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19 February 2004
 I was struck the other day when I was on a 'Dot Com Retrospective' panel for the INSEAD Alumni Group how we make companies in our own image. The investor does more than share an affinity for a service or product which fills a gap in the market, helping to determine how big that market is and how realistic it is to believe that a new entrant will secure a sizable portion. At the Retrospective, Brent Hoberman spoke about how he set up Lastminute.com because he was always running late. A company that could help him with his last-minute needs, from travel to gifts, would help him and his friends, so it seemed like the thing to do. Rob Hersov, the founder of Sportal, talked about how it's important to figure out what you're good at as soon as possible, and then focus on that. He's good at sales and marketing to HNWIs (high net-worth individuals). His latest business, Marquis Jets, was acquired recently by Berkshire Hathaway's Net Jets. I know that one of my investors into Ariadne Capital, Candace Johnson, has set up five telecommunications firms, including SES Astra, because she was introduced to satellite communications as a child through her father, General Johnny Johnson, who was a leader in the satellite program for the US government. The things that are close to our hearts or that we do well are typically what we feel passionate enough about to create new businesses around. As an advisor and investor, I find myself continually in discussions with start-ups that are pitching a product or service for which I'm not the target market. For example, Cambridge company Phonesync makes an application which synchronises one's phone address book via WAP such that if you lose your phone you can simply log in and access stored numbers. I'm a big Outlook user, so I couldn't immediately see the value. Yet the fact of the matter is that the overwhelming majority of mobile phone users aren't Outlook users and this application is a great one for them. Research shows that if you have numbers in your phone, you make more calls. So loss of phone means loss of address book which yields less revenue for the carriers. Lloyds Bank research found that over 99% of customers would be prepared to pay at least £1 a month to insure their phonebooks. More than 4.5m mobile phones are replaced each year in UK, a third of which are stolen. Phonesync's pragmatic, customer-driven approach to the market has driven its sales line. And it's working. BT Wholesale is a key partner, and major portals have signed up. Carriers have been badly burned by horizontal 'platform' vendors and are desperate for new services that generate new revenue streams now. Voice ARPU is declining and they need data revenue. They also need to regain market confidence and to retain customers. Carriers want simple services that can target a large percentage of their current user base, not complex, niche offerings. Phonesync may be elegantly simple, but it's not a dead end. PIM data is at the heart of wireless data services. Wireless telecoms is about communication between people. Contact and diary information is the foundation of building 'sticky' user groups, so Phonesync is well- positioned to build outwards from its position. It's always a good process to go through when you consider setting up a new concept or company to test it beyond you and your friends. It may be that they are a highly representative, large group of customers who will buy the product, or it may mean that you're an early adopter when the rest of the market isn't, or that you have an unusual profile. Just don't assume you represent the entire market. . Julie Meyer is CEO of Ariadne Capital, a London-based investment firm that advises and invests in companies globally; julie@ariadnecapital.com New Media Age is the UK's leading weekly
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