Entrepreneur Country – Part 2

back from our break.

The coffee at IoD was pretty vile, but the conversations and demos were pretty good, so that kind of reset the karma of the event. (see how reasonable I am being? normally bad coffee turns me into a screaming monster, but the promise of a presentation from Caffe Nero founder in the afternoon helped calm me down.)

Quick run down – if you wanted the detail, you would have been there.

General mood = optimism for mediatech and for new ventures in general.

Specific advice = weatherproof your business and cash is king.

In slightly more detail:

From Sir Paul Judge

entrepreneurs need to be navigators, striking out at great risk to bring home huge rewards for their investors and themselves
his great opening was something like 'policy is starting to take the fun out of capitalism' (and I wish I could type faster or do shorthand like the nice Victoria Bates from City am who was sitting beside me)

From Edward Wray  of Betfair

great businesses are founded in times of stress because the ideas are more carefully filtered and the new businesses start with tougher systems and tighter controls.
entrepreneurs now need to think longer term, as do investors, as 2 year “flips” are dead for a while.
raise all the money you can, get options or structure share buy-backs once your VC has made 10x to re-incentivise your founders.
grant options to everyone
worry about your value in 3 to 5 years, not the valuation today (which is artificial anyway)
focus on one thing, go slower, be more profitable
do not be distracted by requests from your investors for huge “quick” wins that will nearly always turn out not to be quick or huge and will exhaust your cash
new technology needs old fashioned business common sense
share problems before they kill you, which means building your personal network of trusted advisors quickly
do it all right, first time, as small errors have bad effects which are magnified in a recessionary period
if you do make an error that customers see, apologise, deal with it and move on rapidly

From Dr Gerry Ford of Caffe Nero

know your customers personally
have a 'negatives week' where only bad things in the business can be talked about – it gets the issues out in the open and stops everyone complaining in all the other weeks
make it open, make it simple, make it fun
when you can, chose “better” rather than “cheaper”

… and, Gerry, PLEASE try to stick to time. Cold coffee is bitter and makes people irratable.

Well, that pretty much reinforced the messages that we were receiving last year. A shade darker, but not a catastrophe for good startups and their entrepreneur teams.

Then there was the Panel on monetising social media and mass participation gaming. That was the bit I had really come for and it did not disappoint. Hard numbers were shared, but I have not included them here. Some mystery is worth preserving.

1.    Michel Cassius ­ Dubit (Leeds) Tools provider

a.    Core of business is an understanding of the behaviour of online players, understanding the use of games, understanding how to build games for other people.
b.    Business model is sales of consulting and data, games development for hire, and licensed game building tool sales.
c.    Michel is a cool guy who I think it would have been fun to work with, had things gone differently

2.    WeiHau Chu ­ works with Geewa, Prague

a.    Geewa thinks that about 20% of the internet can be converted to games playing. That is a big number.
b.    Grew up from promo lite games on mobile into a full online casualgaming company
c.    1.5m uniques, so number 1 in Czech / EE area but still not profitable. Very hard to monetise.
d.    Just starting to see a slackening of the growth rates in new users

3.    Jochen Hummel ­ CEO Metaversum   

a.     The driver for them is immersion
b.    Check out Gartner (who say 80% of users will have an avatar by 2011)
c.     The established MMO all target “old fashioned fantasy” which ­ they think that this is a dead end, and that the real money is in near real  experiences set in near real environments that are safe and understandable.
d.    Check out the Metaversum avatar system !

4.    Paul Solyuk at ­ TNWA

5.    Dylan Collins ­ OMAC industry

a.    Acquires games companies
b.    Charges MTX for assets to drive their casual games
c.    From the way he put it, I was a little concerned that their past acquisition model is really  a way for them to get secret inside data on the segment, but I am sure they are not like that really. 🙂 but there again, their logo is an evil little devil head, so perhaps they are evil, who can tell?

Background data

UK revenues for games up 24% at £4bn, installed base up to 22m consoles ­ good years for games, if not recession proof, certainly resilient. Now that number is only the packaged retail sales, so that very big number excludes all the online sales, MMO and childrens games like Club Penguin, Webkinz, etc

Key points

1  Propensity to purchase digital assets is moderate in the games/internet space, top end in Europe, lower in USA

2  The other big driver is competition ­ being a winner and the smack-down image are very big drivers.

3  Propensity to pay is directly related to perceived brand value of the image.

4  If it is not branded, it will only sell if it is really really good

5  ARPUs over $40 area perfectly reasonable from asset sales to a small percentage of your consumer base that will pay way above the what the average pays in virtual assets. This is now well understood in USA and Asia (especially Korea)

6  Subs models are unlikely to draw large payments per customer and conversion is way lower in this consumer space. Paradoxically subs are higher for higher value service offerings and much higher if there is a strong support element.

7  Multiplayer games grow fastest of all online activities, obviously, as the viral effect has natural amplifiers and accelerators from being in the same environment at the same time.

8  CPM rates re NOT dropping right now, except in areas where there is a lot of bad, cheap inventory to clear. If your content is fresh and current, CPM rates are staying good, but volume of advertising is (apparently) dropping a little. You can really drive this up if you have novel video advertising and over 1m Unique Users per Month.

9  Sponsored content can be reacted to very violently by users ­ unless the users get a direct personal benefit from it being there. (The McDonalds in the Sims debacle).

10 Delegate balancing act ­ revenue and scale. They do conflict, and the trick is to get over 100k regular payers and then power up the scale knowing that the costs are covered.

11 This segment is fantastically profitable, quick to react, cheaper to distribute, cheaper to develop for and has portfolio advantage over the traditional publishers (more games, so they are not killed by one failure)

12  Mashups and consumer modding makes products that have real consumer engagement; consider it non-negotiable

13  Cost of online servers (cloud) is coming down so fast, and tools are so good, that perhaps anyone will be able to launch a successful game and take it mobile (genuine long tail creativity?)

14  As the segment saturates it will be the large brands and their advertising budgets that create the real winners.

15  This market is immature. So some original content will bubble to the top.

16  In a year or two it will all be about brands. You do NOT need to pay them ­ if you have enough players you can get it free. If you have really huge numbers, they pay you. (If you don't know this, expect to pay £100,000+ per deal just to get access. Are you glad you read this far now?)

So, back to the world of work and designing simpler, faster, more socially engaged Moviestorm elements. This year is going to be fun. And, no, I won't tell you which numbers I picked up or who told me