Category: DigitalCircle

From Steve Cheney: Why Android First is a Myth.

A lot of the article is why you’d be crazy to go Android first, but I’m more interested in these comments about capital and then applying them to a Northern Ireland context.

• The effort required to build and release an app is severely gated by capital-raising. Today’s startup seed rounds typically range between $800K to $1.2M. With that amount of capital, startups are expected to not only release a polished app, but also show demonstrable traction before raising capital again (generally 5-10x the user traction versus what was required a few years ago).
• These structural limitations around capital raising for venture-backed companies force startups to take a non-linear path to development which is gated by fundraising—the types of milestones that a company must hit to raise a seed round (great founding team, big market, good idea) are radically different than at the Series A round (significant traction, repeatable user acquisition strategy, early ideas toward monetization, etc).
• To build a mobile app with $1M in capital, a startup can roughly afford to hire one designer, one client developer (iOS or Android) and one back end engineer. Often the technical co-founder is a hybrid back-end engineer and the business founder plays a hybrid product role. This will allow the startup around 18 months with which to release a mobile app and demonstrate product-market fit.

In Northern Ireland, we have some serious structural issues. We have a third of the economically active workforce sequestered inside the public sector. The remaining two third are performing significantly under the national averages for productivity which means that while we have a lot of high performers, their highs are levelled by much more significant troughs.

Because of our isolation we suffer incredibly from the brain drain and even getting experienced trainers to locate here is difficult and expensive. We are facing an existing skills gap in technology and media and it’s plain that demand is far outstripping supply and the rate of increase of the demand is vastly greater than how much we’re responding to it.

We have a depressing number of our potential workforce described as economically inactive though they are not necessarily “unemployed”. We need to re-skill this workforce and get them producing again. The death of the majority of big manufacturing in Northern Ireland has left many disenfranchised because we didn’t educate them properly. A pervious dock worker will have worked hard to make sure their eldest gets to university and joins one of the professions. We handled the transition to a 21st Century workforce particularly badly.

There is an institutional unwillingness to bet big on digital. This is likely because digital means no boxes – and our society loves things that can be put in boxes and then put on ships. What was the point in paying €30 million to get a high speed line from the North Coast if we’re not going to invest in companies who can use it?

Last but not least – finance. In spite of these difficulties, some people think that building the next Twitter costs £10,000. Or maybe £40,000. And not the seed amounts listed above in the quoted paragraph. Just because we are a smaller region and marginally cheaper than other regions, doesn’t mean we can build a digital economy for a tenth of the money.

Sinclair Stockman on the need to go digital in analogue businesses. Be demanding on your suppliers. The danger is that you’ll stagnate or die.