An unemployed programmer Iain Dodsworth recently sold his social media engagement tool TweetDeck to Twitter for 25 million. In a recent interview on Radio 5 he said that he initially created TweetDeck for himself; so how did this tool come to be worth so much and how could you get lucky like him?
Identified a need
The first key to his success was that he identified a need and created something to fill that need. It just so happens that although the software was developed to fulfill his own personal requirements, there were millions of other social media users out there that had the same need. He released the software for free to those users and continued to keep the the product free. So what was it worth 25 million to Twitter?
One of the key factors was the large influential user base. Tweet Deck had about 20 million users which isn’t large at about 5% of Twitters user base. What is special about them is that they tend to be Social Media super users (people who rely on Social Media to make a living such as bloggers and journalists). These users tend to have large followings and are very influential in the on-line sphere.
Another factor that prompted Twitter to make the move was that there were rumours of another company called Ubermedia was interested in buying TweetDeck.
Selling TweetDeck was probably not Iain’s initial strategy. However as he grew his company and got investors on board selling it off was probably at the forefront of their business plans. This is a popular strategy amongst technology businesses and indeed may well feature in Twitter’s own plans as it is yet to make any money. So far they have resisted advances from Facebook and Google but for how long?
So how do the rest of us do it?
We often get people come with us with ideas for the next great thing. As part of our processes we challenge the concepts brought to us before we proceed, after all we don’t want to waste a clients money on something that won’t work. We don’t have a crystal ball and there are times when we may let a good idea get away, as indeed we did a couple of years ago with a young entrepreneur that had an idea having worked in the third sector (charities) that went on to be a successful platform and won a couple of awards. Having said that we have also had some very close ones, with a client that described what is FaceBook the same year it was developed.
We have recently developed a cashflow forecasting application for one of our clients “jump start your business forecasting” who, we believe has not only spotted a gap in the market, but also found a market in the gap!
Here are some steps that are a useful check on whether or not your idea has legs: “
Come up with an idea
For some people this is the easiest part of the process. They can come up with lots of ideas from just looking around them. Iain came up with his idea out of fustration with the Twitter.com interface it just didn’t work for him He knew there could be a better way. He spent 6 months looking into it before moving forward.
Inspiration for ideas can come from many places, the trick is identifying the needs and come up with the right solution. You maybe inspires by the ethos of Bigweld from the animated film Robots where his daily mantra for innovation is See a need Fill a need.
Some people come up with ideas from their experiences of their industries and day to day working life. We recently had a client come to us with an idea for an iPhone app for heating engineers on the face of it, it sounded good but did it have legs?
Undertake the Market research
The client had undertaken some basic market research in that he had understood the size of his potential market place. He had ascertained that there wasn’t anything like his proposed app out there already and had gone as far as setting a price for it. He also had asked friends whether or not the idea was a good one. What he didn’t do, because he was afraid of letting the cat out of the bag was to ask others in the industry whether they would be interested in the app. After all these were the people he was looking to target. So he wasn’t totally sure there was a need for the app with in his target market other than his gut feeling.
So when undertaking the researched don’t just ask family, friends and colleagues. Hunt out potential clients and other industry resources.
Be realistic about what you can achieve
In Iain’s situation he had the skills to develop TweetDeck himself. Others aren’t so fortunate. So the question is do you get yourself retrained or do you outsource the development of your idea. Our heating engineer had the skills and knowledge to create the content for the app but he didn’t have the technical skills to develop it which is why he approached us.
Be realistic about your budgets and finances
The big question is do you have the money to see your project through properly Iain at TweetDeck was able to get so far on his own with limited funds but in order to enable him to grow the company he had to seek outside investment which he was able to get.
Our heating engineer didn’t have any budget at all, which put a scupper on his project.
�Other than breaking open your piggy bank, where do you find the money to get your idea off the ground? The banks are not likely to lend unless you have security such as property they can tie into the deal. You can try to get family and friends to invest in your idea. To get large investment funding you will need a lot of help which will require money so there is a Catch 22 situation.
An alternative source of finance could be asking strangers to invest in your venture. A new website called Crowdcube was recently set up to tap into the Social aspect of funding enabling companies to pitch their proposal at thousands of small investors who can decide to invest in your project in return for some equity. These sorts of investors are not investing in the hope they get a dividend., they are investing for the thrill and in the hope that they will get a big return when your project gets bought by a larger competitor (high risk / high rewards). Certainly worth having a look at as a means to getting your idea off the ground but the advice is do your figures first.
Conclusion
There is definitely a lot of luck involved in getting a multi million pound idea to a stage where someone will buy it. Often the best ideas are the simplest (and you wonder why nobody had thought of them before). Determination and belief are also two good traits to have but they will only get you so far if the idea has no legs. This is why it is good to get your ideas challenged and looked at from every angle to ascertain its viability before you invest your life savings and years of you life.