Sunday, 28 November 2010

Dear British Government: You've Screwed Up Visas Badly

Last week the British government announced they're effectively wiping out the Tier-1 visa. For those not familiar with it the Tier-1 visa is the points based visa that most non-EU software developers and startup founders use to operate in the UK (it's also used by academics, scientists and engineers).

The announcement this week reduces the number of Tier-1 visas from 14,000 down to a mere 1,000. To put that in perspective there are 330,000 professional software developers in the UK. Many of the most talented developers I've had the pleasure to work with in the UK have been here on Tier-1 visas.

Whereas before any talented software developer with a track record could come to the UK on a Tier-1 visa to start a company, now to enter the country they'll have to get a specialist "founder visa" which is much harder to qualify for.

The UK government is shooting itself it in the foot, they're introducing a hard to qualify for "founders visa" while removing the visa option that most foreign startup founders actually use in practice.

To make matters worse the government is actually using the cut in Tier-1 visas to increase the number of Tier-2 visas. The difference between the two categories is that a Tier-1 allows the holder to move freely between jobs (or start their own company), while Tier-2 ties the holder down to a particular company.

The Tier-1 visa didn't surpress salaries, if an employer didn't pay the holder a competitive salary then the visa holder could just go and work for another employer in the UK.

However the Tier-2 visa does surpress salaries. With a Tier-2 visa the holder is tied to their employer (as long as they want to remain in the country) and can't change jobs, so the company knows that it doesn't have to pay a competitive salary. That's the reason why employers wanted Tier-2 visas rather than Tier-1 visas.

In one week the UK's gone from having one of the most talent and entrepreneur friendly visa systems in the world to one of the worst.

I'm making an open plea to the government: When people complain about immigration, they're not complaining about software developers, engineers, scientists and academics. Please don't ruin our international competitiveness for the sake of appearing to do something about immigration.

Wednesday, 24 November 2010

Ideas For Startups: Advertising Ideas

In the spirit of my previous post on the value of ideas I've decided to write up a series of posts (each post following a theme) covering some of the ideas I've had for startups but haven't got around to work on (yet).

In this post I'll be covering ideas for advertising related startups. So without further ado, here they are:

1) A Real Demographics Ad Network

Plenty of websites (small social networks, forums, dating sites) have lots of information on their individual users in term of age, gender, interests, etc. But the only way they can monetize this information is by building their own ad network (as Facebook, Linkedin and PlentyOfFish did) that allows custom targeting. A third-party network that sites like these could easily integrate into would mean more money for the sites, more relevant ads for the end users and an alternative to Facebook Ads.

2) Facebook Ad Tools

Facebook's own ad tools suck if you have a large number of ads, there are a large number of ad optimizations which you have to do manually (adjusting prices to be competitive, keyword splitting, A/B testing images, demographic tightening) and for sophisticated analytics (tracking Unique CTR over time, etc.) you need to download the CSV data on a regular basis and manually process it in Excel.

The only people who have tools to automate these activities are large ad agencies. A tool for everyone else would be nice. Facebook's api is in closed beta at the moment, so you'd probably need an inside contact to get access.

3) Ad Network with Feedback

At the moment if you're running a website with ads (or affiliate links) you only know if someone clicked on an ad, not how valuable that click was. So you don't know which of your users are "high-value" (so can't attract more of them or give them extra benefits). A CPA Ad/Affiliate network that fed back the the value of the ad-click (in a way that could be matched back to the user) to the site running the ad would solve this problem

4) Realtime Adsense for Dynamic Websites

Adsense only works on sites that the Googlebot can scrape, if a site uses user specific content or generates content on the fly Adsense becomes mostly useless. An alternative that could process content in realtime using embedded javascript to provide context-specific ads would likely be much more profitable than non-targeted banner adverts (which is what sites tend to use currently).

5) Correlated Interest Finder

On sites like Facebook where you can target users by interest getting a large enough audience can be tricky as people often don't list all of their interests. However if you can figure out complementary interests you can use those to widen your target audience.

Figuring out complementary interests can be non-trivial though, but it should be possible to automate the process. Maybe by data mining a bunch of social network and dating websites to find correlated interests. Facebook has one of these but it's terrible. It tells you everything is correlated with "music" because it doesn't discount the fact that everyone has music as an interest.

Sunday, 14 November 2010

The Value of Ideas

Every business starts with an idea. One of the most frequently asked questions by first-time startup founders is "How much is my idea worth ?"

Unfortunately most are surprised to hear the reply "nothing".

Paul Graham wrote a good article about the philosophical argument for this viewpoint but I wanted to present an alternative argument focusing on the underlying economics of the value of ideas.

It essentially comes down to the question: Does the idea give you a defendable competitive advantage ?

There are some industries such as cleantech and pharmaceuticals where ideas (new technologies, drugs, etc.) are patentable, and as such give you a competitive advantage which your competitors can't copy. In these cases the idea does have value, and you can often raise investment, etc. solely on the basis of your idea.

However in other industries such as in the web and mobile space, ideas are not patentable, and thus theres nothing to stop a competitor from copying a good idea. Hence ideas in these areas don't give you a defendable competitive advantage. It doesn't matter how good or unique the idea is. If you can't stop someone cloning it the day after you launch then the idea itself has no intrinsic monetary value.

A good idea is the foundation of a successful business, but like the foundation of a new building, it's purely the basis for the work ahead.