Search Results for: ecosystem

BPV Invests in Birmingham-based TicketBiscuit

Birmingham tech company lands $5M investment

Posted October 17th, 2016 by Birmingham Business Journal

One of Birmingham’s fastest growing companies has landed a $5 million investment from Ballast Point Ventures.

TicketBiscuit, an online ticketing and event management software company, announced the investment Monday. The company plans to use the funds to “grow its sales force, bolster marketing efforts and develop additional technology products.”

“This investment opens up serious growth opportunities for us,” CEO Jeff Gale said in a release. “Our team has worked relentlessly to build and support cutting edge technology and provide the best ticketing experiences on the planet. With this funding, we will be able to double down on our investments in talented people and bold strategies.

Founded by Gale in 2001, TicketBiscuit company processes more than $100 million in ticket sales annually for customers like music venues, festivals and event centers. In 2015, TicketBiscuit launched StateChamps, a software suite targeted for high school and amateur athletics.

Ballast Point Ventures, a Tampa-based venture capital and growth equity firm, previously invested in Birmingham-based Prepaid Technologies.

Ballast’s Robert Faber will join TicketBiscuit’s board of directors. Faber also serves as board observer at Prepaid Technologies.

“TicketBiscuit’s industry-leading position in online ticketing is a testament to the vision and platform developed by a great team over several years,” Faber said in a release. “Under Jeff Gale’s leadership, the TicketBiscuit team has had great success to date, and this investment dovetails well with our strategy of partnering with talented entrepreneurs who are building high-growth companies across the Southeast and Texas. We are excited to partner with Jeff and his passionate team at TicketBiscuit to continue building a leading technology company in Birmingham. TicketBiscuit represents our second investment in Birmingham in 2016, and we are excited to continue building our network in this market where a vibrant ecosystem of technology and health care companies has developed.”

TicketBiscuit employees around 50 people in Birmingham and Portland, Oregon. The company announced earlier this year it would be relocating from Riverchase Parkway to a new facility off Valleydale Road.

FVF’s “state of the industry” panel with Robert Faber

faber fvf

Robert Faber (L) discussing our state’s entrepreneurial ecosystem.

This past Friday BPV principal Robert Faber helped cap off the 24th annual Florida Venture Capital Conference as part of the “State of the Industry” panel discussion.

The panel covered several topics, including: new non-traditional sources of capital attracted to our state’s (and region’s) attractive business climate, start-up valuations, and how critical it is for an entrepreneur to do his or her homework on potential venture partners.

The Miami Herald reports that all of the panelists were “optimistic about opportunities in 2015” and foresee “a strong year ahead.”  We look forward to seeing many of you next year at the Vinoy in St. Petersburg for the 2016 Florida Venture Forum conference.

 

The innovator’s blind spot

Pets.com sock puppet spokesdog.  (PhotoTurns Out the Dot-Com Bust’s Worst Flops Were Actually Fantastic Ideas – or so argues Wired magazine.  There remain “many deliciously ideal symbols” of the epic failures during the bust, but “the irony is that nowadays, they’re all very good ideas.”

Now that the internet has become a much bigger part of our lives, now that we have mobile phones that make using the net so much easier, now that the Googles and the Amazons have built the digital infrastructure needed to support online services on a massive scale, now that a new breed of coding tools has made it easier for people to turn their business plans into reality, now that Amazon and others have streamlined the shipping infrastructure needed to inexpensively get stuff to your door, now that we’ve shed at least some of that irrational exuberance, the world is ready to cash in on the worst ideas of the ’90s…  (Emphasis added – ed)

The lesson here is that innovation is built on the shoulders of failure, and sometimes, the line between the world’s biggest success and the world’s biggest flop is a matter of timing or logistics or tools or infrastructure or luck, or—and here’s the lesson that today’s high flying startups should take to heart—scope of ambition.

Maybe if Pets.com had kept its head down and worked harder on getting the dog food to our doors than assaulting U.S. airwaves with ads like the one below, they would have made it.

In Pitfalls of entrepreneurship, ecosystems of innovation, we discussed the book The Wide Lens and what author Ron Adner termed “the innovator’s blind spot: failing to see how success also depends on partners who themselves need to innovate and agree to adapt.”  Here’s Adner:

Companies understood how their success depends on meeting the needs of their end customers, delivering great innovation, and beating the competition…  To be sure, great customer insight and execution remain vital, [but] two distinct risks now take center stage:

  • Co-Innovation Risk: The extent to which the success of your innovation depends on the successful commercialization of other innovations.
  • Adoption Chain Risk: The extent to which partners will need to adopt your innovation before end consumers have a chance to assess the full value proposition.

…When you try to break out of the mold of incremental innovation, ecosystem challenges are likely to arise… a strategy that does not properly account for the external dependencies on which its success hinges does not make those dependencies disappear.  It just means that you will not see them until it is too late. … Dependence is not becoming more visible, but it is becoming more pervasive. What you don’t see can kill you.

Adner serves up an easy-to-grasp example, a 1998 precusor to iPods called “MPMan:”

It sold 50,000 players globally in its first year. But [it was very different than the Walkman] 20 years earlier.  You couldn’t purchase them in traditional retail settings.  Downloading an album – legally or not – could be a multi-hour affair. It didn’t matter that MPMan was first – it wouldn’t have mattered if they were 6th, 23rd, or 42nd. Without the widespread availability of mp3s and broadband, the value proposition could not come together.

For more examples, check out our Vintage Future series – a tongue-in-cheek-yet-barbed reminder that predicting technology trends is not for the weak at heart.  (And that’s before one tries to protect the IP and find a way to profit from it.  There are reasons we affectionately call the really early stage of investing adventure capital.)

It’s a long and difficult journey from idea to successful business, involving many inter-related factors.  The best products don’t always win.  Compelling innovations can and do fail after launch – as did this 1997 precursor to Facebook.

Where are the start-ups?

The entrepreneurship rate, defined as the number of new firms in a given year as a share of all firms, has been in persistent decline for decades (15% in the late 1970’s, 8% in 2012).  It has been punctuated by tech surges – but those decline after a time lag (e.g., the dotcom boom/bust).  However one defines high-growth firms, their share of the economy is declining.  So argues this excellent AEI podcast about job creation, innovation, productivity, and national wealth.

High profile firms such as Google and Facebook (hardly start-ups, anymore) enjoy outsized awareness because they’re personal and omnipresent, and belie the fact that the data show declining business dynamism overall and for start-ups specifically.  No one knows at the outset which high growth firms will explode and disrupt – so we need “more shots on goal.”

As we once wrote:

There’s a heroic assumption propping up that line of thinking:  that there will always be a nicely growing economy, with plenty of opportunity, and no shortage of entrepreneurs.  We believe it is not safe to assume that entrepreneurs will continue to risk their wealth and careers, expend the energy, and make the enormous sacrifices required to build a business no matter how big a bite the taxman takes out of their eventual reward.  It’s fine to say investors will look for the best opportunity regardless, but if there are fewer entrepreneurs there will be fewer opportunities, and the economic pie will start to shrink…

“Terrific” ideas will still find willing investors, but what about all the not-obviously-terrific-but-still-really-good ideas?  For every Facebook there are hundreds of other early-stage companies who receive financial backing and grow nicely…  The economy is not built on a series of towering home runs that clear the fence no matter how strong the wind is blowing into the park.  Winning takes singles, doubles, walks, anything that advances runners and scores runs.  Over-regulating (or over-taxing) early-stage investment activity is like building a pitcher-friendly park and keeping the infield grass long:  you better plan on low-scoring games.

Hathaway believes over-regulation is a significant problem; particularly, how specific regulations impede firm entry and protect incumbents.  What we said in our response to a WSJ editorial about tax rates and early-stage investing is equally true of regulations:

[Large companies like] Costco may grow more slowly but will weather whatever tax regime is in place. However, small private companies (who create virtually all the new jobs in the country) lack a large company’s ability to shift income and lobby Washington, and they won’t fare so well.

(UPDATE:  As if on cue… today’s WSJ reports that Google has just become the country’s biggest political donor, knocking off heavily-regulated Goldman Sachs. – ed)

He also spends some time on the importance of the entrepreneurial ecosystem, the “networks and community, the dark matter, the softer things.”

The bottom line, whether it’s taxes, regulation, or institution-building:  some forms of activity promote economic growth and ought to be encouraged.

The entire wide-ranging podcast is worth a listen.  A few other well-said points:

  • The economy needs more than a narrow rebound in tech entrepreneurship, especially since the current rebound has been accompanied by an uptick in “hardening” or consolidation as early firms are gobbled up before they boom.
  • Using job creation as a measure is problematic because fewer people work for Twitter or Facebook than their previous equivalents – by the nature of what they produce.  Michael Spence divides the US economy between the one that competes globally vs. the local market (tradeable vs. non-tradeable).  The former generates national wealth but will employ fewer and fewer people;  however, that’s what sprinkles money around the non-tradeable localities.  “Not everyone can work at Google or Apple.”
  • Innovation can be costly for individuals and firms in the short run, but is the key to wealth in the long run.  E.g., productivity enhancements in low-tech/low-wage firms, consolidation that drives out less efficient mom&pops, and innovation that pushes stale incumbents out.

 

Why do pioneers tend to fail?

Gerard J. Tellisv, in The Columbus Effect in Business, writes that “Pioneering is glorious, but later entrants are often the ones who see the true potential of discoveries.”  We made a similar point on Columbus Day two years ago:  though conventionally thought of as an explorer, Columbus might more accurately be described as an enormously influential (and lucky, perhaps even failed) entrepreneur.  Not only did he fail to achieve a blow-out IPO, he couldn’t even get the results of his project named after himself.  Here’s how Tellisy puts it:

Christopher Columbus will be feted in many places on Monday as an intrepid explorer, reviled in others as the spearhead of European colonization. But the Genoese ship captain who in 1492 sailed west to parts unknown might be best considered today for what he can tell us about ourselves. The man who successfully pioneered direct cross-Atlantic navigation also died dispossessed and embittered. In this respect Columbus represents a type, not an exception: failing pioneers.

Many scholars believe that pioneers are highly successful, have a high market share, and are long-term leaders of the markets they pioneer. Yet historical analysis shows that pioneers mostly fail, have a lower market share and rarely lead their industries. Long-term market leaders seldom are pioneers. Rather, they are ones who appreciate the discoveries of pioneers, envision the mass market and exploit it profitably.

Columbus might have fared better had he worried less about the idea and more about the execution.  As John Greathouse once put it (in the May 2012 issue of Forbes):

The second time Christopher Columbus pitched Ferdinand and Isabella (two years after his initial presentation – raising money has always taken patience and persistence), he did not need to convince them that locating a shortcut to the spice routes of India was a good idea. Rather, he had to belie their primary concerns: was he honest, tenacious and competent enough to execute the journey?

The same is true of entrepreneurs and their backers:  we want to hear about the idea – the details in the pitch reveal important things about the entrepreneur  – but the intangibles in a good long-term partnership are primary:   integritytransparency, trustworthiness, enthusiasm and tenacity, self-awareness, and flexible persistence.

Tellisy makes another point that is a favorite of ours:  business history is full of surprises.

Today’s market leaders in many categories didn’t pioneer those categories. Microsoft didn’t pioneer personal-computer operating systems (QDOS came before) or word processing (WordStar and others came before). Amazon didn’t pioneer online books stores (Books.com came before). Apple didn’t pioneer mobile music, the smartphone, the tablet ( Sony , BlackBerry and others came before). Google didn’t pioneer Internet search (AltaVista, among others, came before). And Facebook didn’t pioneer online social networks (Myspace came before).

Here’s how we covered the topic in Outcomes that feel ordained only in retrospect:

A few of the stories of these companies’ origins may ring a bell (DuPont began as a manufacturer of gunpowder, Berkshire Hathaway of textiles) but more than a few will likely surprise you:  Avon started as a book seller, Nokia in wood pulp, Wrigley in soap and baking powder, McDonald’s as a drive-in BBQ, 7-Eleven as an ice house, and Coleco made shoe leather (Connecticut Leather Company) long before it did Cabbage Patch Kids and video games.

The common theme to all these Origin Stories?  Business conditions may ebb and flow, but good managers adapt.  Tellisy, again:

Why do pioneers tend to fail in the long run? For the same reason that Christopher Columbus didn’t flourish despite his initial success: Pioneers too often cling to their initial intuition, just as Columbus clung for too long to the notion he had reached India. Pioneers focus on the small initial market, failing to envision the vast mass market that they just opened up. Pioneers stick with the initial product even when the market demands relentless innovation. All the while, a surge of later entrants learns from mistakes of pioneers, envisions opportunities and rides on the explosion of new superior technologies.

 

What color was Dorothy’s dress?

imagesCAT4D4FP

Oh my.

In honor of the 75th anniversary of the release of The Wizard of Oz, we offer three thoughts about a movie whose plot was once humorously summarized as:  “Transported to a surreal landscape, a young girl kills the first person she meets and then teams up with three strangers to kill again.”

1.  Predicting technological trends is not for the weak at heart – and that’s before one tries to protect the IP and find a way to profit from it.  The road to failure is paved with innovations that couldn’t quite achieve a sustainable business model.  The evolution of color film is an excellent example.

Emeralds, gold, poppies

Emeralds, gold, poppies

The Wizard of Oz is often erroneously thought to be the first color film.  Not so.  The first true color still image was produced in 1861 (based on the same RGB principle in use today), and the first instance of color recorded in film was in 1910.  Technicolor was invented in 1917 but it wasn’t until the introduction of their three-color camera in 1934 that the first viable full-color system came to the movies.

Instead of using a single piece of film, the three-color camera used bulky optics to split the image so that it could be recorded simultaneously on three strips of film.  This meant that Technicolor had to be shot with a special camera that weighed several hundred pounds.  It also required much more light than black and white cameras.

The lights on the set of Oz were so bright that Dorothy’s blue and pink (!) dress appears blue and white.

2.  Success often depends on external dependencies within the business ecosystem.  Despite good reviews and 6 Academy Award nominations, the film took roughly a decade to turn a profit due to the astronomical budget ($2.7million) and the low ticket price ($0.25).  It was re-released in 1949 & 1955, but it was a new technology – broadcast television – that took a marginally profitable film and turned it into an institution and source of countless pop culture references.  The initial broadcast in 1956 drew 45 million viewers.

Dude...

Dude…

3.  The Dark Side of the Rainbow (Aka The Dark Side of Oz or The Wizard of Floyd) might be the most entertaining example of chemically-enhanced BS confirmation bias we’ve come across.

At some point in the ’90s, word went around that Pink Floyd’s 1973 album “Dark Side of the Moon” synced up with the movie in eerie ways, producing moments where the film and the album appear to correspond with each other.  E.g.,

  • “The Great Gig in the Sky” meshes well with the tornado.
  • The scarecrow dances during the track “Brain Damage.”
  • The heartbeat at the album’s close coincides with Dorothy listening to the Tin Man’s torso.
  • The old Side 1 of the album ends just as the sepia-colored portion of the movie does.  Some also believe the iconic dispersive prism of the album’s cover purportedly reflects the movie’s transition from black-and-white Kansas to Technicolor Oz.

~ ~ ~

N.B. – Our research for this piece turned up a few additional charming bits of film history:

1910 silent film

1910 silent film

  • Although it lost the Best Picture Oscar to Gone With the Wind, it won for Best Original Score and Best Original Song (Over the Rainbow).  The studio had come within an eyelash of cutting that song from the movie because the scene “dragged.”
  • The 1939 film was the 4th time L. Frank Baum’s story was adapted to the screen:
    • The first was a 13-minute silent version entitled The Wonderful Wizard of Oz released in 1910.
    • In 1925, a young Andy Hardy – later of the Laurel & Hardy comedy duo – played the Tin Woodsman in another silent version.
    • A nine-minute animated version was released in 1933. Though produced in color, the short was released in black-and-white because the production did not have the proper license from Technicolor.
  • Casting notes:
    • 20th Century Fox had wanted Shirley Temple to play Dorothy, but her singing chops posed a problem.  Fox ended up losing the film rights to rival MGM and a young contract player at the studio named Judy Garland got the role.
    • Actor Buddy Ebsen was initially cast as the Tin Woodsman and completed some scenes, but had to bow out due to an allergic reaction to the silver makeup.
    • Margaret Hamilton, who portrayed the (old) Wicked Witch of the West, was only 36 at the time.
  • Trivia:
    • Burt Lahr’s Cowardly Lion costume was knitted from actual lion fur and weighed nearly 100 pounds.
    • Dorothy’s dog Toto was paid $125 per week while the actors playing the residents of Munchkinland only received a reported $50 a week.
    • The movie had two directors:  Victor Fleming handling the Technicolor scenes set in Oz, and King Vidor overseeing the bookend black-and-white sequences set in Kansas.

What the Olympics have in common with [insert meme here]

Olympics+Closing+Ceremony+M2lzqXT4gDSlJudging from the number of articles we’ve recently read about “What the Olympics have in common with [insert meme here],” we’re inclined to conclude that it might be a lazy way for a columnist to hit a deadline.  And as reluctant as we might be to resort to laziness, we do like to please our readers – and our readers like sports.

So… from the many pieces about the Olympics and entrepreneurship we’ve chosen one similarity, one difference, and one curiosity to share here:

“Mike” at crowdspring thinks that both snowboarders and entrepreneurs ought to worry less about the idea and more about the execution:

Snowboarders often steal each other’s tricks, but when they do it becomes about who can perform that kicker, stalefish or roast beef to perfection. Businesses, too, do not always have to be launched with a completely original idea, but if a new entrant in an existing market hopes to gain share, they had better make up for the lack of originality with a more perfect execution.

While we do retain some interest in hearing about the idea – the details in the pitch reveal important things about the entrepreneur  – we agree about the greater importance of execution as well as some of the intangibles:   integritytransparency, trustworthiness, enthusiasm and tenacity, self-awareness, and flexible persistence.

Naveen Jain, writing at Inc magazine, sees a critical difference between entrepreneurs and Olympic athletes:

What separates sports from entrepreneurism, however, is that in business we constantly have to overcome undefined and unpredictable challenges. Athletes train for specific events and conditions, whereas entrepreneurs generally have little idea what they will encounter along the way.

We once peered inside the mind of great entrepreneurs and found the same trait, termed “effectual reasoning” by Professor Saras Sarasvathy (of the Darden School of Business), who likened great entrepreneurs to Iron Chefs,  “at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest.”
4
Perhaps more as a matter of curiosity than as any particular lesson to be drawn, Raymond Keating at the SBE Council mentions there are different means of organizing and financing for athletes to get to the Olympics:
(T)ake note of the athletes and their respective stories. I think you will find that they are, in fact, entrepreneurs. Some work in small businesses with a dedicated team. Others are in partnerships, and many are effectively sole proprietors. They are the owners, operators and risk takers of their sports careers, and they work to become the best in their respective fields. Indeed, in certain ways, part of the Olympic spirit is the spirit of entrepreneurship.

A successful Florida Venture Capital Conference

Kevin Burgoyne, FVF President, addresses conferees

Kevin Burgoyne, FVF President, addresses conferees

Last week’s Florida Venture Capital Conference in Orlando enjoyed record attendance and a keynote address from Governor Rick Scott.  First-time financing were up in 2013, both in Florida and the nation.  “Contrary to the headlines, the ecosystem is working,” said John Taylor, head of research at the National Venture Capital Association.

Venture capital investment has risen sharply in our state and reflects the rise of the high-tech South.

Our state and region enjoy several advantages familiar to NVSE readers: growth-oriented tax policieslower public sector debt burdens, stronger job creation, the best climate for entrepreneurs, and a superior overall business climate.  (The actual climate happens to be conducive to a great quality of life as well.)

We hope to see you again this March 3 at 1Q VenturePitch Orlando at The Abbey in downtown Orlando.  Come out to meet central Florida’s newest start-ups and participate in a discussion with keynote speaker Mike Mason, the “ZEO” of Zentila – a platform that enables corporate planners to plan, price, and book meetings.

See you next week in Orlando

FVF confIf you are an entrepreneur or part of thehodge-podge of scientists, institutions, and fundingthat make up our state’s entrepreneurial ecosystem, we look forward to seeing you next week at the 2014 Florida Venture Capital Conference.  

(You can click here to register.)

Registered attendance is up and the Board is very excited that Governor Scott will be speaking at the Opening Day lunch on Tuesday, January 28.

Venture capitalists and private equity investors from across the U.S. will gather at the Hyatt Regency Orlando for two days (january 28 & 29) of panel discussions, networking, and presentations from some of the most dynamic high-growth companies in Florida.

Finding the right angel – redux

Florida Trend  has an interesting piece about the entrepreneurial ecosystem in our state that highlights the Florida Angel Nexus and the incubator at UCF.

The Florida Angel Nexus has teamed up with UCF’s Business Incubator Program and other groups such as the Tamiami Angel Fund, the Florida Institute for Commercialization of Public Research, and the Florida Next Foundation in order to connect qualified companies with the mentorship and capital needed to create a viable company and product…

The Florida Angel Nexus’ partnership with UCF is already seeing success; it has closed three deals, and is on track to meeting its goal of investing $1 million by years end. With this team, the Nexus plans to make Florida the next major innovative ecosystem in the U.S.

The Florida Trend article floats a distinction between angels and VCs – the former provide experience and guidance while the latter provide only capital – that doesn’t really match our M.O. or the early-stage investors with whom we work.

As a matter of fact, the management teams at our portfolio companies typically value our experience, guidance, and extensive network (which includes many angels who invest in BPV and work with our portfolio companies) even more than our capital.

Early stage investors don’t always fit neatly into angel or venture capital categories, and can take varied approaches to working with entrepreneurs.

In Finding the right angel we covered Scale Finance’s six categories of angels and “The Chaperone Rule”:  the odds of a startup company succeeding are significantly enhanced when the company has a chaperone from the get-go, an experienced guide on the trip from the embryo to the IPO.  Here’s an excerpt:

Good angel investors provide much more than capital.  Their networks and reputations can assist early stage companies with introductions to additional sources of financing, expertise, customers, and strategic partners.  It’s a long and difficult journey from idea to successful business, and entrepreneurs need partners who intuitively understand the right kind of support to offer over the long term during the inevitable challenges of building a business.

Angels have varied experiences, interests, strategies, reputations, and (in the case of angel groups) cultures.  Choosing the one who best fits requires as much rigor and thoughtfulness as any decision an entrepreneur makes.

Serial angels – perhaps the most productive type, often adds significant value to the companies in which they invest because they’ve done it before.

Tire kickers – the opposite of serial agents. They lack a genuine commitment to angel investing – at least at present – but they’re using the process as a means of educating themselves.

Trailblazer angels – experienced investors, typically partners in investment banks and venture capital firms who incubate deals too small for their firms while maintaining a link to their company for larger/later rounds.

Retired angels – business executives with enough personal capital to enable them to quit their jobs and “retire,” but who remain perfectly capable (and eager) to keep up in the so-called rat race.

Socially responsible angels – investors who are interested in doublebottom-line investing – that is, doing well by doing good.

Angel syndicates – groups who episodically invest together, joining their capital for more influence in more material deals.

N.B.  In 2013 the Business Incubation Program at the University of Central Florida (UCF) was named Business Incubator Network of the Year by the National Association of Business Incubators and also was selected as one of four Best Under the Radar Business Incubators by Entrepreneur magazine.

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