In IT, the line between the right and wrong product can be very fine. In 2008, Aneesh Varma and old school friend Manav Gupta "were sure that the mobile internet was going to take off". They wanted to develop a program that would transfer digital content between PCs, laptops and phones. Varma quit his job with investment bank JP Morgan in London and Gupta quit his post with Hewlett Packard in China. They used their combined savings of £100,000 to contract software engineers and office space in China. "Between his technology contacts in China and my business contacts in London we had a great combination," says Varma. However, they also had the wrong product.
After just five months they realised "we couldn't make a product that could handle all of the data and was simple to use. Also the companies we visited were not convinced that their customers would want to use it." Disheartened, the pair pulled the plug and pondered what to do with "a good team of engineers and important contacts with big companies".
Their break came with a tip-off that American TV channel The Food Network wanted to develop a content aggregator, "a program on their website that would allow their customers to share family photos, history and details". As this new product shared similarities with their failed program, the pair agreed to take it on. The money from it kept the firm afloat for a few more months and gave FabriQate a new direction. "I realised our technology and expertise could be used to build social media type' platforms for firms." A media frenzy was a big help. "Companies were worried about missing out and prepared to spend."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The pair began to approach more companies, offering to build content-sharing platforms for their websites. As they won more projects, they took on more staff. Then came the financial crisis. Luckily, it helped them. "Big firms slashed their R&D budgets because they didn't want the risk of failed projects instead they outsourced the innovation to smaller, cheaper companies like us." By the end of 2009 sales hit £250,000, which was reinvested in more developers. "It might not sound like a lot but it's not a very capital-intensive business." One example of what they could do was the creation of website sections that showed videos of bands before taking buyers to a site selling concert tickets.
By 2010 the infrastructure of the internet was improving fast. "We had always wanted to concentrate on mobile internet but our ambition was hampered by connection limitations." But as smartphones increased and became more advanced, FabriQate offered mobile social media platforms. A loyalty card smartphone application for fast-food firm Kentucky Fried Chicken worked a treat. "It's so much more sophisticated than a paper loyalty card and makes KFC money because they can use it to understand their customers and boost sales."
As more firms jumped on the social media bandwagon, sales began to rocket. FabriQate added branches in India and China a slew of new buyers including American broadcaster Fox followed. Last year the firm's sales topped £3m and it now employs 43 people. Looking "to go to the next stage", they are in talks with investors. "Mobile internet has a great future. We hope to take advantage."
-
8 of the best houses for sale with outdoor swimming poolsThe best houses for sale with outdoor swimming pools – from a family house in Wimbledon Village, London, to a 1640s mansion in Derbyshire with a heated swimming pool in the grounds
-
Trouble brews in B&M as bargain shops take a hitOpinion Once a stock market darling, B&M's share price has slumped. What has gone wrong for bargain shops?
