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• Follow the Entrepreneur
• Entrepreneurship Do you have the DNA?
• Presented by Julie Meyer
• 21 April, 2008 at Fortis Banque Luxembourg

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What is it that you look for in an Entrepreneur?

• The Athlete
• The drive to build capacity and performance
• Strength
• Coupled with
• The Artist
• The need and desire to create

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Todays Agenda

• Julie Meyer and Ariadne Capital DNA
• Does Europe have Entrepreneurial DNA?
• What is the Entrepreneurs DNA?
• Some European Entrepreneurial Success Stories

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I. The Julie Meyer/Ariadne Capital DNA
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Julie Meyer American by Birth European by
Choice An Entrepreneurial Profile

• Julie Meyer My Story
• 10 years experience of the venture capital and
  Internet industries
• 20 years experience advising tech firms including
  Motorola, HP, 3Com
• Founded First Tuesday, network of entrepreneurs
  
• Put in 100,000 of seed capital in summer of
  1999, and Sold for 50 m to Jerusalem Global in
  summer of 2000
• Expanded into 100 cities, and was responsible for
  hundreds of millions of start-up financings
• Advised more than 100 companies over 10 years
• Raised more than 200 m for early stage companies
  over the past 10 years
• World Economic Forum Global Leader for Tomorrow
• Founded Ariadne Capital with personal capital in
  December 2000
• Brought in 46 successful entrepreneurs as
  founding investors

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Ariadne A Greek Goddess Helping Theseus get
through the Labyrinth

• Ariadne was the daughter of King Minos.
• From a chance encounter, Ariadne fell in love
  with a dashing Greek hero Theseus.
• Ariadne who helped Theseus to escape the
  Labyrinth by supplying the hero with thread used
  to navigate the tangled passages.
• Theseus promised to make Ariadne his bride, and
  he brought her with him when he left Crete and
  sailed for his home in Athens.
• But something happened on the way to Athens.
• During their journey, Theseus stopped to rest on
  the island of Naxos.
• However, when he set sail again he did not take
  Ariadne on board - he simply left her alone on
  the island.
• Ariadne was devastated - her love had abandoned
  her.
• As she was crying and lamenting her cruel fate, a
  miraculous event took place.
• The god Dionysos appeared and rescued the
  forsaken heroine. In some versions of the myth,
  Dionysos then married Ariadne. In others, not
• Ariadne Capital is building a NEW ending to the
  story

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Ariadne Capitals Mission is to BUILD
EUROPE.NET by Entrepreneurs Backing Entrepreneurs
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The Entrepreneur is at the center of our world
Market Scans
Morse our technology partner
MA Services
Ariadnes enthusiasm - its contagious
Our bedside manner
Needs to be in dialogue with potential acquirers
Needs Services Technology

• Ariadnes Publications
• Journal
• News of the Week
• Newsletter and Reports

Needs support Encouragement
Project X
Needs Office Space
Investor Forum
Needs Information Intelligence
Media Relations
The Entrepreneur
Needs Momentum
Ariadne Dinners
Cap raising Services
Sales
Needs Capital
Execution Capability
Bus Dev
Needs Luck
Principal Investments
Needs Talent
UK Market Entry
Needs Advice
Interim Management
We create Luck
Ariadne Team
Experience, Perspective Mentoring
Talent Introductions
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II. Does Europe have Entrepreneurial DNA?

• A Look Back in order to Look Forward

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Europe has always had its backers of Artists,
Adventurers, and Mavericks
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The Medici Family was a powerful and influential
Florentine family from the 13th to 17th century,
producing three popes and a patron of some of
the most famous works of renaissance art.

• The Medici Bank was one of the most prosperous
  and most respected in Europe.
• There are some estimates that the Medici family
  was for a period of time the wealthiest family in
  Europe.
• From this base, the family acquired political
  power initially in Florence, and later in wider
  Italy and Europe.
• The Medici were great sponsors of art and
  architecture
• A notable contribution to the profession of
  accounting was the improvement of the general
  ledger system through the development of the
  double-entry bookkeeping system for tracking
  credits and debits. This system was first used by
  accountants working for the Medici family in
  Florence.

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Christopher Columbus The 1st Entrepreneur?
Queen Isabella The 1st Venture Capitalist?

• The advisors to Isabella and Ferdinand were
  sceptical about Columbus plans, but to keep him
  from taking his ideas elsewhere, and perhaps to
  keep their options open, the King and Queen of
  Spain gave him an annual annuity and sent an
  order to all of Spain that he was to be given
  free food and lodging wherever he went.
• When they finally agreed to help him, Ferdinand
  was reported as having claimed he was the
  principal cause why those islands were
  discovered".
• Contract between Columbus and Isabella
  Ferdinand
• If Columbus discovered any new islands or
  mainland, he would receive many high rewards.
• He would be given the rank of Admiral of the
  Ocean Sea.
• Appointed Viceroy and Governor of all the new
  lands.
• Entitled to 10 percent of all the revenues from
  the new lands in perpetuity
• He would also have the option of buying
  one-eighth interest in any commercial venture
  with the new lands and receive one-eighth of the
  profits.

The Year is 1492
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The Ariadne Hypothesis Pre-meditated Sabotage

• Entrepreneurs are not the Problem
• Europe has had great entrepreneurs great risk
  takers and achievers, and is starting to have
  great serial Internet entrepreneurs
• The Financing of Entrepreneurship has not been
  World-Class
• The Financing of Entrepreneurship in Europe has
  not kept up with the rise of serial, successful
  entrepreneurs in Europe
• Although its changing.
• Europe may have the richest poor people of any
  other region in the world, but you can count on
  one hand the or 1 billion companies that have
  started from scratch over the past 30 years.
• Great entrepreneurs can be found on every
  continent
• But there has been something pre-meditated about
  Europes ability to squash the ambitions or make
  it harder than elsewhere for Europes home-grown
  group of entrepreneurs.

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Whats The Problem? Lack of Accountability

• Well, in France, one is taxed on assets whether
  or not they are revenue-generating, and taxes
  reach 70 of ones income.
• In the UK, they are increasing capital gains
  taxes without consultation with the 4 leading
  business organisations CBI, IOD etc
• The EU Commissions financial accounts have
  failed to be signed off for more than a decade.
• Many Other Examples
• It is not difficult at all to connect the dots
  between government, their lack of accountability,
  their desire to control peoples lives and money,
  the growth of their intrusion into peoples
  lives, and a diminished entrepreneurial sector.

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Is There a Problem? Feudalism Alive and Well

• Many Europeans still see life through the
  Lord/Peasant framework
• They are willing to defer to the government,
  sacrificing individual freedoms and willingly
  accepting a heavy tax burden from the government
  as part of the implicit deal, which is to be
  taken care of.
• Once hooked, it is near impossible to get oneself
  off of the dependency
• And more importantly, it creates an enormous drag
  on society and growth
• Feudalism, no matter how subtle, cannot co-exist
  with meritocracy and freedom.
•   
• Building a Growth Story for Europe means taking
  individual risks and actions.

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European Entrepreneurs Net Contributers
Driving the Growth story

• Government needs to understand that it is the
  servant of the people, and that European
  Entrepreneurs are driving its growth story.
• We cannot engineer outcomes life can never be
  fair or equal
• What the most important thing to grasp in ones
  life however is choice.
• We all have a choice as to what we do with our
  lives.
• Some of us choose to create, build and be a net
  contributor. Others are intent on taking out
  of the system whatever they can get.

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III. What is the Entrepreneurs DNA?
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The World of the Entrepreneur

• Nick Ogden, the founder of WorldPay, one of my 46
  founding investors who are some of the leading
  European entrepreneurs said the following when I
  asked him what he was most proud of Never
  missing payroll.
• Entrepreneurs know where the buck stops. It
  stops with them and/or hits them smack in their
  forehead.
• Entrepreneurship is not for the faint-hearted it
  is about persisting and taking total
  accountability for a company and your life the
  good, the bad and the ugly.
• As Candace Johnson, one of the founders of SES
  Astra always says, never give up, never accept
  no, and never ever go away even when they want
  you to.

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The Good News Individual Capitalism is the
Force of the 21st Century

• The good news is that in 2008, like a groundswell
  around the globe
• economics is trumping politics.
• The TRIPLE PLAY of the Internet, Entrepreneurship
  and Individual Capitalism is bringing first world
  living conditions to people who previously were
  given aid and never encouraged to dream big
  dreams before.
• This TRIPLE PLAY means that we are losing the
  divisions that have historically separated the
  old and new worlds and different classes of
  people
• Iqbal Quadir, one of the founders of the Grameen
  Phone, says so well
• Capitalism was about empowered authority which
  didnt necessarily activate the citizenry the
  Internet stands that on its head, and shifts the
  power to the Individual making Individual
  Capitalism the force of the 21st Century.

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Follow the Entrepreneur

• He/she has the market insight
• He/she is the value creator
• He/she is the hero

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The credit belongs to the man who is actually in
the arena

• It is not the critic who counts, not the man who
  points out how the strong man stumbled or how the
  doer of deeds could have done better. The credit
  belongs to the man who is actually in the arena,
  whose face is marred by dust and sweat and blood,
  who strives valiantly, who errs and comes short
  again and again, who knows the great enthusiasm,
  the great venture and spends himself in a worthy
  cause, who at the best knows in the end the
  triumph of high achievement, and who at the
  worst, if he fails, at least fails while daring
  greatly so that his place shall never be with
  those cold and timid souls who know neither
  victory nor defeat.  - Theodore Roosevelt

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So, if Europe has Entrepreneurial DNA then why
arent more global leaders built out of Europe?

• It is still counter-cultural to be an
  entrepreneur in Europe until that changes
  overall, the returns wont be there
  systematically
• Europe is feudal at its core
• European established businesses are not used to
  buying from start-ups
• It is still quite difficult to secure funding at
  a seed stage in Europe
• European entrepreneurs need to expect success
  more
• The World is Flat
• The competitive playing fields between industrial
  and emerging market countries have been leveled

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What Entrepreneurs do inside companies - They
Get Out and Create a Market Storm

• Entrepreneurs, if they're good, have the best
  insight into how particular markets are
  developing. They are in the "eye of the storm,"
  dealing every day with how markets are
  dynamically evolving.
• Entrepreneurs also think differently. They see
  things that others don't. They feel compelled to
  make stuff happen, often simply because they see
  something that doesn't exist yetand should.
• Sometimes that blind faith leads to catastrophe,
  but more often, entrepreneurial insights
  eventually turn into step changes in how
  industries operate.

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DNA Factor 1 Entrepreneurs are Unreasonable
About Success

• Entrepreneurs have a view of the market and/or a
  consumer behaviour, which drives them to bring an
  innovation to life.
• Like becoming a Parent, if they knew what it
  would REALLY entail, they would think twice.
• The good ones are slightly paranoid, and feel
  that they are in a race against time.
• Which makes them learn how to
• Act with Imperfect Information
• Never assume they control time
• Never give up tied to their identity
• Expect Success

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DNA Factor 2 Entrepreneurs Understand that You
Know More Than You Think You Do

• They trust their instincts and listen, hone and
  refine their instincts
• They know what their Unfair Advantage is and
  Focus on it
• Jerry Garcia, guitarist for the Grateful Dead,
  once said, You do not merely want to be
  considered just the best of the best. You want to
  be considered the only one who does what you do.
  

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DNA Factor3 Invest in the success of others -
Todays World is an Ecosystem

• The Businesses with Business Models which enhance
  and grow the ecosystem will win
• Abundance Mentality
• Focus on being a Net Contributor to the System
  rather than a Net Taker, and what you find is
  that your Sphere of Influence over the System
  increases
• Focus on Long-Term Relationships

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DNA Factor 4 Entrepreneurs are radically open
to the World

• Bill Joy, the former CTO and guru from Sun
  Microsystems, assume innovation occurs
  elsewhere.
• Build reliable means to continually pull in
  whats relevant and potentially threatening to
  your business
• We have to be in many places and get signals
  sooner, Henning Kagerman, SAP CEO in the Wall
  Street Journal Europe
• Small things can indicate that large change is
  about to happen
• Malcolm Gladwells The Tipping Point
• Pay Attention Nothing is Trivial

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DNA Factor 5 Exact Accountability and build
the conditions of Trust

• Management is the search for accountability. Who
  is doing what, by when, why, and how, and most
  importantly, what happens if they dont?
• The best entrepreneurs and executives are both
  leaders and good managers.
• There are no bad Lieutenants, Sergeants, Captains
  there are only bad Generals
• Trust is the Currency with which great businesses
  are built
• Trust is Efficient Trust but Verify
• Economies who trust spontaneously develop and
  progress more rapidly Francis Fukuyamas book,
  TRUST

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DNA Factor 6 Create the conditions of trust
so that great things can happen

• Trust is the currency of entrepreneurship it
  is efficient
• leadership is about creating the conditions of
  trust, and
• the combination of building counter-cyclically,
• paying attention to small change which indicates
  that large structural change is about to happen,
• seeking out inefficient markets, and
• investing in the success of others,
• leads to businesses that are both valuable and
  sustainable.

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IV. Some European Entrepreneurial Success Stories

• Skype, Monitise, Espotting, SpinVox

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Skype Free Calls on the Web

• Founded by Niklas Zennstrom and Janus Friis
• Marketing or Technology?
• Superb segmentation of customers around early
  adopters
• Founders had personal brands which they knew how
  to leverage
• Business Model
• Free calls Peer to Peer
• Paid for Services on top
• Ariadnes Role
• Engaged in December 2003 to help with early
  business development deals
• Skype hired pre-arranged 4 Ariadne team members
  
• Exit Strategy
• Sold to Ebay in September 2005
• Why Skype was important to Europe?
• Gave European Entrepreneurs the confidence that
  they could build global leaders as well from
  whatever corner they came from in Europe
• Consumerisation of Technology is here to stay

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Monitise Leader in Mobile Banking The Mobile
Becomes the Remote Control to Finances

• Founded by Alastair Lukies and Steve Atkinson in
  2002, joined forces with Morse, a listed Systems
  Integrator in 2003, secured JV with LINK, the UK
  association which provides the ATM/cash points in
  the UK in 2004
• 2006 saw the adoption of the Monitise platform by
  Royal Bank of Scotland, HSBC, First Direct and
  Alliance Leicester
• Individuals can check balances, top up cards, and
  transfer funds via Monilink
• Monitises genius was to put banks at the center
  of mobile banking, and to keep them focused on
  the vision of interconnected mobile banking,
  rather than building proprietary systems which
  would have to be migrated over at a later date.
• 2007 secured JV in the US with Metavente which
  gives them access to 9000 banks in the US

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Espotting Pioneer of Pay for Placement
Advertising

• Founded in London in 2000 by Seb Bishop and
  Daniel Ishag
• Along with Goto.com (now Yahoo! Search Marketing)
  it was a pioneer of Pay for Advertising in
  search engines.
• European expansion paid off and revenues soared
  from just 80,000 in 2001 to 41 million in 2003.
• Although successful, espotting did not have a
  strong partnership with any of the dominant
  search engines.
• When Google and Yahoo! started to dominated the
  market place, espotting merged with US company
  FindWhat.com in 2004.
• The merged company soon re-branded as MIVA in
  2005.
• Ariadnes role was to assist in the business
  development capacity advising the CEO on
  strategic opportunities

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Spinvox Voice to Text

• Founded in 2003 by Christina Domecq and Daniel
  Doulton
• More than 100 m has been invested in SpinVox to
  date, with 50 m closing last month from Goldman
  Sachs and hedge funds
• They sell into Operators and Carriers globally,
  more than 25 deployments currently
• Have expanded into the US successfully
• Built world-class team
• Turning down acquisition offers
• Key Insight was to demonstrate market demand by
  getting consumers to use SpinVox, and then to
  march that market demand into the operators,
  using the market demand to secure the right
• Ariadnes role has been to advise on funding,
  secure partnerships, network the CEO into
  discussions with senior executives in key partner
  firms, find talent and market SpinVox

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What do these companies have in common?

• Built in the market downturn
• Teams duos as founders one strong in
  technology, the other the business/commercial
  brain
• They knew how to raise capital
• They believe in the necessity of marketing, and
  understand that marketing trumps technology again
  and again
• Ariadne backed them all! either as an advisor
  or an investor

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Entrepreneurs Dont Play Small They are Fearless

• Our deepest fear is not that we are inadequate.
  Our deepest fear is that we are powerful beyond
  measure. It is our light, not our darkness that
  most frightens us. We ask ourselves, Who am I to
  be brilliant, gorgeous, talented, fabulous?
  Actually, who are you not to be? . Your playing
  small does not serve the world. There is nothing
  enlightened about shrinking so that other people
  won't feel insecure around you. . And as we let
  our own light shine, we unconsciously give other
  people permission to do the same. As we are
  liberated from our own fear, our presence
  automatically liberates others.
• - Marianne Williamson

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THANK YOU

• If you would like this presentation or to get in
  contact, send me an email on julie_at_ariadnecapital.
  com
• www.ariadnecapital.com