Monthly Archives: July 2014

The startup conundrum

Not that I was ever really a fan of Neil Sedaka but I have been thinking about what is next for the last few months.

I do think that the focus on grocery or food is excellent. Firstly I understand the market dynamics of the supply chain. Manufacturer, distributor, retailer and the associated benefits of each of these roles.

I also have some good contacts in the area for branding, packaging, distribution and customer acquisition. I have been impressed how many companies have launched in this area over the last 12-18 months, but I think times have changed.

When Andrew and I launched Diet Chef (way back in 2008) the barriers were a lot lower. You could work with a supplier and effectively displace consumers from bricks and mortar retail or from other segments that were badly served by e-commerce (diet being a great one at the time).

The issue is retailers are much better at online now, they have the infrastructure, staff and skills to easily launch an online service. The only thing is they are slow, but should you build an interesting online business you are going to struggle with the power of the retailers. This usually comes back to a price war – as consumers are very price focused online. If you started in the last decade you probably have a big enough moat to survive, but starting up today is another story.

In addition, customer loyalty is to new things and price, so churn of customers goes up massively.

You therefore need to understand how you will differentiate yourself compared to your competitors. Diet Chef was started with £100, I doubt that you could start today with this level of investment capital, but I will try!

I am going to try and keep my thoughts on what is next to a minimum on this blog until we have actually tested a few theories. All I can tell you is it’s online and in groceries and not in anyway competitive with Diet Chef!

What’s next?

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This photo doesn’t have anything to do with this post apart from I took it at the weekend while thinking about new ideas on the Royal Mile, Edinburgh.

I have been thinking about the next business project for a few months now (at least 6 actually!).

I do think that the focus on grocery or food is excellent. Firstly I understand the market dynamics of the supply chain. Manufacturer, distributor, retailer and the associated benefits of each of these roles.

I also have some good contacts in the area for branding, packaging, distribution and customer acquisition. I have been impressed how many companies have launched in this area over the last 12-18 months, but I think times have changed.

When Andrew and I launched Diet Chef (way back in 2008) the barriers were a lot lower. You could work with a supplier and effectively displace consumers from bricks and mortar retail or from other segments that were badly served by e-commerce (diet being a great one at the time).

The issue is retailers are much better at online now, they have the infrastructure, staff and skills to easily launch an online service. The only thing is they are slow, but should you build an interesting online business you are going to struggle with the power of the retailers. This usually comes back to a price war – as consumers are very price focused online. If you started in the last decade you probably have a big enough moat to survive, but starting up today is another story.

In addition, customer loyalty is to new things and price, so churn of customers goes up massively.

You therefore need to understand how you will differentiate yourself compared to your competitors. Diet Chef was started with £100, I doubt that you could start today with this level of investment capital.

I am going to try and keep my thoughts on what is next to a minimum on this blog until we have actually tested a few theories. All I can tell you is it’s online and in groceries and not in anyway competitive with Diet Chef!

Trust

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Diet Chef has launched in the USA over the last month. It has been a huge task by all the team.

We will spend the next few months evaluating the opportunity, it’s a great market and consumer feedback has been fantastic so far.

The main challenge entering any market is Trust. We are not a well known brand. There are about a dozen ways to increase trust but for me reviews are the most powerful.

Here is a selection of our reviews from the recent launch

The power of personalisation

The great thing about the Internet is the ability to personalise.

Your dialogue online feels one to one, but once you move into FMCG brands it becomes incredibly hard to personalise.

There are two companies that I feel really have taken both product & customer experience to the next level. Amazingly they had the same founder, so I am sure lessons learned have been applied across each of these brands – it is of course Graze.com and Tails.com, both founded by Graham Bosher and team.

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Here is my first delivery from Tails.com – a fantastically personalised menu profile and bag of food.

It just gives me such a great feeling when I receive this level of personalisation.

It instantly created word of mouth in the office and I handed out 3 refer a friend discount codes within 5 minutes.

So if you run an e-commerce business think of offline personalisation and online personalisation – they go hand in hand…

Is Crowdfunding overheating?

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Firstly I am a big fan of crowd funding, I think it’s a great way for businesses to get access to early stage funding in a timely manner. Angel’s Den, Crowdcube and CircleUp are all great examples of active crowd funding platforms

Crowdcube closed a £1.2m funding round in 16 minutes from going live.

Is this a good thing I ask myself?

I thought I would write this so we can look back in 3-5 years and answer that question.

We have to remember that this is regulated activity and we have a duty of responsibility not just to disclaim risks, but provide as much information to the potential investor as possible to make their decision. During the process of listing Orbital Software, we spent a terrible 36 hours verifying every statement we made in the prospectus. This included qualifications of the directors, age, where they lived and inside leg measurement (ok they didn’t ask for this).

But even a sophisticated investor being given 16 minutes, to download and read a 39 page Articles of Association for Crowdcube Limited is a bit of a joke. I strongly believe that before any effective auction process goes live there should be a 7 day (or even 24 hour) access to information period.

141 investors signed up for this deal, therefore the average investment was £8,500. At this level the average investor was not really “high net worth” individuals in my book. I am sure they are all registered sophisticated investors, but I strongly believe there should be more control over this.

Interest rates and returns are at an all time low in the UK, so the search for returns is fuelling this demand. But selling high risk (and reward) financial products do need some level of control.

In this tweet stream, I specifically asked if the terms of the investment were the same as Balderton (the VC investing £3.8m of the £5m round). I have enough experience of VC’s to understand they typically (and rightly!) ask for preferential rights (liquidation preference, information rights, drag and tag etc) but what about the crowd?

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The answer to me looked like we are all in the same boat – but the Articles tell a different story (and what about the shareholder agreement, service agreements and due diligence documentation). In most angel deals I have done this is made available to all shareholders, not just the VC’s. If I don’t read it that’s fine, but as part of an investment decision there should not be two sets of information rights.

Anyone who read the documentation would understand that the B shares (the ones available on the crowd funding platform) had different rights to the A Ordinary and A Preference shares offered. There are no voting rights or rights to attend or receive notice of any general meeting on any written resolution.

But in the 14 minutes that the offer was open, I am sure this will have been missed. Caveat Emptor!

Burger Meats Bun – Edinburgh

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Opened recently on 1 Forth Street (the old site of Urban Angel) in Edinburgh is Burger Meats Bun, a new restaurant concept that has made it’s way over the M8 from Glasgow.

Anyone who has wandered the streets of Glasgow will recognise this “institution” and its great location on West Regent Street.

So a free Saturday we headed down for a look after a wander into Edinburgh through the Meadows.

The decor is really subtle and although the site isn’t as bright and airy as the Glasgow location, they have done a great job with the space. We managed to get a fantastic table in the window rather than downstairs which we were initially offered (I would recommend upstairs!). The menu is simple and focused on the core ingredient – Burgers.

I choose a chicken burger and some wings at the side. Tasted great and served simply in wax paper with a sticker identifying the variant.

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This is Claire’s original cheeseburger – it does have the addition of some pickles from both DJ & Freyja’s burger and some extra salad that she found lying around – so is slightly bigger than it should be! The brioche roll is amazing, a lovely dark glazed roll with sweet fluffy bun. I do find that sometimes the bun can go super soggy once the juices run out of the burger patty, but not here..

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My only criticism is no kids menu or offering. It is a huge burger and even a 13 and 16 year old (and a 45 year old) struggled to finish it. I think a simple smaller version would be welcome for anyone with a smaller appetite, it would also leave room for pudding which we were sorely tempted to try.

I love burger joint concepts and have spent many years researching and looking at suitable locations for a “diner” concept in Edinburgh. I yearn for the all day breakfast of the Creamery in Palo Alto and a slice of meatloaf during a late afternoon meeting. Take a look at some of the photos

http://paloaltocreamery.com/creamery/gallery

Divided by a common language!

So you have implemented your automated or manual “Can you help” email.

Don’t expect 100’s of emails, but once you get a few, start to use the information and action it.

Here is great example from the Diet Chef US checkout process, it involved one letter that was wrong, but caused a prospect to stop the process and abandon.

I don’t know how many more did this but I thought it was a really interesting example of how minor things can throw off the purchase process.

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So when adding a delivery or billing address you are presented with this form. It looks great to me, clear, simple format.

But there is a typo in it. It’s one single letter Organization not Organisation in US English.

The customer told me that although they knew we were a UK company, it worried them and they abandoned.

We have fixed it of course and will keep you updated on the results.

Why asking prospects really helps..Part One

I thought I would produce a bit of log of how you can get really simple feedback from prospects why they are not buying.

In my previous post I talked about building it and they will come. The frustration of launching a website and not becoming rich overnight (it never happens!).

So how do you garner feedback. I have found one of the best ways is a simple plain text email. Here is an example I have used at Diet Chef.

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I don’t think it could be any simpler. Make sure the email actually comes from you and not an info@ address. It just asks a simple open ended question and if you are polite it is amazing how much feedback you get.

You can automate this quite easily with tools like Mail Chimp, but make sure you use a plain text email. Otherwise it looks too corporate!

Reply to each email that you receive personally and make sure you listen to the items that are brought up.

It is the smallest of small thing that can knock you off an online journey, and over the next few posts I will try and give examples of things that I have seen, no matter how minor