One of my monthly articles for Cardiff Life magazine. Here’s the PDF, for those that like that kind of thing.
I’ve been involved with a few bits of business-related conflict recently. Thankfully nothing that warrants fisticuffs and firearms, but unpleasant emails were exchanged, threats of legal action were flung around like so much confetti, and all in all it’s left a nasty taste in my mouth, and a sick feeling in the pit of my stomach. I pride myself on doing business in a friendly, transparent, and honest way, but it’s just something that happens in business from time to time, no matter how hard you try. I genuinely believe I’ve acted in the best possible way, but sometimes, however you act, you’re going to come up against people with whom you don’t see eye to eye, or whose expectations you’ll never be able to manage. Nothing will change that. They become “the client from hell”, and you’re constantly on the back foot, spending a disproportionate amount of time and energy on trying to keep them happy.
And herein lies one problem with the standard contractor-client business model. You’re reliant on a relatively small base of clients, each of whom can cause untold problems for you, or by disappearing can single-handedly slash your income. Scaleable web and tech businesses flip this on its head by having thousands, or even millions, of clients, all bringing in a relatively small amount of revenue. Sometimes a matter of pennies. But that’s not a problem if you have a billion users like, say, Rovio who publish the phenomenally successful Angry Birds smartphone game.
Issues of client relations become completely different when you have thousands of clients who you solely engage with online, especially if your product is primarily a digital one. If you’re iTunes, for example, and you have an unhappy customer you can just refund them 79p, or send them a new MP3. Problem solved, and everyone’s happy. Even if you’re selling a relatively high-end piece of software for, say, £200 the material cost of uploading a new copy for an unsatisfied customer, would be less than 10 pence. The minimal cost massively reduces expectation.
Also, when you have that many users you can view them as a group, and start testing hypotheses and making decisions on them statistically. Many thousands of users generate fantastic amounts of data which you can use to make decisions. If you have only five clients, it’s difficult to get any statistically significant data from them. But if of your 5,000 users 72% are more likely to create an account when you use a red button than a green one? Then present all users with a red button in future.
Of course, it’s arguable whether it’s easier to get 5 clients worth £1000 than 5,000 clients worth £1. But the reality is that there’s probably a finite amount of £1000 clients out there for what you’re selling, or the cost to reach them is prohibitive. But if you can find something that you can sell for £1, the skies the limit when it comes to how many clients you can sign up. And you probably won’t get letters from their lawyers.
Neil Cocker is the founder of Dizzyjam.com, blogs at NeilCocker.com, tweets at @NeilCocker, and is helping build Cardiff’s startup community with CardiffStart.com.
In this month’s Q&A Neil speaks to Neil Cottrell of LexAble, another Cardiff startup making waves.
Hello! Do introduce yourself…
I’m Neil Cottrell, Director of LexAble and the creator of Global AutoCorrect, an unique software tool for people with dyslexia and literacy issues.
What does your startup do?
Global AutoCorrect helps our users to focus on what they’re writing by automatically (and accurately) correcting their spelling as they type in any program. By minimising the distraction of spell checking, our users can focus on getting the job done.
What makes LexAble special?
Our product is unique because you don’t have to change the way you work; it runs in the background alongside the software you’re already using. We also understand the importance of accuracy when writing, so we spend a great deal of time ensuring that Global AutoCorrect never makes a false correction!
What was the Eureka moment that made you realise you had to build this company?
Global AutoCorrect was born as a personal coping strategy to help with my own spelling difficulties, but soon after starting university I realised that it had the potential to help others. With initial support provided by Cardiff University I founded LexAble and launched Global AutoCorrect as a consumer product in 2009. The rest, as they say, is history!
How’s business at the moment?
2012 was a great year for LexAble: Global AutoCorrect now has a dedicated team of developers and we’ve also acquired three more staff members to help grow our customer base. In the past year we’ve also expanded from our initial target audience of university students, into workplaces and the wider education sector.
Where would you like LexAble to be in five years’ time?
Right now our most important goal is to make Global AutoCorrect the best product it can be and bring our technology to a wide range of platforms. But we’re constantly looking for new, innovative ways to help our users to save time and get more done!
Where can we find out more?