CloudMade: Tools for Location-Based Mobile Applications
21 March 2011
Nick Black, Co-Founder at CloudMade gave this week’s guest lecture. Black, who is UCL born and bred, studied Archaeology as an undergraduate and Geography Information Science (GIS) as a graduate. He then worked in R&D for one year and simultaneously gained valuable experience building websites. He then went on to found CloudMade which creates tools that allow app developers to build-in location services, and create location-based advertising.
Black asked the students aspiring to be entrepreneurs: “how obsessed are you about your product?”. Black added that unless the obsession behind the idea is great, one still needs inspiration. This is how the creators behind Facebook, Zynga and Google created their ventures. Obsession, he says, is the key to face competition.
Black mentions the problem of over-demand for location-based advertising in handsets. This is due to developers not being able to easily add in these services to their apps. As a result, CloudMade created its tools allowing developers to easily use these services which Black believes will be part of more than 50% of apps in the next two years. He also points out that the current trends show that free apps are eight to ten times more demanded than paid-for apps, justifying his choice to work with free apps and the in-app advertising model.
Subsequently, Black gave the students tips from his entrepreneurial experiences whilst establishing CloudMade, and the various stages he went through. He first mentions the things which drove his ideas as a postgraduate student. Looking at the emerging trends at the time, namely, open-source software, crowd-sourcing and the emergence of Google Maps, Black started experimenting and playing with various programming languages as a side activity. As a result, Black participated in Open Street Map, an online initiative for crowd-sourced maps, gaining valuable experience.
Then, came the pre-seed funding stage, where Black stresses the importance of believing and investing in one’s own ideas. He states “if you believe in your ideas enough, why should anyone else invest in you?”. At this time, he built his own advertising network, which was shut down a month later. As a result, he learnt how “markets drive technology, they are not technology driven” and to “not do things just because you can”. Black mentions that it is important to overlook the value of current investments, remembering they will be potentially worth much more.
Then, Black discussed his experience with “Series A” funding, where venture capitalists (VCs) initially invest in one’s ideas. Black stresses that “the best form of negotiation is persistence”. He also talks about the network effect between VCs, as they usually talk with one another. Black mentions that once the second or third VC is aware of your idea, the network effect begins to kick in and many more VCs will be aware of it, giving the entrepreneur more credibility and bargaining power against a VC. Furthermore, Black warns students about dealing with VCs and their lawyers suggesting that: “you’re signing a deal with the devil”. Instead, he suggests to “find a good lawyer, and pay them to tell you what’s in them [the term sheets]”.
In conclusion to his talk, Black gave advice for the final stage of founding a business: “building a company”. This mainly concerned the hiring of employees. He states that: “If you’re not willing to fire your friends, don’t hire them”, Black says, looking back at when he had to survive the recession. Furthermore, Black quotes Guy Kawasaki (Apple’s former marketer): “A players hire A players, B players hire C players” on the importance of hiring top-quality people.
Finally, Black surprised students by suggesting that due to their limited managerial experience -shift supervisor in his case- and the influence VCs have over the business, they would probably not become CEOs, but still be able to make great contributions in their area of expertise, hence his current title as Head of Products at CloudMade.
Written by Mansour Abdulghaffar and Carolina
Mostert, UCL Students
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