David and Goliath

4 February 2008

David Long is co-founder of Skinkers, a specialist developer of information broadcast technology over the internet. A serial entrepreneur, Long returned to the web world a decade ago, met up with Matteo Berlucchi and jointly conceived the idea for Skinkers. He is now heading up the core business, while the company splits off a separate arm to tackle live TV - both based on technology co-developed with Microsoft, which has taken an equity stake. The company has recently raised a second funding round of nearly £8m to further trial its live TV technology and take it to market.

Despite coming up with the idea for Skinkers in 1997, you waited for the best part of five years before founding the company. Why did you hold back?

Timing is of the essence. You can have a great idea at the wrong time or a good idea at the right time and it makes all the difference. I met Matteo at a company we were both working for during the dotcom boom. Everything at that time was about websites and we realised that the only digital communication channel you could use to get to somebody when they weren’t at your website was email. I went to a seminar at the time where it was predicted that email was going to grow by 12-20 times by 2005 – which has been borne out – and we just thought there was going to be a huge problem with it.

So we tried to think about communicating in a different way. We thought ‘push’ [an internet technology which sends messages out to subscribed users] was a great idea but we reckoned its time was going to be later - after the dotcom boom. So we sat on the idea and eventually launched the company in 2001/2002.

What was different about your approach?

We wanted to create a new ‘push’ communication channel. So we started off looking at the desktop environment. Say you’re sat at your computer and you’ve given your permission for someone like the BBC to send messages to you because you’re interested in the programmes they broadcast. We developed a little software application that sends a message when something relevant to you happens.

Having an application on the desktop that could be controlled and measured was new. But we realised we were moving into a world of multiple communication channels, where our customers would be looking for a way of unifying their communications to different devices – mobiles, Blackberrys and so on. We wanted to be able to give companies a big box with the ability to manage all their communications, not only to their customers but also their employees and business partners.

You were the first company Microsoft Research invested in outside the US. What tips can you give about tying up with a big company?

By 2005, we realised that if we wanted to do something that was instantaneous we couldn’t do it with the technology architecture we had at the time. So we started looking around for the best way to do it. One of our senior architects identified peer-to-peer [where each computer in a network contributes bandwidth] as the way to go and one of the best technologies on the market was someting out of the Microsoft research labs in Cambridge called Pastry.

We were introduced to a new group in Microsoft called IP Ventures and we talked to them about Pastry, and then didn’t hear anything for the next six months. In that period we’d raised nearly £6m with New Media Spark. Then we had a call saying Pastry was available and they’d like to do a deal with us, so Microsoft became an investor in the company with a 10% equity stake. We had an open remit to engage with the Microsoft teams across the world in many different areas - we were focusing on financial services, for example, so we worked with their financial services and alliance partnership teams.

Partnering with a big company can be an issue, particularly if the bigger company isn’t committed. But Microsoft stood up on stage very early on and said it wanted to make us successful. Secondly, it only has a limited shareholding, so we are still completely in control of our business. Finally, whenever you do a deal with someone like Microsoft, you should make sure that you know what you’re getting. In dealing with any large organisation the devil is in the detail. We employed high-class lawyers and that was a good decision because there were a lot of complexities as we expanded into different markets and so on.

You secured a number of major brands as customers early on – Sky, the BBC – and still work with them. What’s the secret?

There are lots of small companies trying to sell to large companies, so you have to differentiate yourself with the vision that you give them. In addition, we have always structured Skinkers to be like a big multinational company. All of the systems you would expect to find in a big company have been here from day one. That projects us as being bigger than we actually are. People expect to see different layers within the sales process, for example – they expect to see operational people, professional services people and so on. It doesn’t have to be a huge number of people – it can be people wearing different hats at the same time.

David Long was talking to David Longworth of Webster Buchanan Research