Thoughts for startups (no. 7)

"He never created a finished product. Finished products are for decadent minds. His was an evolving mechanism..."

Isaac Asimov, 1964

Related to the over-hyped start-up concept of the Minimum Viable Product (MVP), on which more later, but also related to the Japanese manufacturing concept of kaizen, or continuous improvement, which in turn draws on martial art philosophies (or the power of practice).

Your tech product isn't finished, and isn't going to be. Ever. You might stop developing it and people might carry on using it, and preferably paying for it; but it's not finished. There will always be some improvement, however slight, that can be made to some aspect of it. But more importantly you won't really start to understand what your product does and can do until you make it. Great that you came up with an idea, tweaked it around a bit before realising it. But until you actually have it in front of you, there will be features, UI elements, loads of better stuff to do with it that you couldn't imagine before; and that's nothing to what happens when you put it in front of someone else.

Another lesson to draw is that those changes should be evolutionary as much as possible, at least from the end user perspective. So it's great that you can get a 10% improvement in UI responsiveness by redeveloping the entire back end - but make that change without disrupting the end user. Thought of 6 great ways you could improve the UI? Make them one at a time. Because each is like a product in its own right; seeing the change in use opens up a whole set of possibilities about how the product could be improved.

So make your product work and then improve it; don't be a decadent mind.

Market size: what's totally addressable (dude)

For some months now I've been wondering how med-tech startups were able to claim such huge global market sizes, and then I read this post from EC1 Capital. If I understand the definitions discussed in that post, then I've been using tiny Total Addressable Market numbers where I could have used much, much, much bigger numbers. As in several orders of magnitude bigger.

Med-tech companies sometimes quote global market sizes in trillions of dollars, which can only be the amount being spent on health or medical-related activity. So the equivalent for TwoTen...

Our product is designed for primary schools, nurseries & families, so we could use the same logic to claim that it has a total market size in the UK alone of over $100bn. I think.

This figure is derived as follows:

the estimated cost to parents of bringing up a child to age 21

=£225k

divide by the number of years to get a per annum figure

=£10.7k

Multiply by 5.2m - the number of households with children aged 10 or under (our target age group)

=£55.7bn.

Add in primary school state funding (approximates to the primary school budget)

Average funding per school £4100, times approx number of pupils 4.4m


=£18bn (those are figures just for England rather than UK, so this total is low)

Total figure, which excludes nurseries and private schools to avoid any double counting of parental expenditure, is then

=£73.7bn

which in USD means our market size, just in the UK

=$118bn

An 18* multiple seems fair for extrapolating the global market size. Conveniently, yay! Turns out we're also targeting a global market worth trillions of dollars!

This huge number makes for an interesting contrast with the financial figure we would normally quote. It's from a report from analysts ABI Research, which estimated the global market for parental control software will grow to a rather dull

$2bn

by 2018.

Again, based on the EC1 article, I think it's appropriate to use that as a starting figure for TwoTen's global Total Addressable Market (TAM) -  a starting figure because it excludes revenue sourced from schools, nurseries, mobile partnerships and special use cases. But still, that means our TAM is around only 0.1% of the market size derived above.

So while it's tempting to emulate those med-tech startups and use the big number, ours was always the more realistic and informative, simply because we can grow to dominate that dull figure, as all of it is expenditure on what we do (only we're doing it better, of course ;) ). On the other hand we would never, ever take more than a tiny fraction of that hugely cool first number, which includes spending on food, clothes, housing, primary and nursery staff wages, etc..

Similarly the med tech market size figure contains huge elements of expenditure that they can't expect to replace; nursing staff wages, medicines, food, power, buildings; so their figure might look impressive, their TAM is certainly smaller - and if they can't find a suitable analyst report, they're welcome to just apply our neatly calculated 0.1%.

Adding real value through ICT

A lot has been written in recent years regarding the importance of ICT (Information and Communication Technology) staff understanding the business in which they work and therefore being able to add real value to the business through their selection and application of technology. Organisations the world around have taken heed of this, particularly after noting the positive results generated for the trailblazers, and have worked to get their ICT staff aligned with the organisation instead of treating them as outsiders. Many specialist sectors tend to be a little behind in these trends, and it seems to me that this is the case in the charitable sector, at least in the UK (exceptions noted!).

So how can ICT staff in charities can add real value? It can take some time for the best of us to identify technologies that will help in a given sector, let alone an individual organisation, but with charities there is a neat starting point - almost all charities depend on specific aspects of culture: the willingness of people to give, to volunteer; to spend some of their own time doing things for the benefit of others. Regardless of what else a charity does, educate, feed, heal, house, clothe, etc., it is essential to their success that the general populace has the desire and interest in giving freely, whether of time, skills, cash or a mix of the three. Anything that promotes this behaviour in our culture encourages charity and therefore helps charities to thrive.

This is the same positive aspect of cultures and individuals that allows open source software to thrive; people give of their time, their skills and/or their cash for the benefit of the greater good. So there is one simple thing that ICT staff in charities can do to add real charitable value; switch their charities to using open source.

Switch the charity to open source not because a given technical solution available at that instant of assessment and acquisition is "the best". Nor because the use of open source allows you to ensure the chosen solution becomes the best (once in use and the success criteria far better understood). Nor because the same technical people interested in open source are more likely to be interested in working in the charitable sector even if that means lower pay. Not even for the other long term cost savings offered by open source. Think, for a moment, about the tendency of charities to be helping the under-privileged in the global society and how an open source solution, having no cost of purchase, is likely to permit adoption by those very same under-privileged people, and how the charity's use of it tends to help to improve the software for all other users; let that influence the decision.

But in the final analysis, switch to open source because it promotes a charitable outlook in the greater society. The ultimate way to add value to your charity through technology. Technically not necessarily simple, but philosophically so, and drawing on ancient philosophies at that. Cultivate the desire to give charity; giving begats giving; do unto others as you would be done by.

To promote your charity, act charitably in your choice of ICT.


(A version of this posting appeared on Oxford Archaeology's blog server in 2007)