Bored investors, dirty data and scaling Ben Thompson.


This is the 29th edition of Sunday CET, a weekly curation of practical observations from the European investment and startup landscape.

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Quite a boring period for investors, well reflected by the social chatter and the content produced to get PR attention.

The past 3-6 weeks saw plenty of social media literature with VC advice directed to companies CEOs and telling them what to do in this crisis. Pointers to some of it are below or in previous email editions. While repetitive and occasionally good, most of it is a mean to an end, representing general prescriptions related, more or less, to further get to financing options. (i.e. raising the next round). It is understandable, providing money is investors’ main competence after all - securing funding is however only one thing that people running startups have on their plate.

There are two types of startups under the investors’ radar nowadays:

1. Startups in need of financing now, because of the due cycle need, and which will likely need to make a 10x more compelling case than usual for being considered. The unlucky ones will take bad deals, becoming un-investable in the future, but at least saving the ship in the short run. Or, unlucky to the extreme - they will die.

2. Startups that still have a 6-12+ runway and need to be creative and figure out a reasonable plan under the new circumstances - either a reset or a re-optimization towards the end goals. This shows great mgmt skills, more to be appreciated than the growth perspectives, which, once the crisis is over, can be planned and taken care of.

But those discussions are not fun for investors. This is defensive, not offensive, they are worried as they need to do damage control and at least preserve the value of their portfolio. And their job is not preserving - on the contrary, it is to make money when things are dandy and growing: buy when it’s X, sell it when it is 5-10X+. It’s that simple, being in the “save the titanic” mode is not the usual modus operandi.

The pre-Covid market was full of fresh powder and the general consensus was that there was more money than projects. Now that the situation is as is, not only that there’s fewer opportunities to invest in, but also the heat of risk taking in uncharted territory is simply not worth it for most of them.

Make no mistakes, everybody has the eyes on the prize and is looking for that informational advantage that they can readily jump on. If that. And actually, if we look at the numbers, there’s still some investment activity, which is mostly residual work accrued and finished these days.

But it’s not a fun period for investors, that is for sure.

Interesting bets

🇫🇮 no-code platform (free for companies with under $10M annual revenue)

🇫🇮 platform tracking data logging for shipping containers (pretty cool)

🇫🇷 white label for rental businesses

🇮🇸 gesture-based wearable for music creative professionals

🇮🇱 passwordless authentication platform

🇪🇸 software for synthetic data interpretation

🇩🇪 monitoring and testing platform for API endpoints & vital site transactions

🇬🇧 GitHub-like, cloud-native, integrated omics & biomedical analyses

🇬🇧 trade execution and electronic brokerage platform

🇬🇧 content production for VR platforms

🇬🇧 subscription-based science education provider

🇺🇸 gamified social network for climate impact

More money in the market

🇫🇷 Partech announced a new $100 million fund named “Partech Entrepreneur III”, which it will use to invest in seed-stage startups.

🇫🇮 Icebreaker announced Icebreaker Fund II at €50 million.

🇳🇴 Antler will start getting startups to the their incubator program from Norway, in addition to career people looking to start a company.

Interesting people

🇸🇪Jarno Vanhatapio

Job: CEO/founder at NA-KD

Background: serial entrepreneur in e-commerce

Why interesting?
If you are ever asked to name a guy building great ecommerce biz in Europe, Jarno Vanhatapio is one of them. Dude started by selling underwear from his apartment in a small Swedish city (Borås) and in 4 years sold it as an ecommerce business and then listed it on the stock exchange. At the end of 2015 he founded another fashion biz, which today has more than $100M in revenue, backed by $90M of venture money.

📚 Books

The Great CEO Within: The Tactical Guide to Company Building

People who know me know that I don’t have a good opinion about coaches. Matt Mochary, the author of the book, makes a living as a CEO coach. And, beyond my prejudices, I discovered him by listening to a podcast he was involved in. And then I got his book - to the point, full of practical advice, regardless of the type of CEO you already are or you intend to become.

It is a quick read that provides structure and substance. My friends from CEO Library are still willing to back me up with 2 free copies for my readers so reply to this email if you would like one, first come, first serve.

Research, data, observations

🇺🇦 Some smart Ukrainians made public a sizeable list of investors, companies and transactions from the private market. For free - serves as a good reminder that getting data is cheap and what matters is what you make of it and the layers you build on top.

Building a business of selling a premiere database and an API access to it doesn’t have too many competitive advantages. You compete on the costs of maintaining the data not on product - Pitchbook et all simply scrap their DBs with India-based teams, so their cost is kept at minimum. Down the value chain you will be able to sell it wholesale, competing on price, again, while up the market you can get to an occasional lock-in for some smaller retail customers.

And, on the demand side, if you are in the VC business, for example, and you have ambitions to be more than a money manager, you need to own your database, because that is your graph, and your graph is the crown jewel since you are in the network business.

🇪🇸 Speaking of data, imagine you are an investor sitting on a data set of transactions with the following 6 out of 20 attributes: apps, fintech, financial services, internet, information technology, mobile apps. And yes, they’re either-or in your table.

What can you make of it?

Well, a first impulse is to say that the labels are vague: what the heck is an internet company today? If you run a hair salon that makes the bookings online, are you an internet company? Been building software-based businesses for almost 20 years now and still have a hard time to describe what an internet technology company is. Wikipedia is rather vague either.

A second would be to notice the overlapping pairs - internet & internet tech, apps & mobile apps, or fintech & financial services. They mean kind of the same thing and hence are redundant.

A third would be to stop here and do nothing further. The data is dirty and, unless you can clean it up, it is useless.

And that’s it, right? Wrong. A fourth answer is to crunch it in Excel, analyze it and draw conclusions out of it. 🤷‍♂️

🇸🇪 In a survey made with 205 angel investors from Sweden, 24% said they’d continue to invest in startups just as before. The rest of 76% either stopped or they’re being more cautious.

🇫🇷 17 French VC firms hold virtual office hours to give advice to startups

🇪🇸 A good onboarding process for welcoming new employees in the company.

🇪🇺 Covid-19 VC Barometer #6

🇬🇧 COVID-19 Mitigation Measures by UK Startups (linking for the elegant visuals, the data is not exactly surprising :P)

🇸🇪 Bad investment business made by the Swedes:

- raised $12M in 2018
- divested part of the company for $4.4M in 2019
- sold the rest for less than $6M in 2020.

🇬🇧 Google pays FT to teach eight European publishers how to make money through digital subscriptions. GG FT!


What others think

Well, for one thing, the dude is a smart thinker who single-handedly upped the disruption theory created by Clay Christensen in the 90s. And, for another, building a successful content outlet requires constant value delivery and Ben’s providing actionable insights or intel, not only opinions. What he does seems easy but it is not.

Question is asked by Andrew Chen, an investor who backed Substack (powering this email as well) as he is looking for ways to scale up the platform with Ben Thompson-like writers.

It is an interesting business case - while there’s lots of BT wannabes which Substack should definitely target, writing periodically good content is an incredibly hard job - you need to master a field, you need to be good at writing, be concise and clear in your thoughts and have an unique perspective.

Substack follows efforts made by Medium, which, beyond being a good tech product, has been struggling to become an investment success for some time now, capitalising on aggregating the granular opinions in an elegant format. Opinions of all sorts you can find anywhere and anytime, but the constant and valuable ones reflecting a strong voice... Somehow, all this reminds me of the Blogger business and the blogs enthusiasm from 20 years ago. Not coincidentally, Medium has the same founder as Blogger - Ev Williams.

Substack’s newsletter option may be an interesting edge feature, as DTC is the way to go for most media these days. Running mailchimp and the like is not exactly easy and not cheap, and an integrated CMS effort that includes a NL and a few-clicks monetisation feature makes a valuable product proposition.

The demand for such as tool is there, the media biz keeps getting fragmented, journalists are laid off in droves and there’s a lot of outsiders looking to build and sell their personal brand via a cheap and decent solution.

Btw, newsletters (also known as email marketing) are without doubt one of the most efficient sales conversion tools out there. They have been since the internet was invented, regardless of the business you are in.

*If you live under a rock, Ben Thompson runs Stratechery, a one-man, content-based business about strategy. Absolutely recommended.

You are a reporter and part of your job is to write a newsletter which is becoming increasingly popular in time. If you breakup contract with the media co, do you have the right to keep the emails?

Conventional wisdom says that your work for a company is IP for that company and that includes its customers, unless stated otherwise in a contract. But times are a-changing.

Happy Sunday!

Thanks for reading 🙌

Reply with comments or other topics or resources that would be helpful in future editions.

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