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By the end of 2008, I was bothered by the question: do people play more games in economic downturns. As I used this material for my own purposes at work, it is only until now that I feel comfortable releasing parts of it to the public.

Let’s look at two major players to answer this question: Nintendo (with its Wii, DS, GameBoy, GameBoy Advance, and GameBoy Color) and Sony (with its PS, PS2, PS3, and PSP).

Nintendo

When looking at the changes in sales QoQ (Quarter over Quarter), you can easily see that while there is still a lot of growth happening, the initial spikes indicate that people are really catching up fast in the beginning, rushing to get their hands on the new hardware.

What’s somewhat expected is that there is a high correlation between hardware units and software units sold. And only in the first quarter of 2008, you see an indication of this correlation breaking up.

What’s somewhat surprising though are the spikes at the beginning of the current recession: shortly after the official date of the current economic downturn, hardware and software units sales went up for both the Wii and the DS.

Sony

Don’t be fooled by the graphs at first: the scale is different from the previous slide to capture the tremendous falloff in the first couple of quarters after launching a new platform.

What’s interesting is that Sony’s sales seem pretty stable even during economic uncertainties. And what’s even more surprising is that Sony started both the PS2 and PS3 in bear markets. Now, if that was Sony’s strategy or just coincidence remains a mystery. But looking at how the different consoles performed in terms of sales, I think it’s reasonable to call this a success.

Games Per Console (GPC)

This is the ratio that should get most of our attention to answer the question at hand. The hypothesis was: do people play more when the economy turns bad? To play more you basically have two options: you either play existing games longer or more often or you play more new games. The latter implies that you buy more games which should be captured by both Nintendo and Sony since these are closed platforms with tight monitoring from their makers. You could only buy software (on pieces of hardware) until very late when Sony opened up its PS-platform for direct downloads. Hence, the data here is not that much influenced by this latest feature.

GPC: Sony Vs. Nintendo

Interesting enough is that during bear markets, GPC stays constant for most of the consoles. This shows that hard core gamers and people playing a GameBoy/Advance/Color do not buy more games.

However, the Wii shows some pretty interesting moves. While it first goes down, it starts to rise until it hits 8 games per console. So, how do we account for the move downwards? This is due to its appeal for one very specific software title. My best guess would be the Wii Step or the sports games that were shipped with each console.

But the fact that the Wii has been designed for casual gamers gives us a clue about how we are able to relate the behavior of different demographic groups in downturns to each other. As people get more used to it or tired of the existing games, they start to shop more games, showing the graph going up. I guess this can be regarded as an indication of a certain demographic group of people playing more games.

Conclusion

I guess it would be a bit far fetched from this data to claim that in general people play more games when faced with economic uncertainties. The reason any more recent data on these two players would not help is the dominance of mobile gaming platforms arising from more capable and powerful handset devices like the iPhone and Androids.

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Today’s fundraising camp 2.0 in Berlin was all about non-profits and the outlook on fund raising for social causes. I personally feel very strongly about social ventures–even if they don’t qualify as an investment for us. But seeing the effort, the creativity, and the passion people put into these projects to make a difference, is both fascinating and exhilirating.

Fundraising is in a transition: the internet has opened an opportunity for more projects to attract a global audience, hence increasing the chances of being realized. While a lot of people were still debating the monetization of social networks, social ventures have already proven interesting ways of receiving money from individuals. These ventures use all aspects of social media and technology to get their things off the ground. 2aid.org, a small project from Berlin, has collected €4,000 mainly from about 1,000 followers through their Twitter-account to build a fresh water well in Africa. While it is great to hear that they succeeded collecting this much in about 6 months, some of the recommendations included rather than asking for money to reach a certain sum, it would be wiser to split up the project into pieces so that people can identify themselves more with the individual parts of the project and are also able to show-off what they were actually contributing.

It is still a nascent field in Germany with less than 5% of all donations submitted online. But we are currently living in times of ever changing means of communication and these offer completely new ways spreading information and motivating people to participate. The long tail makes a difference especially in social ventures. And with ever-decreasing costs to establish and maintain technology to collect funds and put that at work at good causes, social ventures have more prospects today than ever before.

There is still a lot of innovation necessary to get successful projects from regional to international level, e.g. fraud-prevention/detection and integration of existing  social networks.

My friend Jake Harriman has dedicated his life ensuring that all of the funds will be put to work at their destination and started his own startup Nuru. This, of course, is an exception as there are only a few people who are able or willing to give up their lives for such a cause. I am sure that all of the innovation we will be seeing in the next couple of years will also help him making this a better place.

These are exciting times and I am thrilled about the future and feel admiration for everyone trying to make a difference.

When it comes to pitching, a lot of people seem to know best how to lure your audience: talk, use slides, talk even more, use more slides. In general: slides should always support you, never become the center of the presentation  (unless they are handed out without someone presenting them). Unfortunately, none of this works when you want to present an experience product. The name already suggests that an experience product is all about the emotions, feelings, and perceptions.

But what exactly is an experience product? Well, from my perspective the following factors must be true to give you a clue:

  • Senses (one or more) are involved to a great degree.
  • It stirs emotions (good and/or bad).
  • The product might do more than just entertain (i.e. serve another meaning).

From my list you can tell that a product does not necessarily need to serve a greater good. However, most do. A game could be such an experience product even if it just exists to kill time. A radical example is skydiving (hard to explain the feeling but a memory you will never forget). A more common example is cars. But cars also serve a purpose aside from entertaining you: they transport you from A to B.

But how do you pitch such a product? By exposing it to your audience. That’s one of the reasons car dealers do not shy away from letting you sit in and drive your desired car for a short while: touching the handle, opening the door, pushing the pedal, feeling the thrust–it’s all part of a greater experience called driving.

And how does all of this make sense in an all-digital world? Well, handing out free versions and letting people play with it. It’s what lured many people to play FarmVille and getting hooked up on it. Sure, there is more to it than the experience, but I found this a nice example of what can happen when you get people to try your product rather than just trading it for cash.

Many entrepreneurs are holding on to their business plans as if they were some holy book and seem to believe that an investor needs to study every passage before making a decision.

Yes, we do look at those business plans–if they exist. But just imagine how an investor works. There are several business ideas coming in each day. No matter what each individual investor is looking for, the key is conciseness and brevity. But a lot of entrepreneurs seem to forget this when it comes to Word. Switching to PowerPoint for a first contact, you will capture more attention.

I personally prefer a pitch book style PowerPoint for a first glimpse. I understand that there will be people sending in 200 slide decks with 7 pt fonts. But simply the fact that PowerPoint calls for organizing your layout, forcing you to think about what to present on one slide, and what that actually means usually helps me getting to the important pieces more quickly: does the entrepreneur understand what I am looking for in a 10 slide deck? Does he make the right inferences from the data he presents?

PowerPoint tends to keep you from drifting by giving you limited space to focus on the most important aspects–both for the people who “write” them as well as those who read them.

The best thing about PowerPoint though is that you can impress people with the professional looks of it. It is far more likely that whoever goes through your slides will be more positively affected if the data was presented in a more professional way. Furthermore, you can also use the space to use screen shots, pictures or links to videos of your product

I am still convinced that a business plan is an important document you should have. However, for a first shot, just send me your deck of slides.

Why doesn’t Europe have that many great startup companies? That was the topic at a discussion I joined at Deutsche Telekom’s Innovation Day earlier this week. Fortunately, the discussion did not center around the lack of seed and early stage capital which was usually the case in other discussions I joined on this topic (and for which reason I am not going to cover that here). A lot of other reasons were brought forward but instead of just citing them, I decided to comment and add my very own perspective on this issue. I would like to stress that my view might be very much centered on Germany, hence I do not claim these aspects to be applicable for the rest of Europe (particularly the UK).

Risk Aversion & Reward
I believe mindset to be a major issue in this context. Yes, we are all risk averse to some degree. And it is a well-known fact that most startups fail. Some people asserted that this high probability of failure is scaring off too many bright engineers who might go with a more secure (and well-paid) job instead. But as long as failure bears the opportunity to learn, I don’t see why failure should be all bad. Some people learn best from their mistakes. Others learn a lot going through this process. From my own perspective, I found it one of the most valuable experiences in my life. But be aware: there is a thin line between foolishness and embracing risk.

World Changers & Business
I don’t think those two aspects are exclusive. However, I see a lot of researchers who want to have their inventions brought to full swing while, at the same time, they want to pursue what they love most: research.  Nevertheless, I don’t see a reason why these two aspects could not be combined. It requires a bit more structure and planning (and finding the right people to run the business after all), but there are many examples where this worked.

No Internationalization
This was one question that was most seriously discussed and one that we did not reach consensus on. The question is: if you start in Germany, is that hindering you from becoming a global success story? Generally, I am sure that it doesn’t matter where you start your company as long as the basic needs are met (e.g. cheap rent, availability of great engineers). But the question is: should you start building everything in English? If your target group speaks English, why not? But as Julie Meyer from Ariadne Capital put it so bluntly the same day: some think small and need to go big quickly.
The more important question from my perspective is: how do you get in touch with your users? How do you enable your users to give you feedback, become earlyvangelists? Even Facebook’s Net Jacobsson said that it was those local Facebook Developer Garages that enabled Facebook to drive the growth in Applications.

Building for Sale
This was an interesting point: a lot of German startups would have been already sold at a time when startups in Silicon Valley were just closing their second or third round. So, is this a matter of risk aversion on the investor’s side? Maybe. Without further data, I would assume that this might indicate some lack of late stage capital. Later stage investments tend to be much higher and thus ask for syndication or larger funds. However, there are VCs in Germany which have recently closed funds for growth capital and thus help bridge this problem in the future.

Lack of Entrepreneurial Network
Universities built entrepreneurship centers in the last couple of years to provide a harbor for all those aspiring students, foster interaction between different departments and provide help and information. BarCamps are mushrooming everywhere. Twitter, Facebook and others helped finding fellow entrepreneurs and staying in the loop of what’s happening out there. However, after years in which entrepreneurship has suffered from a bad image (esp. after the bubble burst), people are able to find support and others who want to pursue their dreams. All this is great news. But we’re talking about less than 10 years. I guess this needs some more time.

I am sure this list can be extended further and I don’t think that improving either one of these aspects alone would suffice to have a significant and lasting effect. It’s a matter of pulling the strings together.

In recent board meetings, the question about competition popped up frequently. It is easy to succumb to identify only those that can or do build the same technical device or service you do.  But what most people seem to miss is the customer’s perspective: for a customer seeking a solution to a problem, the alternative company might be very different and might not even be technologically close to what you are doing.

chopsticks fork spoon

To make my point more clear, let me refer to an example. Let’s assume you want to get from Paris to Berlin. Basically you have 3 choices: car, train, and plane. They are all very different in both technology, price, and time needed to cover the distance. But they all solve the same problem for a person traveling: the get him from A to B. Hence the train is competing against the plane and the car for the same sort of passenger. There are of course some differences between the three customer groups (e.g. price sensitivity, availability of time) but after all, they do have a choice.

It is commonly referred to as customer pain.

I can not stress this point enough to not pay too much emphasis on your technological achievements but rather keep in mind what your customers think separates you from the pack. And while you might at first not think about your competition, it will become more and more of your focus the further you grow. Is that good? Well, I leave that for you to judge, but I rather suggest you have a look and try to learn than ignore and fail.

This was probably my third Venture Lounge and most probably the largest as well with approx. 150 people attending it. There were a total of 9 startups presenting that day–in all different stages of the cycle from pure idea to seeking a second round of financing. What really surprised me though was the quality of the presentations. Here’s my advice for anyone thinking about going for such a round of pitches.

Time Yourself

Hard to believe, but although people seem to have tailored their slides to the audience, they didn’t pay attention to how much time they would need to cover them all. I don’t think it is necessary to leave room for more than 5 minutes of Q&A but I think it is crucial to cover your key points. And yes, it looks bad if you start to skip slides.

Benefits anyone?

It is funny how many presentations started off presenting the team, the awards they have garnered or went straight to the numbers. Hardly anyone started telling a story about why their startup matters. Let’s admit it: we all like to hear stories. Why? Because we learn a lot more about why your team is perfect for the task and how important your goals really are. In addition, you can draw a nice picture of why this matters to more than just you and where the benefit is for all the other users you want to attract.

A Neat Idea?

Surprisingly, it took some presenters a long time to get to the point about the phase their startup is currently in. Make sure you weld this into the story and let us know how long it is going to take you until you are ready to release it.

People

For a 7 minute pitch, I don’t really care about the team. You need to catch my attention by telling me about the purpose of your venture. I found it somewhat hard to understand the real value of your team, not being able to understand how each is able to contribute to the cause. Hence, letting me know what you want to do and then tell me how and with who you want to get there and how each individual’s experience is able to add leverage.

Rewards

Nor do I care about trophies or other rewards. I know it is great to show off what you achieved. But honestly, is this really what you’re in for? You might be wowing the jury, but do I remember who garnered what award even now, several hours after the event? No way. But I remember catchy visions (e.g. dwarfing Google or attracting the core gamers).

Fonts

Whatever you’re going to show, make sure everyone can read them–even in the last row. This is your opportunity to shine. It’s not a pitch book. So, concentrate on the main points.

After all, you should really be asking yourself what the audience is supposed to take away from those 15 minutes of air time. Just remember how many times you will do this and how many people will have a look at this–in the audience, on the web, and by word of mouth. I am sure that if you concentrate on transmitting a greater message than just the usual slides for investors, you might be able to make more of this event then just maybe just taking home another award.