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Paul Wright, managing director, Aura Sports
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Two and a half years ago, Paul Wright, managing director of digital sports specialist Aura Sports was at a conference. Not your average new media conference, it was held in San Francisco and technology firm Doubleclick was hosting it. The web world had come to its spiritual home.
But despite the sunny location, the web world was hurting. The delightfully named www.f****edcompany.com had started and a sneering cynicism was developing towards all those who worked in new media. Mainly one of "so you didn’t make your million yet". Those who had been envious were now overjoyed.
Lucky me – there I was with a large group of companies hoping that the first signs of the Dot Com crash were not the start of something bigger and more serious. Yes, we had heard of people loosing their jobs, but people had invested in rubbish, so what did we expect?
Anyway I sat and listened to speaker after speaker emphasising that in order to survive we needed to do this and that but then a speaker emerged – Kevin Ryan the COO of Doubleclick – who said something that stuck with me: "The internet now is for the true believers"
I liked the simplicity of this statement – I had sat at dinner with people who had vast investment funds, who struggled to understand the basics of a cost per thousand (the building block of all advertising), let alone the difference between Netscape and Microsoft. So the idea that the digital world was getting rid of the hangers on and the cowboys was good.
I took this simple almost religious statement back with me on the flight home. I sat next to a journalist for the Computer Channel who quietly told me how many of her friends stateside had lost jobs. I drifted off to sleep hoping it was not going to be me.
That channel got closed a few months later, I still had a job for a while longer, but it tested many others and my own belief in the web as a medium.
Little did I know how bad it would get and how the investors would simple walk away from the internet, as if it had stopped working.
The beginning of the end
With the slow down in the world economy, all but a few companies started to struggle. Costs were cut mercilessly and scandal after scandal broke. The venture capitalists, who would have thrown $1m at the most basic of business plans, ran away hoping the hangover would not be too bad.
Those of us who had jumped across into new media from establish companies realised two things – firstly, unless you were number one in a sector you were in trouble and secondly people were still using the web in increasing numbers.
Point one was about short term survival; point two the venture capitalists failed to notice, but was the long-term opportunity.
While I was at Sports.com we managed to convince people we were number one and we hoped to ride out the storm.
Sports site after sports site disappeared – Sportal dragged its demise over several months, Quokka similarly. Small sites here and there merged and then diappeared. Initallly the people who were made redundant were quickly picked up by other companies. Gradually this stopped, as less and less sales people, programmers and editorial staff were needed.
The remaining companies were going to survive, but it was tough.
Those companies who could redefine their business model or had a large head start over everyone else was likely to be OK.
Sports.com was thought to be one of these. But on 31 May 2002 (the first day of the FIFA World Cup) our investors gave up and we, like many others, were redundant.
The irony of this was that people were still using the web – Sports.com was the biggest sports site in Europe in June 2002 and yet it went bust like so many before it. Simply some of our investors could not face further investment. The web’s promise was perceived an empty one.
Or was it, for the true believers kept going, Yahoo and Ebay kept going, and people kept using the web.
The return of investment
So now it’s the fourth quarter of 2003 and I am still doing ‘the web’ and strangely a year after setting up Aura Sports with three other colleagues, we are discussing the return of investors into the market.
I recently attended a reception for the National Business Awards where there was much made of the resurgence and speed of growth of internet-based companies. That same day I had spoken to a financial advisor who said people we getting interested in investing again.
After the last few years, my natural cynicism is unfounded. Investors are very much back – but back with one fundamental change in approach – they want to invest in companies that have proven themselves, ones founded by entrepreneurs who have ‘done time’ in building their business. Ones with real revenues, ones with business plans and ones with employees who understand that they need to work rather than have management meetings on the colour of the break out room.
Who are these investors? Well in our experience they are not the VCs yet, but smaller funds with smart people, business angels seeing the opportunities.
Indeed I have heard of companies shying away from approaching VCs due to the laborious and expensive process that fund raising can be through these funds now.
Maybe the VCs will lose out again, this time for making it too hard...
Paul Wright is the former head of interactive sales at BSkyB and group sales and marketing director of Sports.com.
For further information about Aura Sports call +44 (0) 20 7348 5120; www.aurasports.com
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