Everyone pays lip service to innovation, but fostering creativity then harnessing it commercially isn’t as easy as it sounds.
Everyone pays lip service to innovation, but fostering creativity then harnessing it commercially isn’t as easy as it sounds. We talk to five entrepreneurs with the passion and focus to have made it happen.
Name: Jerome Touze
Title: Co-CEO and co-founder
Company: Where Are You Now, a social networking website for travellers
Peter Ward and I started the company when we left university in 2002. We both had jobs lined up with [consulting giant] Accenture, and because we had debts to pay off we decided to take the pragmatic approach and work on the start-up in our spare time.
At that point there wasn’t any Web 2.0 to speak of, no MySpace, no Facebook: the only companies doing it were Friendster and hi5 in the US, and Friends Reunited in the UK. We were probably the first to come up with the idea of a social networking website in a niche sector.
People say Web 2.0 is great, there are no barriers to entry, but the problem is, how do you get traction? You have to get a critical mass of users to your site, which is quite challenging for new entrants even if they have a fantastic product. It took us two and a half years to get 45,000 users; then, within six months, we went to a million. It really helps to have that “first mover” advantage.
When we hit a million users, we decided to work on the business full time. It had been two and a half years of pure sacrifice – no going out – because you have to keep performing well for Accenture as well as getting the start-up off the ground.
Unlike most Web 2.0 ventures, we have been profitable from a very early stage. We went from revenues of US$200,000 (£98,306) in 2005 to $2 million in 2006. When our VC joined in November last year, we secured Series A funding of $11 million for a minority stake in the business.
You’ve got to remember that this space is extremely volatile. Things move at a pace that astonishes me. We’ve just completely scrapped the business plan we had six months ago. It’s impossible to protect your idea: it’s more about continually innovating to make sure your users stick with you.
Name: Mike Washburn
Company: ScriptSwitch, developer of software for GPs
The idea for ScriptSwitch was dreamt up way back in 2002 by a couple of Warwick University students talking to some computer graduates and a local retail pharmacist. They thought up the idea of a tool that could help control costs by suggesting a “switch” between one product and a cheaper, identical one under a different brand. The students and the pharmacist applied to the bank and got a loan to get the concept to market, but they ran out of money very quickly. That’s when I got involved with the business to secure the funding that would enable it to survive.
When we started the company, there was nothing like this product, and there still isn’t. Patent protection in the UK has been granted – although it took the best part of three years to get it – and we’re now in the final phases of our application in the US, Central Europe and Japan.
The concept has grown from a simple cost-saving measure to a tool that allows GPs to make more informed prescribing decisions, whether that’s about different combinations of drugs to achieve better results, or optimising dosages, or checking that you’re prescribing in line with government guidelines. But in 80 per cent of cases, the recommendations it provides have led to cost savings for the NHS. The annualised savings as of last month were £10 million, and if we roll this out to every site in England, we have the potential to take £390 million out of the system. That could be used to provide more hip replacements and heart bypasses.
We are constantly developing our range of switches and adding new categories. In December, we’ll be able to cover dressings and appliances as well as medication. We can also provide pretty heavy-duty real-time information about prescribing costs and trends, which can be used to help healthcare providers make strategic decisions.
Name: Armando Ruffini
Company: Zubka, a recruitment website that works through personal referrals
What normally happens with recruiters is they phone you up every three years or so. They ask: ‘How are the kids?’ You say: ‘I haven’t got any.’ They say: ‘We’re looking for a marketing manager in Manchester.’ You say: ‘I’m not interested, but try my friend Wendy.’ Then your friend Wendy gets the job, she takes you out to dinner, and the recruiter pockets £15,000 to £20,000.
If you’re Wendy’s friend, you don’t mind that. But what if you could give people a reward for referring their friends proactively? When my business partner David Shieldhouse had the idea for Zubka, he asked me what I thought and I said: ‘It’ll never work – it’s too simple, someone would have done it before.’ But they hadn’t. We first discussed the idea over Christmas 2005, and launched the company in April last year.
We now have 6,500 referrers registered on the site in 100 countries, hirers in 45 countries and jobs in about 15 countries. It’s not only “people who know people” who are registered; we also have recruitment companies signed up. The average recruiter is working on ten jobs at a time, and they expect to fill two or three a month. With Zubka, they can put the vacancies they haven’t filled on the site and use it to help fill them. Because we charge much less than headhunters, about six to eight per cent of the first year’s basic salary, they can still make money.
There’s a lot of stagnation in the recruitment industry, especially among big recruiters. We’re smaller, nimbler, and we haven’t stopped innovating. We’re now opening up job boards on affiliate websites. If someone clicks on our link on an affiliate’s site and it leads to a placement, the affiliate gets £100. We’ve also got plans to introduce internal referral systems for large corporations.
Name: Jeremy Leggett
Company: Solarcentury, a provider of solar energy systems for buildings
When we set up the company in 1998, we had to make a market because there wasn’t one – not even a remotely supported one – in the UK. We had to persuade people to do the first solar panel installation.
There was a great awareness barrier to overcome: people thought that solar energy only worked in sunny countries. Things were already racing ahead in Germany and Japan, and they’re still so far ahead of the UK now; we’ve been playing catch-up since day one.
The goal for us is to stay ahead of the great wave of innovation that’s going on in the laboratories of big companies. We’re small, fleet of foot and focused, so I hope we can do it. Our roof tiles and mounting systems are award winning; the amount of money that’s going into the sector is enormous.
If we don’t succeed in innovating, our business model won’t work. The most important place to start is the hiring process. Our R&D team has become a magnet for talent as we’ve built the brand, which is rooted not just in smart, professional values, but in our desire to make as big a difference as we can in the struggle against global warming. That’s the purpose of the company at the moment, which is what we tell our investors. We will make them money too, provided we succeed.
In the energy sector, the UK’s track record for innovation is disappointing. We have a wonderful opportunity: a lot of design talent, some of the best architects in the world, and the best renewable resources in the world. But there are too many people who think we can’t get energy in new ways: we have to stick to the old techniques and when they don’t work, bolt something else on. As a red-blooded Brit, it hurts me to say this, but the rest of the world is basically ahead of the game – and we want to change that.
Name: Ana Stewart
Title: Chief Executive
Company: i-design, a specialist in advertising on ATM screens and receipts
Advertising is such a competitive space at the moment. What we’ve done with ATM:ad is come up with something original, allowing banks such as HSBC and Nationwide to generate new sales from advertising on their ATM screens and receipts.
Advertisements run during the transaction, which means advertisers know they are reaching customers one-to-one. And it is measurable since advertisers can see how many customers they reach. Furthermore, customers are captive – they aren’t going to run away, because they are waiting for cash – and you reach them when they have cash in hand to spend.
Seventy-five per cent of bank customers take their money out of cash machines. Our solution provides a great way for banks to generate new revenues. We’re the only player in this market offering an end-to-end solution, generating all the advertising and content via our London-based media sales and production teams, who work with our customers.
In total, the company has sold software licences for 8,000 ATMs, plus 2,200 in-branch internet kiosks and has the exclusive media sales rights for 2,500 of those ATMs.
We’ve proved advertising on an ATM works and we are starting to see a lot of interest from abroad, which is one of the benefits we’ve seen from floating on AIM earlier this year.