As Rummble's CEO is ousted, the story of a European startup unravels

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Rummble, one the UK’s oldest location-based reviews and social network which actually pre-dated Foursquare, has had its CEO removed by the board and now faces a radical shift away from it’s consumer-facing service of four years towards a Business-to-Business future.

What we know on the ground right now is that CEO Andrew Scott has departed the company; the existing staff remain in place and Rummble, while maintaining its web site and smartphone apps, is set to move forward towards a B2B strategy which is not white-label, but based on leveraging its core technology.

Over the past week TechCrunch Europe has been delving into the story of why Rummble ended up in this situation, and where it goes from here. I have been covering Rummble for over 5 years. I had them pitch at startups events even before I joined TechCrunch and I’ve written about 45 posts mentioning them in the last three years. So I guess I feel I know the company quite well.

So – to be blunt – what the hell happened?

The story starts over five years ago when founder Andrew Scott had a vision of mobile social networking. He created Playtxt, essentially an SMS flirting and networking service which had some traction but did not take off. Realising that social networking would be profoundly affected by location based services, he created Rummble, which from the word go incorporated Facebook style social networking and something he called the Trust Network, designed to work out what you would like based on the places you rated.

In fact Rummble was location oriented even before it expanded into smartphone, check-in style apps, plying the location based social network world way back in 2007 long, before Foursquare launched in March 2009. Hell, I even called it the “the Whrrrl for the UK” back in 2007. And who remember Whrrl?

It had a facebook app in 2007, and it even integrated Yahoo’s FireEagle location platform back in 2008. Scott was clearly ahead of his time.

But while Foursquare set the world alight with the idea of Check-in social games and becoming “the Mayor” (sure it’s not a big deal now, but at the time it was white hot), Rummble continued to plough the path of Yelp-like local reviews, trusting that it’s underlying Trust Network idealogy would shine through.

That clearly didn’t really get the traction they desired, and although hitting between 150,000 and 200,000 users at their peak last year, Rummble only belatedly added a Foursquare-like medal system months later in December 2009.

It’s at this point that I know for a fact that CEO Andrew Scott had to pull out the stops to keep his vision alive, and would search high and low for backers. And believe me, this is a passionate guy. Some might say a Marmite kind’ve guy. Check out his speech at GeeknRolla last year.

But as we all know in this startup world, while passion can only get you a long way, there must also be execution. Still convinced that Rummble had legs in its consumer-facing form Scott went out fund-raising yet again.

Certainly I seemed to meet him a many different events and conferences, across several time zones, where he would play the triple roles of speaker/panelist, business development, fund-raiser and party host.

But by Summer 2009 Rummble seemed to have much varying degres of focus and it showed. It was an issue I pointed out in a post titled: “Will the real Rummble please stand up?

The UI on the site needed attention and the iPhone app needed updating to counter the insurgency from Foursqaure (remember, in 2009 the location game was not yet sown-up and even Facebook Places had yet to launch). But Rummble spent valuable time white-labelling a version for a WiFi finder company, TotalHotSpots, and that seemed off message. (TotalHotSpots founder Alex Housely later joined Rummble).

As an observer, the whole thing was frustrating to watch. Especially as Rummble had a far more sophisticated approach to location privacy, something other networks have only NOW started to address. Its underlying product, its Trust Network, appeared to be struggling to get heard amongst all this other activity, like making videos.

Rummble continued to grab at straws, hoping to get more traction, putting its stock into the early growth of Android apps.

But Rummble had financial concerns in terms of its runway. It was running on thin air. What it needed perhaps was a financial backer who shared its vision of a mobile world where we would need a personalised filter – something curation apps for Twitter and Facebook are only just now emerging.

Enter stage left Joe Kim, serial investor in startups and founder of new London-based fund M8 Capital. For his part, Kim has had an extremely long and successful career as an investor in Asia and the US, even backing the Access startup in Japan long before the explosion of iMode in that country which made it a world leader in mobile. Kim is also, I would say, a visionary and has a long track record of backing startups which on first instance look crazy.

Lured to Europe late in 2009 by the potential for developing mobile companies out of sight of the intensely competitive venture environment of the US and Asia, Kim has shaped M8 Capital as a purely mobile focused venture fund.

It is TechCrunch Europe’s understanding that conversations between M8 Capital and Rummble started in late 2009, finally culminating in a seed investment of £550,000 in April 2010, which was publicly announced two months later. Any debts or money worries Rummble had were – I understand – settled. As one source put it to me “M8 cleared their decks.” Rummble had a clean sheet to start again.

It could not have come sooner. Foursquare was already growing in the UK and even tied in deals with Vodafone.

Could Rummble hitch its ride to this explosion in location based services? At any rate it now had a chance to try with M8.

However, it’s at this point we have to ask ourselves: Was the funding enough? Should M8 have put in, not half a million, but £5 million to really make Rummble into the consumer platform it clearly wanted to become? Given the recent discussion on TechCrunch Europe about lean startups, it’s clear you just can’t do a consumer startup on seed capital alone. And obviously hindsight is a wonderful thing.

But it’s clear that Rummble’s new backers – who had effectively given Rummble another chance – had a strong view on execution. They wanted Rummble to deliver.

It’s at this point strategies – and stories – start to vary.

We understand Scott wanted to take Rummble to the US, and take the fight to a bigger, tech friendly consumer market. However, on the other side, we hear that M8 needed to see targets and numbers met in Rummble’s home, core territory of the UK before that would be considered and – crucially – before a follow on funding round could be green-lit. Remember, like any VC, M8 has to answer to its shareholders that its investments are performing.

This is a classic scenario in the realm of startups. The board, often dominated by financial backers, has one view. The founder(s) has another. And this story is the quintessential story of many European startups trying to build consumer web apps. Many European VCs are often more interested in the B2B capabilities of their application, knowing how hard it is to scale a consumer application in the fragmented markets of Europe. Meanwhile the entrepreneur can well be champing at the bit to get ‘boots on the ground’ in a large consumer market like the US.

Rummble clearly had three potential avenues: a mobile client, a location-based back-end and a Trust Network. What interested M8 most, we understand, was this Trust Network algorithm – ironically something Scott had for four years been so keen to emphasise as part of Rummble’s overall pitch, but which required massive consumer adoption to really expose.

But time was running out. I myself saw Scott in the US attending conferences and putting down possible roots in San Francisco. But after Summer 2010, it is fair to say, objectively, that Rummble consumer proposition was not shifting the needle. It’s mobile smartphone clients were languishing. The iPhone app continually crashed and had low ratings on the app store.

That said, we understand from sources that Rummble was showing promise on the business side. That it had deals lined up with potential partners for its consumer facing service. These included Nokia, Time Out and – we’ve even heard – The Grammys. The question was, did Rummble have enough runway left to execute, and did the board, dominated by M8 which was now the majority shareholder, have the appetite to continue with a consumer facing strategy?

The story then turns into what you might call, if we were talking about rock bands, a story of “musical differences”. While it appears Rummble’s management had come around to the idea of a B2B stratagy, it is fair to say that, in the face of an inability to get traction in consumer markets, M8 lost confidence in the management’s future ability to execute in B2B.

CEO and founder of Rummble Andrew Scott was given notice on January 6th. He remains on the board and is still the largest private shareholder. And while he is handing over the remaining team, he is out of Rummble.

We’ve spoken to both parties.

Scott declined to comment. However, sources say that he feels he was not given enough chance to turn the business in this new direction and that obstacles were put in his way to prevent him from executing.

For his part M8 principle partner Joe Kim said to me, on the record, that: “We stand by our view that Andrew Scott has compelling strengths as a mobile visionary and we wish him all the best in any new ventures.” M8 also says that the remaining team at Rummble wanted to continue with the B2B strategy, and that M8 wanted to back this.

Privately however, our sources say, somewhat diplomatically, that M8 Capital feels Scott would be better as part of a team that compliments his vision as opposed to carrying the full startup burden. That appears to be a guarded way of saying that Scott lost the board’s confidence.

And there is a lesson here. VCs expect management to execute. But by the same token, the management of a startup expects their financial backers to give them a fair hearing. Whether that happened or not we may never know.

So where now for Rummble?

Claudio Weeraratne remains on board as a developer, Clive Cox remains CTO and Alex Housley will become interim CEO until such time as a new CEO can be found to head up the business.

The next phase of the business will concentrate on the Trust Network where scores given by users for venues (or any data point for that matter) are used as a basis for recommendations based on a user’s social graph. What we’re likely to see emerge is an API-based platform for trust-based recommendations which could be applied to a number of niche verticals.

But Rummble’s – and Scott’s – dream of it becoming a consumer giant in recommendation – the Facebook of personalisation and curation, if you will – is over.

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