Julie Meyer: First Tuesday & Ariadne Capital

The chief executive of Ariadne Capital and doyenne of the dotcom era tells us about the future of online


Julie Meyer’s a rare breed. So intrinsically entwined with the past, present and future of the internet is she that if you’ve had anything to do with the scene you’ve probably met her.

From the earth-shudderingly disruptive time of the late 1990s as the dot com craze took off to the shaping of the new era, Meyer is a woman who possesses most of the business cards in circulation and straddles the roles of entrepreneur, adviser and investor with equal gusto. It’s no surprise that the Saturday night before our meeting she was at the birthday party of Niklas Zennström, the founder of online telco phenomenon Skype.

However, if you were not in the thrall of Brent and Martha, Larry and Sergey, Jeff Bezos and every other dot com entrepreneur as they monopolised the business pages for three intense years – and that’s understandable given the era’s unenviable proclivity for hyperbole – then perhaps you need an introduction.

Back in 1998 INSEAD MBA graduate Meyer was working for internet investment house New Media Investors – now AIM-listed NewMedia Spark – helping fund Lastminute.com among others.

Together with journalists Nick Denton and John Browning and investment banker Adam Gold she started organising networking events for the new media set on the first Tuesday of every month.

Aptly titled, First Tuesday became the meeting place for venture capitalists looking for hot dot com entrepreneurs and vice versa. “The vision of First Tuesday was to help companies,” she explains. “I’d been raising capital for companies such as Lastminute.com and it was always about raising money to go into a new geography and so I saw these companies taking on fixed costs without having recurring revenue and thought there’s got to be a better way.”

First Tuesday went international in September 1999 – ultimately spreading to 17 cities accross Europe – with the aim of offering a network of relationships businesses could tap into.

While it began life as a sales and marketing exercise its immediate success and place in the industry zeitgeist led to it being incorporated as a business in February 2000. Five months later it was sold for around £33m to Israeli firm Yazam.

The timing couldn’t have been much better as the brittle foundations of an industry built on paper expectations crumbled, bringing down new businesses and investors alike. Unsurprisingly, Meyer won’t divulge how well she did from the deal, but with a 22.5% shareholding and only a £35,000 upfront investment it’s not unreasonable to assume she made a pretty penny.

Meyer immediately set about on her next project Ariadne Capital, a technology and new mediaorientated investment and advisory firm.

The arch networker 

Meyer left First Tuesday behind, but she’s been unable to shed the attachment. Not that she’s unduly concerned. She does bristle briefl y when asked about comments attributed to her relating to the way her co-founders allegedly sabotaged some of her efforts as First Tuesday fl irted with liquidation. “Nobody’s really interested in that now are they?” she asks, before responding in full:

“People have intense feelings at a particular moment. I don’t think anybody thought anybody was trying to sabotage it. There have been a lot of things attributed to me where people are trying to create a major trauma, psycho-drama.”

In general she has little but positive memories. “It was a fabulous time,” she says. “A lot of people felt empowered and never would have thought they would take those kinds of risks.” Some VCs will wish they hadn’t, of course.

It’s little wonder then that a monthly event called Second Chance Tuesday recently started, led by a pair of dotcom veterans – founder of gadget website Firebox.com Michael Smith and Judith Clegg, the founder of entrepreneurs’ network The Glasshouse, which organises it.

Meyer herself feels she couldn’t network on that scale any more. “I remember being so ‘on’ for six hours every Tuesday evening and running around Europe. It was exhausting.”

Internet’s new era

Instead, Ariadne is well-placed to capitalise on what many are calling the second phase of the internet. Meyer has noted many changes since landing in Paris as a 21-year-old in 1988. “We think of Europe so differently from people who were our age in 1988, with cross-border transactions and pan-European venture funds now commonplace. The need for something like First Tuesday will never go away.”

The phrase Web 2.0 is all about the true globalisation of the internet, says Meyer, with countries such as India and China able to operate in the same sphere from a near-standing start. “I’m not sure any internet entrepreneur in India and China feels they’re catching up – I think a lot of them feel they have a headstart by virtue of their markets being billion person strong. They’re leapfrogging technology – ‘Forget this fi xed line crap, we’re mobile’.”

Meyer’s experience of internationalisation and her global contacts has attracted an enviable portfolio, boasting early involvement with Skype before its $4bn sale to eBay, as well as global projects for Sage, BT, Carphone Warehouse, FTSE 250 mobile ATM business Morse, and Zopa, formed by the founder of internet bank Egg, Richard Duvall.

While Ariadne has not raised a fund as yet, Meyer firmly believes it will make the tier one club of investment fi rms at some point, given its track record for picking winners such as Skype. “When there were fi ve people we were advising them and, in fact, four of my Ariadne people went over to Skype and we became a part of the fabric of their company.”

This level of involvement, she says, is typical of Ariadne and fees for early stage businesses are largely taken in equity, with Skype and 11 other stakes promising a healthy return. Of the other, one was subject of a bid from Yahoo! recently and another is heading for AIM, suggesting the value is far more than the £500,000 it has on its books.

The company has a pool of 33 high level private investors operating in Africa, Asia, North America and Europe and a team of ‘executives in residence’ ready to open doors. She describes this hybrid combination of fundraising advice and introductions and taking equity as a new style of merchant banking. “We bring all of what you’d expect from an investment advisory fi rm,” she says, “supporting management, helping find people, working on market strategy, finding reference customers, strategic partnerships and opening the channels to market. We get focused on stimulating mindshare and helping companies secure their first client, which are not typically banker and adviser activities.”

Going global 

Despite seeing more than 60 companies each month it currently retains around 10 clients, mixing early stage businesses with multinational corporations to balance the books. For example, it has helped Sage acquire businesses in India, beating bigger investment firms to the contract.

For Morse, Ariadne is helping build its mobile ATM franchise internationally. As for Zopa, Meyer’s team recently concluded a major transaction to enable expansion overseas. It’s a client she’s particularly excited about. “The vision for Zopa is just amazing,” she enthuses. “It has real potential to be an eBay for money. I think Richard’s instincts about how quickly he needs to move and how much money he needs to raise are right on track.”

Skype has of course departed Ariadne’s stable, but its growth strategy is one other internet players are adopting. Rather than expanding by geographic territories it targeted a specifi c user-profile on a global basis. “They didn’t get their money and set up Skype France. They asked how they would reach all those early adopters in high broadband penetration countries. They built a brand through huge word of mouth referral globally, so not surprisingly they became attractive to not just eBay but everyone else who was trying to reach that user base.”

Another major difference between ‘Web 1.0’ and ‘Web 2.0’ is the relationship between what Meyer calls start-ups – pre-IPO businesses – and large corporations. “We all thought that in 1998/99 the corporates were dumb,” she says, “and would buy things over-priced that they couldn’t do internally.”

But with many of the period’s entrepreneurs moving into corporate life or the venture capital world and larger businesses now making astute online investments, the next phase of internet businesses will need to be that much sharper. They are also joined by the top brands of the fi rst phase – Google, Amazon, eBay etc – innovating at scale and closing off emerging niches quickly.

“Owner-managed businesses can’t assume they’re going to have a free run at it” she warns. “You have to look at the roadmap of who your competitors are and, my God, if they’re a £100m profi t company, watch out.”

As for Ariadne, is Meyer’s baby maturing quickly enough? “Would I want to do everything I want to achieve in the next 20 years sooner? Sure,” she admits, “but everything has its rhythm and I’m absolutely cool about the timeframe. I haven’t started the clock.”

The quickfire round: Meyer’s vision for online

What would first tuesday be today?

Much more online – a way to communicate with whoever you needed to but on a truly global playing fi eld. But it?s still tied to the connections you make out of offl ine networking.

How many business cards do you have? 

24 boxes like that [indicates size that would hold around 500] and all of them have to fit into our Knowledge Management System. I’ll be bored and I’ll pick up a box and think ‘oh my God, I’d completely forgotten he was doing that in 1998’. There’s definitely a piece of history there.

How has the internet landscape changed?

People are living their lives online more. We?re managing our assets, relationships, and communications online. You have a real shift from established capitalism to individual capitalism. The reason is that capitalism is cool. Wealth creation is cool.

Who should businesses be targeting as consumers? 

At the risk of sounding horribly feminist I would just say women. We buy most of the stuff at home. We?re also more powerful now because we?ve made our own money. Products and services targeting women are going to be very successful.

How has the web changed approachies to growth?

Look at Skype. People assumed the big telco services make it big in all the corporates and eventually it works its way down to individuals. Actually, goto- market strategies are much more focused around grabbing a certain segment of consumers and becoming a phenomena. Then corporates pick it up.

What new technologies will hit in the next decade? 

We see technologies a lot here but we worry more about the corporates that are going to be adopting them. It’s more about the convergence of technologies rather than what’s the next technology.

Which existing technologies will be exploited? 

There’s the eco-system around VoIP. We’re seeing all sorts of other different propositions, corollary services, devices and products.

Where will the next web giants comes from

Skype has had an impact on the telecommunications world for the next 50 years, even though it’s not a stand-alone business today. And the universe of search is exploding. There’s so many companies trying to create a piece of vertical search. So what’s going to be the next Google? Far be it for me to say there’s not going to be one that can out- Google Google.

Where’s innovation emerging 

Look at how differently we think of India today than Africa. It’s because you had some really smart economic finance ministers in the early 90s who started opening up to global trade and capitalism in India and as a result it’s just taken off.

How will it happen in africa? 

When one of our investors told me he was raising a venture fund in Africa I said ‘wow, do you think you’ll make any money?’. And he said ‘absolutely, I think I’m going to make more money there than we ever made in western Europe because they’re so ready to have someone make an investment in them’. The next big thing could come from an African entrepreneur

The quickfire round: Meyer?s vision for online

WHAT WOULD FIRST TUESDAY BE TODAY?

Much more online ? a way to communicate with whoever you needed to but on a truly global playing fi eld. But it?s still tied to the connections you make out of offl ine networking.

HOW MANY BUSINESS CARDS DO YOU HAVE?

24 boxes like that [indicates size that would hold around 500] and all of them have to fi t into our Knowledge Management System. I?ll be bored and I?ll pick up a box and think ?oh my God, I?d completely forgotten he was doing that in 1998?. There?s defi nitely a piece of history there.

HOW HAS THE INTERNET LANDSCAPE CHANGED?

People are living their lives online more. We?re managing our assets, relationships, and communications online. You have a real shift from established capitalism to individual capitalism. The reason is that capitalism is cool. Wealth creation is cool.

WHO SHOULD BUSINESSES BE TARGETING AS CONSUMERS?

At the risk of sounding horribly feminist I would just say women. We buy most of the stuff at home. We?re also more powerful now because we?ve made our own money. Products and services targeting women are going to be very successful.

HOW HAS THE WEB CHANGED APPROACHES TO GROWTH?

Look at Skype. People assumed the big telco services make it big in all the corporates and eventually it works its way down to individuals. Actually, goto- market strategies are much more focused around grabbing a certain segment of consumers and becoming a phenomena. Then corporates pick it up.

WHAT NEW TECHNOLOGIES WILL HIT IN THE NEXT DECADE?

We see technologies a lot here but we worry more about the corporates that are going to be adopting them. It?s more about the convergence of technologies rather than what?s the next technology.

WHICH EXISTING TECHNOLOGIES WILL BE EXPLOITED?

There?s the eco-system around VoIP. We?re seeing all sorts of other different propositions, corollary services, devices and products.

WHERE WILL THE NEXT WEB GIANTS COME FROM?

Skype has had an impact on the telecommunications world for the next 50 years, even though it?s not a stand-alone business today. And the universe of search is exploding. There?s so many companies trying to create a piece of vertical search. So what?s going to be the next Google? Far be it for me to say there?s not going to be one that can out- Google Google.

WHERE?S INNOVATION EMERGING?

Look at how differently we think of India today than Africa. It?s because you had some really smart economic finance ministers in the early 90s who started opening up to global trade and capitalism in India and as a result it?s just taken off.

HOW WILL IT HAPPEN IN AFRICA?

When one of our investors told me he was raising a venture fund in Africa I said ?wow, do you think you?ll make any money??. And he said ?absolutely, I think I?m going to make more money there than we ever made in western Europe because they?re so ready to have someone make an investment in them?. The next big thing could come from an African entrepreneur

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