Cityvox, my learnings as an angel investor and the power of grit and tenacity

In a prior post – Sometimes it pays to be lucky – I was expressing my gratitude when I learned that MilleMercis, one of the companies I got involved with after my Aucland days, had gone public.

Since then, the other two companies I was involved with were both successfully sold. 2xmoinscher was acquired in July 2006 and Cityvox was acquired last Tuesday (Mach 4, 2008).

This brings an end to my 1999-2000 bubble era angel investments. I had made three significant investments (relative to my net worth at the time) and two small investments. Of the five, there were three successful exits, 1 IPO and 1 bankruptcy.

Large investments:

  • MilleMercis: European online marketing company – went public on the French stock market
  • 2xmoinscher: ” of France” – successfully acquired
  • Cityvox: “Citysearch of France” – successfully acquired

Small investments:

  • Call center operations – successfully acquired
  • Alidoo: “ of France” – went bankrupt

When I look at the three larger investments I was involved with, they only have one thing in common: really smart, passionate and tenacious teams. In none of the three did things end up working the way we expected them to back in 1999-2000!

MilleMercis started out as a wish list site which allowed to sell ads at high CPMs under the assumption that something you want is something you are interested in. The website never took off, but MilleMercis built deep CRM, viral marketing and online marketing knowledge that it used to start managing email databases for third parties and become a full blown ad agency with a viral marketing specialty. Combined with the growth in online marketing in the past 8 years, it became hugely successful.

2xmoinsher has a great business model and is a great product, but constantly faced an extremely competitive environment. Not only did Amazon launch its Marketplace and eBay largely move to fixed prices, but a local French company called PriceMinister launched on the same model, raised significantly more money and constantly outspent 2xmoinscher in marketing, BD deals, acquisitions and hires.

2xmoinscher only survived by the tenacity of Aymeric Chotard its Founder and CEO who made every penny count and obtained much greater ROI on his cash spent than his competitor. He worked his team as hard as he could for 10 years straight! 2xmoinscher did relatively well, but Priceminister is the runaway success: its last round of funding was on a valuation of several hundred million Euros and an IPO is being discussed.

Cityvox also had a circuitous path to success. I invested in the company in 1999 because I loved the intelligence and passion of its founders Bertrand Bigay and Michel Athenour, I liked Citysearch in the US and I believed in the value of local search. The vision was correct but it took forever to get there. In 1999, none of the local small businesses advertised online though we believed they soon would. It only started to happen 9 years later!

The original business model was to have sales teams contact local businesses to build personalized page for them on Cityvox for an annual fee. The business failed as small businesses in France were not ready to go online and there was no way we could compete with the yellow pages sales force.

Cityvox barely survived the bubble bursting. The team’s passion and commitment convinced its angels to reinvest before it ran out of cash while the company aggressively cut costs. They reduced headcount, moved from Paris to Marseilles, got the city to subsidize the move and did everything in their power to preserve cash. On the revenue side, the company was largely saved when it successfully sold its syndicated content to third parties who wanted local information and reviews. Again this business proved transitory as most companies eventually decreased their content budgets.

Cityvox again survived by successfully moving to mobile and getting paid to build local mobile sites for the major operators in France. Finally in the last few years while Yelp started coming to the forefront in the US and the promise of local advertising started to become fulfilled, online advertising revenues finally started to take off for Cityvox and the company was on much stronger footing.

Orange, France’s largest ISP, mobile operator and Internet company came a calling and a deal was made. You can read more about the deal (in French) at:

Things rarely happen as you expect they will it in startups. This was also true of the startups I created. Zingy was originally a copy of Kiwee in France and Jamba in Germany – a B2C provider of mobile content. We transitioned to becoming a B2B provider to the carriers because Premium SMS did not appear in the US market until 3 years after we launched!

It should also be said that in almost all of us who have been successful were very lucky in many ways! However, as you can’t count on being lucky, if there is one lesson to be had from the above experiences, it is that the most important traits of a startup team are adaptability, open mindedness, grit and tenacity. It would have been easy for Aymeric, Bertrand and Michel to get great jobs in large stable companies. After 5 or 6 years of fighting day and night, the lure of stability and a few good nights’ sleep must have been appealing. However, they stayed the path, kept believing that they would figure it out no matter what and ended up succeeding while others simply gave up or failed to adapt!

Congrats guys! You truly deserve all your success!

China’s Business and Policy Evolution

On Tuesday evening, I had the pleasure of attending a seminar sponsored by McKinsey on China’s Business and Policy Evolution at the Asia Society ( in New York.

The panelists were Howard Chao, Partner and Head of the Asia Practice of O’Melveny & Myers, Nicholas Lardy, a Senior Fellow at the Peterson Institute for International Economics, and Jimmy Hexter and Jonathan Woetzel, Directors at McKinsey & Company who co-authored Operation China: From Strategy to Execution.

I learned a few interesting things:

  • While China is not becoming a democracy in the traditional sense of the word, it is becoming much more open. For instance, they took the rather unprecedented step of posting their new energy policy law proposals online and inviting experts, including foreign experts and McKinsey to review it and suggest changes. The project will probably not be put into law at this NPC but it probably will be at some point in the next 6 months.
  • Urbanization is continuing apace and by 2025 there should be 1 billion urban dwellers. This suggests that 40-50% of the population of many cities and workers at most companies will be migrant workers. As such the government and companies are going to have to be much more supportive of migrant workers than they are today.
  • Despite rising labor costs, most multinationals are not going to move out of China given the complexities of changing their supply chain, the economies of scale that China offers and the lure of the domestic market. Last year Vietnam had $40 billion in exports, China $1 trillion. As such, countries like Vietnam do not have the infrastructure to accept a large scale move of companies from China there. Not to mention a large inflow of capital and companies in Vietnam would probably lead to higher costs there. In other words, while countries like Indonesia and Vietnam are going to grow and offer cheaper labor costs than China, China will remain a major manufacturing hub for most multinationals.
  • Most companies in China were built on cheap labor with little effort made on organizational efficiency which provides great opportunities for productivity improvement going forward as companies bring their global management best practices to China.
  • Interestingly a large portion of China’s exports are coming from foreign companies established in China.
  • Inflation is becoming a problem and might be creating bubbles in real estate and stocks because the negative real rate of return offered on bank deposits is leading individuals to invest in any alternative they can find.
  • China will let the Yuan appreciate against the dollar faster than it has in the past (it appreciated at twice the annual rate of 2007 in the first two months of 2008) to fight inflation and decrease its oil import prices.
  • Economic growth is expected to slowdown to below 10% per year as a result of the global slowdown but will remain high (8-9% per year).

If you are white and in graduate school you are a cliche :)

This article is hilarious:

Most of the posts are great as well! You can recognize yourself in some of the posts which is so humbling! These two posts in particular were dead on:

Uh oh, I guess I am a white boy 🙂

Basically check out all the posts:

The Teutonic Viagra

I hope I don’t sound like a spoiled brat when I say this, but I have a major case of lust for the Audi R8 – aka the Teutonic Viagra. My Aston Martin V8 Vantage is drop dead gorgeous, but the reality is that it’s not that fast, it does not handle that well and is not very reliable.

I still have a year to go on the lease, so I am unlikely to change soon, but next year I can definitely see myself getting an R8 if I fit in it (I am too tall for the Lamborghini Gallardo and don’t fit well in most Ferraris).

I also loved the R8’s “Godfather” Super Bowl commercial.

Audi R8 Specifications:

Make and Model: Audi R8
Year: 2007
Engine Type: 4.2 Liter V8
Torque: [email protected]
Acceleration 0-60: 4.5 s
Suspension: Double Wishbones w/Audi Magnetorheological Dampers
Wheel Base: 104.301 inches
List Price: $140,000
Horsepower: [email protected]
Top Speed: 187 mph
Brakes: ABS, vented disc
Transmission: 6 Speed Manual
Weight: 3434 lbs

Entourage is great!

I am on an HBO binge. After watching all of Sex and the City and Rome in order (and loving them), I just started watching Entourage. In a way it’s the male Sex and the City – except even more unrealistic – the premise must be every teenage boy’s dream, but for 99.99999% of us, that’s all it will ever be!

I can’t quite put my finger on why I like it so much – I don’t want to be Vince (well ok, maybe for a week 🙂 or Eric. Their lives are shallow. Yet, somehow their adventures and friendship are phenomenally entertaining!

Next up: Band of Brothers. After that, I will probably try Prison Break, Battlestar Galactica and Jericho.

Did I mention I love Netflix? 🙂 So much to watch, so much to do, so little time!

The first half of Season 4 of Lost is a masterpiece!

I watched the last three episodes of Lost on very early this morning. The HD streaming quality is great! I don’t know if the lack of sleep made me more emotionally vulnerable or if the claustrophobic feel of watching the show in the dark in my bed on my computer got to me, but I could not believe how amazing and great the episodes were! I even cried at the end of “The Constant”!

I can’t wait to see more! It’s so incredibly good I can’t imagine they can keep up the level, but I sure hope they will! ABC, JJ Abrams, writers, cast and all: you have something special on your hands; don’t screw it up! Watch season 6 of 24 for hints on what not to do!

Racing Dune Buggies in the Baja is so much fun!

I read great things about this trip in National Geographic Adventure ( and decided to check it out. I enlisted William, a childhood friend and fellow car enthusiast who is also VP of Marketing at OLX, and we signed up for Ensenada Tour organized by Wide Open Baja (

We drove the same buggies that race the Baja 1000 every November on some of that race’s trails. There were 10 of us in 5 cars plus the guide. We took turns to drive and co-pilot. We had never driven off road before and we rapidly understood the importance of the co-pilot. The co-pilot constantly communicates with the other cars and gives the driver detailed instructions on both were to go and how fast to take a turn. We still managed to get lost once 🙂

It’s absolutely amazing what these cars can do – we went on terrain I would have not imagined any car could handle! We did manage to get stuck once and blow a tire once. Two of the other cars also flipped, though no one was injured.

The best way to get a sense for what it was like is to watch some of the videos below:

You can see all the videos from the trip at:

All in all it was a phenomenal experience I recommend to everyone! Now I just need to get a dune buggy and find a suitable terrain near New York 🙂