic and objective driven about it. We have learnt from the ventures that we have started not least from our failures. Where we can make things happen is on the commercial side, in mitigating market risk, in introducing the customer into the product development process, and in establishing distribution channels as early as possible in the commercialisation process. In contrast, our natural co-founders are the product-centric CEO or technologist with a prototype operating in our areas of interest.

 

FR: What has prevented RIG from starting more ventures?

SR: The lazy answer would be time. I think we have huge potential as an entrepreneurial platform but in truth we have been reactive rather than working out a more systematic and proactive approach to identifying opportunity. One key element of this is resolving the funding challenge. If you are starting from scratch with each venture, then securing seed funding can be a drawn out process and take an ordinate amount of time. One of our goals in the next 12 months is to develop ‘a bench of investors’ that can fund not only new ventures but can take advantage of opportunities within our client base. I am interested in creating a tight knit group that become intimate with and confident in the work we do, that share our approach and values, and are interested in markets and technologies we are engaged with. We have started talking to some HNWIs and we shall also look to some family offices. I am most interested in investors that will place value on social and environmental benefits alongside financial return.

 

FR: What is RIG offering this investor group??

SR: What we will offer our investor bench has a few dimensions. If we take opportunities within our client portfolio then I think we can offer fantastic dealflow with our involvement acting as a form of due diligence. We know our best clients inside-out and we know the size and nature of their market opportunity. There are two scenarios we will bring opportunities to the table. The first is essentially ‘follow-on’ investment opportunities where the investment is made on the back of substantial market traction and the where the business model has been defined. The second scenario is less straightforward and is best characterised as addressing a short term funding need. Even those companies that are well established and firmly on the path to success are not immune from a variety of problems that can result in funding challenges. Few if any emerging companies can get all their ducks in a row. But if the core product and market fundamentals are in place then there is a great opportunity. The critical thing is to be able to move quickly, to ensure a problem does not become a serious distraction, and to preserve or re-establish goodwill.

With regard to new ventures these may attract a different type of investor. What we want to here is to establish a very structured, gated approach whereby we chunk the commercialisation process in a fairly granular and transparent way and then align funding to each specific stage. I believe that by engaging with the market early, by co-developing solutions to high value problems with industry partners, and by confirming, prioritising and sequencing demand, we can accelerate the time to revenue while reducing both business risk and a new venture’s early funding requirement.

 

FR: What still surprises you after running RIG for more than 10 years?

SR: I suppose I thought that as I got older my curiosity might wane but it hasn’t. I thought I might become more conservative with age but if anything I feel more adventurous. We play in such interesting spaces. There is so much to learn and engage with. I spent a little bit of time on my summer vacation doing a deep dive on the ‘circular economy. It is so relevant a concept that it must become part of our internal discussions as to which companies and technologies we work with.

 

FR: Are you ahead or behind where you might have imagined you would be when you started?

SR: Definitely behind. I am impatient person who has had to learn patience. What I have learnt is that developing talent takes time, sometimes much longer than first imagined. But I have stuck with people. I made the decision early on to hire young people and to try and give them the type of challenges that could drive their development. I think you have to commit to talent and be prepared to wait. It probably takes six years or so to get really good at what we do.

 

FR: Last question: Why are all RIG’s partners male?

SR: It is a fair question and it is something that I would like to see change. I started with four male graduates; one is now the CTO of a crowdfunding platform, another left to join Roland Berger, and the other two are senior partners at RIG. So we started off with an imbalance which was compounded by an early failure to attract a sufficient number of female candidates. Foolishly on our part, and mistakenly on theirs, we were viewed as being overtly ‘techie’ which is a mile from the truth. But we are well past that now and so the situation should rectify itself over time. I think that will have a very positive impact on our culture.

"I wanted to get closer to the companies themselves and have more involvement with the actual operating businesses" – an interview with Simon Jackson

I recently caught up with Simon Jackson, Director, in order to learn a bit more about his RIG story.

When and why did you join RIG?

I joined RIG in June 2009 by osmosis. I first started working on one client, and within 2-3 months I was fully engaged working on 3 clients. I’d known Shields for a long time and always thought that what he did and the way he talked about it was very interesting.

I’m a technophile and my career has kind of gone in the opposite direction of flow to some people in some ways. I started off as a fund manager so I was very far away from the things that I was investing in and so I had no influence over those things. Then I was in M&A for technology related companies. In M&A, there’s a lot of excitement in doing the deal and then the real work starts once the merger or acquisition is completed. So I wanted to get closer to the companies themselves and have more involvement with the actual operating businesses.

So essentially your background was as a…?

Frustrated scientist meets techno wannabe.

How would you define your role at RIG?

I wear a couple of hats. So, one is as a regular member of the RIG team which is all about winning and delivering high quality client work.

Then, as a director of the firm, it’s about shaping the direction of the firm. We have been thinking a lot recently about how to grow the firm in a non-incremental fashion. I also act as an ambassador for the firm; seeking to engage with people and build on that which will hopefully bring high value opportunities to RIG. Not just clients, but also high value transactions, potential investors – leveraging X for the benefit of RIG.

With the finance hat on, I do financial planning for the firm: how to grow value for the firm; how to find good ways of compensating individuals; how to create incentivisation plans that reward individuals for being engaged. That’s the finance side of trying to make RIG an exciting place to work, grow, and be rewarded. Along with Shields, I think about team development and team growth.

I also want to help embed in the firm a culture of equity ownership, which is about us owning the investment in other companies and the culture in RIG needed to facilitate it. Part of that is to extend RIG’s skill set in a financial direction because, over time, we are building out the things that we can do with companies.

Catch the second half of our interview with Simon in the near future.

An interview with the founder and CEO of Export Technologies, Daniel Loughlin

Daniel Loughlin founded Export Technologies, an eCommerce platform provider and consultancy, in 2005. To date, their eCommerce platform, the IRP, has transacted over £1 billion in retail eCommerce sales in over 180 countries. I caught up with Dan in order to delve deeper into the world of eCommerce and entrepreneurship.

How would you define an entrepreneur?

From my point of view, it is someone who can create a viable business out of an idea.

How did you come to be an entrepreneur?

I was initially a programmer and had a big interest in eCommerce and still do, and an opportunity arose. Because I was able to facilitate the eCommerce side of it, from there I really developed the business out of that. I didn’t set out thinking I wanted to develop the business but it happened because I knew how to do the eCommerce part of it so it was a very quick and natural thing to do. I’m sure a lot of people in the technology sphere materialise in a similar way – they start with an idea and the business comes afterwards.

If you could go back ten years, would you do it all again?

I’d possibly do it slightly differently. I think one of the bad things in many ways about technology is that it’s not quick. It takes a lot of detail and a lot of time. The length of time you have to sink into these projects makes you question doing it. Saying that, I still enjoy the area that I’m in and it remains very interesting. As you get to learn things, you do realise you could have made a few quicker decisions in the early stages.

How would you encourage someone to get involved in the world of eCommerce?

I am positive about eCommerce, but it has moved on from where it was 4-5 years ago when my answer would have been “get involved” and it was still possible to grow businesses very quickly. I would say now that people should get involved to maintain or expand the market share. To find areas of huge growth in a pure selling sense, you’d have to pick your market very carefully and have absolutely the right technology.

I think the best time to start a pure eCommerce company would have been between 2000 and 2004, after the end of the first boom.  There is a lot more money to be made on the technology side of things: efficiencies, solving problems et cetera. On the shop and selling side of things, it’s definitely getting more competitive.  For serious growth markets I think people should be thinking about selling internationally instead of selling here. Look for demand and think about selling some of the high quality products that we have here and carve out a niche.

You were partly responsible for growing Chain Reaction Cycles into the world’s largest bike store, achieving a turnover of £180m. How did working alongside CRC have an influence on shaping Export Technologies into the company that it is today?

I think it had a big role to play because it essentially allowed us to fund our R&D and was a very nice position to be in. So because of CRC, we became an R&D organisation instead of a selling organisation and remained there for a long time creating a great product.   It was also a great opportunity to learn a lot about the way that online markets work in depth.

You’ve previously mentioned that you got involved with CRC at a time when there were strong tailwinds in the cycling market. In which markets do you think we are currently seeing strong tailwinds?

In my view, you can make money in most markets. You need the right technology and the right choices – it will not just happen. Unusually, there isn’t enough focus on a pure sales angle. Probably because the world of online selling is a bit more opaque. But companies need to get real skills in that area in order to really get on top of the key metrics and they key channels. Unfortunately, these require a lot of detail in order to make them work properly. Not being able to physically see your customer is a challenging thing. Normally, you meet your customer. You can watch them, talk to them, and learn, and in the online world you’ve got to shift your thinking into a different way of doing that.

If I was to pick a niche, I would be thinking carefully about what the populations of the growth economies are consuming, and whether or not we can supply them from here. For much of the world’s history, China has been the largest economy. I’m not sure about the restrictions, but I’d look at Eastern markets e.g. do they consume something that we can supply from the UK?  If there are no export barriers then whiskey might be an example. There will definitely be growth areas like that. People need to look at poorly serviced markets where there’s a demand – companies like us are useful in trying to analyse these markets.

What are your main aspirations for Export Technologies over the next three years?

I would like to really strengthen our technology and simplify it so that it reduces the barrier to success – that is a key thing. Commercially, I’d like to see a wider adoption of the technology because I believe it’s very strong.  And also to grow the business in a structured way, based on a strong value proposition. I believe our IRP technology and our vision of “Commerce in a Connected World” can have an impact.

When you’re not doing all things eCommerce, what do you like to spend your time doing?

I spend time reading about the area I am in, business in general, and current affairs. I enjoy competitive sports; playing them rather than watching them and getting away from the computer screen in the outdoors.

Sometimes I think about the impact our work has, and the bigger impact of Information Technology; the area we are in. There are competing forces in our own area of Commerce – between ‘buy local’ and ‘buy global’ so it will be interesting to see how this shakes out. I think most of us are spending more time interfacing with technology, and less with other people which is a change for society. There are also issues of personal data and security brought about by the way communication has changed that society is yet to catch up on.

"As a CEO, you never stop pitching."

Rory O’Connor is the CEO of Scurri, a cloud-based delivery management platform that gives merchants the tools to gain control and operational efficiency. Scurri was recently chosen from thousands of businesses to represent Ireland at the European Business Awards. We caught up with Rory to hear about his journey with Scurri so far.

First things first, how are you on this rather warm day?

Great, I love the sun. I just biked in which I love doing. Days like today always put a smile on your face.

Congratulations on being chosen to represent Ireland at the European Business Awards. How does it feel?

It’s great. We’ve actually won a number of competitions over the last year or so. It’s good as it gives the team validation that what we’re doing is worthwhile. It also provides you with exposure and opens up funding opportunities that you wouldn’t otherwise get. Sometimes it can be hard to see the amount of progress you’re making, but getting recognition from your peers in business is always motivating.

So tell us a bit about Scurri; how would you sum it up in three sentences?

Basically, it’s a piece of software which makes managing e-commerce deliveries easy for online merchants. What that actually means to a layperson is that we use our software to connect e-commerce companies’ software stack to courier companies like DHL. This allows merchants to print shipping labels and allows them to pull delivery data back into their systems. It improves operational efficiency, provides access to delivery data, and improves customer service.

How did the idea come about?

It happened like most startups I suppose. We started with a slightly different idea but the vision was the same; to make delivery simple through technology. We started out targeting small sellers, like those on Ebay selling excess delivery inventory from the couriers.

We then continued our development by speaking to customers, and kept iterating the product. We thought that there was more value in the e-commerce sector, so now we’re operating in a very focused segment but it’s a very big market with lots of opportunity and growth.

You’ve recently completed a funding round; was that challenging? What have been the other significant challenges that you’ve faced since starting Scurri?

For a startup business, finance and cash is always a big challenge. We had a seed round for angel investors and I learnt a lot as I’d never done fundraising before. Whilst it was very taxing, I actually enjoyed the experience. One of the main things I learnt was the importance of timing; it’s very important to find the right investor at the right time. Maintaining momentum during the funding round is also key.

As a CEO, you never stop pitching. You’re always thinking about the next round; it doesn’t stop. Someone once said to me that the role of the CEO is to appease stakeholders and to get funding. I spend a lot of time working on many things, but it really comes down to those two responsibilities.

As the CEO of a company which is enjoying some success, what would be your advice to other startups?

We made a lot of mistakes. For someone to leave the corporate world to run a startup is difficult. It’s not just like a smaller company; you’re trying to build something. When you’re trying to create a new product or disrupt something, the rules aren’t there. You can’t just take the big company rules and scale them down; you have to make the rules.

When we were building the software, I really started to follow lean and agile philosophies. The whole ‘build it and they will come’ approach can be damaging. It’s better to prototype, to get out there and talk to people, even if you don’t have a fully formed product. I’d advise everyone to read Eric Ries’ book The Lean Startup, and Steve Blank’s The Startup Owner’s Manual.

How do you enjoy working at Tech Hub? Is it a good environment for startups?

I love Tech Hub. My team is in Ireland so I spend four days a week here. To be in a place where your team isn’t around you but there are lots of people facing the same challenges, with the same dreams and aspirations, is great. The staff here are also very good and they look out for you. If they can help in any way, they do.

Finally, what is your favourite TV show at the moment?

I watch a programme in Ireland called Love/Hate. It’s a drama about gangland in Dublin. It’s very good and has recently been shown in the UK and had record numbers of viewers tune in on the first night, which is unprecedented for an Irish TV show. I never miss it.

Introducing SprinkleBit: the DIY Investment Revolution

Alexander Wallin moved to the USA from Sweden in 2007 to pursue a Bachelor in Economics at the University of California, San Diego. Today, 6 years later, he is running the social online investment platform SprinkleBit and has secured seed round funding of $800,000. Fellow Swede and RIG summer intern 2013 Erik Lehmann caught up with Alexander between volleyball tournaments and equity research sessions to check in on SprinkleBit’s progress and Alexander’s view on raising capital.

First off, congratulations on winning the San Diego Business Journal’s Innovation Award for financial innovation.

Thank you very much. I was quite surprised to be honest but obviously very honoured, especially when looking at all the other very strong nominees that we were up against in the final.

So tell me about SprinkleBit. What are you doing and what are you trying to achieve?

What we have today is a stock simulator, where you can buy and sell virtual stocks using “SprinkleBucks”. We have “The SprinkleBit University” where you can educate yourself and learn more about the world of finance and then the social network where you can communicate with friends and experts. In the fall we will launch our brokerage service so you can trade real stocks with real money.

When I signed up for SprinkleBit about a year ago it was free. How are you going to make money?

It is free to sign up for SprinkleBit because the key to building a strong social network is to have an extensive user base. However, when the brokerage service rolls out we will, like the other brokers, charge a commission on the trades. Our marketing forecast predicts 3000-5000 new users per month and conversion rates of about 20%, meaning the 20% of people who sign up will actually start to invest.

Between 3000 and 5000 new users per month is quite impressive. What is the secret?

Well, apart from being good at using Google Ad Words and Facebook campaigns, a recent study we did showed that we have a viral coefficient of 4.57. That is, for every person that signs up at SprinkleBit, they get an average of 4.57 of their friends to sign up as well. That is a very efficient way of growing a user base.

What is your vision with SprinkleBit; how are you going to change the world?

If we consider 10 years from now, SprinkleBit will be the social investment platform. SprinkleBit will be where you will turn for everything finance related. Be it securities-investments, the financing of a new loan, or setting up a credit card. All of these services will be consolidated on our platform and at the same time you can communicate with your peers through our social network. You will discuss your social life on Facebook, jobs and careers on LinkedIn, and finance on SprinkleBit.

How much funding did you raise and what were the biggest challenges in doing this?

To this day we have raised approximately USD 800.000 as a seed round. The investors are mainly family, friends, and friends of friends. At SprinkleBit we are building quite a complex product which posed a challenge in that it makes it harder to receive VC funding as they want to see a minimum viable product. If your business idea is to sell shoes over the internet, it is pretty easy to show an investor “Here are the shoes and this is the guy who is going to build my website”. We have a very good ongoing conversation with a couple of VCs but it is too early for them to make any investments yet. They are willing to wait until we have more traction even if the price will be higher.

$800.000 is a lot of money. If I said it is easier to raise capital for start-ups in the US than in the UK, what would be your response?

I disagree. I think people generally base that opinion on all high profile VC investments they read about in the news. If you would actually look at the earlier stage deals involving angel investment rather than VC investment, I would agree that there is indeed more capital available in the US than in the UK, but that the large number of firms competing for it offsets any advantages for US start-ups.

So what do you think is the key to succeed in raising capital?

First of all, I think a lot of companies go wrong in that they do not know what exactly they are raising capital for. They start with a number instead of a purpose which is not going to get you anywhere. Secondly, I believe in maintaining a network of potential investors that you continually keep up to date with your progress. The important thing there is to not send out messages saying “by January 2014 we will have 40.000+ users” or next year we expect do to a, b and c. Instead, the focus should be on letting them know when you have done something interesting or are starting something new. That way you can maintain a positive dialogue without the risk of diluting your word based on complex predictions about the future. Finally, focus on investors that either know your team well or know your industry. That will save you loads of time and negative answers.

Thank you very much Alexander and good luck.

Thank you.

Post by Erik Lehmann, Summer 2013 intern

"The crowd as a whole is smarter than any single person"

Paul Higgins was a consultant with Rapid Innovation Group from 2005 to 2012, when he left RIG to co-found Crowd Valley. Crowd Valley provides the platform and back office services for crowd funding, peer to peer investing and alternative asset marketplaces for securities professionals. We caught up with Paul to find out more about Crowd Valley’s growth and his views on crowdfunding.

Why should a customer choose Crowd Valley as a platform?

Crowd Valley is a spin out (of Grow VC) which has been going since 2008. We have been involved in the sector since before it all began really.

Grow VC was the first global equity-based crowdfunding platform and it served as a real proof of the concept of crowdfunding in diverse countries across the world.

$3 million has been spent on the product over 5 or 6 years and we have conducted a lot of Beta testing with partners which means that the platform is stable enough to offer to customers. No one else is in the position of having so many years of trying and trying again as our group.

Technology is only a part of it; it’s a prerequisite. We’ve been involved in advising governments and regulators around the world and customers appreciate that. It means that we’re able to offer guidance as well as providing a tech platform.

How did Crowd Valley come about? Why did you see a need to spin it out of Grow VC?

Grow VC started in 2008 and we ran what is now Crowd Valley out of there for a few years. We had an interesting model based out of Hong Kong, with a few financial structures to make it work. The question was always: “how can you grow something into a world class company given the regulatory restrictions around the world?”

Could we license the software out? Could we have a company represent Grow VC? This is actually what happened in India and China and we licensed the product there for a while. Grow VC eventually pulled out because it became too complicated to maintain the technology as separate installations.

So we rethought things again and built the software again so that everything would run on the same central infrastructure, allowing people to operate their own platform.

The real impetus was the JOBS Act and we realised this area was going to be quite a big deal. Crowdfunding hadn’t received any US government approval before then and we didn’t know whether it would continue to be banned in the US or not. When we realised it was going to be big, we wanted to be ready so we created a separate holding company to deal with that.

Grow VC has continued to spin out different financial companies to deal with different areas.

Where do you see Crowd Valley in 3 years’ time?

If you include all the customers we took on last year during Beta testing, then we’re working with hundreds of companies around the world, spread over five continents. So we have a big presence already.

Over the next few years, we need to improve the usability of the product. We would like to see some of the most successful crowdfunding operators in the world using our platform.

We are also interested in connecting people in lesser known markets, as that type of thing is still important. We’re trying to build something which provides different methodologies for investment.

In 3 years’ time there will be a clearer set of regulations and more countries who will have come out with their own set of regulations.

Do you think equity-based crowdfunding is better than rewards-based crowdfunding?

There’s space for both as they’re not really competitors. They’re useful for different industries and scenarios.

Kickstarter has given crowdfunding such prominence in the media and it was able to get started much faster because it required no regulation and worked much like donation websites such as JustGiving.com in the charity sector. Rewards based crowdfunding appeals to the public because it has an endpoint; an output, and is generally used to fund arts and cultural projects.

One of the first things invested in via Grow VC was a green showerhead in Australia. They had their prototype but no distribution or distribution facilities. They needed $100,000 and the equity-based approach was their only option as they were operating in an area where the general public don’t really understand what you’re doing because it’s fairly hi-tech, and there’s nothing to give away as a reward.

The “democratic market” concept is fairly prominent on your website. Is it something that you came up with?

It’s a market where people decide “what’s good” and “what’s bad”. Financial markets usually have a middle man controlling the information and the access to buyers and sellers. You need a middle man otherwise there’s no way for buyers to engage with sellers; like banking.

10-15 years ago you weren’t able to check your balance or make a transfer without going into a branch and talking to someone face-to-face. This is essentially still how the investment world works, even though the rest of the banking sector has already moved on.

The crowd as a whole is smarter than any single person. The Crowd can evaluate as you go which provides more validation than any single person.

Crowdfunding seems to be providing new sources of investment for companies which might otherwise have struggled to secure funding. Mike’s Fancy Cheese recently managed to raise £80,000 from 100 different investors on Seedrs. So is crowdfunding here to stay?

Mike had apparently already collected a load of potential investors and Yorkshire’s leading cheese manufacturer had decided that his company was the future of cheese. Cheese is also something that people understand because it’s not hi-tech.

The crowdfunding platform still provides an opportunity to connect people who know about a niche market. It’s a much more efficient way of securing investment and is less likely to fall down. Much more financial systems are moving to models like this so I don’t see why anyone would go back once you are able to do this.

Roughly 45% of Americans don’t invest in a pension scheme. Do you think crowdfunding will provide more options for people considering their long term financial security?

It will give them another option I suppose. In a lot of the customer cases we’re seeing at the moment, people don’t see crowdfunding as an alternative to other forms of investment.

A pension scheme might use a crowdfunding platform like ours to maintain a better relationship with their customers. I don’t see it changing how people invest because if you invest $1,000 over 40 years, you might get one or two great companies, but it isn’t going to be transformative.

I suppose the whole process of investing has been made easier to understand. Whether it’s real estate or shares, people will start getting used to investing and used to doing it online so it will be interesting to see how that plays out.

The biggest change that the JOBS Act will bring is that you will be able to advertise the fact that you’re looking to raise money. Right now, if you tweet or advertise that you’re looking for investment then you can get into trouble with the SEC. Once that part of the legislation is finalised, we might see a situation where anyone will be able to write on Facebook, Twitter, advertise on the Metro etc. People might see that type of advertising and decide to invest. Whether or not that convinces people to start investing in different things, not just pensions, remains to be seen.

And finally, on a completely separate note, what is your favourite song and why?

I used to be a DJ once upon a time, when I was at Cambridge. I used to run these nights in Cambridge and arrange trips down to London. The music I always used to play was House; people like Masters at Work, during the early 2000s.

There was this movement called Africanism which tried to get African and American beats into House music and people like Bob Sinclar were instrumental in this. It was round about when David Guetta got really famous that I decided to check out.

So based on that, my favourite song is Madan by Martin Solveig.

 

Interview with MoveMeOn co-founder Nick Patterson

MoveMeOn was founded in 2011 to fill a gap in the recruitment market for providing select job opportunities to high quality candidates. We spoke to co-founder Nick Patterson, a former McKinsey consultant, about his iterative process of founding and growing a company.

Your website talks of your ‘first attempt’ to change graduate recruitment at Cambridge, what was your vision for that?

I set up a recruitment agency to place students in internships. When I was at university I did an internship at a small consulting firm, and I think the experience I gained from that was more valuable than what I might have gained from a larger firm. At that age you’re still ‘green’ and so rarely get the opportunity to pick up tasks with much responsibility in the larger firms, whereas at small firms the various different types of work have to be done by everyone, so you often get more opportunity to take on more challenging work. Equally the bigger firms are flooded with applications for a small number of places, leaving many students with no internship at all. I didn’t pursue it for very long but it taught me a lot about the recruitment industry.

What was the ultimate catalyst for starting your own venture?

I really wanted to start a company when I left McKinsey, but I didn’t initially have an idea. I ended up stumbling across it because of my own experiences. All of my peers in the city, particularly those in consulting, were being bombarded with calls from headhunters about potential job opportunities. The headhunters had very little idea of what I had done or what I wanted to do; they called with any opportunity that they thought was relevant to me based solely upon having worked at McKinsey. These phone calls were almost weekly and frustrated me and many of my peers. MoveMeOn came out of this – we thought the whole process could be improved. All it really needed was more transparency in the market; the top companies needed to know where they should be looking for the top tier employees.

I also really enjoy the energy you get from working at your own venture. One thing I’ve learned is that if I can see the immediate value in something I’m much more likely to throw myself into it, which is definitely the case with MoveMeOn. Projects in the past where the immediate value is harder to see or non-existent I found very frustrating.

How long did it take you to get it up and running?

From the initial idea to the website getting up and running took around three or four months. This was longer than we had originally planned, and the delays were mostly due to our not understanding the difficulties involved in building a website – a process which we outsourced and learned a lot from.

We had something of a classic startup story in that we made a fairly large pivot and changed the focus of our business further down the line. We had identified three main channels to use when trying to find a job:

  1. Your personal network
  2. Good headhunters
  3. Jobs boards

We started out by effectively being a middleman between good headhunters and job seekers – this wasn’t the most efficient method, but it was necessary to build a strong network of candidates and develop some credibility in the market. Keeping our definition of MoveMeOn fluid was vital at this stage; it allowed us to evolve into the third channel – jobs boards. This proved to be a huge turning point for us and now is by volume and revenue the most valuable part of our business. It’s one of those industries that hasn’t caught up with what can be done online, creating a gap which we were able to fill very well. Often the problem with jobs boards is that there are too many listings, which makes finding the right job a time-consuming process. It’s followed a common internet trend. The past five years have been all about getting volume and choice onto the web. This has been so effective that people are now overwhelmed with “choice” and don’t know where to look. We envisage the next five years being all about filtering for quality. As such, we go for more of a hand-picked jobs approach, only posting the jobs that really excite us and we can see our fairly specific demographic of members working at and enjoying.

If you have sought funding for your venture, what funding options did you pursue?

We needed some capital expenditure early on but it’s not a capitally intensive company. We were lucky to be able to self-fund and were cash flow positive within a very short period of time (in the region of four to five months). We have been approached by institutional investors, so we’ve thought about getting more funding on a few occasions. Sometimes you do need an extra injection of pace and cash to burn through, but we decided that if we didn’t have a very good idea of what we would spend the money on, we weren’t ready for it.

Interview by John Sherwin

Smart Connections – Networking with Shhmooze

Shhmooze is a smartphone app that makes networking at events and conferences fast, smart and effective. Michelle Gallen, founder and CEO at Shhmooze, explains how every event junkie out there can benefit from Shhmooze and why she admires founders.

Could you start by explaining what Shhmooze is about?

It comes from the fact that we felt that networking really sucks, it’s hard work, it’s painful, it’s time consuming, and most of us are actually pretty rubbish at it. However, networking is really important when you are in business and even more so when you are in the startup world. I have been in this space for quite some time now, and I felt that there has been a need for a service like Shhmooze.

Shhmooze is a smart phone app that allows you to make smart connections by helping you to check-in to events, both massive conferences like Le Web as well as smaller meet-ups like Tech Club.

When you check-in with Shhmooze, it will show you who is at the event. This is done by analysing a lot of publicly available social media and network data, and as a result we don’t only tell you who is at the event, but also who you already know there, and more importantly, we provide you with smart recommendations of who you should talk to. In conclusion, Shhmooze helps you make smart connections so that you can have fantastic conversations at any event you go to.

How did you come up with this idea? Was it because you went to so many events and got frustrated that you couldn’t connect with people in a better way?

I am definitely an events junkie but it’s a little bit more interesting than that. In my early 20’s I had a brain injury and I basically went from having a fantastic job, working on Regent St, being super happy and active – to being sent home to my parents in a wheelchair. I had to spend a lot of time learning how to do a lot of basic skills again, such as learning how to walk, and how to read and write. I spent a lot of time working with technology to support my learning process. I had memory problems and I needed to often look things up when I was out, so when the first smart phone came on to the market I jumped on it. This made me realise very early on that mobiles could help my brain.

I love to go to events and to meet new people. However, as a result of my brain injury I have prosopagnosia, which means that I really struggle to recognise names and faces. So when I was looking at my mobile one day, I thought about how my phone actually has information about where I have been, as well as information on where all these other people have been via Twitter etc. Therefore the phone can basically scan the room for me, and let me know who I know. It is something which can really help me on a personal level but actually, it also helps a lot of other people since many of us struggle with networking.

How long have you been working on this idea?

The company was formed in April 2010. The technology was built over two years in order to be really solid. We wanted to make it right, and not turn it into a service that is about shouting out that you are in a room and that there are 50 other people there too. We wanted it to be about creating an understanding to why someone would be at a particular event, understanding to what level they want to be connected and to understand what they might want to talk about. We want to make things happen in the real world.

What is the market like for an app like Shhmooze?

I am going to be generalist about this. I think maybe 95% of the competition consists of generic conference apps that are based around the conference organisers’ needs. Sometimes these apps only work at one event since the conference organiser pays for them. There is also another section of apps, which are more about discoverability and work to inform you that this friend of a friend is having pizza at the same restaurant as you are.

I think the difference is that when I go to a conference, I am switched on and I am there with a purpose, that’s when I want to know whom to talk to. I don’t think that there are a lot of apps in this space, and I don’t feel like a lot of people have done the same deep thinking as we have.

What is your strategy for monetisation?

We have a freemium service that anyone can use, but if you are a power networker, then you can purchase additional features. We also work with conference organisers. We offer to upload schedules and speaker profiles for free, but for a certain fee, give them to possibility to have their own brand on the app.

Considering the fact that you seem to be a very avid conference-goer it would be interesting to get your point of view on the startup community in London. Is there a community, especially in regards to Tech City, and if so does it provide any support?

I think it is kind of like the music scene, at first you have an underground scene and for a while, everyone thinks it is cool and then it goes mainstream. I think what Tech City has done is that they have identified a scene, and they are now trying to find a way to consolidate it.

To have the government behind you is very powerful, even if it’s not the only solution to sustain London’s tech community. I think we need a more solid support and slower voices – and you also need the renegades and the anarchists, the people that are out there pushing it. I think Tech City is just part of an interesting support system that is happening. The one thing that I am little bit concerned about when it comes to Tech City is that it seems to be such a focus on geography. I think it we would be great if we get over spatting over geographical boundaries and instead focused on the amount of amazing tech startups that we actually have here.

I know you have been involved in the entrepreneurial scene for quite some time now and I was just wondering what it is that you personally find to be the most appealing factor with this choice of career?

Well, my father warned me to never gamble, as we have had gamblers in the family that had bet their entire savings on a horse. So I didn’t go into gambling, I got involved in startups – which is obviously completely different…

I left a career at the BBC to do my own thing [TalkIrish.com] and after that I just kept on going. I think you have to be somewhat of a risk taker. Personally, I had no guarantees when I left my job, I just walked. You will need a great deal of confidence in the fact that everything will work out.

I think founders are different from people that join startups. I have a massive amount of respect for individuals that have actually founded companies, the people that grind away and do a lot of deep thinking. Founders are an incredible, interesting species.

Do you think you are born a founder or do you think it involves a certain set of skills that you can learn over time? Do you think anyone can become a founder?

I think anyone could do a startup but I think that you wouldn’t be really interested if you are not a certain type of person. I think founders are usually people who are risk-takers, and people who can see potential and not resist the opportunity to do something they believe is right or try something new because they believe they can make a positive difference. There are plenty of people out there doing startups because they know that what they build will generate money, and that’s great too, but for me it has always been about creating something which will make things better, and then I try to come up with a revenue model.

Interview by Philip Gasslander

"This is the most exciting thing I've ever done"

Matthew Painter is co-founder and CTO of import.io, a startup currently in private beta that aims to revolutionize the way that we access, collect and analyse so called ‘big data’. We caught up with him over lunch to find out about his background and how he became an entrepreneur.

Import.io is rooted in some serious programming, how did you become interested in computers in the first place?

I had my first computer when I was 5 or 6, a Commodore VIC-20, and I started programming soon after that really. I started off using Commodore Basic, and soon enough was spending time trying to program role playing games and similar sorts of programs. When I started at Cambridge I was studying Maths but in my 3rd year I switched to Computer Science. This was a fairly easy decision to make given that I’d always loved programming and that I’d had previous experience with it.

And how did you first become involved in startups?

On graduating I left to a startup called headporter.com. This operated on a simple premise: it supplied student unions with IT services (e.g. websites, membership card schemes, email lists etc.) in return for access to all of their databases and the ability to resell data to companies doing target recruitment and similar things. We had signed up all of the Russell Group universities when some unfortunate circumstances meant that we had our finance pulled. This was a blow as we had to walk away from what we had spent quite some time building, but I enjoyed myself while there and I took a wealth of experience with me. Following that I did some consulting before joining Yahoo to build a Yelp competitor. Surprisingly this had an atmosphere much like a startup because it was a small team working on their own project within the company. This was going very well until poor annual results caused Yahoo to shut down the project in order to focus on their core business areas and cut costs.

After this a friend approached me saying he was working on some tech within a large organization that had a lot of opportunities. He found it constrained working within that environment though and thought for a chance of real innovation they would need to start their own company up. Having enjoyed my first start up experience and liking the idea I didn’t hesitate to get involved and it’s been a great decision – this is the most exciting thing I’ve ever done.

As CTO what sort of challenges do you face most often?

As CTO you’re not just a technological person you’re also a businessman, and one of the challenges we face is balancing risk and reward and making trade-offs accordingly. With startups the challenge is always about balancing efficiency with quality, and this manifests itself at many different levels. One of these might be human resources, for example the Google founders personally interviewed their new employees until the company grew so much that this was no longer possible – a clear trade-off of their time that they thought was worth it. The right workforce in a startup is crucial to deliver results under very tight time constraints, particularly when bootstrapping. I have to make these judgements regularly as we are currently going through an angel round, but we have to keep focusing on the business itself and not compromising the quality of it while we raise funds.

What processes have you gone through in terms of funding?

We started off bootstrapping for as long as possible. We were lucky in that Kusiri (import.io’s predecessor) was self-funded and cashflow positive very quickly so this was not as painful a process as it can be for some startups. It was pretty clear though that to really get a world class company off the ground you do need investment – you need cash to burn through. If you don’t put money into it, you’re not going to get anything out of it.

Finally, as someone who studied computer science, why do you think more American computer scientists enter into entrepreneurship than their British counterparts?

I’d say there is an element of truth to that, American society is a lot more entrepreneurial in general with people more motivated to start businesses. The UK has entrepreneurial people but our culture is more risk averse and we don’t have the same background motivation pushing us forward. Take Silicon Valley for example, people there have been brought up in an environment that will surely breed more entrepreneurs. If we get a few big successes in the UK people will become more motivated to get involved. More encouragement for young people to do computer science and coding would also have this effect. I’m very keen on this, so we were involved in SVC2UK last year, and this year we’re hosting a team for Young Rewired State. YRS fosters the sort of growth we need to see more of in young people.

Interview by John Sherwin