Andy Cockburn is CEO and co-founder of Wigadoo, a website that helps groups to finance their activities. I talked to him recently about Wigadoo’s business model and progress, as well as his experience during the start-up phase…
In an age of copycat web businesses, Wigadoo is a pretty novel concept. Can you explain the idea and how it came about?
Wigadoo came about when the three co-founders were at business school in France. There was lots of socialising and arranging trips and it was always a nightmare getting everyone to pay their way. Experiencing these difficulties made us realise that there was a potentially very attractive business opportunity in addressing the pain of helping friends organise themselves when money is involved.
Whenever you organise a group of friends, whether it’s a ski trip or a concert, it always requires one person to the organiser and they always have a tough time of it. It’s difficult to get people to sign up, impossible to get meaningful commitment from friends and all too often the orgainser puts money on their card and has to chase their friends for money later. This seemed ridiculous in this day and age and that there had to be a better way for a group of friends to be able to organise themselves using the internet.
We came up with a solution that is really simple. Wigadoo makes it easy for someone to suggest a plan to friends, for friends to pledge support and if enough people sign up for the organiser to collect the money from their friends and book whatever they want in a couple of clicks.
When did you launch it, and how are you doing in terms of usage?
We’ve been working on Wigadoo for over two years. The first 18 months were spent building a fairly complex payment platform that involved six or seven commercial partners including MasterCard and a couple of banks. Wigadoo then went live in June last year.
Since launch we’ve seen good growth. There’s a really wide array of things that people use it for. It’s very popular for Hen and Stags. Then there are things like holidays, weekends away, concert/theatre trips and things like sports practices (hiring out 5-a-side pitches etc). People have even started using it for joint presents for birthdays and leaving dos, which was a use-case we’d never thought of.
A lot of recent growth has come from partnerships we’ve launched. In the last three months we’ve set up partnerships with the likes of lastminute.com, The National Theatre, several West End musicals and Lucky Voice Private Karaoke. A lot of our efforts now are spent on proliferating these partnerships.
The banking system threw a curve ball at you didn’t they? What was the issue here, and how have you resolved it?
They did indeed. Our initial plan was to simply move money from a number of friends to the organiser from their debit cards. Unfortunately, our initial meetings with the four major banks revealed this would be a no go. Doing what we had wanted to do would have broken four of their own rules. We then spent a tough couple of months looking for other ways to make it work.
We ended up talking to MasterCard and decided to take their prepaid card model and make it virtual so that we could get enable all the friends to top up a virtual prepaid card for the organiser to spend. This has ended up being a great success. It means we can enable you to collect and spend money in less than a minute.
Your business model is based largely on transaction / processing fees, right?
There are a couple of ways we make money. We do charge small transaction fees when money moves (currently 50p on a debit card) but the major source of revenue is by acting as a lead generation machine. Users can use Wigadoo to do whatever they want but in the vast majority of cases we can earn affiliate commissions when the user goes and books whatever it is they’re doing.
In addition, there are a few other add-ons we can also offer. For instance, for a small charge users can choose to upgrade and get a physical card so that they take it on the stag and throw it behind the bar (which has to be better than risking the best man’s card!).
It’s a little bit like MyDeco then, in that you have created some really useful tools to help people arrange and buy. And you too have Brent Hoberman involved! Who else has backed Wigadoo?
We’ve had two rounds of angel financing. The most recent round included a good number of people who’ve been very successful as internet travel entrepreneurs, including them Brent Hoberman. It also included Andy Phillips of Active Hotels (who sold to Priceline and then merged with Booking.com). All our angels are incredibly helpful for advice and contacts. It’s made a big difference having them on board.
Are there plans to take further funding, and when might a new round take place?
We’re currently raising another angel round and will be looking to close it in the next few months. This will hopefully set us up for entry in to the US.
Is the US the next big step for you then? Do you have a kind of roadmap for rolling out overseas?
Yes. The US is high on our agenda. We’ve had a few meetings out in Silicon Valley and the pain that Wigadoo addresses is even more acute there than here. There are venture capitalists in Silicon Valley who still send each other cheques in the post!
We have some work to do to get the payment platform set up for the US but that’s well under way. After we’ve got the US up and running we’ll then turn our attention to mainland Europe.
Sounds good. So what does the Wigadoo team currently look like and what will be needed in terms of resources to scale the venture?
We’re still small… and enjoying being small. There are six of us in the UK and three in Bulgaria. We initially outsourced all tech development to Bulgaria through a Bulgarian development house, which has been great for us. Now the team is split between Bulgaria and the UK. It works remarkably well.
Future growth will be split across sales and marketing and tech development.
How did you find the process of building out the website, presumably your first startup? Are any of the founders techies, or do you just have good project management skills?
Fortunately, one of my co-founders, John Connolly, was at Accenture for seven years. While he’s not writing the code himself he’s very good at setting up the specs and overseeing the development.
We also have an excellent lead developer in the UK now who is very good at both overseeing the development and managing the founders!
What other partnerships do you anticipate in 2009?
We’re hoping to cover most of the travel and leisure sector this year in the UK. Early on this year we’re hopeful for major partnerships with some of the biggest companies in attractions and ticketing.
We’ll then be looking to roll out across all travel players. As well as the larger players, we’re also looking to make Wigadoo links available to any smaller providers of travel or leisure content for groups.
We’ll be trying to get a Wigadoo link next to anything you might want to book with a group of friends. Potential partners we’ve spoken to so far have been very keen to partner with us. Wigadoo is a way for them to increase conversion on group sales, which is potentially worth a lot of money.
You personally won the Courvoisier 500 last year – has that helped to open doors for you, alongside your angels?
Absolutely. It’s been great for the partnerships. A number of people approached us to work with us. It was also a great way for angel investors to find out about us.
Hopefully some of the next financing round will be angels that got introduced to us through the Courvoisier 500.
Do you have any advice for other entrepreneurs, in terms of building out a project and putting it on the map?
There are probably two things. First, look for innovative ways that you can work with more established players to share their scale. Growing a site from scratch is incredibly hard/expensive. Offering larger players a service they want so that you can share their scale is far better. PayPal and Billmelater are great examples of this… and I hope Wigadoo will be too.
Secondly, network like fury to get the introductions you need. Warm introductions to sources of finance and potential partners make a big difference. Hit all the networking events, throw yourself into the UK Tech Twitter scene, and never say no to an invitation for a coffee.