The CTO CoFo and other quasi-mythical beasts

Jase Bell is mostly, pardon the pun, on the money:

Put bluntly it’s a big stand off. The startup founder (“Hey, I’m the ideas guy/gal!”) goes tail wagging desperately looking for a tech co founder, someone who can look at the holistic view of the startup, the long term, code the iOS app, the Android app and the back end, the reporting…. those unicorns don’t come cheap, circa £75,000 p/a if you want a quality tech co-founder, someone who will be “all in”. Your short runaway will become a lot shorter, that £300k seed you need to get going is basically mandatory.

Of course there is another side to this. A finder needs to identify a good CTO.. It’s not like there is a large supply.

I’ve been on the fringes of the local software industry for the last 20 years I can count on my fingers the people I’d approach for such a vital role.

Part of this is their ability: they have to command respect, have a good reputation, be pro-active and have a can-do attitude and probably have done more than just worked for a wage in a local company.

The other part is my ability. Will I have to manage them? Am I a good judge of ability or character? Can I raise the cash to get them paid? And if I can, have I judged correctly; is this just another job or are they part of the team?

Over the years I have, with friends, built a heap of stuff you’ve never heard of. The 23rd Letter, SpaceNinjaCyberCrisis, ZOMBI, Syncbridge, Rickshaw, Infurious Comics, Eagle Lake; stuff that was always ahead of the market and if I had been smarter, better connected, more business-savvy, more predatory then I might be talking to you from a private island.

My opinion is this.

CTOs are incredibly rare in Northern Ireland. And when you find them, chances are they will be working for a high five-figure salary with benefits within a secure FDI company doing work well beneath their ability. Their lifestyle will have grown to demand that salary and only inspiring friendship or a mid-life crisis will urge them to move. That will be a lot of risk for the aspiring CEO – because you’re banking someone’s life on the strength of your idea and using your relationship as collateral. And the money had better follow.

As you get older it will be more about the money and less about the relationship: so start young.

Creative Industries Innovation Fund: Legenderry

Yesterday was the second of my CIIF workshops and I was really pleased with the pitches we received. While the world thinks that Northern Ireland is burning, I see creative professionals pitching new ideas and hopes because they, like others before them, want to make a dent in the universe. CIIF is only up to £10K which, in the scheme of startup funding in other regions, is virtually nothing. But for the startups in Northern Ireland it’s an important lifeline to innovation. It just removes that obstacle to innovation and creates hope in a region which is beset with agitators opposed to progress.

The workshop yesterday was in Derry/Londonderry/Legenderry. This is the current home of the UK City of Culture and best illustrated by the annual CultureTECH festival which mixes everything great about the creative industries, both analog and digital, across the province into one coherent presentation. (And yes, you would be an idiot to miss it this year).

The hopefuls outnumber the rioters. Yet they are paid much less attention. Where’s the sense in that?

SBRI Briefing in the Assembly today

That this Assembly calls upon the Executive to actively promote and raise awareness and understanding of the Small Business Research Initiative (SBRI) across the public sector; and further calls upon the Executive to put in place appropriate measures to increase uptake of the SBRI by Departments and the wider public sector to help stimulate and drive innovation, especially in local micro-businesses and small and medium-sized enterprises.

SBRI is, in my opinion, possibly the most important tool for government to support small businesses in Northern Ireland. Northern Ireland is 98% small to medium enterprises, and 95% micro-businesses. Yet, the very people who provide the bulk of the private sector get the least assistance.

You see, it’s not funding, it’s procurement. It’s not a grant, it’s a purchase order. And it also neatly solves the problem of government not getting what they want out of the current procurement jungle (though they get what they ask for, to all our detriment).

The Biggest Lies Start With: Startups need…

I’ve been ruminating this blog post over the weekend and then an article on Techcrunch just spurred me to put the thoughts into electrons.

I’ve been guilty of using the words “startups need” many times. There’s always something they need whether it is access to better talent, better markets, better funding alternatives. A startup is like a newborn baby; it needs access to certain resources, it wants access to other resources and, despite our feelings on the matter, it can get by perfectly well missing out on others.

90% Failure Rate And Why This Is Still Great

The article states that 90% of incubators and accelerators will fail to provide the massive high-growth companies they aim to. And that is okay. Because the important thing with this market is not the guarantee of success, but the taking of chances. And the important thing to realise is not what startups need, but what “we” need.

In a Northern Ireland context, startups who intend to grow fast will either have a rapid expansion programme based on sales or they’ll leave. Because the sort of cash that enables pre-revenue growth simply isn’t available here. We, speaking as the Northern Ireland private sector collective, need these companies to start here, to develop here, to be funded here and, most importantly, to stay here.

By turning this conversation around, it helps our leaders understand the stakes. This is not about small companies trying to get as much out of the government as possible in a market where local private investment is risk-averse, property-focused and afraid of technology. This is about the government putting in steps to avert their own doom. Governments thrive on taxes and without the taxes gained from “adding value”, from those productivity benefits from expert workers, governments can find themselves unstuck.

There’s a limited window now for the government to do what it needs to do for its own sake. Not for the sake of the startups, not for the sake of a few entrepreneurs or their investors, but for the sake of every civilian in the province.

We need to make smarter finance more accessible, we need to make markets more accessible, we need to ensure that the best people to hire for the knowledge economy are found here. By doing this, and only by doing this, can we ensure that startups will be created here in the volume necessary for our continued affluence.

After a decade of intervention…

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Got this in iMessage just now. Describing frustration with trying to kick off a startup in Northern Ireland.

I’ve met with a few private investors, a couple of angels, a few venture capitalists, lots of public sector funding managers and a few deal brokers. I’ve read a few term sheets – enough to realise when I need help but also, thanks to three friends in particular, read enough to realise when someone is being shafted. We’re a long way from having this fixed. And, if I am honest, after a decade of intervention, I don’t think we’re any closer to the answer.

Why?

Because the intervention was In the wrong direction. It was top down and not bottom up.

So why not Kickstarter

I got this question yesterday. If I want to do this, why not use Kickstarter as it’s been such a success for heaps of stuff.

The world famous Double Fine Adventure sets a precedent. A small team of dedicated people can achieve great things.

But, ultimately we’re not ready for that. We’ve got the start of a team with Aidan and Willem. We’re trying to raise some cash for assets – images, music, animations, movies. We have our Lo-Fi movie, a wiki that’s growing with game design features and background and we’re talking to Northern Ireland Screen about what they can do to help.

We’re not ready for something like Kickstarter because we don’t have the twelve year background of Double Fine Productions, the reputation of Tim Schafer, the back catalogue of 2 Player Productions. Kickstarter is a big step and we’re not ready because we don’t have anything to show.

We’d like help to get there.

Crowd funding Investment: I have a bad feeling about this.

From Gamasutra:

Newsbrief: In the wake of Double Fine’s astonishingly successful Kickstarter campaign, industry trade body UKIE called for legislation changes that would allow UK video game companies to use crowd funding to finance their projects.

UKIE explained that the UK’s current legal and regulatory framework puts too many restrictions on crowd funding, and the group promised to release a report that outlines the ways in which the laws should change to better suit game developers and the entertainment industry at large.

I view this with some discomfort. There is nothing stopping UK video game developers using crowd funding to finance their projects. Nothing. Beginning their position with a straw man argument sets the scene for a document filled with repetition and obfuscatory prose.

The restrictions of the UK’s current legal and regulatory framework are in place to protect people from shysters. It’s not always possible and some people get burned but it’s the best thing for everyone.

There is nothing stopping Kickstarter from being in the UK as-is. But this paper from UKIE is attempting to effect serious change in the way securities are dealt by permitting crowd funding from “small holders” to purchase securities in bulk and I’m extremely wary of it for two reasons:

  1. they’re using Kickstarter as an example. This is disingenuous in my opinion as its saying “look what donations/pre-ordering can accomplish, now let us sell shares this way” and nearly every discussion seems to revolve around selling investments. Kickstarter proves this isn’t required. And their opening argument is utterly defeated.
  2. in my own investment dealings (helping to advise local companies), I’ve had to deal with venture capitalists who have been nothing short of shysters. Term sheets which could drive their own truck through them, legals which are not only different to the terms laid out in the term sheet but actual opposites which, when discovered are resulting to more more than an apology.

So, the mother of all unintended consequences would be to permit this and allow investment managers to punt junk companies on the Internet for pennies. In effect, doing a pre-IPO IPO. With the number of companies out there and the number of potential investors, this becomes an administrative nightmare. While the fund managers laugh all the way to the bank, you have thousands of shareholders wondering why they bothered considering the bulk of the money goes on fees and you’ve got such a micro-percentage of the company that you can’t control anything anyway. Ending up with a heap of shares in a worthless company isn’t the only potential outcome. Are they seriously going to have shareholder meetings with thousands of shareholders when a company is worth £100K?

I might be spending too much time worrying about the motivations of strangers. In my opinion, these people are not to be trusted.

Chicken, Egg – getting Kickstarted ain’t a panacea, a diacatholicon, an easy road, a snap, a sure thing

Tadhg Kelly writes about the recent funding of DoubleFine – getting over $400,000 (their target) in less than a day.

What’s also interesting is the spread of backers. Around half have donated the basic $15 pledge, which gets you a copy of the game plus video documentaries. A further 35% have gone for the $30 pledge, which gets you to the video in HD plus a soundtrack. 10% have pledged $100. 3% have pledged $250. 31 people have put up $1000 each, 5 people have put in $5000 a-piece and one intrepid soul has put $10,000 into the project.

Double Fine Productions previous had success with Psychonauts and Brutal Legend (among others) so this success is a little like the reported success of Radiohead and NIN in their independent efforts. It’s going to be a lot easier when everyone already knows you are awesome.

I’ve seen a lot of Kickstarter projects fail – both to get funding and also fail to deliver the end product. In many cases it’s because they are new to the market. I’ve considered using Kickstarter for my own games project but despite my background, I would be considered new to the market and I would need to collect a team of established professionals to my vision in order to be taken seriously.

So is success in Kickstarter going to require building a career first? Or tapping into a meme? Masterful use of social media and connections?

Innovation Island?

From Slugger O’Toole

It seems we in Northern Ireland aren’t doing so well when it comes to innovation, at least according to InterTrade Ireland. Simon Hamilton tweeted this announcement from one of his fellow ministers yesterday:

“Arlene Foster reveals only 1 of 18 nominations in InterTradeIreland awards from NI & this is a trend. Does ROI have monopoly on innovation?”

I do wonder what “innovation” has to do being represented in an awards show. Does a panel from IntertradeIreland actively search for innovation and inspiration or is this yet another nomination exercise? Someone, maybe even the MD of the business, fills in a form, tells a story and enters a dog’n’pony show?

And shame on our ministers for making a big deal of it. Obviously we’d all love to win an award, parade around with a few suits, have my picture taken (obviously proffering an iPad or laptop towards the camera) and get our pictures into a local advertising aggregator web site. That would be a real measure of innovation in our region.

According to the Technology Strategy Board, Northern Ireland companies do not respond to their competitions as much as they should (based on population). NESTA say that Northern Ireland has a poor rate of response to their programmes. Channel 4 “4IP” told me that they got very few applications from Northern Ireland, much lower than expected. Is it just that we don’t play well with others?

Looking south of the border, they have their own sovereign nation which is an advantage as they have their own controls over corporation tax and other economic drivers. While they were holding out their hands to Europe for a national bailout, they were spending like mad to encourage enterprise. They realised that you have to invest your way out of a recession. We initiate a game development pilot, they copy it but boost the numbers by 10. We have been arguing for a publicly supported incubator, they have about ten of them. We’re playing catchup, yes, but it’s not the private sector who needs to wake up and smell the coffee.

All my life has been in a divided nation. As a vaguely union-supporting post-graduate professional from a middle class catholic background, I have very little national identity of any form and quite literally I am not involved in the politics of the region; I have not voted in years. I feel no loyalty to our political parties because I don’t feel like any of them have any loyalty to me.

Northern Ireland is the most isolated region in the British Isles. We’re the only region of the UK which shares a land border with another sovereign nation; a nation which uses a different currency, offers extremely competitive corporation tax rates and didn’t really suffer thirty years of civil war. We’re separated from the rest of the UK by one of the most expensive stretches of water in the world and due to decades of mismanagement, our pointless little country can only survive in handouts from the UK government. When the block grant goes (and it will), we will have to deal with some very hard questions. Either that or revitalise our previously successful crime and terrorism industry.

It aggravates me when Invest Northern Ireland hands back £50m of their budget to the DFP and blames the private sector for not investing. It makes me ask questions about their ability to forecast when a third of their budget goes unspent. It makes me wonder if they are even aware of recession economics – most businesses I talk to are unable to spend days filling out forms for grants because they are paying the bills and when they’re not working their butts off to pay the bills, they’re trying to build the next big thing on their own time; time, according to Invest Northern Ireland, is worthless.

I have started three businesses in Northern Ireland and I am currently working on starting my fourth. I have never taken a single penny of grant aid from Invest Northern Ireland. The job I’m currently doing means I am supping from the public teat and it can be argued whether or not I would be better off doing my own thing or continuing in this line. I feel that I signed up to a duty of care for the digital sector in Northern Ireland when I took this job and right now I wonder whether I’ve taken on too much responsibility and whether I care too much about the outcomes. Being part of the process of helping our startups has somewhat overtaken my life.

So, in short, no, obviously, the ROI does not have a monopoly on innovation. And yes, our programmes in place are not adequately supporting our startups. And no, it’s not the startups fault.

There’s Digital Hubs and digital hubs.

There is an inevitability of a concentration on the digital knowledge economy for Northern Ireland. We have a thriving group of developers and designers in Belfast, a huge amount of ambition in the North West and a heap of activity building in the Southern and Western counties of the province.

Last week I went to the Digital Hub along with Momentum, Belfast City Council, InvestNI and representatives from DCAL and OFMDFM.

We heard the spiel about how it brought some regeneration to the area, that they still have a considerable subvention from the government after 10 years (less than €2m a year, but overall investment has been around €30m since inception and may not include transferred assets).

I also spoke to some of the guys in some of the businesses. They said they wish the Hub was one mile closer to the city centre, that the reason they use bikes and public transport is because they don’t want to bring their cars to that area of town and even the big lads feel a little concerned leaving the Hub with a laptop.

It re-iterates my belief that a city centre location for a Belfast Hub is essential. Not least because Davy Sims put together a map of Digital Media companies in Northern Ireland back in February of 2010 and discovered most were within a square mile in the city centre.


View Belfast Media Square Mile in a larger map

I don’t think we want a straight property play like the Hub in Dublin. We’re a small region with a big ambition so we have to think much more strategically about what goes where. We also need to be 100% joined up. I think I have the support of the Digital Circle steering group in my opinions and in my vision for a digital hub-type infrastructure in Northern Ireland. It’s a big plan, an ambitious plan, even an audacious plan and if it delivers, it will bring the concept to the province as a whole rather than just to a small region.