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.)

  • http://superscout.com Stefan

    Sounds to me like a cunning plan to try something out, if it works, great they will spare some small change (O2 just bought another start up for £157 million) to acquire the company, if it doesn’t then they lose almost nothing. They are certainly not doing anything to benefit the entrepreneur, start up community as the word “incubator” implies. Bad form O2.

  • John Doe

    WTF is paul golding think about when he developered this incubator plan … it needs to be seriously reworked given the competitive playing field of incubators out there.

  • http://www.twitter.com/jasecoop Jase Cooper

    ‘Developers Only’?!!?!

    We’re about to enter a new decade here and O2 are still going around treating design as though it’s something that can just be sorted out at the end of a project!

    I’m sure this will produce a product that’s technically great, but how relevant and useful it will be to the user we’ll have to wait and see. They’ll probably just 99design it… tut tut o2

    • http://www.o2incubator.com/ Paul Golding

      Hi Jase

      As we are now in touch directly, you will now know about my enthusiasm for design-driven innovation. We shall be using a leading designer (ex-Frog, ex-Ideo) as a consultant for the incubator and other initiatives.

      I am pushing a design-driven agenda at O2 and hopefully you will soon see some of the outputs.

      Meanwhile, I’m looking forward to meeting you to discuss design.

      Paul G

  • http://www.o2incubator.com/ Paul Golding

    Hi Steve,

    Thanks for the write up, I’m hoping I can answer some of your queries here.

    O2 Incubator is just starting out, which is why we’re aiming at one idea initially, but have plans to expand and modify based on how it goes and the feedback from start-ups who express an interest. It is certainly possible that more than one idea could be sponsored.

    It was my idea and one that I proposed coming from a long apps background and seeing how O2 struggles to get “webby” ideas off the ground when following a traditional telco roadmap process.

    I’m hoping that the project combines the best of O2 experience and talents with the best possible developer talents in a start-up environment where there will be freedom to innovate without the usual heavy requirements process that O2 is familiar with.

    The developers have nothing to lose, as they will receive free sponsorship and additional support from O2, as well as potentially accessing O2’s substantial SME customer base. As for what happens at the end of the year, the final deal structure is undecided. But by providing ongoing support and advice, O2 is showing how they want to support the developer community.

    The amount of interest and applications received in the first few weeks demonstrates that the developer community likes the idea and wants to make the most of it.

    There are other cool initiatives in the 2010 pipeline for developers and start-ups, which I’d be happy to let you know about further down the line.

    Paul G

  • http://www.umtsflatratevergleich.de Daniel

    I do see the difficulties to set up such a strategy for any established company but on the other hand it is essential to develop a running business further and further. If the incubator idea of o2 is the right way or not is not the question – it shows only that o2 has understood to move forward by teaming up with external forces and competences. Other companys have choosen a different approach – only the future will show which strategy was best :-)

  • http://www.iqbalgandham.com Iqbal Gandham

    Am I the only one who thinks that a program like this CANNOT be misdirected.

    They are offering a route for startups/developers. How many mobile app developers have tried to knock on the doors of major telco’s or major mobile phone manufacturers just to get their app pre-installed, or promoted. O2 is doing, or aiming to do just that, sure they get am awesome deal in the process, but so does the entrepreneur, £1million in 12 months is not really a bad deal, especially since most spend 6-9 months walking the streets just to raise some angel cash to build their app.

    This way they have a exit..almost lined up, and O2 gets what they want, cool apps, cool content or whatever.

    Maybe the name incubator is wrong, but again who cares, I don’t know of Paul Golding, but good luck to them, I guess all of us should be supporting anyone who wants to help, and let the entrepreneur (or the crowd) work out what sticks.


  • http://eu.techcrunch.com/2010/01/14/o2-incubator-project-performs-u-turn-more-than-one-startup-to-get-support/ O2 Incubator Project performs U-Turn – more than one startup to get support

    […] We didn’t exactly heap praise on O2’s Incubator Project, describing aspects of the scheme as ‘pretty dumb’. However, in wants appears to be a U-Turn, the mobile operator has, at […]

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