Iarfhlaith Kelly - Code agus Craic

From time to time I get asked to work on different projects for a portion of the resulting revenue share in lieu of a cash payment. Any time this happens alarm bells go off in my head. Taking a risk on your own project is one thing, but taking a risk on someone else’s needs to be dealt with severe caution.

Ideas Hold No Value

When someone calls me up and asks me to build them an application or an e-commerce site and offers me a share of the revenue from the product I would be creating, I have to wonder if they’re aware of how risky that sounds. An idea on it’s own holds no value. If you can’t execute it, bring it through to completion, and find a market for it then you may as well be dreaming.

I mean, if I went to a property developer and said I had a great idea for building a new housing estate that would ensure a massive ROI, he’d probably say he was interested. But if I mentioned that I didn’t have any land, money, skills or building materials he’d be crazy not to tell me to take a hike.

Getting Burned

I’ve been burned by this once before (back when I was a student), and I certainly learned my lesson then. In hindsight I think it was better in the long run that it happened early in my career when the stakes were still low, but then again, I really shouldn’t have fallen for it at all.

For a long time now I’ve refused to do work using these types of payment terms and I think that today, I’m doing far better because of it. If anyone needs to hire me for a project I’m more then happy to hear all about their idea, but in keeping with my risk profile I’ll only accept payment in cash.

Exceptions to the Rule

The only time I would ever consider getting involved in a revenue share agreement instead of charging a fee is if I was convinced that the proposed project had been fully researched, there was a completed business plan and there was real evidence that it was a viable business. If someone comes to me with an idea and little else, then their time would be better spent talking to another developer.

The Lucky Few

Despite my personal experiences though, I’m sure on the odd occasion, this type of arrangement does actually work. I’d love to hear from anyone who has had success using this method of payment so I can ask them how they managed it. Because I far as I can tell, you’d be crazy to agree.

Today I gave a presentation to Enterprise Ireland as part of my CORD grant application. If my attempt to convince the panel was successful, I’ll be given approximately €30,000 to spend on my startup over the next 12 months. But, I’ll have to wait until next week to find out.

In the mean time, I’ll be contemplating the best ways to spend the pending funds so it gives me the best possible start to my new venture.

Deciding What To Buy

Now I may be counting my eggs too soon, but lets imagine that I get approved and the funding is provided. How should I go about using the money as effectively as possible? Here’s a few ways I’ve considered putting the cash to good use:

• Offload some of the development work by hiring a junior developer. This would free up my time a little and allow me to work on other areas of the business.

• Run a PR campaign once I’m ready to launch. Getting press coverage and a decent bit of buzz around your product can be a great spring board for success.

• Spend on online advertising like Google Adwords. The higher your budget the more people see your ad. Provided it’s relevant, this should give a decent measurable return on investment.

• Go to an overseas web expo (and possibly launch from there). Something like the recent Web2.0 Expo in San Francisco would be the perfect way to launch.

Obviously I’d love to do all of the above, but I’m sure I’ll have to make some concessions and cut the budget in places. The thing is, I’m just not sure where make those concessions.

Looking for Advice

If you had €30,000 to spend on developing your product or service what would you spend it on?

As a new participant in the Hothouse programme, I’ve been encouraged to apply for Enterprise Ireland’s lucrative CORD grant.

The deal is that if you can convince the panel that your start up can create an exportable product, and generate more then a million euro turnover in less then three years, they’ll give you half of your last year’s salary - tax free with no other strings attached.

They’re not looking for an equity stake in your business and they’re not looking for the money to be paid back. It’s the closest thing to a free lunch that you’re likely to get. I think it’s a great way to get budding entrepreneurs to take the first step and give their idea a proper go.

So, in six days time, I’ll be sitting in the hot seat trying to convince these guys I’m worth a punt. All I need now is a plan.

Presenting the Idea

I want to use my presentation to make two main points:

1. I’ve got a great product that people will love;
2. There’s a viable business here that could be very profitable.

I don’t think I’ll struggle too much with point no.1. I mean I really believe in what I’m doing and I genuinely think it’ll make life easier for a lot of people. When I tell others about what I’m working on (more on this soon), I get excited about it all over again, and I think that excitement rubs off on them a little. So far, the feedback has been great. So point no.1 shouldn’t hopefully be a problem.

It’s the 2nd point that I’ll struggle with.

Now I’ve actually done quite a bit of work on the business end of things, and so far, all the figures are looking pretty rosie. The business is scalable, low cost, high margin and there’s a large market for it. The problem is that it’s all just speculation. Nothing more then wishful thinking.

How to Predict the Future

A wise man once said that “the best way to predict the future is to create it”. But what I’d really like to know is how do you predict who will create it? What did the lucky ones do differently from all the other aspiring entrepreneurs that fell by their wayside?

I mean sure, I’ve got lovely projections and figures on how I think the business will be in 2 or 3 years time. I even have some market research done to back it all up. But in all honesty, I still have absolutely no idea if it’ll work out. The only thing I can do is plan, work hard, and try to enjoy myself along the way.

Trusting Your Gut

I can’t say for certainty that I know everything will work out. But I can say that I totally believe in what I’m working on and I think it will help a lot of people. I’ll focus on taking care of the product and hopefully, after a good bit more work and a little bit of luck it’ll take care of me in return.

Any tips on CORD grant applications greatly appreciated.