[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.