Traveling Geeks

Social Media in Schools

Below is a little background on Andrew Davis, Director/Coach of The Worst Kept Secret, who is spearheading a social media initiative in English schools.

We first connected at a London tweetup this month, where I learned not only what his project is doing in education but also about his consulting work which facilitates brands to maximize their marketing potential through social media. And, of course the man has a blog so you can tune in if interested in learning more.

Having helped to launch MySpace in the UK as well as BBC Radio’s 1Xtra, he is now turning his attention to developing social media courses for secondary schools.

Andrew’s school project is gaining momentum, so much so that the Daily Telegraph, the Brand Republic and ITN’s Teachers TV all have something to say about it.

Entitled Social Media Fundamentals, this is the first time social media will be taught in secondary courses. Davis aims to explain the rise and relevance of social media including networking sites and integrate core subjects such as English and Maths at the same time.

London’s Bishop Challoner Catholic School is the first school to book Davis’ services. He will deliver a four-week course starting September where students will be required to submit a reason for being on the course, and the application will work as part of their GCSE coursework requirement. Thirty will be chosen and the fact they have had to work to get onto the course, means only those most eager to learn will be involved.

Davis has worked alongside Heads Of Faculty to devise a course tailored specifically for the needs of the school. In this case, the students will plan the school’s end of year music event.

Davis has developed lesson plans that look at planning an imaginary event, writing for web, and fundamental social networking skills that will eventually be used on a real event. As part of the course, Davis will invite former contacts from the music/media industry to share their experiences with the children.

Getting Ahead with the WOW Factor

From this week’s London Evening Standard on branding and getting ahead with the WOW factor. As Amazon’s Jeff Bezos once said: “Your brand is what people say about you when you’re not in the room.”

A Chat with Songkick’s Pete Smith & the Basekit Team

Learning more about Songkick and Basekit. Click play for a Q&A with the founders of both compelling British startups in London earlier this month.

Qype – What’s the latest at the “European Yelp”?

This is a re-post from Techcrunch Europe.

I met Qype last week at the Seedcamp Speed Dating event as part of the Traveling Geeks tour.  Here’s a quick heads-up if you’re new to it: Qype is a way to discover new places (restaurants, events, nightlife, sports, etc.) with a focus on European cities, by going through other users’ reviews and feedback. There are many categories for each vertical, along with a simple to use search engine and Google maps. The site currently enjoys a traffic of 11m visitors per month and has over 350,000 registered users from 9 European countries (UK, Germany, France, Spain, Austria, Switzerland, Poland, Ireland and Brazil).

In the video below, Andrew Hunter (UK General Manager) explains how the service is differentiated from competitors like the well-known – at least in the US – Yelp. For instance, the site shows each review in 6 different languages, thereby allowing people to read a review about a restaurant in London in German, French, English, Spanish, Polish or Portuguese.

Innovation And Culture – Reflections On My UK Trip

I just got back from the UK spending much of my time with the Traveling Geeks, a group of leading Silicon Valley bloggers and journalists meeting with UK government agencies, UK tech companies, and startups.

It was a very good trip. Here are some notes:

– There are some well established UK startups with good business models and they are profitable. One example is Seatwave.com, which trades show tickets between fans. Spotify and Spinvox are also doing very well. Are they still startups if they have a business model and are profitable?

– Startups face the same problems as those here – funding. There are very UK VC firms and few angels. One estimate I was given was that in the Cambridge area there was just 5 million pounds ($8.26m) available for VC investments. A puny amount. Some startups are seriously considering relocating to the US for better access to investment capital.

– Successful European entrepreneurs have a tendency to go sailing and not come back. But that’s not always true. I met some serial entrepreneurs in Cambridge: Stuart Evans, chairman of Novacem, a developer of a unique type of “green” concrete; Richard Green (photo), CEO of Ubisense; the very impressive Sherry Coutu, (photo)a rare woman serial entrepreneur and one of the hosts of our Cambridge tour; also Steve Kennedy from Nettek.

– Cambridge Innovation. The area around Cambridge University is known as Silicon Fen and represents the European innovation capital. There is more money invested in innovation in this region than anywhere else in Europe. A key part of this infrastructure is the organization Cambridge Angels. I met a couple of the Cambridge Angels (Stuart Evans and Richard Green.) It’s an impressive organization with an interesting portfolio.

– Lots of government agencies and organizations to encourage innovation. At times it seemed as if we were meeting with larger numbers of representatives of groups encouraging startups than with innovators.

It was good to meet again with David Riches, chief executive of East of England International, which helps companies get established in Silicon Fen. I had met him three years ago when he was running Think London. Also represented was NESTA, the National Endowment for Science, Technology and the Arts – “A unique and independent body with a mission to make the UK more innovative.”

– UK is not great for startups. The UK government wants to encourage more startups but it’s a tough place to start companies. Taxes are high and stock options are taxed unfavorably. There is a shortage of talent and salaries are high. But there has been a slight shift in the culture, there is more tolerance of failure these days. But a good job and salary is still more highly valued than a job at a startup.

– Watching the news n the UK is interesting. Much of it is taken up with stories about the government; the government said this today; the government issued a report today; the government is looking at this; the government needs to do this… In the US there is a healthy distrust of the government and far fewer government stories or an expectation that the government needs to do “something.”

– Gadgets and dongles. We were giving some gadgets to try out:

— Nokia allowed us to use their Nokia N79 phone with the Symbian interface. The phone was a solid piece of hardware, excellent photos and good video. The Symbian interface however, was horrible. I couldn’t believe how bad it was, we were all complaining about it. It was far from intuitive and it took far too many steps for the simplest of operations – including something simple as answering the phone. The BT sim card worked reasonably well (it uses the Vodaphone network) but data services didn’t work at all on my phone.

— We were given BT dongles, wireless USB modems that we used with our laptops. These worked well in most places around London. However, because of all the video we were shooting and processing, we quickly ran through our bandwidth allocations without knowing it and spent several days trying to troubleshoot the dongles. BT increased our bandwidth caps and they worked fine but it would have been good to know that this was the problem.

— Intel let us use some MIDS (Mobile Internet Devices.) I played with an Mbook from Uvid. It’s got a cool touchscreen display, nice size but everything was tiny – it tries to display Windows XP on a very small screen. I’m not a fan of MIDs or of Netbooks. I generally find the form factor too small to be useful and their performance subpar. They seem to combine the worst aspects of a cell phone and a notebook. In terms of a light and small form factor, the Macbook Air is still the best, imho.

We also had the new Flip Ultra. Although many digital cameras have great video for the same price, it was handy to have this easy to use “one-click” device. The quality of the video is excellent but I wish I could plug in an external microphone. It also does well as a regular camera, I was pulling some great single shots from its MP4 video.

Here is a list of my posts about my UK trip in chronological order:

– Sunday – Arrival and Tweetup in Chelsea

– UK Startups Look For Funding And Escape From Echo Chamber

– Digital Inclusion And The Moral Obligations Towards Tech Education

– Monday – Reboot Britain – The Traveling Geeks Help Out

– Monday – The Geeks Eat Dinner At The Top Of The World

– Tuesday – Seed Camp’s High-flyers

– Tuesday – It Never Rains But It Pours . . . More BT Innovation

– Tuesday – Guardian Newspaper Media Panel . . .

– A Guardian Newspaper Media Panel, Twitter, From Back to Front And Beyond…

– Tuesday – Back To Soho and Dinner With Agency.com

– Wednesday – Humpday – Lunch With Skype

– Wednesday – Time-Off For Good/Bad Behavior

– Thursday – A Visit To Accel Partners – UK Is Tough On Startups

– Thursday – Ecoconsultancy At Shakespeare’s Globe – Why Innovate?

– Thursday – SVW Goes To The Europas . . .

– Friday – Cambridge Startups

– Friday – Cambridge Consultants, Nokia And Microsoft Research Labs

– Friday – Looking For Ghosts In Peterhouse College Founded 1284

Also, lots of excellent coverage from my fellow Traveling Geeks here.

– In addition to the people I mentioned in my articles above, it was great to meet and talk with: Karyn Barnes from East of England International (excellent host); Jon Garside, sales director of Syphan Technologies; Michael Litman; Kai Turner, head of information architecture at Agency.com; Mike Ferg (@MikeyFerg); Wendy Tan-White. founder of Moonfruit; Vincent Camara, founder, Intruders.tv; Nancy Vega, Said Business school Oxford; Alistair Morely technology director at Cambridge Consultants; Oo Nwoye co-founder of Onepage; Professor Ian Leslie, Cambridge University; Amanda Horton-Mastin, Innovation Director at Comic Relief; Rudolph Rosini, Ecec VP at Cellcrypt; Nitin Dahad at Techspark; William Tunstall-Pedoe, CEO of Trueknowledge; Luke Brynley-Jones, Managing Director at School For Startups; Matt Rogers, co-founder of Aroxo.

DishyMix: Susan Bratton Podcasts & Blogs Famous Executives 2009-07-20 20:22:12

One of the most impressive companies with whom I met earlier this month in England on the Traveling Geeks tour was Basekit. Founded by three Welshman and now being headed by Juan Lobato, Basekit is an evolutionary step in technology for web designers and developers. Basekit is a web site builder and content management system; a better way to create web sites. It is a live online (cloud hosted) browser based application that enables the creation, deployment and management of dynamic CMS web sites for businesses.

Basekit Executives

Their are many template-drive and drag and drop form builders as part of the application, but the process that allows a designer to import photoshop (.psd) files directly into Basekit to create a ‘template’ seems to me to be the most valuable and time saving attribute of this very helpful site creation tool. Now a designer doesn’t need to code their designs into html / css templates – Basekit does it all for them. Users can then access the CSS / HTML from within Basekit (if they wish), once Basekit has transformed their design into a flexible web template.

Here’s my Q&A with Richard Best.

Tell me a little about yourself and how you founded Basekit :
Basekit – head office in Chepstow, South Wales.
Simon Best ( CTO & co-founder ) – age 30, Welsh.
Richard Best ( Commercial Director & co-founder ) – age 33, Welsh.
Richard Healy ( Lead Developer & co-founder ) – age 27, English.
Juan Lobato ( CEO ) – age 36, Spanish.
Simon and Richard Best set up their first web tech business in 2002 – with Richard Healy joining in 2003. The 3 of us went into business together in 2005, setting up a web agency which worked both on internal web tech projects and external SME web site projects.
Juan joined the team at the start of April 2009, bringing commercial management experience mixed with an additional injection of entrepreneurial flair.
We started to develop the Basekit concept in 2006. The Basekit concept was founded out of our experiences building web sites for SME businesses. We noticed that many of the small business sites we created for customers had very similar features, and the vision of BaseKit was to make it really simple to build these sites. We initially developed Basekit with a view to using it internally; but quickly realised its potential as a product in its own right.
Having developed a working prototype, we entered Seedcamp 2008 and ended up as one of 7 winners out of some 400 European web tech companies. Since then we have secured investment from 2 top European VC’s, and grown the company from 3, to 8 full time employees.
We are looking forward to launching our public Beta in September 2009.

Note: If you are a US web designer/developer and interested in being involved in the private beta, send an email to me at susan at personallifemedia dot com and I’ll introduce you to Richard.
Where did you get the idea? How has the product evolved today from your original concept?
We created BaseKit out of our belief that typical web 2.0 development should be quick and easy, and should not require complex coding skills. The idea sprung from our desire to complete more web site projects, in less time – without compromising quality. By moving the focus away from coding, Basekit users are able to focus on the visual aesthetic qualities of their web projects – making them look better, and work better.
Traditional web development processes are disjointed and convoluted – and surprisingly ‘offline’. We believe web sites (of all things) should be created ‘in the web’.
The Basekit product has evolved from an early prototype (taken to Seedcamp 2008) – which despite displaying some impressive qualities and results, had a very steep learning curve. We now have a much more rounded product, with a highly intuitive and easy to use interface. We have focused a lot of attention on usability – and consistently score higher in usability tests than our closest competitors.

Describe the Basekit service.
Basekit is a state of the art web site builder and content management system; a better way to create web sites. It is a live online (cloud hosted) browser based application that enables the creation, deployment and management of dynamic CMS web sites for businesses. It has been described as, ‘a web builder with an injection of superjuice’!
Basekit will enable users to go further without code than ever before – without compromising flexibility.

Tell us how it works.
It works via an intuitive point and click, drag n drop interface making the creation and management of functional and dynamic business web sites quicker and easier. The ‘coding’ elements are taken care of by Basekit, and become trivial – therefore the user is able to focus on the design / layout of the web site resulting in a better looking, more effective end result.
We believe that ‘web sites’ should be created on ‘the web’. With Basekit, what you see really is what you get – you edit web sites live online in true context.
What features are most used and least used of the feature set now?
This is a difficult question to answer, as we are currently in a private Beta testing stage, running set on site weekly user testing sessions with a range of delegates.
We have some really neat and unique features such as :

i)    A process whereby a user can import photoshop (.psd) files directly into Basekit to create a ‘template’. This means that users do not need to code their designs into html / css templates – Basekit does it all for you! Users can then access the CSS / HTML from within Basekit (if they wish), once Basekit has transformed their design into a flexible web template.
ii)    Custom web forms can be created in a fraction of the time, simply by dropping the individual form fields into the page. Basekit automatically sets up a back end (MySQL) database – so that all form submissions are stored in the ‘back end’ of your site. This data can then, of course, be used dynamically.
iii)    Instant database creation. Create databases in Basekit simply by copying and pasting data from an excel spreadsheet. It really is that easy! Again, this data can then be used / displayed dynamically.

Who are your target customers? Be as specific as possible.
Our primary market research has shown that most small businesses currently source the creation of their web site through ‘web designers’ (74%).
Basekit was initially conceptualised and created out of our own needs (as a small web agency) to create, deploy and manage small business web sites in a quicker, easier and more effective way.
Therefore, our go to market strategy will initially be focussed around the ‘web designer’ channel. For them, Basekit is a faster and better way to create, deploy and manage small business web sites. The Basekit platform is flexible enough to accommodate existing web design workflows and can enable web professionals to do more with the capabilities they have.
Basekit delivers particular benefits to the ‘designer’ end of web designers – with Basekit helping them to focus on the visual aesthetic qualities of the web sites they create, with all dynamic coding elements taken care of for them.
In addition to the web designer channel, we can also target small business segments directly either with a Do It Yourself web builder offering for the 26% of ‘tech savvy’ small businesses that favour this method, or as an assisted set up service where we act as web designer rapidly deploying small business web sites at an increased monthly fee.
What’s the #1 reason your customers will use your service?
There are many reasons why people will use Basekit, but the number one reason is that it is an ‘enabling’ technology. It ‘enables’ users to create dynamic, functional web sites quicker and easier than ever before – without having to write a line of code (although for the coders out there, access to code is ‘optional’ !).
What are the first features you hope to launch? What’s the feature roadmap?
We have a very defined set of features that we are in the process of implementing for our public Beta launch in September 2009. We have deliberately held back on locking our feature roadmap beyond that point, as the important thing for us will be listening to our users and developing the features that matter to them.
Who are your competitors?
We truly believe that there is no direct comparative to Basekit. But, we have identified our 3 closest competitors as Square Space, Light CMS and Goodbarry.
What do you need from the market to be successful?
Lots of delighted users, who LOVE Basekit so much they tell all their friends!
On a serious note, we feel strongly that the market is ready for Basekit; in fact it is well over due! We built Basekit out of a genuine need – a need which others can relate to. Web development should not be so hard, and Basekit is here to make it much easier and much quicker.
We hope that in the future people will look back and wonder what life was like before Basekit.
How are you doing on funding?
We have secured funding from 2 top European VC’s – who have not only helped to finance the company, but also provide invaluable support to the business on an operational and strategic level.
We are looking to bring in a further funding partner by November 2009.
What is your business model? How will you monetize?
Basekit is free to try and free to use to develop a prototype web site. Once a user deploys a web site, a monthly subscription fee (per site) is charged. This fee is similar to existing hosting fees, therefore we are not creating a new market but rather being a disruptive substitution for traditional hosting models.
The monthly fee paid per web site deployed in Basekit increases as new features are added to their basic package (e.g. capability to update content, email marketing, promotion, eAccounting etc.). Once web sites are deployed in Basekit the switching costs are always above the price sensitivity of substitutive offers making the lifetime value of each web site high. In fact, we estimate that the net present value of each web site deployed could be more than £1,000.
What kind of US partners would help grow your business faster?
The ideal US partners for us would be people / companies that have either :
a)    Cracked the US SME market.
and / or
b)    Cracked the US web designer market / channel.
and / or
c)    Has a major sphere of influence over either of the above.

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Skimlinks UK Start Up Rewrites Affiliate Links on the Fly for Content Publishers and Bloggers #TG2009

On my Traveling Geeks blogger junket to the UK earlier this month, one of the most impressive start ups I met was a company called Skimlinks. Founder Alicia Navarro’s business model is solid and she provides a real value to publishers and content creators who want to easily include affiliate links on their site. Here’s an interview Alicia and I did as a wrap up for you.

Tell me a little about yourself and how you founded SkimLinks.
I have always yearned to run my own business, and had studied IT and worked in internet application product management in order to learn what I needed to achieve this. While in an interview for a job at Google that I didn’t want, I was asked to come up with a product idea. I started talking about a social decision-making tool, and I loved the idea so much I started Skimbit the next day. Skimbit didn’t do amazingly well on its own, and went through a few iterations, and during this process we came up with a way to reverse engineer affiliate marketing links from user-generated content. This technology became so popular we decided to change our business strategy and focus exclusively on this and other technologies that helped publishers monetise their content. Thus Skimlinks was born!

Note from Susan: The sign of a good entrepreneur is one who alters their business model until they find the right set of offerings and revenue. Alicia is proving she can do this.

Describe the SkimLinks service.
Skimlinks is a simplified affiliate marketing service for publishers. It automates the process of creating and maintaining affiliate links on your site. It aggregates 19 affiliate networks and 11,000 merchant programs into one account, giving publishers instant access to every affiliate program. Publishers just need to add one line of code into their site footer once, and their whole site, including all archival content is immediately enabled. Publishers do what they normally do: write posts and link to retailer products, eg. a review on a pair of shoes and then linking to the shoes on Macys.com. Then when a user clicks on this link to Macy’s, Skimlinks checks to see if the link can be turned into an affiliate link, and if it can, it automatically turns the link into its equivalent affiliate link on-the-fly. Its seamless to the user, and means all your archival content is monetised and kept up to date always, without any effort on behalf of the publisher.

Note from Susan: Though I can’t vouch for how easy it actually is for a publisher to integrate the “one line of code” on their site, I am very impressed with the way Skimlinks automatically changes a direct link into an affiliate link on the fly. This makes the user experience on the site much better.

Alicia Navarro, Founder, Skimlinks

What features are most used and least used of the feature set now?
The most used feature is to use Skimlinks on user-generated content, like social bookmarking, social shopping and forum sites. As we have a custom subdomain feature, we can make Skimlinks look completely internal to your site; and as we don’t rewrite the links until they are clicked on, there is no impact on page load, and the links don’t appear to be affiliate links increasingly chances of clickthroughs.

What’s the #1 reason publishers use your service?
Publishers use our service because they want to earn revenue from their site in an easy way. Rather than spend their own time working out the complexities of creating and maintaining affiliate links, they can focus 100% of their time and effort on their content and their community, and outsource their affiliate management to a company that can do it more efficiently and with the best technology.

What are the next features you hope to launch?
We are in the process of launching our innovative Global feed (one single aggregated global product feed and API) and SkimKit (editorial toolkit to help journalists and bloggers research products), both of which help publishers add more content that can be monetised on their site.

Note from Susan: I’d like to see Skimlinks integrated with Zemanta, another start up I met in London on the TG2009 tour. Zemanta is installed in my WordPress software now and gives me related images, links and online articles I can easily drag and drop into my blog posts. If I had Skimlinks as part of this, I could also easily add affiliate links into my blog posts. Putting more add ons into my current WordPress set up always worries me. I’d like to see more partnerships and wider integration, rather than a bunch of stand alone features from different companies.

Who are your competitors?
Our main competitor is a publisher doing their own affiliate marketing, although increasingly we are getting more and more existing affiliates using Skimlinks because it makes them more efficient and lets them focus on their core competencies: content, SEO, and community.

What do you need from the market to be successful?
There are changes afoot in Europe to force publishers to explicitly disclose if they use affiliate marketing – this would have a big impact on the industry. We are instead supportive of publishers retaining editorial integrity as they use affiliate marketing, and disclosing it within certain sections of their site.

Alicia Navarro, founder, Skimlinks at the US/UK Seedcamp SpeedDating Event

How are you doing on funding?
We are lucky to be funded by some great companies: Sussex Place Ventures, The Accelerator Group, and NESTA, plus some great Angels.

What is your business model? How will you monetize?
We retain a small revenue share of what we make the publishers, but above and beyond our technology, you get attentive account managers who help you maximise your revenues;  you get access to our innovative research and optimisation tools; and we help publishers get voucher codes and discount information to offer their readers, so its a very value-rich service we offer.

Note from Susan: I like the percentage model of Skimlinks and they are smart to include a human optimization element so they increase usage of their features and become a must-have part of a publisher’s revenue model.

What kind of US partners would help grow your business faster?
We like to talk to all sorts of publishers that want to start earning money from affiliate marketing. We are keen to speak to publishers that already have a lot of retailer links, even in their user-generated content, but also from sites that want to create their own ‘related products’ widgets using our Global feed, as we can now help them too.

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Blonde 2.0 Tries Hard to Get Me in Trouble

One thing I've noticed during my six months of jet-setting is that entrepreneurs around the world want to be compared to Silicon Valley, but frequently get upset when you do it. Michael Arrington jokingly asks how I intend to piss off a whole country this time before I leave for any trip. (At least, I think he's joking…)

So, note the tap dancing below as Ayelet Noff asks me to compare Silicon Valley entrepreneurs to London entrepreneurs and Israeli entrepreneurs.

Wonga: How the Net Should Kill the Finance Industry

[Cross-posted from TechCrunch]

What’s awesome about the Internet is how it breaks up monopolistic markets where middlemen unfairly gobble up outsized fees, leaving us little choice but to keep paying them. It happened with software, it happened with music, and it’s happening now with media. But there are a few sectors of our economy that have stayed mostly undisrupted—one of them is banking.

Sure there are companies like eTrade that opened up the market for buying and selling stocks. But it didn’t fundamentally change the market that much, it just moved part of it online. The thought for a long time was that banks needed to be too controlled, too regulated to be turned over to the Wild West of the Net. Then the credit meltdown hit and we saw just how reckless these so-called safe and regulated institutions were.

The time is right for the Web to unleash its full market-destroying power on the finance world and while I was in the UK I found a company making a promising start: Wonga.

Now, Wonga would hardly say its role is to upend the world’s financial institutions. But it’s one of the most dramatic examples I’ve seen of a Web company using what the Web does well to remake lending.

Wonga gives people a way to borrow small amounts of money quickly, between £50 and £200 for first time borrowers to be repaid between five days and 30 days. (Returning customers with a good repayment record can borrow up to £750.) A would be borrower gives Wonga just eight pieces of personal data online, and its algorithms find 1800 data points based on that within 2 seconds, making a rapid decision about whether that person is a good or bad short term credit risk. If approved, the money is wired into the borrower's account within the hour. And, the borrower gets to decide when to repay the money, with no penalty for early repayment. One of the most notable things about the UI is a sliding scale, which shows exactly what fees someone would owe Wonga for every dollar borrowed and extra day before its repaid. No fine print and formulas to calculate; the cost of every dollar you borrow is calculated for you.

Wonga was founded by Errol Damelin, a serial entrepreneur who previously started a supply chain software company named Supply Chain Connect. He sold that company in 2005 and decided he didn’t want to build another enterprise software business. (Smart move.) So he traveled around the world looking for ideas. In the U.S. he became captivated with payday lending companies—an industry of strip mall storefronts that generates a whopping $12 billion in fees.

There was a clear demand for short-term loans to tide people over or take care of emergencies. But it was a polarizing industry, seen as predatory and exploitative. Damelin spent more than a year digging into it, and brainstorming with well-known UK angel investor Robin Klein on how to rethink it and make it better.

Two things excite me most about Wonga. The first is that it isn’t peer-to-peer lending. Peer-to-peer lending in a social sense, like Kiva, is one thing, but I’m not convinced peer-to-peer lending for profit works or scales. It feels a bit like trying to apply Web 2.0 ethos of wisdom of the crowds and social networking somewhere that it just doesn’t fit. Instead, Wonga has raised $28 million from Balderton Capital, Greylock Ventures, Accel Partners and Dawn Capital and is loaning out its own cash. In its first year of business it did more than 100,000 loans, for an average of £250 each, and it’s already profitable. “This is the best business I’ve ever been in,” Damelin says.

Second, it’s the first time I’m aware of that a bank that has actually aligned its incentives with what’s right for the customer. Put another way: Wonga makes its money when you repay the loan, not by keeping you in debt longer. Think about it: Credit card companies make the most of their money from people just able to make their minimum payments every month. And payday advance chains make most of their money by rolling over your debt to the next payday.

Critics have said that Wonga is usurious by charging a 1% interest fee per day. But that’s a knee-jerk response. Wonga is simply charging a premium because it allows borrowers quicker access to cash than any other service, the same way a town car is going to charge you more than a cab off the street. And because it only makes money when a borrower repays the amount, there are no tricks to keep you in debt longer. Wonga’s ideal customer is someone who uses the service two to three times a year and always repays on time, Damelin says. If more financial institutions had this basic orientation to doing business, we wouldn’t have had the credit meltdown because people would have known exactly the risks of agreeing to ARMs and zero-down mortgages.

Sure, you can say Wonga is dangerous because it's giving people an easier way to live outside their means. But that's a bit like arguing giving kids condoms encourages teenage sex. You can't change human behavior, but you can help make people safer.

Now here’s the downside on Wonga: It’s only available in the UK, and it will likely stay that way thanks to a bevy of licenses and regulations entailed in getting near the finance sector. It’s even worse in the US, where each state has its own laws. Even a copy cat business might be cost-prohibitive in the U.S. because of all the state-by-state regulations and red-tape.

As our taxpayer dollars continue to bail out the same lousy institutions, it’ll take innovators like Wonga to force real change in the finance world. But in this country, it’ll need an assist from the government as well.

Why Zynga Is Worried about Playfish

[Cross-posted from TechCrunch]

When I wrote my BusinessWeek column on Zynga a while back, every venture capitalist in the Valley told me that Playdom was the company’s biggest competitor.

After all, it competes game-to-game, with similar mob-style and
poker games, and was said to be doing the same revenues as Zynga with
much higher profitability. (As my column pointed out, Zynga’s revenues
are more like double Playdom’s—and since I’ve heard the discrepancy is
even greater.)

As you’d expect Zynga’s CEO Mark Pincus pooh-poohed Playdom as any
sort of threat. But tellingly, he said the company he was worried about
was UK-based Playfish. So, while I was across the pond, I decided to
see what the fuss was about and sat down with Playfish’s founder and
CEO Kristian Segerstrale. I came away convinced this was one of the
hottest companies to watch in the UK. Here are five reasons why.

1. Not “The UK Zynga.” Playfish is very much running its own
race in this market, and this may be a case where distance from the
Valley is actually healthy. It doesn’t try to compete on specific games
with Playdom, SGN, and Zynga. For instance, it doesn’t have a mob game,
the most popular genre right now, and it doesn’t have a poker game,
Zynga’s top earner. “That’s such short term thinking,” Segerstrale
said. “Something is wrong if your route to success is copying
competitors’ games.”

2. Platform Development Doesn’t Have to Mean Half-Ass Development.
Playfish is not about building a game in a week or so and throwing it
up on Facebook. Playfish spends six months to a year designing a game,
and they’ve only produced seven of them. While everyone else talks up
how quickly and cheaply you can build a game on social networks,
Playfish still employs the same artistic discipline of a console game
with a Wii-like look and feel. The plus with platforms like Facebook
and the iPhone isn’t speed to market for Playfish, it’s easier
distribution and greater social engagement.

3. Traction. The painstaking design process appears to be a
hit. Every one of Playfish’s games has been a top ten hit on Facebook.
Across all platforms, those seven games have yielded 100 million
installs and 30 million monthly uniques, says Segerstrale. Playfish
pays “practically nothing” for customer acquisition and makes money
through virtual goods, ads and premium versions of games.

Playfish is profitable and hasn’t spent a dime of its recent $17
million funding round. That’s gotta be some top line given Playfish has
200 employees across several offices. In fact, TechCrunch Europe’s Mike
Butcher speculated that
Playfish could be the $1 million-dollar-a-month Facebook app maker,
back in September 2008. It certainly puts the company in an enviable
position given the paucity of venture funds in the UK.

4. Proximity to the Valley Insiders via Investors. While
Playfish enjoys distance from the one-ups-man-ship or developer
poaching of SGN, Playdom and Zynga, it’s connected into the Valley
where it counts. One of its main investors is Accel—also one of the
main backers of Facebook. Yes, that matters. (See Sequoia
Capital-backed Google’s purchase of Sequoia Capital-backed YouTube.)

5. Segerstrale Knows Games. This is the fuzziest one, but
also probably the most important. As a CEO, Segerstrale comes to this
industry from a different point of view than Pincus. Pincus has said he
was never really much of a gamer—Segerstrale on the other hand has
loved games since he was three years old playing Pong with his older
brother. He always got a visceral rush from playing, especially with
other people. So he’s spent much of his career working towards two
goals: Decoding what makes a game “fun” and deconstructing the concept
of a “gamer” so games are just something everyone plays.

His first attempt was at mobile, thinking that with phones in every
pocket, everyone would essentially have a game console. Indeed, the
company he cofounded, Glu Mobile, went on to a successful IPO. But
gaming was still a niche activity on phones.  There were too many
barriers set up by the telcos and it wasn’t as easy for people to find
and download games. Facebook turned out to be a much greater platform
for this kind of democratization of gaming because users could market
games to one another.

Segerstrale’s macro theory is that we’re in the first shift of a
move from physical games and goods to digital ones, and from games as a
product to games as a service. It’s a theory that seems right-on to me.
For one thing, we already saw it with the transition from enterprise
software to software as a service. For another, sales of console games
are down 20% year-over-year according to NPD, while comScore says
social gaming is up 20% year-over-year. It’s nice to see a CEO who can
articulate not only a product vision, but a clear industry vision.

All the positives above aside, I’m still not convinced that
Segerstrale will succeed in his mission to democratize games. I still
mainly use Facebook as a way to connect with friends, not to build
virtual restaurants and I don’t necessarily see that changing. In fact,
Facebook has so de-emphasized apps in its new all-feed iteration, I
spent nearly an hour trying to find a listing of games, before someone
finally told me it was on the throw-away bottom bar of the profile
page. And by emphasizing the social stickiness of a game, there’s a
chicken-and-egg risk that the games are boring for people who don’t
have enough friends already playing.

But these are execution risks and every promising startup has them.
When it comes to business model, financing, vision and product,
Playfish is certainly a formidable competitor to Zynga. With hundreds
of millions in real dollars already swarming around social gaming, this
will be fun space to watch.