The Post-Google VC

I have been spending some time with some great entrepreneurs across Europe as part of the FOWA Road Trip and yesterday in Copenhagen was no exception.

In particular it was great spending some time with Nikolaj Nyholm and Nicolaj Reffstrup.

Nikolaj Nyholm made one comment to an entrepreneur which really resonated with me.  To paraphrase:

“You need to raise money from a post-Google VC.  An investor who has lead a company in the last 5 years since Google has been so dominant.”

At one level this is another contribution to the discussion of what makes a great VC (I will leave that one to Fred et al.)

It is, however, of far more significance for entrepreneurs with a web app or offering.

Working for Reevoo and Glasses Direct, both very different businesses, taught me the significance of distribution, and the dominance of Google.  Some examples:

You need first rate SEO?  That will be >£100k p/a for a 19 year old whiz kid.  Someone who will be impossible to manage but can transform your business with organic traffic.

You need to bolster traffic in certain niches?  That’ll be a potentially bottomless pit of adword spending.  (Particularly true if you’re late to a competitive market: look at the differential in adword spend between gocompare, moneysupermarket and confused)

That’s not to mention the possibility of Google using some of their warchest of come after your particular market.

Many entrepreneurs are so focussing on building such a great offering that they also assume virality of distribution is inherent or inevitable.  Unfortunately its not that easy, and Nikolaj is dead right to warn that getting help from people who “get it” is crucial.

Comments

[Nikolaj Nyholm]

paul - good meeting you and ryan.

the remark applies as much for angel investors.
the worst type is probably people who made a good buck as employees of late 90's internet rockets and who simply 'know everything'.
google has changed the rules of this business and not having been active since its inception makes it difficult for anyone to help a company that's trying to survive and grow now.

/n

[Fred Destin]

super post

[Dan Field]

Hi Paul,

My first visit to your blog (Was referred from your comment on Techcrunch UK)...

It's a fact that just about every single Internet business will be reliant on Google for a large majority of their business... they have so much control in the industry today.

The Google warchest can be a double edged sword... if they do decide to enter your market and your business is really that good and ahead of the competition then you may well become a target for a Google acquisition, or worse case is they just re-build what you have!

As a VC, I suppose you must always be looking which markets Google is currently interested in? And how quickly they could re-produce a product?

Distribution is key to any start-up... you can have the best product in the world (Which we have;) ) but if no-one knows about it, its useless... but its not all about Google, many people can get too concentrated on that one distribution channel - don't forget other channels including traditional (offline) marketing & sales, partnerships etc.

Dan

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