4 Big Fish Outgrowing the Start-up Pond

Starting your own business is risky; one in three fail in their first three years. Tech start-ups are no exception, even those starting lean. In fact, their innovative nature means they are perhaps more likely to fail than traditional ‘safer’ concepts.

Is it simply a question of money or entrepreneurial talent to push the enterprise across the line?

For many the odds might seem disheartening, these four case studies show the potential payoffs, for getting it right, are worth the risk.

 

anthony rose zeeboxZeebox

uk.zeebox.com/tv/home

What is it?

Social-networking and television dominate 21st century life; Zeebox cleverly combines the two. In the words of co-founder Anthony Rose, this is “the future of how we’re going to consume media.”

How does it work?

Zeebox is an app for mobile devices providing information related to your current viewing choices, including links to buy on-screen products. Through Facebook and Twitter, users can share their viewing choices, chat with friends, and invite them to watch things ‘together’.

Who’s behind it?

CEO Ernesto Schmitt, a former EMI board member, and CTO Anthony Rose, who designed BBC iPlayer. They employ more than fifty people, in London, Sydney and New York, including former EMI Music CEO Elio Leoni-Sceti.

How are they doing?

Launched in November 2011, Zeebox gained over a million users in its first five months. Available for iPhones, Blackberrys and Android devices, Anthony Rose says their current users number “three or four hundred thousand monthly”. BSkyB bought a stake in January 2012, integrating the app into its services. Comcast Cable and NBC Universal followed suit in the US in September 2012, as did Network 10 in Australia.

Why’s it so successful?

Zeebox is popular with viewers, especially under-35s already used to sharing their media choices with platforms like Spotify. It’s also popular with advertisers, as it enables impulse buying.

By starting small and hiring talented designers, Zeebox perfected their product before rolling it out across multiple devices and countries. They expanded through clever partnerships with big industry players, minimising their own financial risk and guaranteeing support in vital markets.

team huddleHuddle

www.huddle.com

What is it?

Huddle is a cloud-based-software company helping businesses share documents and collaborate online.

How does it work?

Huddle’s software facilitates business tasks such as file sharing and storage, content management, project collaboration, task management, meeting organization and discussion. It can be accessed from desktops or via mobile devices such as smart phones and tablets.

Who’s behind it?

Serial internet start-up entrepreneur Alastair Mitchell and experienced product manager Andy McLoughlin. They now employ over 100 people in London, San Francisco and New York.

How are they doing?

Founded in 2006, Huddle has attracted over £25m in investment and seen sales triple year-on-year. Their software is used by over 100,000 organizations worldwide, including Disney, HTC and Kia Motors and they have contracts with the UK and US governments.

Why’s it so successful?

According to Mitchell, a start-up needs:

“The perfect combination of timing for your idea to come to market”.

In other words, they had the right idea at the right time. Seeing the growth of online social networks, they realised businesses could benefit from similar software. They also went where the business was. Having started in the UK, they realised 30-40% of their business was from the US, so opened offices there. They then raised new investment and now plan to continue growing internationally.

 

Errol Damelin, founder of Wonga.com.Wonga.com

https://www.wonga.com/

What is it?

Wonga.com offers short-term, unsecured loans at high-rates of interest.

How does it work?

Customers select how much money they want to borrow and how long they need it for. The final amount to repay is calculated, including interest of 1% per day plus a transmission fee. Wonga.com then performs a simple credit check and, if successful, transfers the loan into the user’s account with fifteen minutes.

Who’s behind it?

Founded by Errol Damelin and Jonty Hurwitz, Wonga currently has around 300 employes. Damelin has won numerous awards, including The Guardian’s Entrepreneur of the Year award. Hurwitz is responsible for Wonga’s groundbreaking software.

How are they doing?

Launched in 2007, Wonga.com is now worth over £380m.They came first in The Sunday Times Tech Track 100 in 2011 and recently launched wongaforbusiness.com offering loans to small and medium enterprises.

Why’s it so successful?

According to Damelin, the business relies on:

“Sophisticated credit decision technology to ensure we only help appropriate people and give customers unique control.”

Their software is apparently able to predict with 93% accuracy an applicant’s ability to repay, leading to the rejection of around two thirds of potential customers. Customers are clearly drawn to Wonga’s simplicity, providing almost-instantaneous credit and clearly showing upfront how much they’ll repay.

 

Michael Smith Mind CandyMind Candy

mindcandy.com

What is it?

According to their website Mind Candy is “..an entertainment company that creates extraordinary brands with online games at their heart.” To everyone else, they’re the team behind the hugely successful Moshi Monsters.

How does it work?

Moshi Monsters allows kids to adopt a virtual pet monster online. CEO Michael Acton Smith calls it “a cross between Tamagotchi and Facebook for kids.” The game is the central hub of a product portfolio including magazines, video games, trading cards and toys.

Who’s behind it?

Founder, Creative Director and CEO Michael Acton Smith, who previously co-founded successful online gadget and gift retailer Firebox.com. Mind Candy currently employs around 170 people.

How are they doing?

Founded in 2004, Mind Candy’s first project, Perplex City was unsuccessful, almost causing the business to fold. Then, in 2007, they conceived Moshi Monsters, the online version of which currently has over 70 million users. The company’s pre-tax earnings went from £345,560 in 2010 to £9.8m last year. The company’s expected stock market floatation in 2013 could top £200m.

Why’s it so successful?

Mind Candy focused on creating a really imaginative world with a broad range of characters. This strong core concept has hooked millions of kids and driven an ever expanding range of related products.

The basic online game is free-to-play, resulting in a huge user base. Revenue is generated through subscription-only premium content and sales of peripheral products, such as magazines and toys.

In the words of Michael Acton Smith, Mind Candy is:

“Building a new type of entertainment company for this digital generation of kids.”

Diverse as they are, these businesses do have several things in common that helped make them successful.

Zeebox, Huddle and Mind Candy are connected by ‘connectivity’. Allowing us to interact with others in fun and/or productive ways, these start-ups encourage us to suggest their services to friends and colleagues, so we can share with them too, providing a constant drive for new subscribers.

Immediacy lies at the heart of Zeebox, Wonga and Huddle’s appeal. Don’t wait to look things up, or talk to friends, do it right away with Zeebox. Always telling colleagues ‘I’ll email you that over later’? Not with Huddle you won’t. Send files while you talk so you can make instant decisions together. And if you can (legally) get a loan quicker and easier than the ones available from Wonga.com, we’d love to hear about it!

But perhaps most importantly, all these start-ups make it easier to do what we already do, whether playing games with friends. By simplifying our existing lifestyles, these services can rapidly make themselves essential to us. And if you can bring an idea like that to market, it might just be you inspiring the next generation of tech entrepreneurs.