Category Archives: venturing

Sanoma’s Start-up Challenge Five Years On

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Five years on from Sanoma’s Start-up Challenge on the Future of Learning at TNW2014, I checked out how the five finalists have fared.  I’m impressed!

Winner Labster raises growth funding

Winner of the Challenge Labster has been prospering and announced at the end of last month raising $21M in a series B round to develop more digital lab simulations and to grow in the US market.  Next stop the World.

DragonBox joins Kahoot!

Maths app developer DragonBox announced today that it has been acquired by Kahoot! for $18M.  Their claim is that together they are going to make learning maths awesome!

ClassCharts wins BETT

Edukey’s ClassCharts, a seating planner and behavioural management tool, has gone from strength to strength based on the close understanding of teaching and the classroom underpinned by a strong data and analytics capability. Edukey won Company of the Year at BETT2019.

Jumpido combines movement with software to boost maths learning and looks like quite a fun thing to do in primary schools.  Although the website is still active and the company was a finalist at the Forbes e-volution Award in 2016, they have been rather quiet since.

The website for the final contender Eduvee, an intuitive learning and tutoring platform, now re-directs to the education page of custom software and consulting company Elinext, likely indicating that some form of major pivot has taken place for this company.

Impressive

Overall it’s really impressive to see how much success these companies are achieving.  We were lucky to have selected such a strong cohort for our Start-up Challenge.

Inspiring

What I found inspiring in all of the contestants at the time was their deep understanding of their customers and their passion and drive to make a difference.  Five years on you can see the positive impact of the energy they have put into their ventures.

Looking forward >>

I’m curious on how far these companies will go in the next five years, and wish them every success in turning their ambitions into reality.

Where are the giants of edtech in K-12 education in Europe?

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We’re committed to playing a leading role in renewing education for the next generation and believe we can add value by supporting pupils and teachers on three fronts:

– Achieving excellent learning outcomes
– Enabling efficient ways of working, and
– Supporting engagement and motivation.

Technology can be a key enabler on making progress on each of these three fronts, Today, Sanoma Learning is one of Europe’s leading edtech companies, with roughly € 40 M of pure-play digital and € 100 M of multi-channel sales.

We’re ambitious and like to partner with and acquire other edtech companies to help us to support customers on the three fronts mentioned above. Significant amounts of money are being spent on education each year, of the order of 6% of GDP. This is approximately € 800 bn per year in the EU: the market is sizeable and K-12 is a big slice of that. Yet there are relatively few edtech companies established on the continent today that generate more than € 25 M of annual sales. To be honest, I couldn’t name 10 off the top of my head.

Plenty of talent, ideas and capital

IBIS Capital estimates that there are approximately 3,000 e-learning ventures in Europe today. These companies employ a lot of entrepreneurial talent, many of them working on potentially high-impact ideas. Also, it seems to me that it’s not impossibly difficult to find funding for promising edtech ventures. In the USA in Q1/2014 about $ 500 M was committed in new funding to 99 edtech ventures – the biggest quarter for the last five years.

“The market is rich enough in talent, ideas and venture funding.”

So why hasn’t this large and transforming market in K-12 education spurred the growth of a handful of European edtech giants?

To be frank, I don’t know. Let’s start by looking at the context for K-12 education in Europe today. The great majority of the money in the market is spent (directly or indirectly) by the government through schools, many of which are not yet ready for e-learning. Also, the great majority of overall funding is spent on the salaries of teachers; this is absolutely right – teachers are the most critical factor in providing excellent education.

Within this context I think there are probably three main reasons that make it difficult for an edtech giant to emerge from the European continent on the short term:

1. A rather immature ecosystem
A well-functioning e-learning ecosystem can be built if we can make progress on four dimensions in schools: i) a clear vision on what we want to achieve and committed leadership to make it happen ii) good ICT infrastructure iii) availability of content and software and iv) teachers equipped with the skills to get ICT to work for them and their pupils. Although good progress has been made in many countries on many of those dimensions in the last ten years, most of these ecosystems are still relatively immature. In many ways progress needs to be made on each of these dimensions simultaneously in order for the ecosystem to flourish. There are a lot of data available on this. To name one important element – today there are of the order of 5 devices per household in northern Europe but five pupils per workstation at school. The home is a much more advanced digital ecosystem than the school. Surely this is just a matter of timing? Maybe BYOD tablets will provide the impulse the ecosystem needs? In any case, the early stage of the ecosystem hinders the adoption of educational technology.

2. Long sales cycles but narrow sales windows
The great majority of spending on education in Europe is channelled through institutions. Most of those institutions are organised around an annual cycle. Sales processes into them tend to be long and complex and the window of opportunity rather narrow. If your service is great, but you are not well-positioned to make the sale, the opportunity can be lost until the next year, or for many years. This can be killing for start-ups managing their monthly burn rate and can be a big disincentive to some investors and entrepreneurs.

3. Lack of scale
The final area that is probably hindering the emergence of new European edtech giants is the lack of scale in the market. Education systems tend to be organised very locally and can be prone to political influence. There are relatively few things that scale across multiple countries. Even if your business does brilliantly well in one country, it will be very hard to capture that same position across the continent. Edtech ventures from the USA or China enjoy a clear advantage, with large home markets that can attract significant funding.

How can we improve?

Europe has many natural advantages in the edtech space. For example, it’s home to some world-class education systems such as Finland and there’s a rich start-up scene in a number of leading cities. There’s also a reliable and significant commitment to spending on education.

I’m sure there are lots of smart options about taxes and skills and common standards and so on that the EU is working on in building a big single European market, and I imagine many of those things will help. In addition to that I would like to see us getting more proactive as an industry in two areas. Firstly, it would be good to get more transparency on the market. Which of these new ventures are really starting to fly? Initiatives such as Edtech Europe and Sanoma’s Start-up Challenge help, but are not enough. It’s hard (but not impossible :) ) to see the wood for the trees amongst the 3,000 of today. Who should we partner with? And secondly, are there ways for us to create a European network that can bring scale to the market so that we can more rapidly deploy new technology for the benefit of our customers?

I’m interested to hear your views on this. Feel free to drop me a line if you have inspired ideas.

Looking forward >>

Sanoma’s digital transformation gains momentum

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Sanoma House in Helsinki

Sanoma House in Helsinki

Last week Sanoma announced the FY2013 results. To be frank they were mixed, with online and mobile sales growing but print media in decline. The vocabulary turned classical: annus horribilis, Utopia, and per angusta ad augusta, could be heard in English, Finnish and Dutch conversations during the week. As is often the case with mixed signals, the good news has been somewhat drowned out by the more negative headlines throughout the year.  Yet Learning had a good 2013. And after a slow start to the year the overall digital platform has gained momentum and performed particularly strongly in the final quarter.

I always find it tricky blogging about financial results given that Sanoma is a listed company. But now that we have announced the results, I’d like to call out a handful of highlights on digital in Finland, The Netherlands, Learning and early stage innovation at Sanoma in 2013, drawing on the published materials.

As a reminder, the core strategy of Sanoma rests on three pillars: i) connecting consumers with content and brands, anywhere, anytime; ii) delivering powerful marketing opportunities to advertisers through our reach and consumer insight; and iii) providing personalized digital learning solutions to pupils and teachers.  Digital is clearly an integral part of that strategy.

Finland

Our share of the online media market grew by 5%-points to almost 40%.  Our online advertising revenues grew by 18% over the previous year and digital consumer sales grew by almost 30%. Digital subscriptions at Sanoma’s single biggest brand, the newspaper Helsingin Sanomat, grew by almost 40% to 160,000 (on a total of about 355,000). Furthermore, digital sales at our second biggest brand Ilta-Sanomat grew by about 40%, whereby digital revenue gains now appear to be exceeding print losses; this terrific performance also secured a lead for Ilta-Sanomat over Iltalehti in terms of visitors. We also saw early success at magazines with the Donald Duck library reaching 12,000 subscribers.

Our market-leading position in recruitment got even stronger and we regained leadership in terms of visitors in real estate.  Finally, we made a great start with e-commerce service MSO.fi with more than 120 retailers already on board.

We have seen strong growth in usage via mobile devices and of online video and this is where we have registered our fastest growth.  By the end of 2013, over 50% of all pageviews on our Finnish network came from mobile devices, with mobile visitors growing by over 100% and pageviews by close to 150%.  Correspondingly, mobile advertising sales grew by around 180%.  Online video advertising sales grew by over 30% and the weekly reach of video platform ruutu.fi by 25%.

The Netherlands

comScore ranks Sanoma #4 of the big 5 in The Netherlands with 8.1 M unique visitors (MUV) in December 2013  – behind Google, Microsoft and Facebook (12.7, 10.7 and 9.9 MUV, respectively), but ahead of eBay (6.6 MUV). Other Dutch media groups are also represented in the top 20, but lack the reach of Sanoma. The state-subsidised NPO, and privately run TMG, De Persgroep and RTL Groep, registered a reach of 6.2, 5.3, 4.7 and 4.4 MUV respectively in December.

NU.nl, the leading news site by visitors and strongest media brand in The Netherlands and a cornerstone of Sanoma’s digital network, further strengthened this position in 2013 delighting readers with more than 10.000.000.000 pageviews, almost exactly 50 per inhabitant per month! Pageviews have more than doubled in the last three years and in the meantime more than 75% of views are made from mobile devices.  NU-apps have been downloaded more than 5 M times so far.

In common with Finland, video also grew strongly (about 40%) totalling 152 M at video platform zie.nl.

Lindanieuws.nl – an extension of the highly successful magazine brand Linda. – came with a new version that resulted in a tripling of the number of visitors to 1.2 M and a doubling of advertising sales.

Digital sales via automated trading increased by almost 25% – a serious money-maker for our digital network.  Our performance-based business had a solid year. In particular, sales at the recently acquired FashionChick doubled, partly driven by international expansion. The introduction of curated search at directory Startpagina.nl has been a runaway success and one of the most rapidly growing digital product innovations we have made in recent years. Net sales of e-commerce service SBC grew by 25%, with sales of home deco performing particularly well with a growth of nearly 50%, And soft launches of new brands leef.nl (health) and yixx.nl (jewellery) and of the international launch of price comparison site kieskeurig.nl in France and Poland have helped to ensure a healthy pipeline of new business lines that we expect will support the growth of the performance-based assets in the coming years.

Learning

At Learning, there are also good data to evidence our progress to a more digital future. Much of this relates to bringing content to life by making it more functional through digital. For example, in The Netherlands, more than 1,000,000 pupils in primary education work with Malmberg’s software, reaching 60% of all schools.  In a single week in November, more than 1,000,000 exercises were made on homework platform Bingel.be in Belgium. And in Finland, teachers and pupils logged into Sanoma Pro’s new learning environment 1,900,000 times, with 768,000 hours of active use. In the meantime 800 e-books have been published in Sanoma’s five Learning countries on the BookShelf platform provided by Young Digital Planet.

In addition to transforming its core business, Sanoma Learning is working on providing learning services to the home market with a new online tutoring proposition for mathematics: StudySteps. This has been soft launched in Belgium and The Netherlands, tested in Poland and Russia, and the first results are promising, with 110,000 exercises made in the test period.

Furthermore, Sanoma Learning is exploring the possibilities to build a position in emerging markets and has amongst others made an agreement with the People’s Education Press to provide digital services to support the provision of e-learning in China. It’s early days, but there is clear demand for Sanoma’s high quality Learning capabilities abroad.

Innovation

SanomaVentures had an exciting year, receiving over 400 requests from external startups, which ultimately resulted in 9 investments, bringing the total to 15 to date.  In aggregate the business/financial performance of this portfolio has been promising and these ventures currently employ over 161 people. We expect to make a similar number of new investments this year.

Building on the success of the series of in-house innovation accelerators, we have now launched an Innovation Lab to foster the ventures that are borne out of the accelerators and as a test ground for new ideas from the core business.  We currently have a full pipeline of concepts, prototypes and early stage ventures and have set ourselves the goal to have established five ventures in the next 3-5 years that have an annual revenue potential of € 10 M+. In 2013 we ran four accelerators (Content, Commerce, Talent and NU-lab), two of which were open to external participation. Through these accelerators we trained about 500 Sanoma employees on the lean development methodology and created 15 functional prototypes, about half of which have been given seed funding for further customer validation.

Finally, we have significantly increased our investments and human resourcing on data science including hiring a team of 20 data scientists last year to boost our analytics and insights capabilities across Sanoma. We are currently working on developing the common “big data” enablers, as well as specific cases on consumer sales, online advertising and new business models. We expect to make a quantum leap in our insights capabilities in the coming years.

Good progress on the journey

Overall, reflecting on the three pillars of Sanoma’s strategy i) connecting consumers with content and brands, anywhere, anytime, and ii) delivering powerful marketing opportunities to advertisers through our reach and consumer insight and iii) providing personalized digital learning solutions to pupils and teachers, I believe the highlights above show that digital has made a big contribution in 2013 to progressing this strategy. Respect to the teams who have made this happen and thanks for your hard work!

Sanoma Startup Challenge: the Future of Learning

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We recently announced the launch of a startup challenge, focusing on the future of learning. The goal of the challenge is to identify Europe’s most promising startups in K-12 education and to work with them in finding ways to help them to grow.

We’re encouraging applications from European startups that have a live product and growing customer base, but are still smaller than € 2 M in annual revenues and have been established within the last five years.

The application round is now open and will close on 1 March. Five finalists will be invited (expenses paid) to Amsterdam on 23-25 April to work with executives and experts from Sanoma Learning and SanomaVentures and to pitch their startup to The Next Web Conference audience and jury. The final winner will be announced immediately after the pitches and will receive a cash prize of € 25.000. We will also explore the options with the finalists for closer collaboration with Sanoma in supporting their growth ambitions.

Education is at the dawn of a new era, partly enabled by technology. As interim CEO of Sanoma Digital and CEO Designate of Sanoma Learning I am excited about working together with high potential startups in the edtech space and hope that we can build some successful and long-lasting relationships through this initiative!

For more information on the learning startup challenge, including the application procedure, click here.

Good luck to all applicants and I hope to see you in Amsterdam in April!

CommerceAccelerator goes to bootcamp

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commerce-accelerator-bootcamp-selectionLast week in a live broadcast, we selected the five winning concepts and idea owners who will join us this week at the bootcamp of the CommerceAccelerator in Amsterdam. We will build prototypes of these ideas and test them with customers, as a pre-cursor to deciding which concepts to sponsor as new ventures at Sanoma.

Two big goals

We have two main objectives for the accelerator programs.

Firstly, we want to develop new digital business lines – to plant the seeds of the next generation of Sanoma products and services. We have set ourselves the target of establishing five new ventures (the “fabulous five”) within the next five years that have clearly demonstrated the potential to become as successful as NU.nl is today. From the first two accelerators we have created six new ventures and we will soon reach the critical moment when we decide which of them to boost further and which to discontinue.

Secondly, we want to develop lean development skills across Sanoma to support the overall digital transformation. We want 20% of all employees to join an accelerator program in the next five years. By the end of 2014, we expect that more than 1.000 Sanoma employees will have participated in an accelerator and learned the lean development methodology.

So far, so good :-).

Why the CommerceAccelerator?

This is the third accelerator in the series so far and focuses on enabling commerce. We see three domains of opportunity where Sanoma has the ability and ambition to succeed: i) creating, curating and distributing content for consumers ii) providing powerful marketing solutions to advertisers and iii) supporting learning and education. This accelerator clearly supports our ambitions in the second domain.

Positive and optimistic

I’m enthusiastic about how this accelerator has been going so far. I love the positive energy and can-do attitude of the people. This time we have made the accelerator “open” to university students and that’s brought it an extra edge, a new freshness. I like it when we innovate the innovation programs :-). It’s also been great to see such a good mix of people: Sanoma and Students; Finland and The Netherlands; Print, Digital and TV. Lassi and Joris have done a wonderful job again: every time we do it, it grows and gets better.

Voting criteria

The ten concepts and their owners were all strong and had put forward excellent pitches. Prior to the selection I advised the voters to consider five criteria when making their decision: i) does it fit our strategy? ii) are we capable of doing it? iii) can we earn money from it? iv) can this person make it happen and v) is the lean development method being well used? I don’t know if anyone listened to the advice, but I am happy with the results of the voting :-).

High Five

Voting was tense and the public rounds went to the wire a couple of times. The three concepts selected from the public voting included propositions for mobile advertising, engaging tv ads and marrying offline and online commerce. Two additional concepts won “wildcards” from the expert jury based on the expectation that they would be well position to “make it happen”: a reverse retargeting proposition and a relevant and engaging online advertising service.

Excited about bootcamp

I’m truly excited to see what the idea owners will create at bootcamp this week! What can we make of these concepts? Might one of them eventually become one of the fabulous five? I’m sure that most of the participants will experience this as one of the best weeks in their professional lives so far: hard work, fast pace, rapid learning, focus on delivery and a lot of fun too! Tomorrow morning is the kick-off and by the end of Thursday afternoon we will see what the teams are capable of.

So, good luck to the teams and do your best! Looking forward >>

Wise crowds and wildcards: the moment of truth for the CommerceAccelerator

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Commerce-Accelerator-logoMid-September we kicked off the #CommerceAccelerator. This is the third in the series of Innovation Accelerators at Sanoma. We have two big goals for the program: i) to build new business lines and ii) to learn new skills.  As a direct result of the first two accelerators we have established six new start-ups and by the end of this accelerator almost 450 of our most talented employees will have learned new skills about Lean Innovation.  We believe this will boost our capability to succeed in the overall digital transformation of the company.

This accelerator has two new angles. Firstly, we are focusing on “enabling commerce” rather than creating and distributing content: how can we use our ability to inspire, engage and reach consumers to enable commerce? And secondly we have opened up the process to include about 70 students from 6 European universities, to bring an extra richness of talent and ideas. This has given a great new twist to the proceedings.

Vote yes to make it happen

Previously we have selected the top ten ideas and their owners to build pro-MVPs. vote-yesTomorrow evening is the moment of truth!  In a live webinar we will select the top five that will be given the opportunity to go to bootcamp. At the bootcamp we will be build working prototypes and evaluate the potential of both the concept and idea owner to take the next step in our intrapreneurship program and establish a new venture at Sanoma.  Places at bootcamp are highly coveted and are a ticket to build your idea and show your talent at our company.

Wisdom of the crowd and expert opinions

Three of the five winners will be chosen by the public vote with the final two positions awarded by a team of experts (the “wildcards”). We took a first view on the ten competitors in the expert team last week and made a preliminary ranking for the wildcards. The experts tend to use the wildcards to strengthen alignment with the overall strategic goals of Sanoma. It was really great to see the pitches and concepts – it’s going to be a hard fight for the places tomorrow! In previous accelerators it’s been remarkable to notice how similar the voting of the wisdom of the crowd and the experts has been.  In some ways that gives a certain level of confidence that we are making the best choices. (In others, I wonder if I could save some money on the experts :-)).

Three criteria

There are three key criteria that will be considered when voting. 1. Strategic fit with Sanoma.  2. Ability to operate.  3. Financial attractiveness.  Most of the ideas tend to score highly on the first two points, partly due to the guidance we give during the process and partly because of the experience of the participants.  My biggest question usually relates to the financial attractiveness of the idea – particularly with regard to scale. What are the ideas that could really succeed at scale?

Intrapreneurs

Last week we reviewed the first quarter performance of the new ventures Hubly and SpotandShop that we created from the #ContentAccelerator.  I was truly impressed by the progress Birgit and Nikky have made, including first sales already!  It’s really brilliant how they have taken the opportunity and brought it to life. Respect!  I hope this is a sign of what is to come from the #CommerceAccelerator.

Good luck

So, I’m excited about the outcome of tomorrow’s voting.  Good luck to the ten teams competing and thanks to everyone who joined the program. It will be great to see the winners at bootcamp in Amsterdam during the week of 9 December! Looking forward >>. 

I’m interested to hear how other corporations boost innovation, or any feedback or comments you have on our program – feel free to drop me a line!

 

Spirited start at Sanoma Digital

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sanomaxAt the end of October, Sanoma announced the planned launch of Sanoma Digital to boost our pure-play digital business in consumer media. Sanoma Digital will have three main goals: i) to grow ii) to boost innovation and iii) to advance our capabilities on analytics and lean development.

Engaging with colleagues

In the weeks since the announcement I’ve been meeting my colleagues in the new digital organisation to talk about the plans for digital and to listen to and discuss the feedback. This has been a truly positive experience and I’ve also been really been proud to see how my new team is stepping up to the challenge.  I especially like it when there is a lot of interaction and direct and open questions in the sessions; the more lively the discussion, the more fun it is!

Reflecting on the past weeks, there are three themes that I have heard frequently in the feedback and discussions at new Sanoma Digital, and I want to call them out here:

Optimism and positive energy

Although we are facing challenging times, the over-riding spirit at new Sanoma Digital is optimistic and positive.  The announcement of the new unit has been welcomed. This is widely seen as a good step to take in boosting digital at Sanoma and in bringing new opportunities for our people.  It brings a new and promising perspective.

Support for the clarity and focus

There has been strong support amongst the employees and in the new management team of Sanoma Digital for establishing this new business unit. This support comes from the clear and distinct mandate: to grow, to innovate and to advance our capabilities in digital consumer media. Each part of the business has a role to play in navigating Sanoma to the future. This is where Sanoma Digital can make a difference.  And organising to make that happen is seen as making good sense.

Ambition to win

I sense a strong ambition to win amongst the teams at Sanoma Digital.  I feel it in the teams of our successful brands such as NU.nl, oikotie.fi and kieskeurig.nl. I feel it at the Innovation Lab and at SanomaVentures.  And I feel it in the analytics and professional support teams.  It’s an ambition and determination to take this opportunity and to make a difference by winning in the market.  It feels good and I respect it a lot.

So, these are my reflections on the last couple of weeks.  I’m looking forward to becoming CEO of Sanoma Learning during the course of next year, but know very well that I will be leaving behind a fantastic opportunity at Sanoma Digital!

 

Sanoma Digital to boost transformation on three fronts: growth, innovation and capabilities

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nu-labSanoma recently announced the planned launch of Sanoma Digital as part of an overall accelerated transformation program.

We see many opportunities in digital and have in the meantime built a substantial and growing digital business.  We intend to boost digital by creating this new business unit which will focus on pure-play digital assets in consumer media in Finland and The Netherlands, and will include brands such as oikotie.fi, NU.nl and kieskeurig.nl.  Digital brand extensions such as hs.fi and libelle.nl will be run directly by Sanoma Media Finland and The Netherlands. Sanoma Learning will drive all Learning activities.

Focus

A core element of the overall transformation program is to bring more focus to the business and to ensure that each part has a clear mandate and objectives.  This also holds true for Sanoma Digital.  Growing and innovating pure-play digital businesses in consumer media is a different assignment than transforming a portfolio of magazines, winning viewers for television, taking newspapers to their next level or building digital workflow solutions for learning.  Each of these assignments needs dedicated management attention to focus on making it happen.

Digital enjoys a unique role within the portfolio and will for that reason also work very closely with the other platforms to enable cross-media solutions for consumers and advertisers – shared sales, insights & analytics and ICT teams will help us to achieve that.

Goals

Sanoma Digital will have three main goals:

  1. The first goal is to grow.  growthWe intend to significantly grow the digital consumer media business in the next 5 years. Part of that growth will come from working closely with the local business in Finland and the Netherlands, including adding new verticals, new media (mobile and video) and new services to our performance-based (lead-generation, e-commerce, online classifieds) and pure-play digital content businesses. Another part of the growth will come from scaling successful concepts created in The Netherlands and Finland to new markets.  We have been investing in the early part the product pipeline recently with quite some new launches in the final quarter this year.  We expect this to bear fruits during the course of the coming years.
  2. The second goal is to boost innovation and to strengthen skills across the organisation on lean development methods. Commerce-Accelerator-logo To achieve this we will establish a new innovation lab which will nurture the winning concepts borne out of our ongoing series of innovation accelerators.  Furthermore, we will continue to invest in external digital enterprises via Sanoma Ventures. We want to fill the pipeline with new business lines – to plant the seeds of the next generation Sanoma.
  3. The third goal is to strengthen our capabilities on data insights & analytics. We will bundle our resources on insights and analytics, boost them, and deploy them across Sanoma, to help the whole company to succeed in the digital transformation.

Positive outcomes

From the perspective of digital, we hope this will position us to better serve our customers. If we are successful, we will grow digital and this should help us to provide attractive new opportunities for employees and improved returns for shareholders.

Two passions

From a personal perspective, my next assignment is to establish Sanoma Digital. I’m excited about this and believe setting up Sanoma digital is a good step to boost the digital transformation. We’re now in the process of setting up a new team to drive this agenda.  I’m really proud of the talented people who are joining this team and who will work at Sanoma Digital!  During Q1 next year I will succeed Jacques Eijkens as CEO of Sanoma Learning.  My two passions are digital and learning.  Sanoma has a strong and successful international Learning business that is also going through a digital transformation.  I hope and believe that I will be able to contribute to the further success of Sanoma Learning by boosting the leadership of digital and innovation there.

Making innovation happen: how to organize for disruptive growth?

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One of our new intrapreneurs is building a marketplace for fashionista’s.

Following excellent performances at the bootcamp of the #contentaccelerator in June, two of our top talents have taken new roles as intrapreneurs at Sanoma this week. Making it happen!  This innovative burst immediately caused temperatures to sky-rocket to a sweltering 33°C at the office. Respect to them for showing the courage of their convictions and going for it. And thanks especially to the local organisation for supporting a speedy transition.

Creativity and customer-focus sit deep in Sanoma’s character.  However, we have deliberately organized these and other new ventures separately from the core business, yet cooperative with it.  We wanted to establish a model which gave the accelerators and new ventures the liberty to exploit their disruptive opportunity unrestricted by the core, yet in a way which supported both the new venture and the core. In my view, the process of the accelerator (ideation and competence development for hundreds of people from the core) and the sharing of various capabilities in the operation (mainly marketing, technology and expertise) achieve that.

Dual Transformation

I recently came across an excellent article by Gilbert, Eyring & Foster, in the Harvard Business Review called Two Routes to Resilience which clearly articulates the case for developing disruptive and core businesses separately yet under one umbrella. How to organize for new growth?

The authors make the case that when your industry is undergoing disruptive change, companies should respond by making two distinct transformations in parallel. Transformation A focuses on repositioning the core business to its altered circumstances. Transformation B should create disruptive innovations that will eventually bring new growth. And the structure should work for both through a “capabilities exchange” that allow the sharing of select resources for the benefit of both parties, without changing the mission of either. Each transformation needs a leader fully convinced of the future success of their mission. Both pillars of the transformation have to act in the market as if the future of the company depended on it alone.

“Capabilities Exchange”

The “capabilities exchange” should in principle bring competitive advantage to each pillar in the transformation. In the case of our accelerators and new ventures, some important shared resources come to mind. The Sanoma brand helps us to build connections to consumers, advertisers and schools.  Easy access to media and traffic help support existing brands and build new brands. Expertise in content, advertising, learning and other capabilities required in managing a company, such as finance and HR can support each transformation. The re-use of content and technology can reduce unit costs and bring speed to innovation. An international network can bring scale. Access to a skilled talent pool and methods of developing new skills on innovation are required in both tracks. And a dual transformation can support the financing of the respective pillars. That’s quite an exchange when you come to think of it!

Boosting Transformation B

For the sake of good order, Sanoma has many growing, successful and disruptive business lines and I would not for one moment say that the ventures born from the accelerators are the only seeds of the next generation of our products and services and everything else is legacy. That’s clearly not the case. The new ventures are just one of the pockets of innovation and digital disruption in the company. And we have many other business lines which would not count as digital disruptions but are far from legacy status.

Yet the argumentation in the HBR article is good and sharp. I believe it’s a credible approach and our actions and investments in new ventures are for their part consistent with it. Bringing additional relative scale to what the HBR article refers to as transformation B (the new growth businesses) would help to support the dual transformation. Increasing the pipeline of new ventures would be one way to achieve that.

I’m interested to know your opinion about this.  Feel free to leave a comment or send me an email.

SanomaVentures helps develop young enterprises in digital information, entertainment and education

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Digital technology is driving fundamental change in media and learning markets.  Sanoma is responding to this by a) transforming core brands to play multichannel and b) building new digital brands.  I’ve recently posted about the accelerators at Sanoma and the role they play in the (early-stage) innovation portfolio.  In addition, the company has established SanomaVentures (www.sanomaventures.com) to support early-stage (external) businesses looking for growth funding following initial market success.

Herman Kienhuis, Investment Director at SanomaVentures

Herman Kienhuis, Investment Director

I’m enthusiastic about SanomaVentures.  I think it brings Sanoma a lot on this journey of discovery to the digital future. Clearly it will not be an answer to all of the opportunities and challenges we face, but it is an important piece in the overall puzzle.

This week I caught up with Herman Kienhuis (@kienhuis), Investment Director of SanomaVentures about their approach.  I believe in Herman and his team.  I think he’s smart and professional.  He’s proactive and takes initiative – he’s out there in the network.  He’s commercial and has sharp analytical skills, and thinks creatively about negotiating attractive deals for both parties.  And I like him – he’s a decent chap.  I respect his support for microfinancing organization Kiva.org and he’s very sporting with his annual Movember action.  Here’s what he had to tell.

Why was SanomaVentures launched?

We had five main reasons to go for this.  It gives us access to new sources of innovation and entrepreneurial talent.  It creates new avenues for growth.  It’s a vehicle that allows us to spread our investments across multiple new ventures, also making use of media as part of the investment currency.  And we felt the time is right, partly because of the fundamental shift in consumer, advertiser and learning behaviour and partly because of the rise of the start-up and venturing communities in our markets.

What’s your investment scope?

We focus on areas where the strategic fit with Sanoma is the strong – specifically, digital consumer services; online video and connected TV; advertising, marketing services and e-commerce; mobile & tablet apps; e-learning & personal development.

What are your investment criteria?

We invest in enterprises that are entering their first growth phase, where cooperation with Sanoma can add value through our media, network and expertise.  Within that scope we make our assessment based on five criteria namely a high quality team, revenue & profit potential, sustainable competitive advantage, international scalability and strategic fit with Sanoma.

What does Sanoma have to offer?

Typically, we invest € 100 k – € 500 k as a combination of working capital and media, with the mix depending on the needs of the enterprise.  Sometimes cash is king.  In other situations the reach and exposure of media offers a significant value to boosting the brand, engagement and conversion.  We have found both cash and media to be useful and valuable currencies.  We also bring online expertise; Sanoma has highly successful digital operations, including NU.nl and Kieskeurig.nl in The Netherlands for example.  And access to our networks – not only advertisers and consumers, but also to other expertise.

How does the process work?

We spend a lot of time networking and orienting ourselves in the start-up community. When we identify opportunities where the fit is good we make an assessment of the venture against the investment criteria mentioned earlier.  If the opportunity is attractive we negotiate terms in preparation for decision-making by both parties.  If the investment case gets the green light, we then proceed to due diligence, contracting and closing.  The entire process typically takes about 3-4 months from first contact to closing.  We then move forward with the funding and access to media, and supporting with any agreed expertise.

How is SanomaVentures organized?

We launched in The Netherlands, with two Investment Directors (Antoine Hendrikx and me), an Investment Associate (Sjoerd Huitema) and access to two Legal Directors (Marije van Akkerveeken and John Vogel).  In the meantime we have also extended the concept to Finland with Investment Director Ville Varis.

Have you closed many deals?

To date we’ve made investments in nine ventures: Vault79, a designer fashion auction; Fashionchick*, a fashion storefront; VirtuaGym, an online fitness platform; Peerby, a local P2P sharing platform; Scoupy, a mobile couponing app; Truly Yours, a beauty products discovery subscription; brandkids, a kids fashion e-commerce platform; Nosto*, e-commerce personalization and recommendation tools; and Fosbury, a passbook campaign management tool.   We see a lot of potential and promise in these investments and are proud to be working with these entrepreneurs.

Good start.  See any challenges ahead?

Sure, opportunities and challenges always go hand-in-hand. A couple of areas come to mind.  In the first year we have been focusing on making the initial investments.  Moving forward we have to combine scouting and deal-making with supporting the growth of the ventures – that’s a more complex task.  Also, we expect that about half of our investments will fail – we will have to make tough calls on which ventures should get additional funding and where to take a loss.  Given the relatively early stage of these ventures those calls might not always be clear-cut.  Maybe the first year was the easiest; now the hard work starts.

How do you look back on the first year?

From a professional perspective, I think we have been successful in establishing the SanomaVentures brand in the market.  We’ve made some very promising investments.  We’ve built a good investment team and established strong links to some great entrepreneurs.  And there’s been a positive buzz about SanomaVentures, both inside and outside the company.  From a personal perspective, it’s been an exciting and demanding period in setting this up, well worth it.

Thanks for the good update Herman.

*The investment in Fashionchick was made prior to the establishment of SanomaVentures and the investment in Nosto was made by the Finnish team