jamie urquhart march 1 st 2013 pond venture partners silicon south west tech trends 2013
TRANSCRIPT
J A M I E U R Q U H A R TM A R C H 1 S T 2 0 1 3
P O N D V E N T U R E P A R T N E R S
SILICON SOUTH WESTTECH TRENDS 2013
SSW Tech Trends 2013 2
GEEK
• Currently
• Venture Partner Pond Venture Partners Ltd - Venture capital
• Entrepreneur In Residence Centre for Entrepreneurial Learning, Judge Business School
• Fellow IET
• Previously• Bath University B.Sc Physics and Physical Electronics.• Plessey Research Limited, analog (RF) and digital CMOS, Bipolar and GaAs. • Acorn Computers Limited, VLSI Design Manager of the VLSI Design Group. • ARM Holdings plc Co-founder - November 1990 until November 2002.
• VP of Sales and Marketing, Chief Operating Officer and Chief Strategy Officer
• nCipher plc Non-exec Security through Strong-Cryptography
Acquired by Thales• Antenova Non-exec Aerials/RF Systems (private company)• Splashpower VP Licensing/Non-exec Wireless charging (private sale)• Imperas Non-exec EDA (management buy-out)• Acco Interim CEO RF • Picochip Non-exec Small Basestations, acquired by Mindspeed
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DON’T DO PREDICTIONS!
• Either:• Wrong
• Obvious• Everyone else can see them as well• Market slugfest
• Valuable• Become a Forecaster• Start a business
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FOOD FOR THOUGHT
• What matters?• Markets
• Growth• Accessibility• Intensity• Conservatism• Stage
• Problems – value of solving a problem• Extrinsic• Intrinsic
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MARKETS
• Where is the growth?• GDP growth rate 2012
• Italy -2.3%• UK -0.1%• Germany +0.9%• Japan +2.2%• Korea (South) +2.7%• India +5.4%• China +7.8%
• Wikipedia – based upon CIA Factbook
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PORTER’S MARKET FORCES ANALYSIS
Competitive
rivalry within
an industry
• A method to assess the competitive intensity of a market
• A high intensity requires a significant advantage to create a profitable company
• Assess markets against the Strategic directions of the company• Markets already
addressed• Potential markets
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DIFFUSION OF INNOVATIONS
• Diffusion of innovations is the social sciences theory for how and why new ideas spread through cultures.
• French sociologist Gabriel Tarde originally claimed that sociology was based on small psychological interactions among individuals, especially imitation and innovation.
• Diffusion of innovations theory was formalized by Everett Rogers in a 1962 book called Diffusion of Innovations.. Rogers showed these innovations would spread through society in an S curve.
• Characteristics of product adopters:• 2.5% innovators - venturesome, educated, multiple info sources • 13.5% early adopters - social leaders, popular, educated • 34% early majority - deliberate, many informal social contacts • 34% late majority - sceptical, traditional, lower socio-economic status • 16% laggards - neighbours and friends are main info sources, fear of debt
• Other adopters of diffusion of innovations theory include Geoffrey Moore.
• THIS APPLIES TO THE IDEAS IN A COMPANY AS WELL
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CROSSING THE CHASM (GEOFFREY A. MOORE)
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MARKET MATURATION
• When a market has reached equilibrium• Low growth• Lack of innovation• Status quo prevails
• Mature markets• Two or three major suppliers (Tier 1) share the majority of
the market• Tier 2 suppliers share the remainder
• Affects product uptake and EXIT strategies
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MOORE’S LAW
• Number of components in an integrated circuit doubles every two years (or so)• Done so for around 50 years• Growth is slowing – some say!
• Although a Google search shows that prediction going back quite a few years.
• Constraints• Physics• Capital (Estimates @ $50Bn for the 300mm wafer transition)• Heat• Cost of design complexity
• Innovations• Multi-core• Architecture• Flexibility• Re-use• Systems – Semiconductors, Software & Sensors
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EXISTING VS FUTURE MARKETS
• Existing market• In operation• Pricing and volumes and specifications understood• There will still be trends that can’t be ignored
• PC market• Desktop, Laptop …Tablet• Performance, specification (size, screen quality, memory, storage…)
• Future market• Uncertain timescales
• Technology constrained• Demand driven• Infrastructure constraints
• Galileo GPS
• Uncertain demand
• Disruption can occur in either market• Significantly affects investment profile
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POST-PC WORLD
• PC shipments drop by about 6% as consumers opt for tablets (Guardian – 14th Jan 2013) to 90m
• Why?• Money is a finite resource
• Versatility is not utility
• People are not geeks
• B2B often ends up with a C
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IOT
• Internet of Things• Lots of things connected to the Internet and uniquely
identifiable• Software, Sensors & Semiconductors in a small package• Reliability of operation• Very low maintenance (batteries or updates)• Ease of use• Ease of Installation• Wireless – Whitespace vs. Managed• Cost effective
• Obvious candidates• TV, Audio
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LIFE-CYCLES
• Life-cycles becoming more dominant• Miss a product beat and even large companies struggle• Miss a product trend and it can be near-fatal• Disruption is the norm
• Flip-phones, Smart-phones
• Increased conservatism in the take-up of new technologies?• X10 advantage• Support costs• Design costs• Assimilation costs
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SUPPLY CHAINS
• Clusters• People• Customers• Suppliers• Capital• Cost of transport
• Change on the High Street• “One shop closed every HOUR” – Daily Mail• HMV, Comet, Blockbuster
Ascendant Data: 2012 VC InvestmentsLondon – 93Dublin – 17Cambridge - 14Edinburgh - 12Oxford - 10
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ENERGY
• A bit of a bandwagon• What are the issues?
• Security of energy supplies• Political and logistical• Peak oil vs Fracking
• Transport (Automotive)• Batteries• Safety• Connectivity
• There are spaces• Distribution, control and storage• Efficiency
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UK
• Electronics Systems is an enabling capability• Industry• Significant value-add component in many other industries
• Automotive• Health• Telecomms…
• Issues attracting young people into the space• Invisible magic• Lack of visible coherent career path
• World-class companies, research• Initiatives to support Industry
• Tax Credits to Technology Strategy Board
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AN ENTREPRENEUR
• See opportunities where others fail!• Finds and organises resources
• Natural, people, ideas, finance
• Builds and leads a team• Adapts to external forces
• Customers, competitors, markets, technologies
• Is “hungry” for success• Is a “Business Architect/Evangelist”
• Business models as well as technology
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STARTUP APPROACH?
• Big Problems that have value• Too much technology oversell• Significant advantage• Disruptive business models• Revenue
• Lean and mean until value created• Capital efficient
• Ability to bootstrap
• Run the company
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SELLING METHODOLOGIES
SPIN
Situation•Find out about the customer
•Budget cycles, decision making
Problem•What are their problems?
•These are the areas with value
Implied Needs•Dig into the implications
•(financial, career, stress etc)
Needs Payoff•Your product is the solution
•Creates a value and need
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INFLUENCES
• Balance• Too many chefs• Do take advice
• Stakeholders• Angel investors• Customer expectations• Partners• Recruiters• Advisors• VCs
• Who will architect the “organisation”.
• Teams are stronger than individuals
• Do you know your co-founders • Aspirations• motivations• skills • goals/health…
• Some time for honesty!
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THE VC WORLD
Old VC World New VC World
Predictable economic cycles Enduring, stagnant economy
Macro booms accelerate niche market growth
Niche markets grow despite weak economy
Go for a home run until it becomes a single
Assume it’s a single/double unless it becomes a home run
Assume 6 – 8 years to exit Target 2 – 5 years to exit
Bet big to win big Capital efficiency
Strategic $ only at later stage Consider strategic $ at any round
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SOME SMALL COMPANY ADVANTAGES
• Nimble• More exciting – attract talent• Fast growth provides opportunities
• Faster communication• Fewer links in the chain• Fewer people to consult• Better alignment
• More Responsive to customers• Faster decision-making
• Access to experts – not layers of field support• Fewer elephants
• You shouldn’t really have any – but they do exist!
• Easier to eat your own dog food• Dare to be different
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LESSONS I’VE LEARNT
• Focus on business not technology
• Do not have a large burn-rate heading into an uncertain market
• Focus on earning revenues not raising money
• Being an entrepreneur is more than building a new bit of technology• Business models, ability to sell, ability to convince