Phase 4: Develop Live Services
Unit 2: Incubating in InnovationRCA
Turning an idea into a business
In this unit:
The aim was to take a service concept and turn it into a functioning service that can exist in a live marketplace in a way that it can de-risk investment.
By incubating in the RCA’s entrepreneurship and commercialisation centre, the project can validate its hypotheses through more robust experimentation.
In doing so, it can demonstrate user engagement, user impact and viable strategies for monetisation that can ultimately lead to investment and the continuation of the project on its path to its next round of investment and development.
One of the studio teams joined the lab team to develop their service in-house. The other team took a different route. They applied for the InnovationRCA start-up programme and the client was one of their investors. InnovationRCA is the Royal College of Art’s centre for entrepreneurship and commercialisation, helping staff, students and alumni transform compelling ideas into successful businesses. Their start-up programme provides incubation and acceleration services, together with expert coaching and business mentoring.
The studio team decided on this route because their objective was to turn their idea into a business, setting up a company, getting fundings and launching the product on the market. The concept was initially known as Spark, a service that helps people discover their financial personality to align it with their consumption, helping them make better financial decisions and achieve financial health and wellbeing.
The team planned to launch an MVP in the market, delivering the simplest version of the app with a limited budget that could still provide value for the users and get a high number of engaged users.
The process encountered some obstacles due to Covid-19.
The first challenge was a shift in how investments are made, as fewer people are willing to fund risky businesses that focus on market growth before income growth, preferring instead strategies based on monetisation and profitability. This new context posed a big challenge for the team, who had to make changes to their initial strategy.
The second challenge was working remotely, for which the team had to adapt and creatively improve their way to work and communicate.
Joining the Innovation RCA start-up programme
The first stage the team went through was setting up the company and joining the InnovationRCA start-up programme. During the registration of the company, which made them a legal entity, the team also had to negotiate the shareholder agreement between the newly formed company, the client as the sponsor organisation, and InnovationRCA. Once they settled the agreement, the team started a mentoring program with InnovationRCA, through which they received support to prepare the pitch for potential investors and fundraising events.
Creation of the company
The first thing the team had to do was to register the company through Companies House. Companies House is the United Kingdom’s registrar of companies and is an executive agency, which falls under the remit of the Department for Business, Energy and Industrial Strategy. The first obstacles the team encountered were finding a unique name for the company. As the name previously chosen for the app was already in use, they went through a new process of renaming and registered the company as Quirk Money ltd.
The procedure to create the company also required other administrative steps, such as getting business insurance, partnering with accountancy for tax records, employment and founders agreements, as well as stocks and shares. The most time-consuming aspect of the company set up procedure was negotiating the shareholder agreement. The process required different rounds of negotiation with both the client as a sponsor and InnovationRCA.
This required the provision of unbiased legal advice that they found through a free service provided by a London university, which works in partnership with master students and legal firms. The shareholder agreement allowed the team to settle the conditions between co-founders, employers and investors at the inception of the company, as well as determining the Board of Directors’ participation.
The mentoring programme provided the team with ongoing support at individual biweekly sessions throughout the entire process, from the creation of the company to fundraising. They also had access to a series of masterclasses on specific topics around how to launch a successful business. Another part of the programme included the Investment Readiness Program. During this intensive period, the teams were invited to pitch their ideas multiple times a week, first to the internal team at InnovationRCA and then to external advisors, practising the delivery of their pitch decks in a short amount of time and refining the narrative. The objective of the programme was to get ready to pitch in front of a network of angel investors during a dedicated event organised by InnovationRCA.
Pitching and fundraising
The most time-consuming activity for the team had been the fundraising, which extended for many months across the various stages. They had to refine the pitch multiple times, trying to balance and reconcile what investors think may be a good investment and what users actually want. This tension was especially evident for the monetisation strategy. On the one hand, users favour free services, on the other, investors want reassurance (especially in a time of Covid-19) that the product/service will be profitable in the short term. Investors also have preconceptions about the financial technology (fintech) industry, based on many failed businesses.
For the team, fundraising posed a big challenge, as they put huge efforts into making the pitch appealing to investors while being conscious that, at the end of the day, it is the consumer need that drives the business forward. Fundraising did, however, also lead the team to get more exposure with people and businesses in the industry who became aware of their company and started to follow the updates.
The research conducted by the team at this stage was no longer exploratory, as it had been for the ‘explorations’ and ‘propositions’ research stages. Instead, it was intended to help refine the concept, and understand how to build the MVP. The team conducted market research and a competitor analysis to define their positioning in the market and adjust their business model.
During this phase, the team explored the options they had for IP (Intellectual Property) protection and found that there was hardly anything that could be legally patented. It is often difficult for services to be patented, given their intangible nature. Instead, the team registered copyright on the ‘financial personalities’ they had developed within their proposal and filed a trademark for their brand and logo.
The objective of the team’s research, at this stage, was to understand how to transform their concept into a fully functional financial product. The team conducted academic research to explore in greater depth the theories behind their value proposition. In addition to desk research, they interviewed professors with expertise in the field and worked with psychologists to develop a more robust personality test that would help identify ‘money personality’ types.
They learnt how to manage data, which would be one of the core aspects of the service. To do so, the team worked closely with data analysts, who helped them make sense of their data and know more about machine learning models and statistics. Their research also helped them navigate the regulations, the legal considerations, and the privacy and GDPR requirements involved in building a financial app.
Positioning of the company
Another considerable area of research was on the market, to understand how to better position themselves in the current competitive landscape. One of their early findings was that fintech is an extremely crowded industry; however, there are only a very few big players. The team focused their research on examining and understanding what is already out there, what features are already available to the users, and how much they cost. This research helped the team define where to position themselves as a different and unique offering, both to catch consumers’ attention and for the investors.
An essential part of the work done at this stage was around their monetisation strategy and the creation of a business model. This was especially necessary in the light of the Covid-19 pandemic, which led to investors being more risk averse.
Before Covid-19, it was considered acceptable to focus purely on growth during the first years of the business, even without making profits. However, the situation changed so that investors began looking for assurances of company profitability early in the process.
The team had to create a more robust business model, which increasingly drew more focus on their pitches to potential investors.
Designing and developing the MVP
The design and development stage was dedicated to the improvement of the user experience and user interface. Once the team agreed on which features to prioritise and what their MVP could be (the simplest version of the app they could build in order to deliver the value proposition), they started designing and testing the different elements, before handing over the work to the development team. Covid-19 posed a big challenge for the team, who had to switch to working remotely for designing and testing of the app.
Design of the app
The team went through many steps to reach the design of the service, now called Quirk. Firstly, they had to define a clear architecture and go through the scope of the app to see if their plans would fit in the timeline of the developers. The team started engaging with the developers early on, to make sure what they were creating was feasible in the desired timeframe. Then, the process of designing the user interface and user experience was quite fast, having multiple rounds of prototyping and testing using a fast-paced, iterative methodology that allowed the team to get everything done in only a month.
They started with paper prototypes and then they developed clickable (but not functioning) prototypes through incremental improvements. The team created multiple versions of many different forms to understand how people engage with the concept, how to structure the experience of the service and how to brand it. They also conducted usability testing on the design, testing interactions and language.
Their personality test required further testing, so the team launched it online in the form of a website, to get more people involved and to receive feedback while collecting the contacts of potential users.
The design of the app also required the creation of new branding. Once the team defined a name, they worked on the logo, tagline, colour palette, visual style and tone of voice that would be applied across the multiple platforms where the business would be active, including all social media channels.
Positioning and trust
Another critical area of consideration for the design of their service was around trust, because the service dealt with sensitive information and requested users to link their external bank accounts. There was therefore a delicate set of design decisions to make about when it is best to ask users to link their bank accounts. These decisions required multiple rounds of testing and trialling. One of the main takeaways from the trial was that users needed to take some value from the app before being asked for personal information.
Development of the app
As mentioned earlier, the involvement of the developers started before the actual development of the app. The quality of the relationship between the team and the developers was essential; it required honesty and good communication on both sides and ultimately resulted in the smooth development of Quirk.
The team came up with an efficient system to ensure clarity when communicating with the developers. They shared every screen with details on the visual appearance for each section of the app, together with the user experience flow. They also included a list of features based on the priority they should be given, specifying which ones were a must-have versus a nice-to-have. They used a document to collect questions from the developers, where they would point out what was not clear and needed more details.
Before building every part of the app, they would have a discussion with the developers about potential technical limitations and timeframe for the development, so that the team could make an informed decision on possible adjustments and changes. Given the limited time and money they had at their disposal, the team wanted to make sure they would not deliver unnecessary features and avoid things like animations that would slow down the development. It was an agile way of working with the development team, which ensured efficient quality testing.
They also created a system to record bugs and changes to be communicated to the developers. To keep track of the updates, they asked the developers to record the status of the fixes, so that the team could check them.
Promoting and releasing the app in the market
This stage of the process is the final stage covered by this methodology, although, as with all services, the learning and development goes on.
At this point, the body of work is divided into two stages that are focussed on the fine tuning of communication and promotion strategies followed by the ultimate release of the service in the open market. The methodology presented is a great example of how rapidly responding to what the market shows you, enables a constant evolution, and in this case, led to some successful strategies.
As stated previously, one of the challenges for the team was building trust, particularly when communicating the nature of the service in their promotion. People were sceptical when sharing sensitive information such as bank details and were inclined to believe their data may get stolen. Additionally, regulators of open banking are not directly connected with consumers, so there are significant misunderstandings.
The team had to test different promotion strategies to ensure users that their data would be safe and secure. These tests revealed another problem, which was that certain types of communication made users mistake the app for a banking service. It was therefore essential to differentiate Quirk from a bank as it could significantly raise users’ expectations of features h and cause friction in the onboarding process.
Through these tests, the team started to grow an audience and collect contacts of potential users long before the release of the app. They also built a social media presence, posting regularly and getting followers. To increase engagement, the team began creating original content to share through different channels, such as articles around financial topics and the FIREside chats with personal finance micro-influencers, which helped the team reach a bigger and more targeted audience. Through blog posts, they got more and more people visiting their website and signing up for beta testing or early access to the app.
The team also relied on some paid promotion, such as promoting posts with a small investment of money or advertising on social media, which often resulted in a significant return of traffic to their channels or helped them collect contact information of potential future users.
To keep these potential users engaged, the team set up a weekly newsletter to engage with the community, providing money news and finance tips. They also experimented with unusual channels; but, they ultimately focused on the few that would allow them to grow more and faster in the long term. One of the unintended consequences of experimenting with different engagement strategies was seeing them get copied by competitors with more visibility. However, for the team, the effects were minimal.
The last strategy the team used to get recognition was using a platform that allows makers and marketers to launch their products or services and get in touch with their first real users. The team promoted their personality test and received positive votes and reviews through this platform and even got featured, which allowed them to grow an even bigger audience.
Overall, the promotion strategies were very useful and successful. With a minimal monetary investment, they were able to engage and reach a significant number of potential users before the launch. One of the critical factors of success was having something already built and shareable – the personality test – to show the value of the service.
First launch on the market
At the time of the writing of this section, the Quirk app is currently in beta testing.
The team launched ads on social media to get more targeted users and used an online form to collect information about their suitability for receiving the beta version. The team encountered some difficulties at this stage, as emails collected did not automatically translate into users who installed the app. Another challenge was the inability to recruit users from outside the UK, meaning that for every 50 emails collected, they got approximately ten installs.
A good strategy adopted by the team was not to have a big launch immediately after the release. Instead, by having users grow gradually, they managed to spot bugs and fix them, before reaching more people. It was also possible for them to mitigate the effect of issues in the app by personally emailing users when something was not working, or when people were not finishing the onboarding. Giving access to the app to only a few users also helped the team build a feeling of exclusivity, which led to more engagement from these early users and higher-quality feedback.
At this moment, the team has 100 people using the app regularly, and they plan to get 1000 active users before launching it to the public.
Edit is an app that helps you fill your daily routine with more positive actions than smoking. It’s not about quitting cold turkey or feeling like a patient. It’s just about trying new things and seeing if they work for you and your lifestyle.
Quirk is a personal finance app that helps young people learn about and manage their finances according to their personality and interests so that they can ultimately make better financial decisions that align with their life goals.