Warren Heal is the CEO/founder of RentMyItems, an online rental marketplace that allows person to person renting of items owned among friends, family and communities within an online community.
I spoke to Warren Heal about how the idea for RentMyItems came about. He also shares some tips with entrepreneurs just starting out.
Could you quickly give us some background information about yourself? Tell me about yourself growing up?
I was born and raised in Brighton, the oldest of 4 children. Then, in 1994, I went to university in Kingston to study Business Studies.
How did you get into business? Were you exposed to entrepreneurship as a child?
Both sides of my family have always been entrepreneurs and have never had regular “9 to 5” jobs and so it was always something that I wanted to do. It’s just that I was employed for 12 years before setting up RentMyItems. I have, for many years, wanted to set up an online business.
Who was your inspiration growing up and why?
Difficult to say. Various family members had different traits and I hope that I have picked up advice and skills from them all.
What was the inspiration behind RentMyItems? How did the idea come about?
I came up with the idea one afternoon when my lawnmower was not working one day and I thought it would be great if I could just rent my neighbour’s for an hour. After doing so he then asked if he could rent my bike from me for a week for an upcoming holiday, and that’s when RentMyItems began to come together.
So Warren , what is RentMyItems? What are you guys are trying to solve?
RentMyItems is an online rental marketplace. In essence we are using modern technology, with the internet, to build a community-centred online marketplace which facilitates person to person renting of items owned among friends, family and communities.
The website rentmyitems.com launched in September last year and anyone can rent a household item for free – in fact basic listings for all households will always be free. We are well aware that sometimes people need specialist equipment and we are delighted that we have Hire Station on board as a corporate listing company, so if anyone is doing any specialist work they can see if Hire Station has what they need. Though our main aim is to get people renting and lending within their local community.
What were you doing before you founded RentMyItems?
I have worked in the music industry for over 12 years, predominantly in the licensing and digital fields.
What was your biggest challenge during the starting up phase?
Dealing with challenges of website development and funding.
How were you able to get traction for the business in the first couple of months?
I was interviewed on BBC Breakfast, BBC Radio 5 Live and 10 local BBC radio stations on the day of launch. Additionally coverage has been achieved in The Sunday Times, Guardian, The Independent, , Woman’s Own, Green Magazine, Yahoo Finance, MSN Money and WebUser magazine, which highlighted RentMyItems.com as one of the 40 Best New Sites To Save You Money. This coverage is down to our great PR, Paul Savident.
Raising money is always such a hot topic when starting a business, How have you been able to fund the business?
The business has so far been financed by myself and family and friends.
What are the most crucial things you have done to grow your business?
We continue to receive press exposure and offer free listings to our users without taking commission on completed rentals.
Would you say the business has changed from the first initial idea?
Not as yet, however we plans for additions to the site in the not too distant future.
What would you say has been the highlight of your entrepreneurial journey so far?
The day-to-day experience of launching a start-up is never dull! However the highlight has to be our launch day, the 19th September. It was extremely satisfying to see a year’s hard work finally come to reality, and to do so with such great press coverage was the icing on the cake.
What can we be expecting from Warren Heal in 2012?
Continuing to build RentMyItems into everything we want it to be….and hopefully a Summer holiday!
What three pieces of advice would you offer entrepreneurs starting out today?
Be sure that you 100% believe in your idea before starting out. You will always need more money than you think. Turn all the negatives into positives by learning from your mistakes and not making them again.
Describing itself as ‘the Facebook for people who haven’t met yet’, members share over 8 million interactions every day, with Global Personals gaining a new member every six seconds. The business creates a platform for thousands of online dating sites to be built, the majority of which are privately owned and managed by website owners.
Founder and CEO Ross Williams created his first agency during his time at university in 1997. In 2003, armed with just a credit card, Ross alongside Steve Pammenter created Global Personals. Since then the business has grown a tremendous amount, resulting in Ross being shortlisted for Young Entrepreneur of the Year in 2006, selected for Top 10 to Watch in 2007, and nominated in two categories in the Fast Growth Business Awards in 2008.
Global Personals has a very impressive portfolio of over 7,500 sites with over 1,500 brand name partners internationally, such as FHM, Magic and The Independent. Partners benefit from Global Personals by using White Label Dating, a fully supported free to set up platform created by Steve Pammenter, which enables any organisation to run their own dating website regardless of their size. Branded as ‘the simplest way to break into the dating industry’, White Label Dating allows an individual to set up their own dating site or an established brand to monetise its existing customer base – all you have to do is attract traffic to your site.
Members benefit from Global Personals’ mobile web platform; designed for speed and performance, customers are able to use geolocation services in order to find people in their area, whilst also having the opportunity to ‘flirt’ with people on the other side of the world.
The business has used its inherent tech capabilities to continually adapt in order to keep up with social media trends; the development of a new API has allowed for app development and links GP’s services to sites such as Facebook, a key strategy for growth and innovation through the sharing of information between members.
Founded in Windsor, Global Personals now has offices in London, New York and Melbourne, and has reported an annual revenue of $50m in 2011. In January 2012 Global Personals celebrated their 10 millionth member. Their easy-to-use, ready-made dating platform has attracted a huge number of partners at this stage, and the ever-changing technology embedded within the platform will continue to attract partners, both big and small.
Gott Technical Services, a company based in the North East of England will be hoping to maintain its position as one of the market leaders in motor equipment suppliers this year.
I recently caught up with director, Ian Gott as we spoke about how he got involved in the business and how he has managed to grow the business so far.
Can you give you some background information about yourself, were you the entrepreneurial type growing up?
I was quite a thinker rather than a doer as a child, but I always wanted to find easier and better ways of doing things. I suppose some might say I took the easy route to a career by joining my father’s business but I joined it when it was in its infancy so I enjoyed the buzz of seeing something new take shape. I joined because the company needed a stores and purchasing system to be set up and I offered my services to develop this.
Once this was running smoothly I looked for the next challenge and volunteered to go out selling for the company. After these early bursts of enthusiasm, there was a long period where I was simply ‘following in my father’s footsteps’ but as I matured I refocused and set myself goals to achieve personal success within the business. I often think I have lived my life in reverse compared to most people because I have become more enthusiastic, energetic, innovative and demanding as I have got older.
Tell me how Gott Technical Services came about?
My father was sales manager for an industrial lubrication equipment manufacturer, when he decided he could do a better job, he went off and did it on his own. With agreement from his employers he left and set up Gott Technical Services as a distributor of the product range for which he had previously been sales manager.
In the early years the company’s target market was mining companies that worked at the open cast coal mines in Northumberland, various industrial and manufacturing companies and farming businesses. Basically, any company that required pumping and compressed air equipment to maintain mechanical plant and machinery. I then recognised our products and services could be useful to the vehicle repair trades and started to target these markets with my sales activity, developing and growing our product range to suit.
What is Gott Technical Services?
A family based business, based in the North East of England that supplies, installs and maintains garage workshop equipment.
Why vehicle maintenance equipment?
Our involvement with these products grew from our involvement with industrial lubrication equipment. Not many people know what garage equipment is but it is an essential part of everyday life.
Our equipment is used to keep refuge vehicles, fire tenders, ambulances, police cars, school buses, army vehicles, supermarket delivery vehicles and family cars maintained and on the road. Our MOT test equipment checks that vehicles are safe and meet environmental legislation.
What would you say was the hardest part of taking over your family business?
Trying to establish my own identity and authority and make my parents feel safe knowing that the business can run effectively without them.
How have you been able to fund taking the business forward?
We have always had great support from our bank and over the years we have received funding from Business Link and more recently the North East Growth Fund to support the business growth.
Would you say the initial idea for the company, or that the business model has changed since the company was founded?
The original goal was to distribute industrial lubrication and compressed air equipment and as such our target markets were open cast coal sites and manufacturing industries. With the decline of these industries in the area it was necessary to expand our range of products and services and grow into the automotive market.
In recent years, with the onset of recession, we knew our clients would have less money to spend on the purchase of capital equipment but also knew they would need to keep their equipment maintained. We grew our business by listening to our clients’ needs and developing packages to suit their requirements.
What would you say Gott Technical Services does differently from other vehicle maintenance equipment suppliers out there?
We are straightforward, honest people who take the time to find out exactly what our customers want and we give genuine advice – simple as that. There are so many equipment suppliers and maintenance providers who do not find out enough about their customers’ problems so do not necessarily provide the right solution.
Whilst we have a preferred product line and established maintenance packages, we are prepared to tailor these to suit our customers’ requirements. Many of our competitors seem to think the only way to get business is to supply the cheapest products possible but we believe in supplying value for money products. We do not sell the cheapest products because these will be unreliable or will not last very long. Despite this country’s economic downturn in recent years we continue to grow our business through recommendation because we are known for supplying high quality, reliable equipment.
How big is your team now?
There are twenty-one of us.
What would you say has been some of the most crucial achievements that you’ve done to build the company to this level now?
The key achievements that I have made since taking over the business are, assembling a strong team, securing funding for growth, securing contracts with most local authorities, emergency services and national garage groups. As well as securing distribution agreements for market leading products and ensuring that all our engineers are accredited to the latest trade and health and safety standards.
What is your business model?
Sell high quality products at competitive prices, whilst providing a first class aftersales service.
Is the business profitable?
Yes.
What’s been your most memorable moment so far on your entrepreneurial journey?
Various contract wins, as well as taking the business from being ‘one of many’ to being the recognised market leader in the North East of England and establishing a national presence.
What pieces of advice could you give to aspiring entrepreneurs out there?
I’d say, be decisive. Go with your gut instinct. Genuinely care about people – both staff and customers. Have a clear plan and set stretching goals.
What can we be expecting from you and Gott Technical Services in the future?
Continued expansion and the introduction of new products and services.
Recently I’ve been running a small side project selling posters. The idea came from theUniversity of Warwick Memes Facebook Groupwhere me and a chap named Leigh Dawson both made images inspired by the popular “Keep Calm and Carry On” posters. A few people commented, saying they’d like the designs as a poster. Seeing an opportunity, I got in touch with Leigh andJames Thake(a Warwick graduate who polished the designs), suggesting we work together to get the posters made and sold and split the proceeds.
They were favourable to the idea, and we got our first batch of posters sold earlier this week. So far we’ve made a (small) profit. Along the way, I learned a lot about the ground-level, tactical details of running a business that weren’t apparent before. I’ve spent a lot of time reading about business, both in books and online, but you know what? You can get a basic grasp of the high-level strategy that way, but you really have no idea until you actually go out and do it.
I sold this. (Not a Warwick student? See this. Not British? See this.)
It’s like the sports fans that know exactly how the team’s manager should be doing their job. From an outsider’s perspective it all seems so easy. Why doesn’t Costa copy Starbucks and have staff write down customer’s orders? Why doesn’t Transport for London copy Hong Kong’s MTR and clean their tube stations? (And maybe make their service actually affordable and reliable while they’re at it)? But viewed from the inside, there’s a million more pressing details, any one of which could kill the whole enterprise if it went wrong.
Selling posters was a tiny venture, but it brought up a whole bunch of business issues. And this was for a project that involved a handful of people, about two weeks time and a few hundred pounds in revenue; I can’t imagine the pressures of running a billion-dollar corporation with tens of thousands of employees. Here’s a summary of what I learned.
Lesson 1: The Lean Startup Approach
I wasn’t sure where to begin at first. Was it worth paying to get posters printed without knowing if people would pay for them when they arrived? And how much could I charge? I needed to ascertain if there really was a demand.
Then I remembered the “Lean Startup” approach, which suggests making a minimum viable product to gauge demand. The MVP might be a working demo or prototype, but it can be more minimal then that. I decided to make a pre-order form for the posters, with a range of prices on offer. Although the form wouldn’t take payments, it would be a pretty strong signal of intent to purchase (or lack of it). It would also gauge how much people would be willing to pay.
It worked. I got my first pre-order about 5 minutes after setting up the form. The orders came so rapidly after that, watching them come in was addictive. The idea was validated.
Lesson 2: Manufacturing
The next step was getting the posters printed. There were lots of little issues here — tweaking the designs, getting the files in the right format — but they were mostly straightforward.
The hard problems were deciding which posters to print, how many, and from whom. The printing industry has massive economies of scale, and it works out a lot cheaper per item if you get a larger print run. That is, I would be better off getting many copies of one or two designs. On the other hand, we had five designs offered on the pre-order form, in four different sizes (big mistake there, eh?), and people had ordered a whole range of them. If I didn’t satisfy these people, would I be leaving money on the table? And some people had said they’d pay extra to get their posters early. Would it be worth using two printers, one fast and expensive, one slow and cheap?
These problems seem a lot simpler when it’s not your money at stake. In the end, we decided to order two designs in two different sizes, and use a slow-and-cheap printer. Right choice? No idea.
Lesson 3: Pricing
Students are pretty cheap, and keeping the price low would increase demand. But some pre-orders had been willing to pay £18 for their posters, and if you undercharge people who would willingly pay more, you’re leaving money on the table. It’s the classic price-demand curve. Again, it’s a much harder problem when you’re faced with the prospect of people calling YOU a rip-off and a terrible person if your prices are too high (which happened), and losing money if your prices are too low (which also happened).
What you really want is for everyone to pay what they’re willing to pay. Except that’s not feasible. Another way is to have a tiered pricing structure, like Starbucks has with their coffee. Small black coffee? £2. Want more coffee, fancier coffee, flavoured shots? Price goes up. Remember how I made the big mistake of offering too many options? It’s not a mistake from this perspective. People could order an A3 poster for £5, or an A1 poster with fast delivery for £18 (people did, too), or somewhere in the middle. In the end we ended up one print run of A3 and A2 posters, so people who might have paid £18 ended up paying a maximum of £10. Mistake? Hard to say.
Another issue was whether to lower the prices from the pre-order form. After printing in bulk, the price per item turned out to be quite low, and it would have been possible to lower the prices a fair bit and still make a per-item profit. But people had been willing to pay the existing prices. It seemed people who wanted the posters felt the prices were fine, and so lowering the prices wouldn’t have attracted more customers, only left money on the table. And like most retail businesses, despite a high per-item profit margin, our overall margins were low, mostly due to unsold stock. In the end, we kept the prices the same.
(Why did I order so much stock? Because of the economies of scale, it worked out a lot better to order too many than too few posters. Again, one of those things that’s easier to appreciate when it’s you running the numbers and your money at stake.)
Lesson 4: Marketing
Marketing, I think, was the biggest weak point of the venture. Most of our traffic came from the Facebook group, but people were posting constantly to the group, meaning our advert would disappear quickly. We posted a few times but didn’t want to spam people.
We also did some offline marketing, by sticking flyers up around campus. Considering the business, getting hold of flyers wasn’t hard (we just used some of our excess posters), but sticking them up took a long time. Flyering is an effective way to get the attention of university students, but you have to be ubiquitous (we weren’t). We flyered some of the “designated flyering points” on campus, but not everyone walks past those. If you flyer other places, they might get taken down quickly, wasting your time.
There’s a few guys who occasionally hold a proper poster stall at Warwick, and they stick up proper signs all around campus, along with a notice saying the signs will be removed at the end of the day (so campus security doesn’t remove them first). Both more effective and efficient than our approach. I’m definitely going to try and market our next stall more seriously.
Lesson 5: Sales
Actually selling the posters was the biggest “grind”, though also the most rewarding part. The few hours I spent at the stall by myself, not making sales, were really tough. I just felt incredibly stupid accosting people and trying to get them buy silly posters. And the buzz when people actually turned up and began forking over their hard-earned was amazing. I also realised the benefit of having good salespeople — it’s not something that comes naturally to me, but I was doing an OK job. Then my friendTeenieshowed up (she owed me a favour for helping her set up herblog) and immediately began hustling to get people to come over and buy. Impressive to watch.
I can also see why business programmes like The Apprentice make such a big deal out of selling. As well as being the business function that directly brings in cash, it’s also the best way to get a ground-level, detailed view of your market. You’re on the frontline, seeing directly who is buying, who isn’t, and what it takes to get them to open their wallets.
Lesson 6: Legal
We didn’t break any laws selling the posters, but we did, er, stretch a few campus regulations. Warwick in general does not look too kindly on students selling things on campus, especially if it takes away profits from Warwick Retail or the Student’s Union (“UK’s most entrepreneurial university”, yeah right). Aside from that, we also needed a space to set up the stall. It’s fairly cheap to rent space inside the SU, but foot traffic there is not that high. We had a hard time getting hold of clear information about where else we could sell on campus.
In the end, we took an “easier to ask forgiveness than permission” approach and used the library. I didn’t know if this was permitted or not — I found out after setting up the stall that it wasn’t — but no-one from the library said anything during the 8 hours we were there.
Lesson 7: Public Relations
People in general have funny opinions about making money. I know I used to. So I was pretty apprehensive that I’d get shit from people once I actually started making sales.
In the end, most people were supportive and approving of what we were doing. Some people said they thought it was really cool (what can I say, some Warwick students are really fond of the Koan). There were a few people who declined to purchase once they found out it wasn’t for charity — fair enough, their money. There was only one guy who gave me serious shit about it, and posted on the Facebook group that we were fraudsters, mercenaries, etc.
It was pretty hard to not react emotionally to that, though I managed not to (imo). Most people were on our side so not much damage control was required. Still, the whole thing occupied my mind for way too long.
(I calmed down when I figured out what the guy was actually complaining about. It wasn’t that we’d stolen the designs (we hadn’t), it was the fact that the original “koan” meme wasn’t our idea. Which is a pretty flimsy criticism, and I realised the guy was mostly just trolling for the hell of it.)
Lesson 8. Making money is easy
Wealth isn’t money. Wealth is matter that’s in a form favourable to humans. So if you rearrange matter into such a form, you create wealth. Sounds easy? It is, really. There’s so many opportunities to make the world slightly better or more convenient for people, and you just need to find and exploit one.
Despite the complexity detailed above, all we really had to do was make some designs, get posters printed, and sell them to people.
Lesson 9. Making money is hard
We made a few hundred pounds selling posters. It also cost a few hundred pounds to get them printed, so we were only just breaking even. That’s not factoring in our time. We have a lot of stock left over and I think we can hold another stall and get more sales, but still, we’re unlikely to make a fortune. I’d be happy if we ended up making minimum wage for the time we put in. There’s almost no chance of making what I’d earn as a professional web developer.
So although there’s a lot of opportunities out there, big opportunities, and especially big, scalable, opportunities, are scarce. That’s one reason why a lot of these same university businesses crop up year after year. Every year, students begin reselling textbooks, running events, or printing t-shirts. If they’re lucky, they make a few hundred or even a few thousand pounds, but then find out they can get way more in a graduate job. So they quit, until someone else comes along and spots the same opportunity, and the cycle repeats.
The upside of this is that there’s always small opportunities out there. You could probably quantify the expected value of unexploited opportunities with a variation of the efficient market hypothesis. Obvious opportunities over a certain size will already have been gobbled up, but the small ones might still be worthwhile (And of course, there are plenty of big, but non-obvious opportunities).
Was it worth it? Yes. Although the financial rewards were miniscule, actually getting out there and hustling has taught me an incredible amount.
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This guest post was courtesy ofIsaac Lewisand was originally post on his personal bloghere. Do check it out it is a great blog & it is a pleasure to have Isaac contributing to YHP. Read more of his postshere.
Steve Callanan is the CEO and co-founder at wireWAX. wireWAX is the first and only taggable video tool which allows users to add intuitive tracking tags to people and objects in video. So whilst watching a video, you can basically stop, click on anything that might interest you, something you want more information on or perhaps want to purchase – a two click process to the store.
I recently caught up with Steve as we took a trip down memory lane, talking about his background, earlier entrepreneurial ventures and how the idea for wireWAX came about.
Hi Steve, How are you doing, great to have you on YHP?
Thanks Joseph, I’m great, thank you. It’s an honour to be here.
Could you quickly give us some background information about yourself?
Sure, my background is a strange combination of different visions. I’m a Bristol boy and studied an Electronic Engineering degree at Cardiff Uni. In my final year I set up my own TV production company and made a documentary series about first year students for ITV, not engineering related at all. This was followed by a another six-part series about graduates in limbo. I was the youngest TV producer in the UK at the time and I moved to London and continued producing TV content for the next 10 years.
During that time my company also produced commercial online video for brands and publishers and became the production house for all short-form video content for major digital publishers such at National Magazines and Hearst Digital. During that time it became acutely apparent that there was an obvious lack of interactivity in video; the brands whose products we featured grew frustrated by the failure to exploit obvious commercial opportunities. It was at this point that the concept for wireWAX was borne.
How did you get involved in entrepreneurship? Were you exposed to entrepreneurship as a child?
I wasn’t exposed in the sense that neither of my parents were entrepreneurs but I guess I was always interested in building things and creating something from nothing and they always encouraged that. I suppose in many ways, that’s what entrepreneurship is all about – if you have enough desire to create something unique, you enjoy the challenge of making it work – no matter what – and you get a buzz from seeing others use something you’ve created; you have the makings of a budding entrepreneur.
I was lucky enough to have free rein of my dad’s garage – which was my ‘sweet shop’ – I would spend hours, days sometimes, building something useless. A good example was my first ‘business’ making long-boards for the local skate shop during the summer break – I spent all my time building them and by the time it came to selling them, summer was over. I sold nothing and it was a few years later I turned them all into free-standing bookshelves and gave them away, one of which we still have in the office. Not the best use of my time but a valuable lesson learnt nonetheless.
So tell me about wireWAX and how the idea came about?
Typical of any technology making ripples, wireWAX was a classic case of borne of necessity. Producing short-form video content for brands and publishers it was obvious there was a trick being missed. The products in the video were impossible to buy unless you heard a mention or could see a product name enough to search for that product yourself.
A huge ask for viewers and unless they were determined the opportunity to purchase on impulse is lost. For the first 6 months, wireWAX was a crude prototype being engineered in evenings and weekends but a eureka moment changed everything and we changed focus from production to creating what wireWAX is today. I’m very glad to say I have no plans to go back, production is hard work and I absolutely love what I’m doing now.
What is wireWAX and how does it work?
wireWAX is the first and only taggable video tool. What does this mean? Well, anyone with a video, whether on a desktop, tablet or mobile device can upload it – just like YouTube or Vimeo – but this time faces are automatically detected. Key to wireWAX is our motion-tracking engine which mean those faces are automatically tagged with clickable hotspots or ‘tags’ that lock onto those faces and stay with them as the move around.
You can even add your own tags to other people and objects by simply drawing a box around them. What you then do with that tag is also up to you – link to profiles, text, images, video or other web pages. You can also use any of our wireWAX apps; Amazon (for linking products), Facebook (display a friend’s profile), YouTube/Vimeo (play another video right there in your video), Instagram, Flickr, Qwiki, iTunes, etc., etc. – instantly creating an interactive experience for your viewers.
Just adding one tag makes your video infinitely more interactive and engaging. There is no reason why all video shouldn’t be ‘wireWAXed’. The experience it creates is undeniably powerful.
What is your business model?
Our business model is simple – we have two user types, anyone interested in recording and sharing interactive video with friends and; production companies, brands, publishers, broadcasters or movie studios who want to do something a bit special. We cater for both by offering a free service to everyone and when you want to do more, you pay for those ‘add-ons’.
How did you initially attract users to wireWAX , and how do you do it now?
We’ve not yet done any commercial marketing, every wireWAX video displays a subtle logo at the top right which marks the experience as ours – this is by far the biggest market driver and the start of how people discover us. We also invest a lot of time connecting to fans and, for want of a better term, ‘reaching out’ to potential users on a personal level.
Our first big project was with EMI, I managed to get a foot in the door and a ten minute presentation to the digital team. A week later we’d created an interactive promo for the Kooks where fans could click on the band and enter a competition. We gathered 3000 email address in a week and drove a tenfold increase in traffic to the fanpage – something, we were told, would normally take up to a year.
This was really the start for us, from there other record companies and brands started to show interest. It was the fashion houses such as Tommy Hilfiger, Nike, Rip Curl, Oki-Ni and SSENSE that embraced wireWAX the quickest. The fashion industry has always been nurturing innovative and artistic promo methods and was one of the first sectors to discover that online video needs to be as polished as the products they represent.
So, having produced a beautifully crafted, well-executed and expensive video – where’s the return? Where are the results? Where are the sales? wireWAX has an obvious presence in this space – high-end video production, models wearing products, big online appeal and – until now – no method of engaging customers and exploiting commercial opportunities.
We really believe that everyone could benefit from wireWAX and with video playing such a major part in a connected world we feel that people just need to know about it. Therefore over the next few months we’re dramatically increasing our through-the-line marketing – we have a discrete strategy as well as national and international PR plans. Making the tool free to all will help push the technology out to a wider audience too.
What makes wireWAX different from any service out there? What problem does it solve?
wireWAX is the first and only tool for taggable video. And that is the key difference, while there are lots of companies that provide a service (you send them your video and their own backroom guys manually add basic, rarely moving, hotspots and return the video in a few days), we’ve always set out to make wireWAX a simple, self-provisioning and personal experience.
That last point is also what makes us standout. Users can choose there own tag type and most importantly create their own pop-up (what happens when a viewer interacts), in a style of their choosing and relate it to their project, campaign or brand aesthetic – not a fixed and restrictive template. Putting the power into the hands of the users not only means things are infinitely scalable for us but allow users to be more creative with their own interactive experiences.
wireWAX solves a very difficult problem, very easily. Video is the last of the digital assets to be interactive, a computer knows nothing of the content, just pixels. Adding tags and adding a digital reference point to people and objects instantly means that dumb, passive medium is now rich with metadata. All the other content relating to that person or object elsewhere in the web can now be linked to it.
What are the most crucial things you have done to grow your business?
SEO, clarity and smart pricing are essential to attracting visitors. Keeping interest and then converting them into active users. We work hard at our SEO and do everything we can to let people searching for a tool like wireWAX know we exist. That traffic is essential to our business. Over the next couple of weeks we’re releasing our new ‘front of house’ – our website and most importantly our homepage – the first thing visitors see and make millisecond decisions on whether to pursue or not. We’re also making it much, much easier for users to get started with simple user procedural changes with clear and big calls-to-action.
We trialed a tiered-price subscription model for users based on a very similar model to Brightcove’s. We assumed our client base would be users familiar with video hosting and therefore familiar with a similar pricing strategy. We were wrong, while some appreciated it, a licencing option was just not right for the vast majority of users.
We underestimated how many people would want to experiment before signing-up to a subscription, wireWAX is a brand new technology not a well-understood video-hosting solution where it’s easy to quantify what your money will get you in return. Users look to create one-off solutions in the first instance where they can experiment, distribute and analyse results before committing to something more tiein. We’ve abandoned subscriptions altogether for a free solution with paid-for add-ons. We’re confident it’s a better way to go and we know our users will feel more comfortable and willing to do more.
What was the most challenging part of starting the business?
Staying determined, long hours, difficult clients, difficult employees and technology failure all play a part in everyday struggles but without money, it never would’ve happened. Sourcing that finance was by far the the most difficult thing and in the early days we took ‘bootstrapping’ to the extreme.
Would you say the business has changed from the first initial idea?
The idea was always to create something big, accessible and game-changing but the product is so much better than I would have ever imagined and the business is growing much faster than I expected. If someone had told me a couple of years ago that our product would be used by global power brands such as Nike, Tommy Hilfiger and Rip Curl; and broadcasters such as ITV and Channel 4, I don’t think I would’ve believed them.
Who are your competitors?
We have the privilege of being a world first which means our nearest competitors have either changed tack and focused elsewhere or abandoned the concept altogether. We used to be compared to companies such as VideoClix or Clikthrough but they both provide serviced solutions rather than a self-provisioning tagging tool so their business and customer base is very different. Some newcomers are showing some interesting tagging and recognition features such as Veenome but we’re yet to see a working demo and our tech is more advanced.
While we are in a great position, we never take that for granted and constantly strive to improve and evolve everyday. We have just completed a 9-month rebuild of our original tech and back-end infrastructure to make it so much easier for the technology to stay fresh and always adaptable.
What were you doing before you founded wireWAX ?
I ran Wiseguy Pictures for over 10 years producing a diverse range of TV programmes such as Freshers, Housemates, A Year at Kew and Paparazzi as well as hundreds of hours of online video – mainly fashion and beauty – for some of the biggest digital publishers. We also produced movie trailers and lots of motion graphics – the latter of which gave me a very good grounding for vision techniques and user-interface.
It was working with those brands and publishers that spawned the initial need to develop an interactive video tool.
How have you been able to fund the business?
As wireWAX started as an experiment while running the production company, I was able inject a lot of personal finance and channel production revenue to research and development. It grew increasingly obvious that wireWAX was bigger than production and required more time, people and resources; so reducing the amount of personal time on production and looking for investment was the first major step to taking things further. In June 2011 we received earlyround investment from Passion Capital, headed-up by Eileen Burbidge, Stefan Glaenzer and Robert Dighero.
Between ramping down production and successfully closing that early-round, I’d by lying if I said things were easy. Yes, I could redirect production profits but as my personal involvement in that business diminished so did those profits and there was increasing pressure on me to fund things personally and embark on a very hard period of ‘beg, borrow and steal’. I never doubting that wireWAX was worth the pain and when the tech was in good shape and people were paying to use it, there was an overwhelming sense of vindication and it all felt worthwhile.
We started door-knocking investors at the beginning of 2011 and having the opportunity to present at Mike Butcher’s GeeknRolla certainly allowed us to hit a lot of people at the same time and open doors. We were invited to Seedcamp Berlin and a few weeks later we were sat around a table with Eileen, Stefan and Robert from Passion bashing out the details.
What can we be expecting from your company in 2012?
2012 is a very exciting year for wireWAX. The investment from Passion came with a road-map to develop wireWAX to what it is now. A major overhaul of infrastructure, a complete rebuild of communications, a vast simplification revision of user-interface and user experience; and the start of the biggest commercial application of computer vision in Europe.
Our aim is to make wireWAX the first and only solution to make all video, everywhere, interactive. Doing that means we need the systems in place to cope and the automated functions to reduce almost all user effort.
We launched the first part of this earlier in the year and the new website and user management studio to be launched by the end of April. We’ll always be adding new automated features and improving the technology but as of next week you’ll start to see some incredible stuff, amazing things with video no one has done before.
What three pieces of advice would you offer entrepreneurs starting out today?
I wouldn’t say that I was a successful entrepreneur by any stretch and I can only pass on a few things that have worked for me so far…
1. Persevere. If you really believe in your idea and you believe that it has a genuine use for more than 10 people, work hard and work long – whatever it takes to get it working.
Whatever it takes to get it to your audience. Sometimes your designs or your code won’t work and it’ll feel like you’re killing yourself for a silly idea that never will, but stick at it. There is no substitute and no easy route. Be prepared to sacrifice to make it succeed, but be aware not everyone around you will like you for it.
2. Lists. This is probably an obvious one but make a list, no matter how big and silly it looks and never quit working through it, ignore anyone or anything that tells you to skip tasks or lose enthusiasm. Stay determined at all costs, set yourself a target and get there no matter what. The trick is to never be overwhelmed by the mountain left to climb, set yourself small goals and cross off achievements as you go. You’ll feel good as you work through it and keeping all your tasks in one place will free your mind of clutter and keep you creative. It’ll also ensure you get a good night’s sleep.
3. People. Surround yourself with very, very good people. People who you can rely on and who genuinely share your vision to make your idea happen. Get rid of those who don’t, fast – it may not be immediately obvious but they’ll drag you and the team down. There’s nothing better than coming to work, building something with guys who love it as much as you and having a proper giggle along the way
[Editor's Note] Milos Bezanov is a second year student currently studying International Politics at King’s College London.
Your mail has arrived. You open it up and you start eating it. That’s not a sentence you’d expect someone to tell you, but if you asked somebody what they did with their Graze box, that pretty much hits the nail on the head.
If you’re stuck in the office, hungry, and short for time, people would be willing to try almost anything other than the usual McDonalds or KFC, perhaps in some extremes even their own mail.
It’s very simple; Graze is a service that delivers a small package of healthy food anywhere in the UK for £3.79. In fact it’s so simple I’m sure many of us have thought of the idea in some way or another. Yet when it passed through Graham Bosher’s mind, he saw more, he sensed a business opportunity. People want healthy food, but need quick food; the problem is that quick food generally isn’t healthy, Solution; offer quick food that is healthy and reasonably priced. In fact it’s so simple it makes you wonder why no one else has done it? The truth is; the simpler the idea, the more difficult the challenges, which makes the need for the solutions to be that much more innovative and ingenious.
Graze was founded in January 2009 by 7 friends. It’s small, neatly packaged from recycled material (environment consciousness is always a plus) and is well presented. They deliver at work and home, and are never late. They invested a quarter of a million in research and development; to find a way of ensuring that the food doesn’t go bad during delivery. For this entire service they charge £3.79. The Grazebox is small enough to fit through the letterbox; so you don’t have to trudge to the post office if you’re not in on the delivery day.
However, a professional product and service isn’t enough, people have to want it. How did Graze do this? Looking at the idea it seems easy to answer; they marketed what people wanted (healthy food) and provided a professional service. In truth, however, it’s much harder.
People have known about healthy food for a long time, they just never wanted to eat it. When people think healthy food, they think “spinach” or “broccoli”, which is not exactly synonymous with good taste. All the investment would be in vain if people don’t want the product.
Redefining the image of healthy food is one of the two key parts to Graze’s success; the other is the innovative ways they then convinced you to buy it. The innovation comes from the use of technology. Their interactive site lists the various food types that they do (up to a 100 different foods to choose from), next to which you have 5 options; Bin, Like, Try or Love. This is a flexible, user friendly approach because rather than having simply “like” or “dislike” it caters to the various moods people are in. They might not particularly dislike something, but not like it enough to order it regularly; thus they can click “like” which simply means that Graze vary the times they put that particular option in.
With this system they can tailor themselves to not just the specific food they like, but also what food the customer is in the mood for. This flexibility carries on into their service; you can have boxes delivered as often or as little as possible; and cancel the delivery anytime before 6am (although they are seeking to extend this) on the delivery day. In this way, healthy food isn’t something that is forced upon you as a child, but rather something that can be enjoyable; almost an indulgence.
The use of technology extends to that of social media in network marketing. They offer deals through Groupon and various other sites where you can get your first box half price. Through this they entice customers, but at the same time they don’t devalue their brand. Lets face it, if they put up these deals on their site you’d ask; why are they giving it away? Is it that bad? Better yet, they offer customers free boxes if they recommend their product to their friends, and provide a unique code to reference this. These people then market the product through Youtube and various other social media sites, continuously enhancing their exposure. The scary thing is, the chain of network marketing that is created is potentially endless. What’s more, using people to advertise through video media rather than just blogs makes people more likely to trust the reviews as genuine. If they see a person with a Graze box, eating it, people are more likely to give it a go.
It’s difficult to gauge exactly how successful graze is, as they don’t disclose their profits. However, in it’s first half year, Graze shot up to 80,000 orders, and today sends out over 120,000 boxes a month. It is estimated that in the first year they raked in £1.4 million in revenue. Also, if we multiply £120,000 by the price they sell them for (currently at £3.79), and take into account how it uses the internet to generate completely free marketing, reducing costs..well, it doesn’t take a maths genius to work out it’s a lot. Graze’s expansion has not stopped there; they launched their first TV ad back in December 2011; which increased site traffic over 10 times as soon as it was aired.
In fact, the entirety of this article can be summed up with the following words; Graze has hit a winner. Not necessarily with their idea; it’s brilliant in it’s simplicity although not the most original. The real originality comes through the use the internet. On the customer end; tailoring the final product to the customer’s needs, in the process redefining how people look at healthy food. On the marketing end; advertising their product continuously through social media, which costs them almost nothing. The business model, combined with the focus on healthy food and an all round positive image is what, at least in my eyes, make Graze a success.
[Editor's Note] Milos Bezanov is a second year student currently studying International Politics at King’s College London.
It’s becoming more easier and faster to build websites online and one platform making sure of that is BaseKit. I caught up with the company’s CTO and co-founder, Simon Best.
The full interview is below.
Could you quickly give us some background information about yourself? Tell me about yourself growing up?
Born in Wales, I was a very creative kid; sketching, painting, and always taking things apart and trying to put them back together again. I was about 5 when I had my first computer for Christmas – a ZX spectrum – and was soon hooked. Technology has always fascinated me, and I guess this is what started me on the path to be a founder of a tech startup.
How did you get into business? Were you exposed to entrepreneurship as a child?
I was exposed to entrepreneurship as a child via my dad, who had a hugely successful career with British Steel (now Corus), but it wasn’t until university that I was actually taught about business and entrepreneurship. I first went into business with my brother, joining his finance company to create a web application. After that, the tech startup became a growing phenomenon in the media, and I knew that’s what I wanted to do. From that point on I pushed my skills in both technology and business to get me there.
Who was your inspiration growing up and why?
From a technology point of view, I was inspired at a young age by the early computer game companies. These were some of the earliest examples of tech startups; young guys working on software that could quickly be picked up by thousands or even millions of users. At the time I didn’t appreciate the business acumen that must have made this happen. From a personal point of view, I’ve always been inspired by creative people, for example artists, designers, and architects. I have huge respect for people who build things from scratch with a combination of their own creative talent, and a healthy dose of blood, sweat and tears!
So tell me how the idea for BaseKit came about?
We know how expensive it can be for a small business to get an online presence. A web designer’s fees can be thousands just to get a website online. Then there are ongoing costs for hosting and maintaining the site. Add to this the pressure to stay on top of the constantly changing technologies like mobile and social. We wanted BaseKit to give small businesses a cheaper alternative that they could build and control.
What were you doing before you founded BaseKit?
BaseKit was originally created to help us to build more websites for less money. I had a web design agency that worked with local small businesses. We quickly recognized that these businesses were poorly served by current offerings, and that there was a huge gap in the market. We pulled all of our web technology skills together to build the first version of BaseKit to build sites for our client base.
What is BaseKit? What are you guys trying to solve?
BaseKit essentially makes it really easy and cost effective for a business to create an online presence. We do this by providing them with a product to put the power back in their hands, so they can create sites that are flexible and adaptable to technology changes. We think we go further than most website building tools as we also enable them to create visible, dynamic and future-proof web sites.
What was your biggest challenge during the starting up phase?
The biggest challenge was proving that we had the potential to turn BaseKit into a global business. This needs to be proved from lots of different perspectives, such as technology, team and market opportunity. You need to hire the right people to ensure that the important pieces of the product and business are progressing at the right time.
A lot of entrepreneurs oppose to working with family, how has it been working with your brother?
We have always had very different skills, with myself being the technical and product brain and Richard being the sales and marketing guru. These are very complementary skills, and in fact startups will often struggle if all founders have the same skills. If anything, the competitive relationship we have as brothers has helped to drive the business faster!
Tell me about Seedcamp, winning the competition and the opportunity it exposed the company to?
To describe Seedcamp, take Dragon’s Den, extend the 15-minute pitch to an entire week, with tens of investors and hundreds of mentors scrutinizing every part of your business. It was a nerve-wracking experience; a baptism of fire into pitching and selling the company to investors. It helped to put us firmly on the map in the tech scene in the UK, Europe and even as far afield as Silicon Valley. It ultimately led to the investments that have been essential to grow the company to where it is today.
You guys have been successful also in raising additional money, what are some of the key things that you have learnt from the raising money process?
Every stage of fund raising is different. In early stages, you need to convince potential investors about the vision, and that the founding team has what it takes to fulfill the opportunity.
Later stages are about proving that your business has the potential to generate revenue at scale. We raised the last round of investment with one distribution partner, and within one year we’ve grown to over 40 signed partners all over the world, with over 40,000 new paying customers coming on board every month.
What tips can you give to entrepreneurs looking to raise money to grow their start-up?
You need to do enough to prove that your team can start a business. Everybody has ideas, but you need to show that you can execute on those ideas. It’s also not just about the money – you should always choose an investor who will bring relevant expertise and experience, active participation in the business, and a network of useful contacts.
What are the most crucial things you have done to grow your business?
I believe that people are the most important factor in any business. The key to growth is to hire the right people at the right time, to bring momentum to the parts of the business that need to be moving fast. It’s easy to slip into the mentality of trying to do everything yourself, because ultimately every company does begin that way. It’s crucial to make the transition to a team mentality, and make sure everybody is pushing in the same direction.
Would you say the business has changed from the first initial idea?
The original BaseKit product was fairly technical, and we’ve worked hard to improve the usability of the product to make it accessible to a typical small business user. We’re always refining our marketing in order to maximize customer acquisition. In general, the overall vision has stayed rock-solid, but we’ve adapted along the way to grow the business as quickly as possible.
What would you say has been the highlight of your entrepreneurial journey so far?
For me one highlight at BaseKit has been the speed of our global expansion. It’s amazing to be involved in something that is pushing out across the World into many countries. We’re now localized in 10 languages and sign-up 40,000 new paying small business customers every single month.
What can we be expecting from your company in 2012?
We have some exciting product enhancements, including the ability to buy new items and functionality – like an App Store for your website. We’re currently busy launching the BaseKit Learning Centre, which will be a hub of information about how to run your business online. We’re targeting massive distribution in many countries, and we’ll have over 500,000 paying users by the end of 2012.
What three pieces of advice would you offer entrepreneurs starting out today?
1. Don’t sit on your ideas, act on them today!
2. Get some early users and develop your product based on their feedback.
3. Collaborate with great people to give your business more speed and the best chance of success.
Why does Simon Mansell decide to start a business during the dot-com crash?
Simon tells me about the early days of TBG, getting their first client onboard and some of the key things he’s learnt from that experience and the future for TBG Digital
Below is the full interview.
Can you give us some background information on yourself? How did you get into business?
Having left school at 17 after a particularly rebellious phase, I went through a number of temp jobs before joining online business directory, Scoot.com and then MyPoints.
Although at the age of 22, I was earning one of the silly salaries synonymous with those times but I wanted to do more. I offered my employers the opportunity to pay me on a commission only basis on the sales I made rather than a salary. They accepted and I started working at full capacity and made £24,000 within the next month which was my seed money.
And so TBG London was born… in a room in my house with a couple of the mates that I trusted and that had an eagerness to start carving out a career in the industry.
Who was your inspiration growing up and why?
Liam Gallagher from Oasis. Because he did whatever he wanted to.
You started TBG in 2001, tell me about that period in your life and your experience running the business? It was during the dot-com bubble, things must have been crazy back then?
Having spent a few years floating around the internet, I realised the potential of advertising using this channel. No one had broadband, dot coms were crashing around the world and the more traditional advertising mediums were dominating. However, media owners themselves (such as MSN, Yahoo!, etc) were having difficulty in selling their online advertising space and advertisers were hesitant to invest in, what they believed, was an unproven route to market. Despite this, I was aware of one vital point that was being ignored by advertisers – that users were still using the Internet in their millions and the market was growing quickly.
We started building relationships with the big media owners of the time (Freeserve, MSN and Yahoo!) and negotiated deals whereby we would buy their inventory on a CPA (Cost per Acquisition) basis and offered advertisers a guaranteed Return on Investment as they only had to pay when a sale was made, an application was completed or a registration was submitted. Our first client was Britannia Music. They spent £1 million with us that year and it was the start of a whole raft of brands to come through our door. In the first 12 months, TBG London billed a total of £1.7 million and made profits of £340,000.
What would you say were some of the key things you learnt from that experience?
There’s so much that I’ve learnt in the 10 years since TBG began. Speed is one of those things. Being first to market provides great advantage. That together with really leveraging technology. Google and PPC marketing passed us by but I wasn’t going to let that happen again when Facebook became a valid advertising partner. We dived straight in and invested over a million dollars in ONE Media Manager, our Ads API tech platform. We’ve also found that building a business based on data has given us a foundation to provide an exceptional service to our clients whilst also really understanding our environment. It’s a real USP for us.
Looking back and comparing it to now, what are some of the things that have changed in running a business or in building a successful company?
Running a business with 10 employees in one office in a country you grew up in is one thing. Running a business with 140 employees in seven countries requires a different set of skills. In many ways I’ve had to let go of the day to day but the only way I’ve been able to do that is to surround myself with people I trust and that show excellence in their own right.
What is TBG? What do you guys do?
We are a Social Media company helping global brands to advertise and engage through Facebook and Twitter. We create custom social experiences that are amplified through targeted media. We invest in bespoke technology to help with stand out and our client activity is benchmarked against a data store of over one trillion events.
What is your business model?
We’re similar to an advertising agency but we also work with other agencies so we’re more of a Social Media specialist.
What makes TBG different from any service out there?
Our products. We are not just a services business – we use services to help companies use our products more effectively.
What are the most crucial things you have done to grow your business?
The biggest opportunity for growth came out of Facebook. Other agencies just could not get it to work for them or their clients so we put our best analysts on it and didn’t give up until we were delivering strong ROI for our clients via the channel. Facebook stood up and took notice as our spends were increasing. They invited us on to their API program and we had built and released ONE Media Manager within six months. We released ONE in November 2009. Our first non-UK office was opened the following February in San Francisco with Paris, New York and Hamburg following close behind. It’s not all about technology though. People and relationships are a constant focus of ours.
Are you guys profitable?
Yes we are and have been since month one. We’ve had our ups and downs (70% of our client base was in the Finance sector when the Credit Crunch occurred) but we’re in a great place right now.
Have you raised any money to build or grow the business or has it been purely bootstrapped?
No, we’ve grown organically.
Would you say the business has changed from the first initial idea?
The business has changed constantly. Rarely a year goes by where we haven’t added or changed our service offering. That’s because we work in digital and it is forever changing so we must adapt. No-one grows at the rate we have by standing still.
What has been the highlight of your entrepreneurial journey so far?
Winning the biggest spending Advertiser on Facebook.
What can we be expecting from your company in 2012?
We’re looking at new territories and we’re also working very closely with Twitter.
What three pieces of advice would you offer entrepreneurs starting out today?
Why does Graham Cooke decide he wants to leave his position in one of the biggest companies in the world to start his own business?
I spoke to Graham Cooke, an ex-Google employee about his latest start-up, QuBit – QuBit is a customer data platform which extracts and processes customer behaviour on websites e.g how much time consumers spend on a site, what triggers a purchasing decision etc.
Before starting QuBit, Graham worked on Google Analytics and their website optimisation programme.
Below is the full interview.
Can you give you some background information about yourself, were you the entrepreneurial type growing up?
You could say that! I started a record label while I was still at school and then started my first technology business at University. That was aimed at providing video streaming services into public spaces and I ran that until I started my job at Google.
Tell me how the idea for QuBit came about?
Me and my co-founders worked together at Google working on a range of products focused on using data to improve the effectiveness of websites. It was great experience but, after a few years, we all saw the potential to create a focused suite of products that could do this for companies directly – out of that thought QuBit was born.
What were you doing before you started the company?
We all worked at Google in the UK and US, working on a range of products like Google Analytics and their website optimisation programme.
What is QuBit?
QuBit is a customer data platform. We work with companies to extract a whole range of data about customer behaviour on their websites and then process this information to create actionable insight into how the site can be optimised to improve efficiency and conversions.
We have a whole range of products including OpenTag, our tag management system, Exit Feedback, our customer feedback collection tool, Behavioural Attribution, a tool to correlate visitor’s source of origin with their subsequent activity on the site, and Behavioral Analytics, which looks in detail at what people are doing on the site across multiple visits.
All of these products come together to create a set of data points that can give a new level of insight into online customer behaviour.
What is QuBit trying to solve?
We’re a big data solution for online marketers. Traditional analytics packages are limited by the amount of data they can collect and process. We use commodity storage and processing along with innovative algorithms to collect and analyse huge quantities of data about customer behaviour, generating new insights and opening the door to new efficienes and optimisation opportunities.
Talk me through the first few months of running the business? What would you say was the hardest part of starting the business?
The most important part of building the business has been to create the right team. From the very beginning we’ve put a massive focus on finding the right people and getting them on board. Being based in London is great for this as there’s a massive network of people with the right experience and skills, but its also a challenge as there’s a lot of competition for the right talent.
One of the biggest challenges has been to stay focused. Given the breadth of what we do it would be all too easy to get sidetracked into a whole range of different things, but we have a clear mission and objective and we’ve been single minded in targeting that.
How were you able to fund the business?
We all cashed in our Google stock to fund the business, but we’ve since secured substantial angel funding from a private investor.
Would you say the initial idea for the company, or that your business model has changed since 2010?
The idea has remained constant, what has changed has been how we offer that. To begin with we took on a lot of consultancy style engagements with retailers to help us build our understanding and product sets. We’re now moving into a much more product-focused stage of the business where we’re taking those learnings and packaging them into a set of technology products that companies can use themselves to access and act upon data.
What would you say has been some of the most crucial that you’ve done to build the company to this level now?
The most crucial thing we’ve done is to stay focused on the goals of the company. Last summer we realised that we were trying to do too much and to build too many products. We took the hard decision to prune back what we were doing so that we stayed focused on what was achievable and valuable to clients.
What’s been your most memorable moment so far on your entrepreneurial journey?
I don’t know if its been one moment, but there are lots of milestones that really stand out for me. Whether its winning great clients like the BBC or Arcadia or reaching the point where we’re now processing many billions of interactions and hundreds of millions of individual users each month. Starting a business is a process, not an event, so for me each individual milestone is just as important as any one single occurrence.
What pieces of advices could you give to aspiring entrepreneurs out there?
Make sure you bring on the right people. When I started my video business at University I was the only founder and it was a real struggle to deal with everything on my own. I started QuBit with three other great people and we’ve built on that team by hiring a strong and diverse team of people who can each add a lot to the business.
Stay focused. Know what you’re setting out to do and stay focused on that goal. Too many companies get sidetracked into ideas that are superficially attractive or promise short term revenues. Getting drawn into non-core business can quickly detract from your core goal and will cost you in the long term.
What can we be expecting from you and QuBit in 2012?
I think you can expect us to continue to launch new and innovative products that complement our core proposition, you can expect us to sign some more major name retailers and publishers and I think you can expect us to continue to innovate in our space.
[Editor's Note] Milos Bezanov is a second year student currently studying International Politics at King’s College London.
Betfair, a brilliantly simple idea. An online betting platform that uses trading technology, matching odds set by individual users to prospective bettors, cutting out the bookmaker. To learn more about the business, we need to first look at the man behind the idea. Who is Andrew Black? It seems like a simple question; The grandson of a former Tory MP, a gambler, entrepreneur, software developer…oh and a secret agent of GCHQ. Yet none of these quite answer the question, If he’s a gambler, why is he running a business? If he’s a businessman? Why in gambling? If a secret agent…well, you get the idea. The answer to this question lies in, as Steve Jobs put it, connecting the dots; “It was impossible to connect the dots looking forward..[in my life]. But it was very very clear looking backwards 10 years later”.
In much the same way, connecting the dots of Black’s life experiences will tell us about what inspired the idea, how he met Edward Wray, and how they together moved Betfair from simply a conceptual idea into the business that revolutionised the gambling industry.
As the grandson of Tory MP Sir Cyril Black, you may think Andrew had it all, but the beginning of his adulthood was not without it’s challenges. His brother suffered a sudden brain infection and fell into a coma, after which Andrew put everything else aside for two years to care for him. However, upon overcoming this difficult period, he set out on his career and never looked back. He started work at 26 in software, exposing him to the trading environment and triggering an interest in gambling; “When you’re at the sharp end of trading you’re trading very much in the short term and it is very, very similar to gambling”.
He pursued gambling further, and despite initial success, began to lose money and interest, returning to trading only to be sacked over disagreement on business ethics. From this string of failures, he was able to discover his talent for computer science and love for gambling, all the while learning the technical aspects of trading. If you told Andrew Black at the time that getting fired and gambling money away was the best thing that could happen to him…well, the conversation will not last very long. However, we see how all those experiences afforded him the motivation and knowledge to come up with Betfair, as well as the time to explore it. Black himself was able to connect these dots looking back; “In my career I’ve worked directly with the stock exchange, been a professional gambler and built websites. I’ve been there on all three”.
However, the step from idea to business was too big to take alone “I understood the exchange, gambling, the internet and could deliver the product. But with the business side of things I needed help”. Despite some difficulty, he would get it in the form of his best friend’s brother, Edward Wray, a J.P Morgan employee familiar with the business end; “I remember..(talking to him about the idea)..and it appealed”. A few months later, their partnership was born. What followed from here would make a pretty good film! A journey which took them from a small office in Wimbledon to the front cover of the Times business section; overcoming obstacles and rivals along the way to creating a business which in 2010 valued at £1.5 billion.
The difficulty of raising finance became apparent, as they quickly learned that Flutter, a company offering a similar service, had beaten them to the punch, making it difficult for another company in the same market to raise venture capital. They resorted to other means to raise money; (Ed Wray) “I got a hold of the banking bonus calendar…I worked out when the bonuses were announced… when they were paid, and then we tried to see people in between those two dates”. Through this, and investments from friends family, the duo managed to raise £1 million, which Ed marks as his turning point “That was really when it became serious, certainly for me…you suddenly felt a real sense of urgency to make it work for them”. However, this was not necessarily bad; “Looking back now, one of the best things that happened to us was that we didn’t raise lots of money”, as it forced Betfair to be more innovative with the funds they did have.
Using the slightly unconventional theme of a funeral procession as their marketing strategy, the duo carried around coffins which had “Death to the bookmaker” written on them. Whatever the controversy, it was clearly effective. Their antics hit the front page of the Times business section, which Black recalls “was spotted by a lot of people, and got us off to just a little head start”. In the first week, Betfair traded £30,000, and how much of that money came from people who happened to be reading about funerals in the Times business section three days before is anybody’s guess.
The competition from flutter did not go away, but neither did the success of Betfair. Black and Wray went from £100,000 in the first year to £35 million in the third. Despite a short battle between Flutter and Betfair; in 2002 the latter had 97% of the market share, and merged with Flutter. The rest is history; Ernst & Young awarded them “Emerging Entrepeneurs of the year” in 2002, and the business has only continued to grow and expand into different countries, incorporating smaller businesses. Today, Betfair boasts 3 million users, and over 1,200 employees. In short, they got very big very quickly, but Ed Wray still find’s this hard to comprehend “We weren’t planning on getting 1,200, we were planning on going from 22-30, to 35 or whatever” (Ed Wray).
That said, the vision and belief in the business came from the man who forged the idea. Whilst £30,000 of trades in the first week was not bad, it did not meet the expectations of investors, but Black maintained belief; “I always thought it would be one of those sites that would creep..(people) come to us, have a look, go away, come back, have another look, go away again, but come back and bet.” Judging by the numbers after, he wasn’t wrong.
While connecting the dots of Black’s life shows how the idea arose, Betfair as it is today moved beyond this. Where Black needed Wray to guide him on the business end; it was Black’s initial idea and vision which carried the business forward. Nevertheless, success does not come without a price, and several critics have questioned the integrity and legality of Betfair, arguing that the risk of anyone gambling for any, potentially criminal reason is too high. Like any new industry area, what is legal and what is not is a grey area, and in exploring ideas there is always the risk of prosecution/legal challenges. Black and Wray took the risk of setting out to corner a new market, weighed the odds, and succeeded.
The gamble paid off, but would they take such risk again? Andrew Black says yes; “It would be a difficult choice. I’ve got everything I need, but I would do it all over”. If you’re wondering why, it’s that entrepreneurial spirit, and I’m sure if you asked Edward Wray, he’d say the same thing.
[Editor's Note] Milos Bezanov is a second year student currently studying International Politics at King’s College London.
