Lite Business Models, is this the future of value creation? We think so and here is why!
We believe that the previous barriers to entering a market of prohibitively high capital investment and the requirement to deliver economies of scale, no longer apply for many new emerging industries.
Companies that harvest great ideas and take a stand for creating new industries are fusing together new innovative business model’s, high intellectual capital and high collaboration practices in order to take on and beat established companies; in the past the big ate the small, now the small beat the big; speed beats size. Ireland is nurturing many of these companies today. Three companies that reflect this new reality and which are forging ahead in hitherto unchartered waters are Idea Gallery (www.ideagallery.co), Seedrs (www.seedrs.com) and Phlok (www.Phlok.com).
We are witnessing the emergence of new game changing business models. Here, the buzz words of destructive innovation, business agility and cloud computing, are proving more than transitory management fads and are posing real threats to large established organisations.
This new breed of organisations embodies the sheer antipathy that exists towards the established business model and is in stark contrast to it. They are carving new market spaces and have the ability to create exponential value for their investors, their clients and themselves. They bring a sharp articulation of the future, redefining the categories in which they operate.
To start with, how can a two-man operation take on and beat multi-million- dollar earning competitors? We will show you how by putting the spot light on a company we are following. They are ‘Idea Gallery’ that was founded in 2011 by two entrepreneurs from the creative industry. Their company was borne out of the founder’s increasing frustration with the lack of a genuine creative integrity within the advertising industry. They felt their ability to be truly creative was being compromised by powerful and distorted relationships between the clients and their advertising agencies. Put simply, too many clients were squeezing the creative energy out their agencies and too many agencies where accepting this as the industry standard. As a consequence, many creative teams were not getting the opportunity to express their ideas and bring these to a commercial reality.
‘Idea Gallery’ is taking a stand for ‘the power of the idea’ and want to turn the advertising industry upside down and land in a place where the idea is dominant. According to John Kane from Idea Gallery “Ideas will be the currency of the future”. They are inviting creative’s to submit their ideas online to Idea Gallery. There, they will apply a filtering process and shortlist the best ideas. They then plan to approach top executives and sell them the best ideas and then utilise the creative industry to put them into production, sharing the rewards with the idea originator.
The Idea Gallery approach may sound idealistic and perhaps naïve, yet they are acutely aware of the value of the idea, having worked with and helped turnaround an Australian pillow company manufacturer called Tontine. Together with Tontine, Idea Gallery came up with the idea of putting expiry dates on their pillows. They devised a messaging and promotional campaign highlighting some uncomfortable messages about pillows including the fact that a pillow weighs twice its weight after two years, due to the inclusion of bugs and dead skin cells. This campaign was so effective that it resulted in a turnaround in the fortunes of the company.
Idea Gallery believe they already have 8-10 ideas that are transformative and capable of yielding huge value for those companies smart enough to buy them. If successful, this business model will disrupt the way ideas are traded today and create huge value for both Idea Gallery and the idea generator. By creating a marketplace for ideas they are threatening a revolution in the way advertising, marketing, and product research is conducted and how investment is allocated so creating a new paradigm for ideas and their value creation and transformative effect.
Seedrs is a UK company setting-up to provide an online market place for early stage companies seeking equity investment. It is due to open for business in the UK as soon as authorisation is granted by the UK regulator – the Financial Services Authority – which is expected shortly. It aims to attract mass affluent investors that want to put their savings to work by taking on the added risks of investment in start-ups for potentially greater return. The company recently won the London Web Summit startup award. It takes a percentage fee on invested funds and of profits returned to investors. The ease at which investors can invest and entrepreneurs pitch ideas may pose a real threat to the traditional equity investment establishment.
Phlok.com is another recently established entrepreneurial business. Phlok.com have an innovative two-sided business model that appeals to both business owners and consumers. By blending smart technology design, social engagement and the consumer’s appetite for a good deal, they have an industry defining social media service that may be the next big thing. In next month’s newsletter I interview the founder and CEO of Phiok.com in order to get inside his head, understand what excites him, how this business works and where he’s taking it.