What do you do after selling your company to Microsoft for almost £500m? If you are Mike McCue, a serial and very successful entrepreneur, you start work on the next.
“I took about a couple of weeks off,” he says, erupting into loud, staccato laughter.
“But, you know what? As soon as I had the time off, I immediately started sketching ideas for a new company, a new product.”
That product was Flipboard, an iPad application that could dramatically change the way we consume media, and shift advertising spend from magazines and TV on to the web.
Described as a social magazine, Flipboard takes content from your social networks and displays it like a magazine.
So, instead of a Twitter stream – often just a series of links to other websites –Flipboard opens up those links, posting pictures, snippets of articles, updates and so on, all on magazine-like pages.
You can flip the pages, quickly skimming until something catches your eye. Tap on it and you will be taken to a specially designed version of the content, if the publisher has an agreement with Flipboard, or the original webpage if not.
Gary Lauder, of venture capitalist firm Lauder Partners, says: “It takes a lot of the stuff from nerd-dom to mainstream. My mother is not going to read tweets, but she will read Flipboard.”
That’s the idea, McCue says. “I love hi-tech, but what I love more is an experience that is so simple that the technology disappears.”
At 43, McCue is old by Silicon Valley standards. “I felt old 15 years ago.” Again, the laughter shakes the screen that separates us from the open-plan Flipboard offices in the heart of Palo Alto, California.
Back then, he had just sold his first company – a 3D internet software outfit – to web browser Netscape, which he joined as vice-president of technology.
“I was working for Marc Andreessen, who was almost a decade younger than I was. I was used to being the young guy in the room, especially when I worked at IBM. I was 18, 19 when I was there, but now I definitely feel like the old guy in the room.”
An “old guy” with an impressive track record can raise an awful lot of money in Silicon Valley. This year McCue persuaded investors to stump up a staggering $50m (£31.8m) for the company, just nine months after launch, giving Flipboard a valuation of $200m.
The fundraising, which seemed rich even by tech-company standards, made him the poster boy for the new bubble. Fellow entrepreneur Caterina Fake, who founded Flickr, says: “Mike McCue is a great entrepreneur. However, that was a crazy valuation.”
McCue contests the idea of a new bubble. “I don’t see it as a bubble the same way it was back in the late Nineties. It could still veer into that terrain, but right now we’re talking about real companies with real dollars.”
Flipboard itself has a persuasive commercial proposition. It works with a range of publishers, from the Telegraph Media Group to The Economistand Marie Claire, and is adding big names weekly.
These publications agree to deliver their content in Flipboard’s slick layout, interspersed with magazine-like full and half-page advertisements.
“Only about 10pc of ad dollars are spent online,” says McCue. “Most of the ad spending still happens in print publications and TV.
“I think a big reason for that is that big brands like Burberry can’t create desire for a brand with a banner ad or a search ad.
“They can’t get you to decide that you should wear khakis instead of jeans. They need a beautiful full-page ad, that’s immersive and emotional in a magazine, or they need a TV ad to do that.
“We have an opportunity to have that kind of advertising, for the first time, move over to an online realm and I think that’s a huge market opportunity.”
It is also better for users, he says. “The problem with these banner ads is that they tend to interfere with the content – they sort of squish the content down to these little columns and that’s a terrible user experience.”
McCue says publishers can charge between 10 and 15 times more for advertisements within Flipboard than they can for banner advertisements, and Flipboard takes a cut of these revenues.
The company is not yet profitable but McCue says it will be within two to three years. The app is one of the most popular on the iPad. It won a million readers in the first five months, adding another million in just three months.
It works best if you are a keen user of social networks, such as Twitter and Facebook, where people regularly share links to articles with their online friends.
“Social media is transforming how people discover information and how they share it,” says McCue. “It’s not so much about search any more, it’s not so much about going to a top-level domain like time.com or newyorktimes.com, it’s about looking at your Facebook and Twitter feed and then discovering links there.”
McCue argues that Flipboard is good for publishers, because it drives traffic to their stories and creates a much slicker way for consumers to enjoy digital content.
He says Flipboard does not infringe copyright because it displays only what publishers have chosen to put in an RSS feed, something that allows publishers to syndicate content automatically.
“That’s what the publisher has decided they are willing to syndicate,” McCue says. “Somebody has to decide to share it on Facebook and the link has to be in RSS. If it’s not in RSS, it’ll appear just as the title.”
But it is debatable whether people want to consume media according to what their friends say they “like”, or even the postings of a professional blogger.
McCue himself describes the beauty of a paper magazine. “Timemagazine will take everything that happened in the world and condense it down to 60 pages, and lay it out beautifully, and provide context with beautiful photography, and beautiful typography, and incredible rhythm.
“So it’s not just about a whole bunch of facts coming at you, chronologically ordered, which is how social media works today.”
The problem is, Flipboard will also be throwing together content like this, however attractively it is displayed. It will necessarily lose that rhythm.
Still, McCue believes this is the future. People want another level of curatorship above a magazine or newspaper editor to personalise the news to their taste.
He does not believe paper magazines will die out altogether. “I think that they’ll be a luxury. It’s very hard to replace the feel of paper and you never will. There’s something absolutely wonderful about being able to flip through a magazine.
“But it’s incredibly bad for the environment, it’s incredibly expensive to produce, it’s incredibly problematic when it comes to what people want now, which is real-time news.
“This will ultimately become the primary way I think that people will get their news,” he says, waving the iPad energetically, “because it will be more fresh.”
Mike McCue CV
Born July 4 1967
Education After secondary school, he built and sold video games
1986 Joined IBM, working in graphic design and IT
1990 Founded 3D web-browser company Paper Software
1996 Sold Paper Software to Netscape, joining the company as vice-president of technology
1999 Founded internet voice communication company Tellme Networks
2007 Sold Tellme to Microsoft for $800m and joined Microsoft as head of Tellme
2010 Founded Flipboard. Joined Twitter’s board of directors
Family Wife and four children