[The Gateway I — extended version] EUREKA!

Archimedes

So you’re studying for a demanding degree, bombarded with a plethora of fantastic career opportunities but you’re also tempted to try out starting something of your own on the side.

How do I come up with an idea?

At the Silicon Valley Comes to Oxford conference on 19^th November 2007 at the Said Business School, Paul Graham (Co-Founder, Viaweb – acquired in 1999 for $49.6M to become Yahoo! Store) put it well:

“Look for things that are evil, broken or stupid. These are usually great opportunities.”

Essentially, there are 3 ways to come up with an idea:

1. Solve real problems.
   Many of the best ideas are inspired by the personal experiences of their creators. Have you ever observed a large number of people sharing a common pain? Perhaps at a previous job or among students at your university? This is how Andy Young (my co-founder) and I came up with our idea. We initially thought of creating a website for all the sports clubs’ results at our university. We then realised that there were hundreds of clubs and societies at most universities – many of which were holding other exciting events. However, in our experience, it was very difficult to find out about them after the Freshers’ Fair at the beginning of each academic year. Therefore, we decided to create a website which would centralise all the news and events from these clubs and societies.
2. Make something better.
   Facebook certainly wasn’t the first social network –MySpace (founded in 1999), Friendster (founded in 2002) and various other sites were already up-and-running before Facebook launched. However, they took an existing concept (a social network) and improved upon it. By initially restricting access to students at a particular university, allowing ‘poking’ and later on introducing the ‘News Feed‘, Facebook has had great success.
3. Copy someone else.
   You are treading a fine line if you take this option. Nevertheless, the technological advancement of countries like the USA and Japan compared with much of Europe and the developing world provides many opportunities. A good example of this is German social network StudiVZ. Launched in October 2005 by students Ehssan Dariani from the University of St. Gallen, near Zurich and Dennis Bemmann from Humboldt University, Berlin. Effectively, they cloned Facebook, dyed it red and translated it into German. Then in January 2007, the company was acquired for $112M by German media company Holtzbrinck.

The final point to make with idea generation is that it’s always easier if it’s something you’ll personally use. Who better to know what people want than a genuine customer?

I’ve got an idea, what next?

The first thing to point out is that having an idea doesn’t mean you could write out a 30-page business plan covering your prospective company’s first four years of activity. Initially, it could be as simple as

“We’re going to create something that makes it easier for students to get a graduate job.”

Next, you need to work out what product or service you’re going to provide. Having thought of some possibilities, you need to do your homework:

• Check with potential customers.
  Find five people or companies who could actually be potential customers for your product/service. Tell them a bit about it and ask for their opinions. Would they buy it? If so, why? If not, is there something that you could do that would make it more appealing? Make clear to them that you want complete honesty.

• Perform some market research.
  Start by typing your idea, or variations thereof, into Google. Your goal here is to determine if someone else is already providing the product or service that you envisage. Make a list of each company that you would consider a competitor and compile a spreadsheet of each of their details – web address, location, product/service offerings and pricing. Then ask yourself a few questions. How many competitors are in the marketplace? What is the size of the market you are targeting? What percentage of that is addressable with your product/service? What percentage market share does each competitor have? Does it look like the companies in this market are making money?

• Do the maths.
  First, accurately cost out how much it will cost to create your product/service – include design, production and labour costs, overheads and any other expenses you may incur along the way. Next, figure out how much you can charge for it. Again, this can probably be done by asking potential customers how much they would be willing to pay. Finally, add up everything (on a per-unit basis) and work out if you can undercut your competitors. If you can’t, do you have something else that differentiates you from the competition?

Now that you have the numbers and have performed a thorough assessment of the competitive marketplace, you should be ready to make a decision as to whether or not it is worth moving forward with your idea. The above research shouldn’t take more than a couple of days.

With web-based ideas, the third point above is not necessarily about monetary cost – the currency would be better described in terms of time and ease of use. It’s almost free to set up a website, but the important thing here is that the idea is something people will adopt so you don’t end up building a graveyard. Gordon Buxton (MD, Oxinet and Board Advisor to GroupSpaces) has a good theory on this – he calls it Gordon’s Law:

1. Does it allow people to be lazier?
2. Does it allow people to be more disorganised?

If you can answer yes to at least one of these questions, you could be onto a winner.

Lastly, don’t get caught up with the intricacies of your initial idea. Many successful businesses don’t end up doing what they originally envisaged – it’s important to let your idea evolve.

For example, we launched the first version of our site at Oxford University’s Freshers’ Fair in October 2006 and we wanted students to set it as their homepage. In addition to news and events from clubs and societies, lots of students were asking for other information – e-mail, BBC News, Facebook feeds and various other things. We then observed that most students log onto the Internet and perform the following tasks: check e-mail, check Facebook, check BBC News, run some Google searches and then do what they had originally logged on for! The process could happen several times each day, and it gave us the idea for ClickUni – create a webpage with e-mail, Facebook, BBC News, Google search and anything else a student wanted all on one page – then suggest students set this as their homepage.

During the Easter holidays last year, we were staying up all night working to develop this idea as quickly as possible and in April launched “The Homepage for Students” at www.ClickUni.com. Within a few days, it had hundreds of users. The main other feedback we received was from the presidents and committee members from societies. It was becoming clear that there were many pains inherent in running a university society – typically, this was the status quo:

• “We use a Yahoo! Group, Google Group or the university servers to run our mailing list.”
• “We use Facebook to organise our events.”
• “We use Microsoft Excel to keep track of our member information.”
• “We have a website built by this guy who graduated last year; no-one knows how to update it anymore.”

It gave us some more ideas, and we realised that there wasn’t just a problem obtaining news and events from societies; societies suffered a lot of pain in managing themselves online. So we started off building a news and events portal; then, having got some users and listened to their feedback, our idea was evolving into a group management tool. Since the group management problems have emerged as the biggest pain-point for our users, these are now what we are focused on solving at http://www.GroupSpaces.com

So we’ve taken quite a journey, but what’s reassuring is that these changes happen to the big boys too! For example, Paypal is one business that ended up with something very different to their original idea. In 1998, founders Peter Thiel and Max Levchin originally intended to build a wallet application for the Palm Pilot that would allow its users to securely beam money back and forth. What they found though was that people were actually trying to use the website to send money instead of downloading the Palm application. Hundreds of people were flocking from eBay mistakenly thinking that this was a web-based method of making a financial transaction with a stranger. With only a handful of people actually using the Palm application they had an epiphany that they were building the wrong thing. So they got their heads down to build what the eBay customers were asking for and a year later essentially had the service that is available now. After they were acquired by eBay on 3^rd October 2002 for $1.5bn I doubt they were regretting their change in direction.

In summary:

1. Look for something evil, broken or stupid.
2. Do your homework and decide whether you want to proceed.
3. Once running with an idea, listen to what your customers/users are asking for and let the idea evolve.

You can view the original version of this article on page 8 of this week’s edition of The Gateway.

A Week of Conferences (Part 1)

Last week, I had the pleasure of attending Silicon Valley Comes to Oxford on Monday, Essential Mediatech at the BFI IMAX Theatre, London on Tuesday and the Oxford Private Equity Conference on Friday. The week contained too much free coffee and not enough sleep, but I’ve listened to and met some pretty inspirational people. In the next couple of posts, I’ll share my experiences and thoughts from the more tech- & entrepreneurship-oriented conferences of Monday and Tuesday.

So on Monday I attended Silicon Valley Comes to Oxford for the second year running. Last year’s conference was held on 20^th November 2006 – just after we launched the first version of ClickUni. I found the event particularly enlightening. The masterclass from Matt Cohler, VP Strategy & Operations, Facebook stands out. He gave a talk entitled “What is Silicon Valley?” which was my first proper insight into the place and culture that has spawned so many of the successful technology companies in recent years.

It was also the first time I met Bob Goodson (former President, Oxford Entrepreneurs) Chris Sacca (Head of Special Initiatives, Google) and Reid Hoffman, the world’s most successful investor in consumer Internet. Reid’s LinkedIn profile alone names some 44 companies in which he’s angel invested including Facebook, Digg, Friendster, Ning, Flickr, Last FM and Six Apart. He claims to have help finance over 60 companies in total.

This year, the 7^th year of the event had an exceptional list of speakers as always – Reid Hoffman, Chris Sacca, Bob Goodson, Kirill Makharinsky and also Auctomatic boys Kulveer and Harjeet Taggar were back again. New appearances were made by Biz Stone (Co-Founder, Twitter), Kim Polese (CEO, SpikeSource) and Bill Byun (MD, Samsung Ventures) but the highlight for me was Paul Graham and Jessica Livingston from Y Combinator. Having keenly watched their scheme develop over the last couple of years, and written about it in a recent post, it was great to see the people behind it face-to-face.

More on what happened when I met them coming soon…

FreshMinds’ Charlie Osmond is “Man at the Top”

Charlie Osmond (30) has just been crowned Young Entrepreneur of the Year in Esquire magazine’s “Man at the Top” business awards. Other notable finalists include Michael Birch (Bebo) and Richard Branson (Virgin) in the Most Influential Business Thinker category and Simon Woodroffe (Yotel) who just pipped Artemi Krymski (Extate) to win Best New Idea.

In June 2000, Charlie graduated from Worcester College, Oxford with a degree in Engineering, Economics and Management. Subsequently he co-founded FreshMinds with Caroline Plumb, a St. John’s College graduate. They started up with £500 of their own money and worked out of a spare room at Charlie’s parents’ house. The money allowed them to buy a Web address, a telephone line in the spare room and some business cards. This saw them through to January 2001 at which point they received £100,000 angel funding.

The business initially carried out bespoke research projects for management consultancy firms and other large companies, but over the last few years FreshMinds has evolved into a fully fledged research and recruitment consultancy with a talent pool composed of some of the UK’s top students and graduates. They work with the full spectrum of clients right through from small start-ups to the largest blue chips. FreshMinds now has a £5M+ turnover and over 70 full-time employees.

Facilitating the talent acquisition process for FreshMinds is their Ones to Watch^TM (OTW) scheme which annually rewards 50 of the most promising students in the UK:

“Every year we ask students at the UK’s top universities to predict who out of their peers will go on to become the business leaders of the future. FreshMinds picks out the nominees who we think really have the wow factor.”

I first met Charlie at the 2006 Oxford OTW party. Both Andy and I, along with 4 of the students who have worked on ClickUni over the last year (AJ Asver, Jamie Harvey, Sagar Shah and Ran Wei) have now been given the accolade of “One to Watch”.

Charlie also regularly speaks at the Said Business School – usually sharing his experience of shunning the City jobs in favour of entrepreneurship. Hopefully success stories like this will inspire more Oxford students to take the leap of faith in future years:

Silicon Where? (Part 2)

Other than visiting Michael Birch at Bebo, entrepreneurial landmarks that greeted us during the Silicon Valley trip included Google, Facebook and Crystal Towers – affectionately known as the “Y Scraper” since it has so many residents from the Y Combinator program.

Google stood out though – it recently beat McKinsey to #1 in Fortune magazine’s annual list of the top 100 MBA employers (arguably the most reputable ranking of employers available). With their gyms, games rooms, unlimited free exotic cuisine, campus environment and density of super-smart people working in sunny Mountain View, it’s not hard to understand why. Having been started up by Sergey Brin and Larry Page in 1998, they’re now a $210bn company and are still growing fast 9 years later!

One of the Y Scraper’s residents and someone we spent a lot of time with was Sumon Sadhu, the Co-Founder of Imperial Entrepreneurs and Lightbox , and also a Board Member of Seedcamp. Last year I was introduced to Sumon by my (then) girlfriend and I like to think we’ve become pretty good entrepreneurial buddies since – we certainly share a lot of opinions on the European ecosystem and how it can be developed. Along with his co-founder Jamie Quint , Sumon was staying on the top floor of Crystal Towers, overlooking Alcatraz. Andy and I worked round at their apartment a few times during the week and also had the pleasure of attending a British Founders event which Sumon organised:

Left: Bob Goodson, Co-Founder, YouNoodle – a social network for student entrepreneurs
Centre: Andrew Davies, Co-Founder, Idiomag – a personalised digital music magazine
Right: Andy Young, my co-founder on ClickUni and GroupSpaces

Later on in the week, Sumon invited us to a Happy Dev Lunch at Facebook – an event focused around platform applications. We saw Mark Zuckerburg, and also bumped into Alex Tew, Creator of the MillionDollarHomepage – another British founder. The quality of conversation at the event was high, and unlike many events in Oxford or London, most of the attendees had a very good understanding of Web start-ups, raising funding and how it all fits together. I was fortunate enough to meet Eddie Codel, the Internet video producer and Co-Founder of GETV. We got talking and he really liked the vision for ClickUni. This resulted in him inviting us to be interviewed on the Podtech show LunchMeet:

[podtech content=http://media1.podtech.net/media/2007/08/PID_012104/Podtech_LM69_ClickUni.flv&postURL=http://www.podtech.net/home/3775/lunchmeet-clickuni-manages-social-groups&totalTime=831000&breadcrumb=bdefae0f26e947bea65552b19ed251a1]

Andy and I both enjoyed shooting the video and it’s a nice souvenir to take home from the states. Cheers Eddie!