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Strategic Mistakes: A Technology Startup

Are you a tech start-up? We take a look at a case study of why one failed... 😭

  • Lucidity
  • 3 min read

In this article we will look at the strategic mistakes of a company you’ve never heard of – which perhaps shows the severity of the mistakes made! 🤦

The Seed – A Good Idea & A Good Team

Quickal was the brainchild of a university graduate in 2005. The idea was for vouchers to be delivered on a mobile phone. These days that doesn’t seem ground-breaking, after all companies such as Groupon dominate this space and make billions in revenue. This was 2005, a simpler time(!), and vouchers on your mobile were unheard of , as were app powered smart phones.

A team of five was formed, all with good track records. Two in technology, one in web design, one in legal and one in banking, and a small round of funding was generated (circa £20,000).

The product was developed as a self-service web site where you could go and create a voucher, which could be then purchased via a text message request for the user.

With a good concept, a decent product and a good team, there was a high chance of success, so why isn’t Quickal a known name instead of Groupon? Let’s take a look at six strategic mistakes…

1 – Spend, Spend, Spend

Early decisions on how to spend the £20,000 investment were perhaps flawed. An office was rented long before the system was built, resulting in immediate outgoings, and no budgeting set aside for marketing, tools or equipment. Given the skillset of the team, Quickal could have been ‘built in a bedroom’ prior to launch…

2 – Target Demographic

Vouchers are commonly used by many organisations, but little customer research was conducted in the market to understand the need for such a product. Who would sign up to the system?

3 – Market Awareness

There was no PESTLE Analysis or SWOT Analysis conducted, and no consideration of the wider market forces at play. So many factors that would impact Quickal weren’t considered such as:

  • In the decade since the company closed up, retail and high streets sustained significant decline. With more users going online for shopping, how did the Quickal model work for this scenario?
  • Microsoft had stylus smart phones running a version of Windows, as these improved (pre-iPhone), how would the web change and adapt?

Ultimately it was designed for today rather than tomorrow.

4 – Flawed Commercial Model

This was a real killer. Quickal sent vouchers to a mobile based on MMS. Multimedia Messaging. You may not remember this, but MMS was a SMS text message with a low quality image, video, or audio attached. Every time a voucher was requested an MMS was sent… and that had a cost.

The cost would be somewhere between 10p - £1 per message, but as you can imagine this quickly scales up, and so the question arises who would take on the cost? The end user is unlikely to pay for a voucher, and that had a set of complexities legally, Quickal couldn’t really afford to pay, and the company providing the voucher wouldn’t want to pay either.

Ultimately Quickal ended up footing the bill… but the model never really stacked up. Groupon and subsequent companies have worked due to the free to use and free to send capability that smart phones, app stores and modern web sites have provided.

5 – Developing Many to Many models

A Many to Many model is a business where there’s a requirement for two different parties to be present in quantity and interest. A job board must have employers and jobseekers. A travel site must have holidays and consumers. And a voucher system must have a critical mass of companies and interested users.

Many to Many models are extremely difficult as to get one side you often need the other in mass – going back to that job board analogy, you don’t get jobseekers if there are no jobs.

Quickal suffered from this – their user audience too low to attract companies, their vouchers too few to attract users. Marketing didn’t exist beyond printing flyers (which cost more money) to hand deliver around the city.

6 – Skills Shortage

The idea was sound, the team were solid, but they were young and reasonably inexperienced… and it showed. The lack of commercial skills meant the above 5 mistakes were made, whereas had another team member brought them to the table the story would be different.

Summary

Quickal came to an end due to a number of strategic mistakes and some bad luck in the timing of the product, as they wrapped up the iPhone began to ramp up and the App Store launched a year later. It was a missed opportunity.

In the decade that followed the team all went on to more successful ventures, without doubt taking the learnigns of the venture with them:

  • Understand your market
  • Use your financial backing carefully
  • Research your potential customers
  • Establish a commercial model and budget
  • Make sure you have the right mix of skills

Of course, Quickal wasn’t the only mobile business to get it wrong in the 2000s – a much bigger one made some fatal mistakes, as our article on Nokia’s strategic mistakes shows…

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