Category Archives: Pontification

Start ups: launching a marketplace

A year or so ago we signed up for a bunch of free Cycle Alert tags. They’re RFID tags you attach to your bike that ping a sensor in the cab of suitably equipped vehicles, warning the driver that a cyclist is nearby. We even did some truly adorkable PR to go with it. If we ignore the subtle whiff of victim-blaming it’s a nice idea; after all, who doesn’t want to be safer on their bike?

Twelve months on though, and it’s all fallen a bit flat.

Why? Because not enough cyclists have the tags on their bikes and not enough vehicles have the sensors installed. Like so many businesses the Cycle Alert model is predicated on making both ends of a market simultaneously, and therein lie some serious problems.

Your business is a different beast

Around half the start-ups that reach out to us for help have a business model that relies on taking a percentage from transactions occurring on their platform. The idea might be a new twist on recruitment services, or fashion retail, or services for motor tuning enthusiasts; who knows? But they share that same problem. Without vacancies on the site why would I upload my CV? Without CVs on the site why would I post my advert or pay a fee to search? Without beautiful shoes on the site why would I visit? Without shoppers why would I upload my beautiful shoes?

This isn’t to say that applications that rely on making a market are bad ideas, but they need treating quite differently. If your business is a straight product build you can pretty safely build an MVP (for your personal definition of M, V and P, obviously) and start marketing the hell out of it, but a marketplace of any sort needs more careful planning; it’s a marathon, not a sprint, and founders – and their funders – need to plan their resources accordingly.

What is your focus and what should be your focus?

There are a few things we see over and over again with this type of business idea. First up, founders regularly focus on trying to attract both classes of users at the same time. After all, you need both to start making money, don’t you? This can have a bunch of effects, but the two that are absolutely certain are that user numbers won’t grow as fast as you hoped and that you find yourself spread too thin.

At this stage more often than not our advice is to focus on one class of users and build secondary features that draw them to the platform before the marketplace is up and running. In the recruitment example get candidates on board with a great CV builder. Or get the recruiters on board by offering great APIs to publish to all the other job boards. One way or another you’ve got to get a critical mass of one side to attract the other and get the transactions flowing.

It can feel completely arse about face – and expensive – to be building features that aren’t core to your main offering, but unlike a product build you need a critical mass before you can start generating revenue. Like I said, it’s a marathon, not a sprint, and you need to look after your resources accordingly.

Are you doing the last things first?

Secondly, founders can’t help but want to build the core offering straight away. If the business model is selling premium listings for shoes then – obviously, right? – we need to build all the controls and widgets for uploading, managing and billing those listings… Haven’t we? Right?

Well. Not necessarily. See my point above. You need to phase your delivery, and when looked at through the lens of generating critical mass those widgets probably aren’t necessary yet. I know that you’ve got a limited budget and once the product is “finished” it’s those widgets that will be the core of you making money, but if you haven’t got anyone to use them yet perhaps the budget is better spent getting users on the site some other way?

A corollary to this is that, insensitive as I’m about to sound, it’s important to make sure your site is attractive when it’s empty. If your logged-out homepage is an infinite scrolling mosaic of tiles, each made up of images uploaded by your eager users, it’s going to look awful bare on day one. Getting the first dancer onto the dancefloor is your most important job; leave worrying about the layout of the bar until after you’ve got people dancing.

Don’t underestimate. It’s never as simple as you think

Thirdly, and lastly for this post, is the biggy. Everyone we’ve ever met has underestimated what it will take to get to critical mass. They underestimate the time, the money, and the sheer volume of changes they’ll need to make along the way.

I’ve said “marathon not a sprint” a couple of times already, so I won’t labour the point… But. Well, you know… Just make sure you’ve got access to more than you’re currently planning to spend.

Your goal here is critical mass, so alongside user acquisition your focus has to be on user retention and reducing churn.

Make sure you’re swimming in analytics, analytics, analytics. These will tell you what your users are doing and give you real insights into what’s driving uptake (and drop off). And be responsive to your users’ behaviour; be willing to change the offering mid flight.

Finally, make sure you’ve got the marketing budget to keep plugging away. You’re going to need it.

We’ve got a ton of experience helping web businesses get from first idea to funding and sale, and we work in every which way, from short term advisory roles through to providing an entire team. If any of what I’ve said above rings true give us a bell; find out how we can help your business take off.

4 Times That The Misery Of Creative Agencies Made Me Happy

Clickbait titles are fun, but bear with me, good people. I’m trying the make a point.

This report was wafted under my nose the other day. It makes for depressing, but not terribly surprising reading. The first paragraph pretty much nails it:

Anyone who’s spoken to me in a professional capacity for the last 3 months will probably recognise that Smith & Beta’s report is quantitative confirmation of what I’ve been going on about for ages. Each one of these makes me sad – but also, because I am a shallow, vapid person, I still get to feel happy that I’m right.

1) Good quality creative requires good quality technical implementation

Agencies lead with creative vision and lean on technical skills (internal & external) to deliver this vision. No one ever won a pitch by saying that the creative will be a strong C+ but it’s going to be implemented really well. Sadly, the opposite is almost always true. The industry is generally OK with taking an amazing creative idea and delivering it late, over-budget and on top of a pile of bodies of fallen colleagues.

2) This technical resource – where it exists within an agency – is often siloed and over-committed

Because of the way the creative industry works, creative resource is always going to be an expense the agency is happy to invest in. Investing in technical resource however; is a more expensive, slower, trickier business.

Similarly, investing in older, more skilled resource is always going to be a harder sell when there are countless thousands of young and exploitable juniors clamouring for your attention.

An agency trying to walk the line between capability and capacity in order to really call themselves “Full Service” will end up with a safe but middle of the road offer. Conversely, an agency who shoots for the moon and invests in highly specialised and/or highly senior team may find that they’ve painted themselves into a very expensive corner.

3) It’s hard to hire your way out of this problem

I mean, duh, obviously. It’s hard to hire your way out of any problem. Recruitment, training and increasing retention are sloooooow processes. And the problems that this report outlines are problems of the now.

(Side-note: In my role here at Isotoma, I often end up talking to agencies about projects that we can collaborate on. I’m usually talking about projects that might be coming up in, say, 6 months, but people actually want help RIGHT NOW.)

4) These problems when considered together, reduce the satisfaction of the customer and shorten the lifetime of the account

As abusive as the client/agency model can be, there’s a satisfyingly stark bottom line to it: “Do good work; get more work.” Note that this is distinct from “Pitch good creative; get more work.”

As I said above, no one ever won a pitch for outlining a competent implementation plan, but once the project is over and the smoke settles, the customer doesn’t just remember the pitch.

(If you’re really unlucky, the people who were in the pitch don’t even work for the customer anymore…)

The knife edge that a marcomms agency has to walk is being able to deliver creative vision *and* technical competence in a way that doesn’t fundamentally alter what the company is. Go too far in one direction and you’re unable to deliver anything profitably, go too far in the other and you’ve magically become a company that you don’t want to be.

So this is one of the reasons that Isotoma do what we do. We’re already a technical agency. We’re already geared up to help you estimate, deliver and, crucially, support a creative campaign. We’re good partners. And the better we get at ploughing this particular furrow, the better we’re able to help and complement agencies who’ve chosen to plough another.

And that makes me happy.

(See? I was being cynically provocative to attract clicks. And the pug at the top? The cherry on the cake, my friend. Truly I am a monster.)

 

Will the industry heed the Digital Powerhouse Report?

Last month The Digital Powerhouse Report, commissioned by Tech North and published by the RSA was released. It looks at the Northern Powerhouse, the digital industry, the region’s digital economy and future. The report outlined how the northern tech sector could improve its business performance and reach full potential.

As Marketing Manager of a northern technology company, a copy of this report naturally found its way to my desk. I was interested in what the report recommended; it is after all the north’s first major guideline to becoming a ‘Powerhouse’. Anything that aims to improve business infrastructure in the region should be welcomed and, more importantly, acted upon.

What does this report bring to the table?

What’s so striking about the report are the key recommendations for the north to grow. Suggestions such as establishing a digital powerhouse contract portal were – in our eyes – unexpected. Many northern tender portals are in existence already, such as YorTender, Due North and YPO. I believe that instead of reinventing the wheel, we should start turning the wheel that exists already. Yes, these portals haven’t been set up specifically to cater for the digital industry but they do exist and they do work.

Problem-based commissioning, data on KPIs and procurement results are brilliant recommendations and we’d like to see activity of this type in the region. The report also encourages the use of open source software, which is something we have been passionate about since we first opened our doors back in 2004.

There are some solid recommendations within the report which, if undertaken correctly, will certainly bring the north’s tech businesses closer together.

Retaining graduate talent in the north is key

I believe one of the stickiest problems facing the north are the demographic differences we’re seeing between the north and south of the UK. We need to retain our talent and encourage graduates to seek employment within the region.

This is something we at Isotoma are passionate about, investing a lot of resources into our junior onboarding and training work, ensuring that we give graduates the tools they need to thrive in a working environment. This is a long-term investment on our behalf as current apprentice schemes do not apply to individuals with degrees.

When it comes to higher education, the north is well catered for – the region contains 23 universities, 6 of which rank in the top 20 for research excellence on a national scale. However we don’t seem to be utilising the facilities on our doorstep, The Guardian’s Northern Powerhouse article states that “Only three cities in the north – York, Warrington and Leeds – feature in the UK’s top 20 when it comes to the number of workers educated to degree level.“

So it would appear that less people are attending Universities in the north, and can we blame them? We’ve all seen the media coverage about the rise in tuition fees, can students afford the financial setback that getting a degree now brings?

London is growing, is the North shrinking?

According to the official government projections, an explosion of growth in London’s East End boroughs will bring London’s population to nearly 10 million within eight years. Compare that to the shrinking population of the northern boroughs such as Blackpool, Richmondshire and Cumbria predicting the biggest fall in population in England, declining by 4.3% by 2024.

The Guardian newspaper wrote an article 2 days after the Northern Powerhouse report was released with some worrying projections about the north-south working-age and retired population; “Barrow-in-Furness is predicted to lose 4.3% of its population by 2024, while Tower Hamlets in London is expected to grow by 25%“.

So, do we need better transport links?

Commuting from Leeds to Manchester alone is a nightmare, the M62 is one of the worst motorways I’ve had to commute on. The northern rail links are awful. More often than not there’s no chance of working from the train as the mobile signal is non existent most of the time, especially when going over the Pennines. The Government has announced many elaborate plans to improve the transport links in the north, such as the HS3 rail link between Leeds & Manchester, however no deadlines have yet been announced.

What else does the report recommend?

The report has 14 overarching recommendations, most of which we wholeheartedly agree with and are more than happy to pioneer. One such recommendation is to champion the tech cooperative model. This idea has legs, but tech cooperative models are very expensive to form contractually. Model contracts and assistance in making this work would be needed.

Another recommendation from the report is to kickstart new corporate-backed accelerators. I agree, and this is already happening, but the businesses seem to naturally migrate to London and not stay in the north, so is this really going to help?

In summary…

You can find evidence to back up any argument you want to make on the topic of the Northern Powerhouse, but will it be such a hot topic after the next general elections..? I hope so.

Identifying the problems that exist in the north for business is half the battle won. We live in such an exciting era of emerging technology in an ever changing landscape of tech invention… meaning we need to keep our graduates. The onus is on employers to incentivise graduates with great jobs, exciting technology and amazing career opportunities!

Transport links need to improve from city to city, as well as inner city links. York has an excellent brand new Park and Ride scheme which uses electric busses, free Wi-Fi and parking to attract commuters, in comparison the northern rail network between the major cities needs substantial improvement and investment.

Most importantly the recommendations in the Northern Powerhouse report need to be owned, actioned and supported by all of us, those northern tech businesses the report is aiming to help.