Nick Webb, Nick, Webb

Meeting Doug Richard

April23

Doug RichardYesterday evening I was at the British Library. I was there for the Inspiring Entrepreneurs series, a chance to meet famous entrepreneurs who are gurus in a particular field. Yesterday evening the topic was raising finance and one of the panel was the ex-dragon’s den business angel Doug Richard.

I managed to catch Doug after the event and have a chat with him and get his advice on entrepreneurship:

  • Doug’s primary theme throughout the evening was storytelling. He said that, though it might be difficult to believe, even bankers are human beings and that every investment must be sold emotionally first. Why? Because you are pitching the future so by it’s nature it must be fiction. You must tell a story.
  • He learnt storytelling by pitching to VCs. He pitched to 46 VCs before finally convincing the 47th to back what was then his first business.
  • Brutal honesty. This is Doug’s personality and it was incredibly refreshing and entertaining. I couldn’t keep up with number of times he said no (including to me, when I asked him for 30mins of mentor time). He said no to pretty much everything but, importantly, he always gave his reason why.
  • It doesn’t matter if you’re 2nd to market or 17th to market but you have to bring something game changing/world changing. Frequently the not-the-best product becomes the incumbent and you need to have something really special to change things.
  • Big incumbant web companies aren’t slow. He instructs his product managers to look at his competitors daily, watch for anything new, and, if it’s any good, copy it.
  • Outside the US, London is the best location for a creative start-up
  • He spoke about the current obsession with user-generated content and how he thinks there will be a swing back to produced content and cited the statistic that most content (80%?) watched on youtube was the produced content which only accounts for 5% of the total content. He said that Joost isn’t the answer but anyone that comes up with a business making a web / TV intersection will make a ton of money.
  • He hears 2-3,000 pitches a year and invests in 2 to 3.
  • He runs his business with a daily cheatsheet with his 5 key numbers that he has e-mailed to him at 9am each morning (e.g.# of sign-ups and # of active members over the last 24hrs) then he has a weekly snapshot, does full monthly accounts and quarterly board meetings.

So meeting Doug was a fantastic education. The only thing that didn’t click for me was his investment approach. He really wanted to be sold to emotionally. That must limit him to only entrepreneurs that are good presenters and miss out on some great businesses. Seems irrational to me.

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2 Comments to

“Meeting Doug Richard”

  1. On April 30th, 2008 at 7:45 pm joshua Says:

    Hi Nick- Sounds really interesting- wish I’d been there! But! I’m sorry- I feel myself agreeing with Doug about the narrative approach. It’s really not as novel (ouch! -sorry) as you think. VCs are looking for people they can trust to be able to get Other People doing things effectively with their investment, right? There’s a massive emotional component in this… In fact I’d go so far as say that we only call it “emotional” because we don’t understand fully the scientific factors at play! Emotion is a blanket term for a whole set of endocrine (ie. chemical) and nervous reactions too subtle for us to fully understand right now. Give it 50 years…

    But seriously, it’s not irrational to want the person you’re about to lend £2m to give you the confidence that they could lead other people to success, is it?

    Tech and patents alone get eaten alive by big business management…

    Good post!
    J

  2. On May 2nd, 2008 at 6:35 pm Nick Webb Says:

    Hi Josh

    Thanks for commenting.

    Agree with you that tech and patents are not worth relying on when running a business. Most are both hard and expensive to defend.

    On the other hand, there’s a lot more to business than being able to tell a good story. Many entrepreneurs are so involved in their products that they simply can’t boil it down. Others are just plain dull… but that doesn’t mean they don’t have a great business or offering a great investment.

    I reckon Doug chooses the entrepreneurs who tell fantastic stories because he’s a storyteller himself and thinks they will be much more fun to invest in.

    I guess he can allow himself this liberty given the number of pitches he hears and the fact that he isn’t lacking in money + it’s a pretty smart way of learning the benefit of the product/service.

    Still to be convinced Josh but open to more debate!

    Nick

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