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Neil Rimer of Index Ventures
Summary:

Index Ventures co-founder Neil Rimer has helped steer his company to success with investments in Skype, Betfair and many more. He explains why he’s obsessed with education and marketplaces — and why he wishes he’d invested in Kickstarter.

Neil Rimer doesn’t get a lot of publicity. Compared to some of his more high profile colleagues at Index Ventures, the cerebral investor tends to stay under the radar.

This is despite the fact that he’s one of the driving forces behind what must be Europe’s leading venture capital firm, certainly as far as the web is concerned. As one of the founders of Index back in 1996, he is intimately responsible for a business that has scored major coups with companies like Skype, MySQL, ASOS, Betfair and more.

So what is he interested in right now? What trends is he watching closely?

I caught up with him to find out where he plans to invest — and hear about the smart money in big data, the problem with Europe’s clone culture — and find out about the investments he wishes he’d made.

Index has invested heavily in online fashion in the last few years — most recently with money put into Nasty Gal. What is it that attracts you there?

The thing is that we’re big in marketplaces. We didn’t wake up and say “let’s do fashion because it’s sexy” — it just happens to be an amazing category for e-commerce. The things I’m really interested in are marketplaces, and the notion of using social networks to do much more valuable things.

I mean it’s valuable to connect people and keep in touch, but that’s just getting to know each other. So we’re in a company called Funding Circle, which isn’t that well known but is really transforming the way businesses finance themselves by connecting them directly with investors in the U.K.

I think that’s a very powerful application of a marketplace, and that’s just business finance. There are lots of other financial products we buy, like insurance, that I think could be transformed by these kinds of things. So marketplaces is still something I’m going to put a lot of money into.

Another hot marketplace you’re involved in is travel. You’re an investor in Housetrip, which is targeting the European hotel market in an Airbnb-style way. Meanwhile another European Airbnb competitor, the Rocket Internet-backed Wimdu, is doing well. How do you see this panning out?

Housetrip are leading in Europe and they want to own that space. But they’re focused on family travel, holiday rentals, and that’s different to Airbnb.

All these other guys saw Airbnb and just copied it. I mean that’s clearly what Rocket does — and I don’t think you get the best people by doing that. Eventually your own people clone you. But Airbnb is a different thing from Housetrip, it’s typically more social, you’re staying with someone, usually while they’re there. They also have whole places, but that’s not really in their DNA.

But even if you believe the market is different enough today, the reality is that Airbnb will need to expand — especially if they go public, which is clearly where their investors are pushing them.

Yeah, they want to be in this market too. There are very few markets where it’s one player takes all, and we look at it from a DNA standpoint — where are they coming from and what’s their guiding vision? They’re very different, and I believe that Airbnb is more in the eBay of resources: eBay for houses, eBay for cars, eBay for boats — rent everything. Housetrip is more like the Conrad Hilton of the 21st century.

You don’t get that when you’re defining yourself by those guys in a different market and saying “they’ll come and buy us one day.”

You’ve started investing pretty heavily in big data companies, too. What drives you there? Do you think there are payoffs we can’t see yet?

I think we are trying to be very pragmatic about all this.

Let me give you a counter-example: our foray into clean tech — which was really not a foray, since we entered the forest, took a look around and said it wasn’t for us. We are not ever keen to invest in an area because think it will be a good idea at some point in the future, but we don’t know how. So when we invest in big data, it’s Kaggle, it’s Factual, and it’s Alertme: businesses where we can actually see and touch the way they are acquiring the data and turning it into something valuable that they can sell and scale. We’re not doing a lot of speculative stuff in big data.

What about those who criticize big data, and are concerned that it can deliver lots of information, but not really produce useful insights?

I was surprised to hear that there are a lot of skeptics of big data. I don’t know how you can be skeptical of it: more data is better than less data, and more ways of extracting insight from that data is better than fewer.

So: you’re excited by marketplaces and big data. What other trends do you think will become more important over the next few years?

The other one is education and knowledge, which where we’re just getting started in. I led an investment in Stack Exchange, and I really love that company… they’ve kind of cracked the best way to aggregate and curate knowledge about a wide array of topics. Everyone knows Stack Overflow, but few people know about photo.stackexchange.com or gardening or DIY, but they’re very good sites and they’re infinitely better than the crap Google used to point you to.

We can do a lot with that, and they pay nothing for that content, and they pay nothing for their traffic.

We’re going to look a lot more around education — the technology just enables this stuff. Teaching stuff online, this stuff wasn’t usable for a long time. Like video conferencing 10 years ago wasn’t usable, but today I’m avoiding travel because of it.

You’re not alone in thinking that — but doesn’t change in education take a long time? It can take a couple of years, five years, 10 years — even a generation — for the impact to really shake out.

It depends. All the vocational stuff, where you’re trying to learn a skill or achieve a level of proficiency in a language, or coding, or in English — we know in China what a big deal learning English can be, and what a difference that makes for someone in terms of their earning power. That’s measurable.

People make these decisions over a long period of time, but I think there’s less stickyness that we think — a lot of these things have been institutionalized, but people aren’t happy with them. There are a lot of degrees you can get in the U.S. that are worthless, but they are companies that make a lot of money.

The technology and these platforms for exchanging knowledge and helping people get to a different place in their life, I think that’s going to be a big area for us.

So what’s the company you wish you’d invested in right now?

Kickstarter, honestly. I think Kickstarter is a profound, profound company. The execution’s obviously great, and we’re just at the beginning. Most people don’t even know it exists yet.

We didn’t see it, so it’s not like I’m kicking myself for making the wrong call… but I think that’s a very, very important company — not just in what it’s doing, but in the theme it’s unlocking. It changes the social dynamic, and it shows also how much pent up goodwill there is among people to fund stuff with no financial return. Imagine what they’d be willing to do, by the way, for financial return.

Photographs used under Creative Commons license courtesy of Lift Conference

  1. He really thinks that HouseTrip isn’t just another Airbnb rip off? And that they aren’t in the same space? Airbnb has 2x as many entire homes in Housetrip’s backyard of London, and 4x more all together listing in London.

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    1. Arnaud Bertrand Saturday, April 14, 2012

      Hi I’m Arnaud, the founder of HouseTrip. I wrote the business plan for Housetrip with my wife Junjun in 07 and as far as I know airbnb was founded one year after that so we are definitely not ripping them off. We have chosen our own path which resonates strongly with our hosts and guests.

      As far as number of properties go, we focus on whole properties and on maintaining an optimum match between supply and demand. In our view, it makes no sense to gather thousands of properties somewhere if you do not get bookings for the hosts.

      That being said in some key markets like France and Spain we have 2x the number of whole properties that airbnb have and in Switzerland– our home country– we have almost 10x. In the UK we do have 1’000 fewer whole properties than they do but meanwhile our top host in London made more than £400k in HouseTrip bookings in the past year and I am sure she is satisfied with our strategy of managing out supply ;-)

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  2. Neil is not only smart, he is also a really good, down-to-earth guy.

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  3. FAIL. he bored me half way through.

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  4. Thanks for sharing your ideas regarding the house trips. Myself am clear about your points.

    http://www.cogzidel.com/airbnb-clone

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