FUSE by Infusive

SECOND EDITION | FUSE by Infusive Magazine

Cutting giantsdown to size

Also in this edition:

On the Spot:Sapient

FSTRHYPR

The Infusive Team:Damien Bird

On the SpotHarris & Hoole

This edition of FUSE by Infusive is sponsored by

We are Spun Candy. We hope to change the confection-ery world forever. From a unique pick and mix, bespoke corporate candy, an unusual thank you gift to person-

alised wedding favours the opportunities for originality and creativity are endless.

Learn more about Spun Candy here

www.spun-candy.com

Learn more about Spun Candy

Infusive Partners Letter

An old industry is changing fast. And even with-out this pace of change, the consumer-goods industry is more dynamic than many people realize.

We often bring up these two points when talking about the work of Infusive. The drive to understand the full extent of the sector’s dynamism and pace of change energizes our research and investment activities.

This edition of Fuse shows how far science and digital technology have progressed in changing how a cup of coffee is ordered, where a can of soup is placed on a Wal-Mart shelf, and when a brand name pops up during a 30-second television advertisement in a World Cup match.

“The digitization of the physical environment” is a trend happening at so many retailers. This is the phrase Nicholas Kim, an executive at SapientNitro, uses when describing how sensors are affixed to tubes of toothpaste or cans of soup in grocery stores so that market research-ers (and food retailers) can better understand how cus-tomers shop. More broadly, Nicholas is talking about the adroit use of digital technology to selectively enhance our

experience of the grocery store and other “old economy” businesses.

Nick Tolley and Danielle Anderson know this trend better than most. They are the founder and digital chief at Harris and Hoole, a trendy London-based coffee chain. Less than two years old, Harris and Hoole (named after two coffee-shop habitués of seventeenth-century Lon-don, as noted by the diarist Pepys) has engineered a coffee customization and payment app. Its functionality surpasses the app of Starbucks, its far larger competitor. And it is at heart of Harris and Hoole’s growing business.

“As customers are always having a mobile phone in their hands, everybody expects us to do more for them at each retailer,” Danielle says in Fuse’s featured video. “Customers need to know what information you’re cap-turing and why you’re capturing that information. There needs to be an exchange of value – a benefit for the cus-tomer. But as that balance works in terms of ‘You give me this information, and we give you this great service,’ they start to vote with their feet. And if customers have that expectation when they buy clothing or groceries, why won’t they expect it of a coffee shop?”

Infusive Partners Letter

Coffee apps, grocery apps, and clothing apps are about choice – about playing to the individual consum-er’s preferences and tastes. And we all know how idio-syncratic those can be.

How are the app-ification and the Twitter-ification of life changing what we buy, and why? Richard Cope of Mintel, the market research firm, has developed a whole frame-work to explore this question. Fittingly, he calls it FSTR HYPR.

“The advent and mass adoption of the internet and mo-bile technology kicked the pace of life into overdrive,” he says. “The ability to connect to anyone, find information about any subject, and watch, listen to or buy anything in an instant has morphed into an expectation. Whether or not convenience culture is with us to stay is hardly up for debate. The real question is: how will it shape us as consumers? Have we come to appreciate time more than ever – perhaps even coming to consider pure, uninter-rupted moment as the ultimate luxury?”

Infusive is growing. This month we introduce Damian Bird, our portfolio manager at Infusive Asset Management. As we continue to grow, there will be similar introductions in future issues.

In those issues to come, we look forward to sharing more of our insights about the consumer space. And we look forward to passing on some of the excitement we feel when we meet some of the best, most innovative compa-nies in the sector.

Arturo FrancoStefan Jansen

Luca PadulliNic Poole

T h e R e a l P i c t u r e

C U T T I N G G I A N T S D O W N

T O S I Z E

By Arturo Franco

C U T T I N G G I A N T S D O W N T O S I Z E

Picture Instructions

Single tap on picture to

Pan & Zoom(Zoom in / Zoom out)

You might have seen this image before. This colorful organigram – created in 2012 by Joki Gauthier for an Oxfam report - shows some of the biggest consumer conglomerates in the world, mostly in the food and beverage space, together with some of their most famous brands and products.

Virally spreading across the blogosphere and social media, a picture created originally to advocate for corporate responsibility has become shorthand for how multinational corporations have come to dominate what we eat for breakfast, what we eat for dinner, how we wash our hair, and how we clean our homes. “In the supermarket—as you can see in the graphic at the top—these companies own everything” asserts one blog post that cites this graph. The Consumer Companies that Rule our World, is the title of another.

It is true that these particular ten companies are huge, albeit not exactly the top ten consumer-goods producers. Nevertheless, their aggregate annual revenues amount to almost 500 billion dollars, according to Oxfam’s report. Combined market capitalisation (for the parent companies alone) is way over $1 trillion. And of course, that should grow: consulting firms have estimated that the consumer sector will be adding $250 billion in market capitalization every year for the next 50 years. It is up for these and other huge companies to grab.

But, just how much do these companies really rule the consumer sector?

“In the supermarket — these companies own everything.”

C U T T I N G G I A N T S D O W N T O S I Z E

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | 2 0 1 4

C U T T I N G G I A N T S D O W N T O S I Z E

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | 2 0 1 4

C U T T I N G G I A N T S D O W N T O S I Z E

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | 2 0 1 4

C U T T I N G G I A N T S D O W N T O S I Z E

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | 2 0 1 4

Getting the Real Picture Last December, in a report called Tough choices for consum er-goods companies, McKinsey projected that by 2025 the global consuming class would include 4.2 billion people. Total consum er spending in the developing world will nearly double over the next eight years, from $14 trillion to $22 trillion, according to Ro land Berger. In other words, yearly per capita consum er expenditure in emerging and developing economies is forecast to surpass the three thousand dollar threshold by 2020.

In my view, the “featured image” of the consumer sector should not be that of a highly concentrated group of old conglomerates, but that of a highly fractured, dy-namic and competitive space. Relatively new companies like Redbull and Zara can already be found at the top of the charts in brand value or product introductions. New players from around the world, including Tiger Brands in Africa, Alicorp in Peru and Sigma Alimentos in Latin America are taking these consumer giants head on in developing markets, and often winning.

C U T T I N G G I A N T S D O W N T O S I Z E

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | 2 0 1 4

The Infusive Team

DamianBird

The Infusive Team:

Damian Bird One way to learn about companies is to read corporate filings, and another way is to show up at the company offices and grill management.

Damian Bird, who has joined Infusive Asset Management, traveled to 40 countries over the past five years to meet managers of dozens of compa-nies, big and small. He visited a distiller in Kenya, a pasta producer in Peru, a hamburger chain in the Philippines, and a brewer in Zimbabwe, to name a few. He toured multinational food companies’ local operations in Israel and Morocco.

Damian joins from Arisaig Partners, a specialist fund that only invests in emerging-market consumer companies. While at Arisaig he lived in Sin-gapore, Dubai, and finally Cape Town. Now he has returned home to London with sophisticated perspectives on investing in a globalizing world.

“Living in these different markets, meeting companies from all walks of life, gives you a good understanding of the emerging-market consumer: what their needs are, what they are feeling. It gives you an understanding of the whole emerging world, which is four-fifths of the world population.

“When you see how one fast-food company operates in South Africa, and another fast food company operates in the Philippines, and a third in Indonesia, you also get a picture in your head of how to ‘do it’ as a fast-food company. You learn what each is doing well and not doing well, and you take that knowledge to the next operator you see.”

“I met a fast-food company called Jollibee, which is based in the Phil-ippines and is doing a great job of outcompeting McDonald’s there. Their model resonates with the Filipino consumer. Their burger is sweeter. They have better branding as well as a first-mover advantage.”

He was not only comparing Jollibee to its equivalent in South Africa or Indonesia, but also to the global giant of fast food.

“To understand what Jollibee is doing right, you also have to under-stand McDonald’s. I’m a great believer in benchmarking companies against the best in the sector. For now, most of the best businesses are western businesses, so I’ve researched many established, developed-world compa-nies. You need to understand McDonald’s before investing in Jollibee, and you need to understand Wal-Mart before investing in an African supermar-ket.”

Damian’s investment philosophy was colored by the financial shocks of 2008, when he joined Arisaig. Like most asset managers of the time, the company’s funds under management fell precipitously between August 2008 – when he signed – and December 2008 when he started work.

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | S e p t e m b e r 2 0 1 4

“Living in these different markets, meeting companies from all walks of life, gives you a good understanding of the emerging-mar-ket consumer: what their needs are, what they are feeling.

“One of the good things that came out of such a tough period was the company stepping back and assessing its approach to investment at a fun-damental level. The question to answer was: how could we have done better?

“I learnt a lot over this period working with great people. We back-tested the portfolio to see how it would have done if, for instance, we had left it alone for the ten years starting from 1998 to 2008. And the clear lesson that came out of tests like this was we could have done better if we had traded less. That was a great discovery, and it resulted in a lower-turnover portfolio.

“What I took away from that is how careful as-set managers have to be in terms of not destroying value through trading. They have to be careful about selling good businesses when they are highly valued on the hopes of buying the shares back cheaper. Ob-viously valuations are critically important in portfolio management. But worrying overmuch about them can be a distraction. It can easily destroy value.

“Ultimately you have to invest in businesses, not stocks. You have to take a long-term view on val-ue creation. There are so many examples of funds selling stocks when they are ‘expensive,’ only to see those stocks keep compounding continuously for the next ten years.”

His job at Infusive Asset Management, he says, will be about looking for those long-term suc-cess stories.

Consumer Alpha, the philosophy that guides Infusive’s research and investing, was intuitively graspable, he says. “It was identifying a concept that one subconsciously recognizes all over the place without really realizing it. It could be craft beer in London or Maggi cubes in Nigeria. Consumer Al-pha was a conceptualization of something that I see happening.”

Damian will apply the Consumer Alpha ethos to equities through the Consumer Alpha Fund. This ethos defines the criteria for stock selection and guides the fund’s long-term view on value.

“We want to own a portfolio of the leading Consumer Alpha companies that are best placed to harness the secular rise in disposable income all around the world. In some markets that might mean toothpaste. In London it might mean artisan popcorn or organic lemonade. Consumers are using their relative disposable income to pursue happi-ness through different material products.

“Consumer Alpha exists around the world in many forms. Our job is to go out there and find com-panies with a majority of sales deriving from Con-sumer Alpha goods and services.”

The Consumer Alpha Fund will play the con-sumer growth story, perhaps the oldest (and most rewarding) story in investing. But according to Da-mian, the fund takes a highly original approach that radically differentiates it from other consumer-only funds.

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | S e p t e m b e r 2 0 1 4

“To my knowledge we are the only consumer fund that approaches the sector with no bias toward geography, no bias toward subsector, no bias toward ‘emerging market’ or ‘developed market.’ We are all about finding the best Consumer Alpha stocks. We’ve identified a type of compa-ny, and we’re agnostic about subsector and geography.”

This special, rare type of company can also have differ-ent growth characteristics: it can be high-growth or low-growth. It can be found in markets that are fast-growing or in decline. This is another element that sets Infusive – and Consumer Alpha – apart, he says.

“More than any other sector, the consumer sector has these companies that are low-profile, steady earners. Some of them are cash cows. They have built economic moats around their businesses whether because of brand or market share, and it costs relatively little in the way of R&D and marketing to maintain their position. Think of what Coca-Cola has to spend to maintain its brand versus Apple, which has to spend enormous amounts to engineer multiple new products every year and keep its edge.

“Not all of these companies are in growing sectors. So some of our investments are in companies that are visibly, actively reaping the benefits of market demand. Others are in markets that are not necessarily growing, but where the products have continued to resonate with consumers. And this second type of company can leverage its position to generate just as good a return, if not a better return, over time than companies riding a sectorial expansion.”

The move from Cape Town to London feels like a natu-ral progression, Damian says. Instead of focusing only on emerging markets equities, he will now invest in blue-chip western equities too. Where before he would visit the likes of Jollibee, he is now just as likely to visit the likes of Mc-Donald’s.

But although he will be based in London and is a London-er, he does not see himself as moving from the commer-cial periphery of the world to the commercial center.

“I don’t think ‘emerging market’ and ‘developed market’ will be practical designations in 20 years. The world is globalizing so rapidly. Developed-market companies are becoming emerging-market companies, in terms of their earnings being weighted toward emerging markets. And emerging-market champions are becoming global champi-ons. Samsung is not a Korean company any more. Tata is not just an Indian conglomerate. Unilever does not count on Europe to drive its sales growth.

“Infusive will invest with a global lens. That means balanc-ing risks around the world, because obviously there are different risks in different markets, and we want to pro-duce the best risk-adjusted return for investors. But we will look beyond western blue-chips.”

After Cape Town, Damian enjoys being back in a global me-tropolis like London. His family is close by, as are friends from Oxford days. And after spending so many hours re-searching consumer products from Indonesia to Peru, he has an above-average interest in things sold on a shelf. “It’s wonderful being back in a place like London, because there’s so many more things to try out.”

“To my knowledge we are the only consumer fund that approaches the sector with no bias toward ge-ography, no bias toward subsector, no bias toward ‘emerging market’ or ‘developed market.’

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | S e p t e m b e r 2 0 1 4

Previous employer: Arisaig Partners. December 2008 - February 2014

Education: Somerville College, Oxford. BA Mod-ern History and Economics

Hometown: London

Cities lived in: Cape Town, Singapore, Dubai, Paris, Miami, London

Away from the office: Damian takes a keen interest in al-most every sport. His first job was (briefly) as a sports journalist working for Eurosport in Paris.

Living the FSTR LifeIn conversation with Richard Cope, Mintel.

FSTR HYPR

How is digital technology changing our lives and our buying habits? Mintel, the consumer research company, has a short answer. Digital technology is making everything “FSTR HYPR.” The pace of life is faster, but it is also more hyper. It is a waste of time to even spell out the words, when an eight-letter text message will do. And saving a few seconds of time allows consumers to order something online, browse their favorite sports site, and generally keep up the pace of frantic lives.

Richard Cope, a Senior Trend Consultant at Mintel, coined the term four years ago. Since then it has become one of dozens of broad-based conceptual frameworks guiding Mintel’s research across consumer subsectors. It is one of the compa-ny’s high-level consumer trends, defined as trends that play out across multiple consumer subsectors and are expected to last at least five years.

Richard met FUSE to discuss what FSTR HYPR means for con-sumers.

FUSE: What is this concept all about?

Mintel: The trend we see is of technology both fueling and fa-cilitating a high-speed existence for consumers across demo-graphics. FSTR HYPR is about products and services branding themselves as being instant. It’s about products that play to our much faster pace of life where everything is on-demand.

FUSE: For many decades there has been a trend toward con-venience culture, from refrigerators and washing machines to fast food. How different are things now?

Mintel: Convenience culture is hardly a new concept. Indeed the post-industrial age has in large part been defined by a con-stant race for faster, easier and more efficient ways to procure things, or get things done.

But the advent and mass adoption of the internet and mobile technology kicked the speed of life into overdrive. The ability to connect to anyone, find information about any subject, and watch, listen to or buy anything in an instant has morphed into an expectation. And with today and tomorrow’s youth more deeply gripped by technology, instant-access living looks set to be the permanent norm.

In the digital world everything is always on demand all the time. Everything is available now. So you see consumers’ impatience, their need for instant gratification spilling over into the real world. Suddenly we need twenty-four-hour personalized service for just about anything. We’re seeing a rise in the num-ber of 24-hour gyms, 24-hour salons.

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | 2 0 1 4

We did not look at the fstr hypr idea from the perspective of whether our lives in any measurable way are busier than they were before. It’s just that life feels faster with the rise of digital technology. The fact is that we can’t switch off anymore. Even in our downtime we are connected. We’re seeing some companies experiment with blocking employees’ access to email on the weekends or during hol-idays.

FUSE: So digital technology is making life faster and more conven-ient. But is the implication that it is also making consumers more frantic, impatient, a little crazy?

Mintel: The “hyper” side is not entirely positive. Hyper brings to mind overstimulated children. Smartphones are a novel technology in con-venience culture, because they’re the hub for both work and leisure. That is the convenience of them, but it can also be toxic. There is no separation between work and pleasure. It’s all on the same portal. Ironically, the way we switch off is now by using apps that switch off our devices.

FUSE: What is your example of the classic ‘fstr hypr’ product?

Mintel: It’s really just your standard smartphone, and everything on it. I went out today at lunchtime and five or six people were walking really slowly, because they’re wrapped up in their phones. We’ve all seen that. It’s convenience and distraction at the same time. They were all using products and services.

We have seen huge growth, and huge growth potential, in the beauty products that are marketing themselves as being ‘instant:’ an instant facelift, instant moisturizers.

The product side has been around a long time, if you think of fast food and things that cater to a faster-paced life that demands convenience. We’re seeing the ‘fstr hypr’ theme play out more in ser-vices. Brands are trying to find what’s the most effective blend of automated services with personalized service. This gets intriguing. You have fashion brands, for example, developing apps that connect the customer to a real person in a real store, so that you get quick one-on-one service outside the store, but then also you have a rela-tionship with someone when you go to the store. So that is marrying fast-tracking with personalized service.

Particularly with the millennial generation clamoring to get things faster, I think we are going to see consumers much more will-ing to pay for services where you browse for clothing and say, “I want to try these clothes on, have them ready in the store.” That is one of our big predictions for 2015. This is not just about online-only shop-ping or digital-only shopping. It’s about how real world retail can deliv-er the instant gratification we get online. The compelling thing about this to me is how in the analog world we are seeing products that try to match the effects of the digital world.

FUSE: What is the flip side of the fstr hypr phenomenon, in terms of supporting the market for services that marketed as slower … SLWR?

Mintel: We have done work on other trends that we call “Switching Off” and “Slow it All Down.” In some ways these are the corollary of “Fstr Hypr.” There is a sense that technology owns us, and that we have become completely dependent on our devices.

Cinema is popular because it is one of the few areas of life where you get to disconnect and focus on something. There is a big opportunity for shops and even big retailers to cater to that. So that you come to the beauty salon and it is the one place where you switch off, where you don’t have to multitask. We’ve seen gimmicky things like resorts in the Indian Ocean that give you a 15 per cent discount if you hand in your phone at reception and fully switch off. That is going to an extreme, and in fact the resorts tend to be in places with bad reception anyway. But how can bigger retailers tap into that desire to slow things down?

The flipside of Fstr Hypr is that the more we commodify time, the greater currency it has. Leisure time is perhaps now the ultimate status symbol. This means that luxury will increasingly be defined through the ability to savor an experience. Perhaps we will see com-panies with a graded portfolio of brands that expressly target two speeds of life, allowing consumers to toggle between a high-speed and a low-speed experiences at will.

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | 2 0 1 4

FSTR HYPR In the Real WorldThe Coolest is a new cooler made in the US that includes a waterproof Bluetooth speaker, USB charg-ing ports, a functioning blender. So that you can recharge your phone on the beach while you relax with a beer. It recently surpassed the Pebble smart watch to be the highest-funded campaign in the history of Kickstarter, the crowdfunding platform.

MindMeld, a predictive voice-powered API, makes it possible for developers to create sites and apps on which consumers can search for items or answers with only their voices. Retail websites using MindMeld can let visitors browse their pages by speaking things like “Show me brown boots” or “Do you have yellow sweaters?” rather than clicking and scrolling.

Building on the success of online grocery-ordering, US-based Blue Apron delivers all the ingredients of a meal to your door so that you can cook it – without having to spend time shopping for the sup-plies. A similar service, Gousto, has launched in the UK. This is part of a “tremendous surge” Mintel has seen in the number of service models that deliver exactly what a consumer wants directly to their doorstep as quickly as possible.

Source: Mintel

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | 2 0 1 4

I N F U S I V E R E C O M M E N D S

Books, Articles, Videos, From our desk to yours.

(The

Kin

g C

ole

Mur

al a

t S

t. R

egis

New

Yor

k C

ity)

Adam Rogers takes us on an amazing journey that blends both the science and art of liquor production. From the physics behind distillation, to the biology of fermentation, through to genetics, economics, anthropology and sociolo-gy – he paints the full story behind the history of our human crave for boozy drinks.

“Booze, more than any other foodstuff, connects the quan-tifiable real world to the messy version of it we all create in our own brains,” he says as he guides us through impres-sive amounts of academic research on smell, taste, effects and even hangover remedies.

Going to great lengths to explain even the most minute detail - like the difference in chemical behavior behind froth-mak-ing bubbles in beer and champagne - Rogers delivers an entertaining, if not intimidating account, to be taken slowly as the sommelier would in a tasting. This book is definitely a must read for anyone who wants to understand the drinks industry and the cutting edge thinking and technology that is brewing behind it.

So whether you are interested in the science, the art, or the business of alcoholic drinks, this book has something for you to enjoy. A “zillion-dollar, flat-bottom crystal decanter doesn’t aerate the wine any better than Tupperware would,” Rogers asserts. I really wish I had known this before getting that expensive wedding present.

Mark Tungate portrays the USD 300bn global luxury indus-try through a series of interviews with key players, and looks at the history of brands, changing perceptions of luxury and the evolution of marketing communication, common themes across a diverse set of categories, and the impact of the latest economic crisis. He covers recent trends in 20 goods and services, and combines long-standing catego-ries like jewelry, fashion and drinks with the more recent emergence of time as a luxury good and the related surge in transport (shared jets) and concierge services, as well as sustainable products like Italian slow fashion.

Tungate starts in 19th century Paris when Cartier and Louis Vuitton launched their careers as craftsmen and continues through the emergence of affordable mass-market luxury at the end of the 20th century and the ensuing market consol-idation that created the dominant conglomerates of today. He traces luxury back to fundamental human desires - in his 1992 book Histoire du Luxe en France, Jean Castarède mentions a 30,000-year-old ivory figurine known as the ‘Ve-nus of Brassenpouy’. He notes that she has braided hair. ‘As bizarre as it might seem, one of the first concerns of man (or woman) was not clothing or protection, but seduction.’

Neale Martin  reviews how our understanding of the brain

has been revolutionized in the past two decades: clever laboratory experiments with animals and new technologies that look inside a human brain lead us to challenge much of what we thought we knew - our unconscious controls most of what we do. Although we have long known that the uncon-scious mind controls autonomic functions, in the last few years, researchers have discovered that the unconscious also influences a wide range of highly complex behaviors, and the distinction between an ‘executive’ and a ‘habitu-al’ mind, popularized by Kahneman in ‘Thinking Fast and Slow’, has gained pervasive currency.

These insights contradict basic assumptions in disciplines as divergent as psychiatry and economics, and have par-ticularly stark implications in marketing, where roughly 80% of all new products fail or dramatically underperform expectations. Martin blames our  business assumptions that customers are making conscious choices. Much to the contrary, consumer psychology today suggests that every marketplace is controlled by the habits of its customers. In-cumbents maintain their position only as long as their cus-tomers maintain their habitual behavior. New entrants can only succeed if they supplant the entrenched unconscious behavior of one or more existing segments or by creating new habits thus creating new markets.

Proof: The Science of Boozeby Adam RogersHoughton Mifflin Harcourt, 2014

Luxury World: The Past, Present and Fu-ture of Luxury Brandsby Mark Tungate Kogan Page, 2009

Habit: The 95% of Behavior Marketers Ignore By Neale MartinFT Press, 2008

Infusive Recommends

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | S e p t e m b e r 2 0 1 4

The Hard Thing About Hard Thingsby Ben Horowitz

This summer two grand masters of the Silicon Valley VC world have come out with books about how to start and run a business. Ben Horowitz (Andreesen Horowitz) and Peter Thiel (Founders Fund) perhaps timed the release of their books with the competitiveness that permeates the tech world they live in.

The Hard Thing About Hard Things, Ben Horowitz’s book, is hard to put down in its first 50 pages, where he describes what it was like to be there at the start of the internet age as we know it. It seems to have been exciting, but in the way that it’s exciting to be in a sailboat in the middle of a hurricane. He got in early at Netscape, but soon saw Microsoft annihilate the company’s lead position in the browser market. (“We are getting killed killed killed out there”, wrote Marc Andreesen, Netscape CEO, to Horowitz - the day before Andreesen appeared “barefoot and sitting on a throne on the cover of Time magazine”).

After Netscape sold to AOL, Horowitz did the popular thing and launched a startup. The business model was robust, and everything looked splendid - until the dotcom bubble burst. He avoided ruin by IPOing at the bottom of the market. He somehow steered his company back to moderate success, only to see a new competitor annihilate its position, forcing him to rebuild the company more or less from scratch. And so on and so on, until he becomes a respected billionaire VC dispensing advice to youngsters.

The meat of the book is a how-to guide to building and managing any internet-age business. This is the part that makes the book required reading for consumer e-commerce entrepreneurs. His advice is brutally honest and self-critical. There is no catchy concept of the sort that other management books put in their titles. His theme is basically: the tech world is cutthroat competitive, building your cool startup is going to be really hard, there are no easy answers to how you succeed, and even if you are brilliant you may well fail.

His advice about company culture, for example: “Ask ten founders about company culture and what it means and you´ll probably get ten different answers. It´s about office design, it´s about values, it´s about alignment ... The primary thing that any tech startup must do is build a product that´s at least ten times better at doing something than the prevailing way of doing that thing. The second thing that any tech startup must do is take the market ... If you fail to do both of these things, your culture won´t matter one bit. The world is full of bankrupt companies with world-class cultures.”

Such statements are sweeping and often sound a bit grumpy. But he backs them up with specific insights gleaned from working 30 years at the top of an industry that is about 30 years old. He has worked with hundreds of startups, starting with his own where he was founder-CEO. Entrepreneurs will get some bracing advice from this book, and it just might make their failure less likely.

Infusive Recommends

F U S E b y I n f u s i v e | S e c o n d E d i t i o n | S e p t e m b e r 2 0 1 4

SINGAPORE

54A Amoy St069880Singapore, SG

NEW YORK

132 Mulberry St Suite 501New York, NY 10013, USA

LONDON

50 Liverpool St Suite 307EC2M 7PYLondon, UK

www.infusive.com