However, the current competition (in the UK) has some methodological problems. As a consequence, fast growing companies are sometimes missed, thus the list is incomplete, pundits start criticizing the whole approach and the end result is diminished from what it could be. That is a shame.

I personally have made some very half-baked comments on Twitter about this and thought I would put some more effort into suggesting some minor changes to the methodology that would make the competition more inclusive, more interesting, and more just. Here it goes.

The current approach

The Fast 50 are calculated by taking the revenues of a company, comparing it with the revenues five years later, calculating the increase in revenue, express that as a percentage increase and then rank companies according to percentage increase. Sounds great. And actually, it is not a bad approach. However, it has two problems associated with it:

1. Shooting stars are ignored. You found a company. Three years later it could have £100m revenue. You are nowhere to be seen in the Fast 50. That feels somewhat wrong to me.

2. There is a minimum amount of revenue in the first year of Euros 50k. If you have £10k in the first year, you have to wait another year. This might be despite that fact that in four years, you have grown faster than anybody else, but because your first year value was so small, you are basically ignored. Even worse, you are then forced to take your second year value, which might be £1m and as a result, you are placed far lower in the ranking than you ought to be. Again, this strikes me as wrong.

I think with some subtle changes to the methodology, both problems could be avoided.

Suggested changes

I would introduce the following subtle changes to the methodology as follows:

1) Abolish the five year period. Replace it with a flexible period of a minimum of one, and a maximum of five years. With the last year being the most recent accounting period. This allows for the accommodation of shooting stars, but will still keep long term solid growers in the race and high up in the rankings. Because you take a combined percentage amount for the rankings (not an annualised one) this should have no adverse effects on long term strong performers.

2) Abolish the Euros 50k minimum requirement. Replace it with a levelling approach. For all companies with revenues smaller than Euros 50k in the first year, replace it with a Euros 50k value. This means you always have a base to compare against and companies with £0 in the first year are not discriminated against.

A few hypothetical scenarios, let’s see what the effect would be

Scenario 1:

a) Company A posts £50k in the first year and has consistent growth of 100% year-on-year for five years. They post £1.6m in year 5.

b) Company B posts £50k in the first year, as well as the second, third and fourth year. In year five, revenue jumps to £1.6m. The company submits years 4 and 5 for consideration.

According to the current Fast 50 methodology, both companies are equal. Under the new methodology, this still holds true. Consistent growers are not squeezed out by companies with a short term boost, even when such companies use two years as the time period for consideration. However, under the suggested changes, one could state the time period and as a consequence, the achievement of Company B looks a bit more impressive, but both companies would still have the same score.

Scenario 2:

a) Company A posts £50k in the first year and £5m five years later.

b) Company B posts no revenue in year one and £5m in the second year.

Under the current rules, Company B is ignored twice. First because they don’t have Euros 50k in the first year and second because they don’t have a five year accounting period. Under the suggested rules, both companies would get the same score, as Company B’s first year revenue would be set to £50k. Again, Company B would look more impressive, as it should.

Scenario 3:

a) Company A posts £1m revenue in the first year and £25m five years later, a 25x increase.

b) Company B posts Euros 25k in its first year and Euros 5m in its second year of operations, a 100x increase (assuming a Euros 50k base for calculation purposes in the first year).

Under the current methodology, Company B is ignored. Under the new rules, Company B outranks Company A. It think this is actually the correct way of doing it. If companies get to Euros 5m so quickly, then I really want to hear about them!

Conclusion

I think there good reasons why the current Fast 50 methodology makes a lot of sense. It is objective, it is quantitative, it is revenue based. But is has some limitations. By tweaking it slightly, you stand to lose very little, but you allow for a wider pool of fast growing companies to enter, and you make it a more interesting and a more just competition. Sounds good to me.

The Blog-Health-o-Meter™ reads Fresher than ever.

Crunchy numbers
This blog was viewed about 33,000 times in 2010. If it were the Taj Mahal, it would take about 4 days for that many people to see it.

In 2010, there were 3 new posts, growing the total archive of this blog to 80 posts. There were 3 pictures uploaded, taking up a total of 434kb.

The busiest day of the year was March 17th with 204 views. The most popular post that day was Online Marketing Example with a Halo.

Where did they come from?
The top referring sites in 2010 were coheda.typepad.com, crane.hr, thebln.com, ttpventures.com, and avc.com.

Attractions in 2010

These are the posts and pages that got the most views in 2010.

Online Marketing Example with a Halo September 2007
5 comments

Evolution and Marketing August 2007
1 comment

VC Fund Raising Manual – 2 Documentation June 2008
6 comments

Monopoly Game Discount by Tesco December 2008
1 comment

The Role of Internet Marketing September 2007
5 comments

Iris wanted the ability for her organization to talk directly to their target audience. In order for this to happen, you need to be in the news feed of the relevant people on Facebook which is where these kids spend most of their time. Facebook allows organizations to communicate directly with individuals, but you cannot initiate a request. Individuals have to become a fan of you site and once they are, then you can communicate with them directly. This is obviously there to minimize spam. Nonetheless, this makes is tricky to approach the right people that you care to contact. Facebook is all about conversation. Why is there not some ‘networking’ ability to start talking to people whom y0u don’t know, yet?

At the same time, I had to think of a blog entry by Bruce Cleveland of InterWest Partners on the Mythical VP Sales & Marketing. The rationale of the article was that there are very few great VPs of Sales & Marketing in the world, because these two disciplines demand very different skills. To summarize it briefly:

“Sales is a 1:1 game”

“Marketing is a 1:many game”

I have now come to see the conversations on Facebook or Twitter as essentially a new category of interaction between a company and a potential customer. Let’s call it:

1:some

Companies actually want to talk to the people that they care about. Not in the sense of selling them something, or in the sense of marketing something to them. But rather in the sense of conversing with them, befriending them to their course. This is a different skill set from both sales and marketing. If sales is the realm of the “oral communicator” and marketing is the realm of the “verbal/written communicator” (Bruce Cleveland’s words), then social networking is something of a personality/chatting communicator. I think this is very different from the others.

Why can’t Facebook and Twitter set up accounts that enable this kind of communication to happen? Give free accounts to individuals and paid accounts to companies. Simple. People who spam get shut down. This would enable companies to have meaningful conversations with people. People obviously have to opt into these discussions. If they stop liking them, they can opt out again. This prevents spam from the start.

Doing a rough back of the envelope calculation, I think this market is easily in excess of $10bn per year.

For me personally, I now class company / customer interaction into three categories:

Sales – 1:1

Social networking – 1:some

Marketing – 1:many

Look at this chart:

In March 2009, Facebook changed their layout to mimic that of Twitter. Their growth accelerated markedly at that point. Twitter’s stalled shortly after.

It is possible that this is coincidence, but somehow I don’t think so.

Launch of Apple iPhone

Launch of Google NexusOne

Nice to see that even Google has a lot to learn!

“I am in London-based startups’ offices all the time and I am gobsmacked when they are nearly empty by 6:30 PM…European startups need to work as hard as Valley ones – or forget it“

I have been thinking about this for a little while since that post. To me, this is about passion.

Start-up Passion

When you care so much about the company, that you would rather work on it than do anything else. I think you could also call it an obsession.

Some personal observations:

1) When a start-up with high ambitions goes out to change the world, this kind of passion develops. It is not sufficient for success, but most companies that really want to win develop that kind of working environment.

2) I think most UK, US and German start-ups that I know have this kind of environment. Of course, I only have my personal reference frame for this observation. I don’t have any detailed data.

3) This passion tends to wane over time as the company matures. Many later stage employees are just paid a wage with few or no share options. They are not in it to kick ass, but to earn a living. This is a normal process. I have seen many mature and very successful UK, US, and German companies, where staff work more or less normal working hours.

4) UK VCs invest typically later stage than US VCs. This means that they may miss this early stage of passion. Or they may have invested in the wrong kind of company.

My personal opinion:

1) This kind of passion and team spirit is, for me personally, the No.1 reason to do a start-up. It is a fantastic feeling and many long lasting friendships are formed during this period.

2) I personally think that passion and success in a start-up go hand in hand. You need this passion. If you are not passionate and obsessed, how do you expect to kick ass and make a difference?

3) The passion is not a question of being a workaholic. It is simply that the founders and early employees go out there to change the world, kick ass, and make money. It simply absorbs you. It draws you in.

4) If you are passionate, you prioritize what you are passionate about above other things. It is not that I have to work twelve-hour days, I WANT to do it. I love doing what I do. Why would I want to do other, less interesting things?

5) Passion doesn’t necessarily mean twelve-hour days every day of your life. You can’t go 100% all the time. Something will break. Pacing yourself is important. But the principle attitude to working with a passion is just there.

6) If you don’t want to be passionate about your company and would rather work a solid 9-5 job, then this is perfectly fine. However, it makes little sense to work for a start-up, if that is your preference. I suggest you work for a large company. This is a much better paid, better perk option.

7) It is unrealistic to expect of all people at a maturing start-up to continue this kind of passion-based work attitude for many years. I am aware that some company such as management consulting firms and banks institute a similar kind of behavior amongst junior staff. But most companies just cannot sustain this kind of behavior beyond a certain point, as they cannot afford the salaries or equity share to fuel it.

8 ) If you are a VC, you should probably steer clear of young companies that don’t exhibit this kind of passion. When you are dealing with older companies (say 3-4 years+), you should not expect it. It is simply unrealistic. If you can find a company that has managed to instutionalize it: all the better.

9) I doubt that young start-ups without this kind of passion are actually VC investible. VCs want companies that grow very fast. Unless you push hard, how is this likely going to work?

10) Finally, passion can only get you so far. You can’t build a great company without it, but you cannot rely on it either. At some point, your company will become mature. Unless you have turned your company into a cash generating machine by then, it will likely fail, as early employees turn their backs.

Final thought:

I think everybody is living their passions. It is up to all of us to decide and discover what they are. For some, it is starting companies. For others it is other things. All of that is fine. Doing things we like and enjoy will make us happy. Even if we don’t get that much sleep. Just like the (stupidly) smiling people in the photo below.

This newsletter is going to focus on another type of newsletter, the ones that focus on news.

News newsletters can be very effective. They tend to focus on news that is of genuine interest to the audience.

No newsletter should focus on news of the company itself. I can’t name a single newsletter that I have ever read that focussed on news on the company itself that was of genuine interest to me. The reason is: nobody cares. The only people who care about what is happening at the company are the people who work there. Obviously, what is happening at the company is of interest to people. However, nobody cares that much, that they would like to read about it in a weekly/monthly or quarterly newsletter. If you have company news you wish to share, I suggest you stick it onto the company blog or news section of the website. But not in a newsletter.

There is one exception and that is company internal newsletters. Obviously, the people at the company are interested in what is happening at the company. If you operate a mid or larger sized company, this newsletter might indeed be well read and effective.

When I analyzed the news newsletters that I like (and subscribe to), I found that the best ones met the following criteria:

1) It appears daily (meaning news is really new).

2) It covers one specific niche 100%. I am guaranteed not to miss anything essential. And even should one bit of news get missed, they are very likely to mention it the next day.

3) I can scan the newsletter very quickly for bits of news relevant to me.

4) ALL the information that is relevant to the news is contained in the newsletter. Outbound links just give me more information, but I don’t need to follow them to see the story. It is very annoying when you need to click backwards and forwards between the browser/email or the different browser windows.

5) The best newsletter go beyond this and introduce a personal view on top of the facts, that make for genuinely interesting and entertaining reading.

The best news newsletter that I have ever read is written by PE Hub and is called the PE Hub Wire (fka PE Week Wire). Screen shots are included below:

This specific newsletter consists of two parts: a) a personal comment section at the top in blue and b) the news. The blue opinion piece are very frequently very insightful and worth the time. The news is not only broken into specific sections, but within each article, key companies and individuals are highlighted. This allows the reader to scan this newsletter very quickly. You don’t neeed to to READ the Newsletter to KNOW what is in it.

Pe Hub Wire appears daily. It covers nearly all important events in the North American private equity scene. Nothing that is truly important gets missed.

To date, I haven’t seen a better news newsletter. Highly recommended.

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a) the ones that I really like – 23%

b) the ones I feel indiffierent about – 23%

c) the ones that I think are downright useless – 54%

I then unsubscribed from half of the newsletters that I was receiving.

What makes a good newsletter? I had a look at the ones that I liked and didn’t like. In short, I found only three newsletter formats that worked and one that was really a waste of time. The three formats that worked were:

1) You care about X, here are some special time limited deals

2) You care about news on X, here is ALL that you need to know in one view

3) You care about X, here are some X that you may have never heard about and that might interest you

There are some great newsletter that manage to combine several of these three aspects.

The worst newsletters are the bland corporate ones: ‘We thought you would like to know what has just happened at our company’. Ah. NO.

These kind of announcements should be somewhere on the news section of the corporate website, so that people who care about recent developments can get an impression, but they don’t belong in a newsletter. It is likely the only person who cares about your company is you. People who read newsletters care about the things that they care about, not your company (unless you are Apple of course).

In a small series of posts, I will have a look at the most interesting newsletters that I can find.

Let’s start with the limited deal format.

One of the best newsletter I have ever had the pleasure of subscribing to is sent out by WineDirect.co.uk

WineDirect is a UK based online wine shop. below, I have copied in a screen shot of their weekly newsletter:

WineDirect combines several elements in their newsletter that work very well. First, they introduce you to a different winemaker every week. There is a pretty in depth description of the work of the wine maker that is genuinely interesting. Second, it lists several of the wines by that wine maker. These wines are available at a discount for one week. Each wine is described in detail with tasting notes, tasting scores, and the price (both original and discounted) which give me an immediate idea whether one of these wines might be of interest to me. Clicking on one of the hyperlinks takes you to the online page of the specific wine. Third, nothing else clutters this newsletter. It is all about the weekly special deals.

Overall, this is an exceptionally well made newsletter. I read it with interest every week. There are three reasons that I found why I read it:

1) It is genuinely interesting for somebody with an interest in wine

2) There may be some special deals in here that I might be really interested in

3) It doesn’t ‘push’, it isn’t loud. It is trying to be genuinely helpful.

Great stuff.

Part 2 of this series can be found here.

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Some background

aiHit, the company that I co-founded, has recently put live a web app called HitCompanies.

HitCompanies is a database of the world’s companies.

This database of companies is automatically assembled from the Web by our intelligent Web crawlers. This involves a substantial amount of artificial intelligence and machine learning technology.

It is our vision that at some point, all companies in the world will have a presence on HitCompanies. So, if you want to find companies by what they do, so you can do business with them, you will be able to find them here, quickly and easily.

The current IT beta of HitCompanies contains some 400k IT companies and we intend to roll out across an increasing number of industry sectors over the coming months. The landing page of HitCompanies looks as follows:

We are assembling structured profiles of companies in HitCompanies. An example screen shot is shown below. Again, all this information is collected and structured automatically by our bots.

Over the coming months, there will be many changes on HitCompanies, as we grow, expand and improve the app. News on developments of HitCompanies can be found on our corporate homepage’s news section: aiHit News.

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Some good articles on the future of selling access to news have got me thinking. What is the future business model of news reporting? What is broken right now?

The Past:

The distribution was via paper. Editors bundled a lot of stories together, printed them and sold access to the printed edition. Later came broadcast radio and television, using similar principles. Advertising plays a critical role, too. We, the consumers, paid for a combination of editing, the content, and the delivery.

Now:

Bundling is dead. Digital publishing, search, RSS readers, hyperlinks across platforms, suggestion tools (Memes, Google News etc), news pointing tools (Twitter, Facebook, etc) and so forth mean that I pick the individual articles that I read. I don’t care whether it is written on a blog, the NY Times, the WSJ, or somewhere else. I select what I read. I still read the content though, it is still just as valuable. Distribution has become much cheaper due to online publishing. No more expensive printing presses and paper needed.

The graphic below summarizes this:

What this means:

I DO care about reading a PARTICULAR type of news item at a time when I decide. I DON’T care about reading a particular NEWSPAPER. I bundle my own news now. I am the editor. The job of editing for others is becoming less important. It is becoming obsolete. This is true for both print and broadcast.

In the past, we paid editors to pick the content, package it and deliver it to us. But now, we don’t have to anymore. And we don’t want to. I will not pay an editor to select my news. This is a dying part of the value chain. I also don’t have to pay for paper anymore.

However, I am more than happy to pay for the content. No problem. But publishers still insist on selling me editorial services…

Suggestion:

I am happy to pay $100+ per year to an industry organization for a subscription to all content that currently resides on newspapers. This organization could pay their members dependent on the amount of traffic that comes to their sites via the subscribers of the scheme. This would mean large and small publishers could benefit proportionally to their contribution in terms of what people actually read.

But I won’t pay for editors anymore. Not in news print, not in television. I consume on demand now. I am the editor and I decide the composition of my own, personalized news flow. My ‘newspaper’ comes for dozens of sources each day, some of which I didn’t even knew existed the minute before I read them.

When can I start paying?

Update
This video doesn’t fit the article 100%, but it is still pretty funny:

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