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O2 Incubator Project is vague and misdirected

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O2[UK] O2’s newly announced Incubator Project would normally be the kind of scheme that we’d happily share with readers (and possibly recommend). On this occasion, however, not only is the whole thing vague – it’s neither a traditional incubator nor straight up commission – we think the mobile operator is going about it in the completely wrong way. The deal, as far as we can tell, is as follows.

Teams of 2-3 developers are being invited to submit ideas for “a network for small businesses” which will help them “sell services to each other and build reputations.” It’s to be a web app not mobile specific and must deliver an “outstanding online experience”. That appears to be the brief in its entirety.

One winning team or company will be chosen to be sponsored by O2:

… with a monthly allowance in consideration for having an option to buy your business for up to £1 million at the end of 12 months. It’s simple, we seed the idea and you do the rest.

We will give you direct access to our people, knowledge and experience. We will also recommend our customers to use your service provided it is good. However, setting up the website, creating the brand and developing the idea is all up to you.

The programme is being overseen by “apps guru” Paul Golding at O2, with support from Stephen Pilkington, O2’s finance expert for new ventures and Simon Devonshire, O2’s head of marketing for SME.

Two aspects of O2’s Incubator Project strike us as dumb.

It’s only going to be good for one lucky winner – from O2’s point of view it would make a lot more sense to back five teams with five different ideas in order to build in some redundancy. A great idea on paper may fail for a number of reasons. Personnel problems, technology issues, poor execution, the idea doesn’t resonate with users and so on. Back five teams and you have a much better chance of one of them being successful. Who knows, you might end up with two killer startups.

And then there’s the small matter that anything the winning team comes up with will be worth a lot more to O2 than £1m, presuming the mobile operator decides it’s worth exercising its right to make an acquisition.

Digging through the FAQs page, one other thing struck us as a bit odd.

Are the founders required to join O2, or would it be an IP acquisition?

The founders of the company are not necessarily required to join O2 and it could be an IP acquisition. Of course, great people are always needed at O2. Part of this project is about working with great people.

The terms of most acquisitions, especially those of early stage companies, require founders or key employees to stick around for a while, and in a company made up of 2-3 developers only, this is even more crucial. Unless of course O2 is basically outsourcing a bit of its R&D with the option to purchase the IP at the end or walk away. Which might be one way of looking at it.

That said, if you still wish to apply, the deadline for applications is Sunday 31st January 2010. (Note: You’ll need to be able to live and work in the UK.)

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