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    Scout’s honour


    Tech-based personal recommendation systems have come a long way in recent times. In 2002, the Wall Street Journal published an article by Jeffrey Zaslow entitled, “Oh no! My TiVo thinks I’m gay,” outlining the severe limitations of algorithmic taste-profiling. Even today, iTunes, Amazon and other popular online media stores insist on taking the “Customers who bought this also bought…” approach to media recommendation, with inevitably humble results.

    Richard Giles knows all of this better than most, and now he wants a piece of the action. Giles and business partner Graeme Sutherland recently launched Scouta, an online video and podcast recommendation service that Giles describes as like having your best mates always online, offering media recommendations based on their intimate knowledge of your personal taste.

    These days, Australian web entrepreneurs are faced with crucial early choices. They can head straight for Silicon Valley, where the concentration of talent, skills and capital form a fertile ecosystem (Nik Cubrilovic of Omnidrive is a good example). Alternatively, they can remain in Australia and focus their offering on the local market, as Ben Barren is doing with his local blog search service, Gnoos.

    But Giles is adamant that there is another way. He believes Scouta can be a genuinely global web service, based outside the US. (He is based is Perth, while Sutherland is based in London.)

    “It frustrates me that high profile bloggers continually reinforcing the notion that Silicon Valley is the epicentre of the online boom and if you’re not there, you’re nobody,” says Giles. “I want to prove that Aussies are just as viable; that you can network successfully no matter where you are in the world by using the tools found online.”

    Scouta has a simple, intuitive interface. First, discover an interesting video or podcast online and add the url to your Scouta favourites. The media file is embedded within the page, and others can vote (with Caesarean thumbs) for or against it. If you approve of someone else’s file, it is added to your favourites list. This educates the site’s back-end, which suggests more accurate recommendations with each entry.

    “Community sites have always been focused on the community as a whole,” says Giles. “We’re focused on an individual and what they love – that could be anything from sport to entrepreneurship. We’ve stayed away from top-ten lists. We’re the anti-top ten, if you like – the epitome of long tail.”

    Giles and Sutherland are working on a prototype that syncs with iPods and the soon-to-be-released iTV, so that several video and audio recommendations will be waiting for you every morning, based on your consumption habits.

    Scouta raised several hundred thousand dollars in its first investment round. Giles admits that the process was an exercise in getting out there and making contacts.

    “One of the potential investors had an immense amount of experience and wisdom to share, but we were put off by the potential for them to gain too much control. We didn’t want them to become a majority shareholder after the second round,” says Giles.

    In the end, Giles and Sutherland settled on an investor and investment that struck the right balance. If uptake continues at the anticipated rate, they will be searching for a larger second round of funding later in 2007.

    When asked about the future and a possible trade sale, Giles is not coy.

    “I’d like to meet someone who would not be willing to sell their company for the right price, but we want to stick this out and see where it can go. Graeme and I love this space and this technology. It’s our baby. And the community aspect is so exciting. We’re gong to give this a real crack. Who knows what the future will bring.”


    Summary: Scouta is an internet recommendation system that generates personally relevant suggestions of online audio and video for individual members.


    Revenue model: Advertising and sponsorship. Technology licensing for owners and distributors.

    Launched out of private beta: February 2007.

    Capital raised: Several hundred thousand dollars (significantly less than a million).

    Type: Angel. (First round.)

    The capital raising process…

    • Started capital raising early (straight after leaving full time employment) by networking with local and national entrepreneurs.
    • Met with local high net-worth individuals through contacts – asked for advice and explored investment interest.
    • Settled on investor who had industry experience but didn’t push for so much equity that it would jeopardise founders’ future control and ownership.

    Paul Ryan is an editor and senior writer at Australian Anthill.