Month January 2013

crowdfunding – money for nothing?

caroline hughes Leave a comment

In the olden days, if you wanted to start up a business or launch a new product, you either had to have lots of your own money or find an investor willing to part with theirs.  For most budding entrepreneurs, it meant having a whip-round amongst friends and family to raise seed capital.  Which, inevitably, meant that those same friends and family then felt that they had acquired the right to tell you exactly where you were going wrong with your idea…

Then came Dragons Den.  Which taught us all that the boy scout motto applies equally to investment pitches and convinced the entire nation that an idea without a patent is utterly worthless.  It also provided a valuable insight into human beings’ capacity for self-deception (remember the guy who wanted £100k for his amazing device for helping drivers drive safely abroad??  It turned out to be a single glove that you wear on your right hand when travelling abroad, to remind you which side of the road you should be on…).

All very enlightening, but, ultimately, it was hard to take the show seriously when one of the dragons clearly thought that a retail high street stationery business was a good idea.

I’m out.

crowdfunding

Now there’s a new way to get investment.  It’s very trendy and inclusive and gives people a warm, fuzzy feeling inside.

It’s called crowdfunding and it involves getting lots of people to invest a small amount of money in your business or product.

When I first heard about it, I was skeptical. I mistakenly thought that each person who invested would get a teensy piece of equity in the business, so you’d have lots of little shareholders.  I assumed that it was a bit like taking your company public, but without people being able to then buy and sell their shares.  I thought that it sounded interesting, but I wondered what would happen if you wanted to sell your company on?… hmmm.

Turns out I was right to be skeptical, but way off the mark in terms of how crowdfunding works…

kickstarter

There are a ton of crowdfunding platforms out there now, but Kickstarter is the biggest for the US and UK markets.  The Mack was looking to use it for one of his business projects and explained how it worked.  We were in a Vietnamese restaurant at the time.  I almost spat my pho out at him.  I definitely remember telling him that he was immoral and that I wouldn’t be any part of it.

Overreaction?  Maybe a tad, but I’ll let you be the judge of that.

So the premise of crowdfunding is that it allows individuals to invest small amounts in businesses or projects that they like the look of and it allows companies to raise money without having to give away any equity.  Typically, individuals can invest upwards of $5 in a project.  In return, they get some sort of reward or recognition.  Whether that’s a name-check on the art film project or an advance copy of the role-play game they’ve invested in.

So you could look at it as a platform which gives rein to the ultimate free market principles.  Power to the people.  A chance for consumers to influence the latest products and support the arts.  A way for small companies to forward-sell innovative products.

Or, like me, you could just look at it as absolutely barmy and ripe for scamming.

money for nothing?

Because it’s not even money for old rope.  It’s basically free money.  It’s the equivalent of the friends and family whip-round of old, but with 10 million mates all chipping in a couple of quid.

It flies in the face of all conventional business wisdom on bootstrapping and angel investment and careful financial husbandry.  You don’t need a business plan.  You don’t even need a company.  You don’t need to show anyone your finances.  Or tell investors how you plan to spend the money they’re investing.

All you need is a project, a snazzy marketing video and enough people who are happy to part with the cost of a latte, and bingo!  Instant success.

Because not only do you raise the money that you need, but you also get massive exposure to your target audience and, if your fundraising exceeds all expectations (the largest amount raised was $10m; over 10,000% of the target), the media will pick up on it too, so further free advertising and even more potential customers.

The most successful projects seem to be those involving funky technology products (smart watches, games consoles), computer games or arty stuff.  That would seem logical – the people who like those things tend to be early adopters anyway, so of course they’d jump at an opportunity to say that they helped make that product a reality.

The Mack and I think it’s only a matter of time before crowdfunding is taken over by organised crime.  Gullible punters willing to part with cash in return for nothing?  It’s the ultimate investor-endorsed Ponzi scheme.

Maybe because of this, Kickstarter has closed its platform to all but “creative” projects.  Don’t be put off.  It seems as though “creative” stretches a long way.  Just take a look at some of the projects that have been funded recently and you’ll get an idea of what flies and if it could work for your project.

And even if Kickstarter is a non-starter, there are many more crowdfunding platforms out there.  Country-specific platforms, sector-specific platforms, even worthy causes platforms.  If you’re looking to attract crowdfunding, then you need to think seriously about the amount of money you need to raise and which platforms get enough of the right eyeballs to make that likely.  As with all of these things, with popularity comes fragmentation and if there are too many platforms, then it becomes harder to attract enough mugs, sorry, investors, to your project.

So my advice…  Get in there now if you’ve got an idea but no cash.  In a troubled economy, it seems there is no shortage of people willing to throw money at new “stuff”.  And they expect almost nothing in return.

Jeez, I bet Madoff wishes he’d thought of this…

highs and lows of semi-retirement

caroline hughes 1 Comment

There are two distinct parts to being semi-retired.

There’s the incredibly smug “retired” bit, where you spend your weekdays flaunting your freedom.  Being able to see sold-out exhibitions, going for a slap-up afternoon tea just because you fancy eating miniature food, or starting cocktail o’clock at 3pm on a Tuesday… It doesn’t really matter what you do – all that matters is (1) you’re not at work and (2) you make sure everyone knows it.  You know you’re doing great at this bit when your nearest and dearest regularly tell you via facebook to stop showing off and get a bloody job.

afternoon tea

And then there’s the less smug “semi” bit.  Which basically translates as not having enough money to actually retire.  And then translates as having to email all your mates and former colleagues and random people you once met at a work “do”, to ask them if they have any work that they need help with.  And finally translates as ringing round various temp agencies to tell them that you pack a mean 70-words-per-minute and surely somebody, somewhere needs a jaded former lawyer with an acute allergy to hard work??

reality check

Six months into the new lifestyle and time to take stock.  For anyone watching my progress with (a) a view to jacking it in and living the dream, or (b) anticipatory schadenfreude, here’s a list of the highs and lows so far, to help you make your mind up.

the highs

  • leaving my job and being able to leave all the accumulated stress and mental energy behind.  I expected there to be a time-lag between physically quitting and mentally quitting.  As it turned out, I seemed to shrug it off as I walked out the door.  See ya, suckers!
  • how incredibly supportive and enthusiastic everyone has been.  And also how my decision seems to have positively rubbed off on other people, even without my doing anything.  I don’t think that I’ve made it look particularly easy, but I think I have shown that there is an alternative to what we’ve been sold.
  • being able to go full olympics last summer and being massively over-excited every day for the best part of a couple of months.  Typically whilst wearing ridiculous union-jack-emblazoned outfits.
  • learning new stuff and meeting new people.  So far, I’ve learned basic html, javascript and css (all very poorly, but at least I gave it a go – try Codeacademy’s free online training if you’re keen).  I’ve got to grips with WordPress for blogging and basic websites.  I’ve discovered tons of resources available for start-up businesses.  And I’ve learned that even though I still detest networking, my new lifestyle at least provides a talking point (for about 10 seconds before they decide they hate me and my smugness).
  • going to bed at 2am and getting up at 10am.  Much more in tune with my body’s natural sleep/wake cycle.  And nothing good happens before 10am.  Fact.
  • getting very carried away with new business ideas, before either forgetting them (see above high re: 2am bedtime) or realising that they lack the vital money-making element.
  • losing my blackberry tic.  You know, that involuntary twitch every time you see the notification light flash.  And the Tourette’s that seemed to accompany it.  That’s disappeared too.
  • the month spent horizontal in the Indian sunshine.  Aside from the karma drama and the fear that all that lounging would result in muscle wastage rendering me unable to walk, it was wonderful to escape the winter grims.

the lows (regrets, I’ve had a few; but then again, too few to mention…)

  • the lost passport f***-up, practically doubling the cost of my India trip.  Idiot.  And yes, my passport is in a very safe place now.
  • the ever-lurking spectre of anxiety about money.  Which starts from fair-enough resolutions not to spend quite so much on cocktails.  But which quickly spirals to resenting paying for essentials like shower gel and toothpaste.
  • not getting the Friday feeling anymore.
  • the occasional bouts of self-doubt which, if left unchecked, descend into abject fear and disillusionment over your complete lack of purpose in life. Daytime TV feeds this.  Avoid anything involving homes under a hammer, bargain hunting or escaping to the country.  They will only highlight that your life has no meaning.

Since nobody seems in a hurry to get me back to work, I’ll probably focus on the retired bit for a little while longer.  Starting with a week in the Lake District next week.  Smug enough for you??

readers, I need your help…

caroline hughes 1 Comment

Right guys, time to test the power of the blog.  I need your input on an idea that I’m testing.  I’m going against all of the rules that say never ask friends and family – so call me maverick and run me out of town… but not until you’ve answered my questions below, please.

Here’s the concept:

A website, similar to an online dating website, but where people can meet new friends.

You know how, in the olden days, you used to join clubs or societies to meet people with similar interests, and you just took pot luck over who you met?  Well I want to take the hassle out of the connecting process and help make it more likely that you’ll meet people you’ll click with (geddit, “click with”? Oh I’m good…).  And take away any stigma in feeling like you’re a Billy/Norma-no-mates.

It’s definitely not intended to replace Facebook.  It’s about giving people a way of finding potential new mates in the real world.

Unsurprisingly, I am not unique in having this idea.  There are a few sites out there already that claim to do this.  The most modern one is citysocialising.  It’s closest to the vision I had, but it’s a little over-complicated for me.

Here’s where you come in…

I want your thoughts on the concept, whether you’d use the site, how you would use it and what you’d use it for?

I’ve put some questions below, so would be very grateful for your responses, but if there’s something I’ve missed or you have other input, feel free to add it in.  Oh and I should add that I’m not just looking for you all to tell me how wonderful my idea is… I want honesty and constructive feedback.  My next step is building this thing, so I’m relying on you clever people to tell me what to build.

1.  Do you ever want to make new friends or have you recently wanted to make new friends?  What are/were your reasons for wanting to make new friends?

2.  If you answered yes to Q1, how did you or how would you go about finding/making new friends?

3.  Have you encountered any difficulties in finding/making new friends?  If yes, what were those difficulties and did you manage to find a way to overcome them, or can you think of a good way to overcome them?

4.  Would you consider using a website to meet new friends?  If yes, what features would it need to have for you to use it?

5.  Who would you be looking to meet through the website?  What would you want to get out of the connecting process?  Who do you think this sort of website should be aimed at?

6.  Would you be prepared to pay to use this service?  What would make you more likely to pay for this service?

7.  Have you ever used a dating website? If yes, what did you like about it and what did you dislike about it?  What improvements could have been made to the site to make your usage better?

That’s all I can think of right now, folks.  In advance, I thank you for your time, intelligence and insightfulness.  Please post responses in the comments section below, or email them to me at justminding@gmail.com.

Besos x

hey, what’s the big idea??

caroline hughes 2 Comments

I’m going to come clean.  I don’t have a big idea.  I don’t even have a medium sized one.  There are probably a few small ones scattered about somewhere in my brain (the mental equivalent of lost coins down the back of the sofa).  But I can definitely say, hand on heart, I do not have anything vaguely approaching a big idea.

It’s interesting, there’s a definite assumption that if you’ve quit your well-paid job to start your own business, it must be because you’ve got this amazing idea.  I’ve noticed that people are really uncomfortable with the concept that you might just be mooching along seeing what comes your way.  In a social or networking context it goes a little something like this:

group shot 1

group shot 2

So without being in the slightest bit defensive, I thought it only right that I debunk a few unhelpful myths: 

the next-big-thing-myth

The next big thing is only the next big thing when it becomes the next big thing.  Got that?  Ok, let’s move on.

the we-planned-this-from-the start myth

Take a look at any of the internet big guns: they all started out as something pretty different from how they look now.

Pay-pal grew from a digital wallet solution.  Facebook started life as “Facemash”, a “hot or not” ratings site for Harvard students.  Amazon, if you remember, started off just selling books.  Google and You Tube spent years in the financial wilderness before finding a revenue model that turned a profit.

So don’t feel that in order to create a worthwhile business, you have to have figured out the path to global success from the very beginning.  Chances are you are going to have to radically change your concept, business model or both along the way, so your best approach is to be mindful of this from the outset and welcome the process.

the ability-to-predict-the-future myth

I’ve yet to meet someone who is in possession of the double-whammy combo of a crystal ball and hindsight.  Instead, we’re all members of the coulda, woulda, shoulda club.

I was supposed to go to a talk last month given by some important people in tech circles (Google, Groupon) on tech trends for 2013.  I couldn’t make it, but heard that it was interesting enough.  Conspicuously lacking in any substance though.  Mainly a rehash of what’s already out there with a bit of wishful thinking (Google+ anyone?  Anyone at all??).

I mean, between them, these guys have quite a lot invested in trying to work out what’s next for the tech juggernaut.  But they still don’t know for sure.  There were a lot of bets hedged.  So if they can’t predict the future, I’m sure as hell not going to try to.

the must-be-original myth

Sometimes, the best ideas are the ones that are derived from something that’s already out there.  I’m not advocating stealing anyone’s intellectual property.  I am saying there’s no point reinventing the wheel (unless you are in fact inventing a better wheel).  If you can improve on an existing product or service then that is just as legitimate a business as creating something totally new.

Look for the gaps in functionality, application, quality, service, cost, target markets.  There may well be a business hiding in between.

the gotta-change-the-world myth

Between them, Bono and Bob Geldof haven’t really managed to change even part of the world.  And they’ve got a heap of money and publicity behind them and they’ve been banging on about it for years.

Let’s be honest with ourselves for a second.  How many of us really believe that the iphone has actually changed the world?  Or Google?  Or Facebook?  They may have changed the way that we communicate, or obtain information, or interact, but they have not fundamentally changed the world.

If the strap line for the new iphone 6 is that it has brokered peace in the Middle East, then that’s a different story, but until then, we all need to get a bit of perspective.  (I actually think that unless Apple sorts out its woeful maps, the next iphone is more likely to incite violent land-grab insurgency, but I may be unduly pessimistic…).

the if-it’s-not-big-it’s-not-worthwhile myth

This one is the most damaging in my opinion.  I have no problem with people aiming high, if that is what inspires and encourages them.  But more often than not, this sense of having to have a big idea in order for your business to be valid, does nothing except cause paralysis.

There is nothing wrong with wanting to create a business that is just big enough for you.  If you look around you, that’s exactly what most businesses are.  Small.

If your goal is to create an empire, then by all means, sharpen your sabres and round up your troops.  But I view that brand of business colonialism as outdated and slightly distasteful.  To me it smacks of sitting in a leather swivel-chair with the obligatory white fluffy cat.

I think it’s ok to dabble, to start small and see what happens.  Without the pressure of a big idea, there is more room to grab the small but perfectly formed ones.  I see it in terms of the Crystal Maze.  Those teams in the Crystal Dome who aimed high ended up jumping around with arms flailing trying to catch the gold tokens being blown all over the place.  They lost.  The smart ones aimed lower and were able to gather up the already fallen tokens from the floor.  They won.

So that’s where you’ll find me, scrabbling around on the floor, picking up the overlooked ideas…