twopointouch

As I make my way down Cannon Street, I feel like death warmed up. I’ve had a bad cold for three or four days, and I’ve used the magical power of cigarettes to develop a simultaneous cough of room-shaking proportions. I’m off to see Julie Meyer at Ariadne Capital. Julie is perhaps best-known as the co-founder of First Tuesday, the entrepreneur’s network which claimed half-a-million members across 100 cities at the height of the dotcom boom. Now, she’s CEO at Ariadne, an investment and advisory firm focusing on web startups.

“Don’t forget to take a dictaphone,” said one of my colleagues. “She speaks really quickly.” Scoffing at the youngster’s lack of power-note-taking skills, I have simply brought my notebook and pen. Like an idiot. He was right. She speaks very quickly and very intensely. Here are some scraps of what I was able to salvage between my coughs. (Apologies, Julie. I hope you didn’t catch anything!)

What is the impact of Web 2.0 on established businesses, I ask.

“So, what we’re finding is an unusual dynamic between large business and startups. You know how they say that M&A is the new R&D, right? Well, that can bring benefits on both sides. Startups need to develop good habits and practices, no matter what stage they’re at. They need to be on track to be bought. At the same time, large businesses need to be radically open to the dynamic change being offered by new companies with new ideas. And large businesses don’t often attract innovators. They’re too slow moving and don’t want to change, you know? Change more often comes from outside companies rather than within them. So there’s a lot to be gained on both sides by new companies working hand-in-hand with established ones.

“One company that we’ve worked with is Monitise. Monitise offers banking - real time information, security & payment services - over mobile phones. Monitise has been incubated by Morse Plc, the big communications company. That’s not a popular word nowadays - incubate - but it’s the best description of what’s been happening. Because of that relationship, they have been able to strike deals with the big high street banks, which an unaffiliated start-up would have a lot of difficulty with. But they’ve also been independent enough to be able to do things their own way and be fast-moving and agile. That sort of model, where a new company is given some stability and insight into best business practices by a larger company, but also remains independent in many ways, that’s the way I see things happening.”

There’s a pause here for me to cough and wheeze a bit and desperately gulp down some water.

“A lot of what I understand by Web 2.0 is that companies need a lot less cash to get started. They’re able to use existing investment by other people. Broadband penetration is a great example of that. Because people have always-on, fast internet access, it’s possible to offer services cheaply that would historically have required enormous investment.

“And technology is empowering marketing. It used to be thought a central business tenet that marketing-based companies are not a good thing. But now, technology has evolved to the extent that that can actually be a very good thing. Another company I’ve been involved with is Eloqua, which you might describe as a next-generation salesforce.com. But it also builds in marketing tools that give you very fine control over cost-per-acquisition.

“They used to say that 50% of the money spent on advertising is wasted, but you don’t know which half, right? Well, we’re moving to a point where we have the capability for marketing to become 100% efficient through careful analysis of Google AdWords and other mechanisms.

“Marketing-led companies can be entirely successful; it becomes a question of execution. Look at Apple Computer, right? I’ve been involved with e-tribes. It’s a social network, but for people my age [To be polite, I can only say that Julie is one month older than me]. A lot of what they’re doing is finding the means to get to the right people to join their service.”

I demur, slightly, and start talking about social marketing - blogs and so forth - becoming more important as marketing tools, and having less precise ROI calculations…

“Right, so I think what we’re seeing is a couple of things. First of all, we’re moving to a point where communications are more and more real time. At Ariadne, we publish an online journal that is only updated a few times, but I think we’re moving to a point where people will expect us to have a blog. They expect the information to be updated in real time.

“Also, the nature of marketing is changing. Word-of-mouth has always been enormously powerful, but technology is giving it even more power still. People are broadcasting for themselves, whether that be on a blog or video or whatever it is.

“It’s a question of your aims in that space. People are talking about you whether you like it or not. And you want to be engaged in that, to be part of that feedback loop. Because if you’re not, then you don’t really know what’s going on. Social media lets you show your best side if you can. On a wider scale, we’re moving from a model where communications are about control of the message, to a point where the best you can hope for is to have some influence. Markets are conversations, like they say, and the best thing you can do is attempt to join that conversation.”

So, I say, between more coughs, this Web 2.0 thing, is it business or consumer?

“It’s interesting, right? Because historically the companies we’ve been involved with have been B to B to C, and we’ve been at the top of that. Your channel finds your customers for you. Nowadays, things seem to be a lot flatter, because of the increased power of the internet and you can go directly B to C.

“I wouldn’t say that these services are necessarily about either business or consumer, but they are about individuals. People find these services, and if they are useful, then they become part of their business practice.

“It becomes very challenging for CIOs, because their role is changing. In the past, they’ve decided what software and hardware you’ve got access to in your business. But nowadays, it tends to be more about integration.

“People find and use tools and it’s up to CIOs to help them with that. Take instant messaging. As the CIO, you find your sales department is using IM to talk to customers. You can’t just shut it down, like they might have done in the old days. The sales people have got relationships with customers through the use of IM, and it’s your job to make sure it works properly and to support that. They’re needing to be a lot more flexible.

“There’s a service I use called SpinVox, another company we’re involved with. It turns speech into text - so you can get your voice messages through your mobile as an SMS. That really helps me as an individual, because it’s a lot faster and more convenient. But is it business or consumer? Well, it’s both. We’re also involved with Otodio, which does the opposite in a way. It turns text into voice, so you can say ‘read’ business documents while you’re driving your car through the stereo. It’s a business tool, sure, but it’s more about being useful to people as individuals.

“While some of the companies we deal with are about mobile phones, that’s an area that I’m actually still quite cautious about. For one thing, it’s very difficult to see where things are going as we move from 2.5G to 3G. It’s hard to see what people will want or what will stick. The other big issue is integration. To create an application for mobile phones, you currently need to create 160 different versions. That’s quite a scary and expensive prospect for a startup.”

Time for me to go. I scribble furiously and pray that I’m not sick before I leave the building.