Jacobo Elosua

Advising and investing in Spanish start-ups

A few years ago, when we set up Ezaro Media, I had a vision of combining advisory activities --the 'sources' side of the business-- with making selected investments in a number of promising tech start-ups, based in Spain mainly --the 'uses' side of the business--.

That initial vision has suffered two key adjustments since.

Firstly, in connection with the type of advisory mandates pursued. The tech/internet early stage scene in Spain is not really in a position to support sustainable advisory business models around it. There are a number of factors explaining it. Apart from the general underdeveloped advisory culture, which has historically favored less professional agenda sharing powerbroker offerings, two other ones deserve highlighting: on the one hand, potential clients are very small and dramatically cash strapped. On the other hand, the value added perceived is limited, since finance providers are few and not overly keen in dealing with intermediaries.  

Secondly, the fragility of the ecosystem advises against making small minority investments with somewhat random accompaniment. Investments that do not take a significant percentage of the equity in the target company run a severe risk of developing non-performance related issues, such as less access to operational information and unfavorable treatment in future rounds down the line. The legislative framework is not particularly helpful in this regard, so unless investors are willing to lead rounds with considerable capital per investment, our experience indicates that they better be prepared to take on a more entrepreneural role in the venture, as opposed to a purely financial one.  

So, today, Ezaro Media has abandoned the pursuit of early stage advisory mandates, focusing on carrying out transactions for larger and more consolidated corporate clients. Additionally, the investment transactions considered have to be ready to take on a real partner from early on, as opposed to just another financial investor.

With these two adjustments it now appears that 2013 will be the company’s best year to date. We will see what the future holds.  

 

PS: if you haven’t seen it yet, do watch Civio’s latest teaser. 

 

 

Media and technology. Not technology or media

These two areas have always focused my interest, both personally and professionally. But one issue that I have often though about is that media and technology and not on the same dimension. Media is horizontal. A thematic business area, such as energy, healthcare or infrastructure, just to name a few examples. Technology, on the other hand, is vertical. It pervades every aspect of every business area.

In previous projects, such as Rojo Vivo or Factual, I failed at finding the right intersection between the two. Everything, starting from the partners with whom I launched those projects, suffered from this imbalances --and many other, not the point at hand today--, a factor which undoubtedly contributed to things going awfully wrong. 

What am I referring to? My background and deep biases drove me towards not valuing technology enough. Perceptions of raw talent, business acumen, commercial expertise or even shared passions around media have empirically been much more relevant criteria when it came to designing past projects' basic architecture (i.e. ownership and initial team structure). Being truly technologically savvy was hardly on the map.

And what do I mean by technology? Not just what software engineers learn at university. We could call this 'product technology', and it is critical, but technology spans well beyond that. One of the fields in which I have felt more alone and somehow trapped, for example, has been accepting the crucial importance of developing appropriate management information systems and structured working protocols from day one. We could call this 'corporate technology'. And the funny thing is that, over time I have discovered that precisely those university-trained engineers, and not your typical business major or MBA, are often much more prone to sharing this view!

The 2012/2013 harvest should see the launch of professional ventures truly integrated with technology. WIP at this stage though... 

 

The birth of CIVIO

In just a few weeks we will officially launch CIVIO, the civic foundation we hope wil spearhead the design and develpment of exciting new transparency and e-participation related apps.

Our long term goal is to  foster a community around these new apps to help generate relevant analytic and journalistis contents to inprove the quality of our democracy.

Spain has long been lacking a rich ecosystem of engaged civic entities to empower its citizens with the enormous potential of new technologies. CIVIO will modestly try to advance in this direction.

It promises to be a very exciting journey! There will be more news soon.

 

Why programming now?

Yes, why programming indeed? As a business, law and economics major educated in Europe during the 1990's, I was taught to look down on programmers and the content of their jobs. A plain vanilla commodity, they told us. Business (and business related) backgrounds were the brains of the operation. Or at least they were meant to be.

You did need to learn a thing or two about mainstream software packages from an end user perspective. Sure thing. But dealing with code and the insides of how computers actually work, that was geeks' stuff. Programming was depicted as some sort of modern plumbing. No money and no real future in it.

Obviously things have changed quite substantially. It never did sound too reasonable that a few pretty brainless business courses was the making of the world's future entrepreneurs, whilst spending a good number of years learning very demanding computer engineering modules was possibly the only reasonable professional way out for the socially inept.  

The age of communication technologies has just made it all the more obvious: it is the other way around! Business --classroom business-- is for dummies. All the exciting stuff is happening over there, in geekland. If I were  now trying to decide how to play my university studies, I'd have no doubt: a computer engineering major with a bit of 'businessy' varnish on top, or possibly a top notch MBA a bit further down the line.

Too old to try to make amends now? I honestly don't know, but over the last couple of months I have made my first serious inroad into HTML, CSS and Javascript programming. The goal is to be able to tackle professional visualization packages in the not too distant future. Will it yield me some tangible results? Too early to tell. Possibly not directly. But I am convinced that it will be worth it, if only  to be able to interact with the real pros from a platform of at least a minimal degree of common and shared knowledge. Anyway, the most important thing is that so far it has actually been a lot of fun. Mental note: let's try to keep it that way...  :)

Jordan or McEnroe?

I have been reading a fascinating book on how to approach entrepreneurship. The title is 'Little bets' and the author Peter Sims. The main thesis is that breakthrough ideas most often originate from small discoveries, i.e. innovation can be guided through methodical experiments.

In one of my favourite bits, the author cites reasearch according to which effort-based encouragement is a lot more effective than talent-based encouragement. The former drives measured risk taking and the right mental attitude towards challenges. The latter, on the contrary, ego preservation.

If effort is what counts, the actual new task is not that important, no matter how daunting. However, if the  focus lies on talent and excelling, every new challenge can easily be perceived as a threat. Lowering the adoption of new risks (living in the confort zone) is thus a much more natural course of action.

Focusing on personality types, Sims builds a ranking with Michael Jordan sitting at one end and John McEnroe at the other. Jordan was a risk taker, thriving for continuous improvement throughout his career (his all career shooting average was significantly better than during his first four years, is one example provided). McEnroe, on the other hand, was an undoubted talent, one the greatest, but he easily lost his balance when faced with difficulty. His tendency to blame others is read by Sims as a good example of the wrong way to go about things.

The good news is that apparently having the correct relationship with risk taking is a skill that can be gradually learnt. So don't lose hope on becoming an effort-focused and continuously-improving innovation champion, even if you don't see a Michael Jordan --or a mere Javier Villarroya... :)-- when you look at the mirror.