#3dsedin

Over the past few months, many have noted my posts about teadough – the Edinburgh-based doughnut company I joined at 3 Day Startup – on Facebook, Twitter and LinkedIn. So this week, as we celebrate the launch of our new product, the Original Doughnut Kit, I thought I’d share our story, of how I joined the brother and sister team and, together, took an idea for an iPad Recipe app and turned it into the first make-your-own doughnut kit, just in time for Christmas.

3 Day Startup: It All Started with an App The last thing you would expect of a weekend which started out with sketches for an iPad app is a make-your-own doughnut kit. However, as we learnt at 3 Day Startup, pivoting to meet the needs of consumers is key if you are to win over potential consumers and make your mark.

After pitching our ideas for businesses and products (you can find my idea for a Student Finance Platform here) to seventy students and staff from around the University, I joined the teadough team who’s idea was to share their passion for doughnuts, inspired by their great(x9)-grandmother who invented the doughnut in 1803, with the world through a simple iPad application. The application was to offer recipes, inspired by the original British doughnut, for enthusiasts to make at home.

As the weekend progressed, however, we discovered that our target market, including many iPhone and iPad users, had no interest in another recipe app, many noting that BBC Good Food was their preferred source for recipes (market research is key, and the opening of Edinburgh’s Apple Store during that weekend helped in gaining easy access to our target market). So, we posed the question: how could we share our doughnuts with the world?

The answer: the Original Doughnut Kit. All-in-one baking kits are increasingly popular in the UK and abroad, with simple biscuit and muffin ingredient jars selling for upwards of £15 and more complicated kits, such as make-your-own cheese and fudge, selling for £30 and above. We noted, however, that doughnuts had not been developed into such a product, in part due to the common use of a deep-fat fryer. So, within twenty-four hours, our team of just three (we started the weekend with six) developed the first prototype of what is now a finished product, just in time for a first pitch in front of investors and business experts at which we secured our first three orders (all online through our new website, also assembled in a weekend) but, more importantly, received some great feedback for developing the product further.

Taking it Further It was very clear, after our first pitch at 3 Day Startup, that we had developed a popular idea but not a finished product which many would buy. Feedback received from our first pitch pointed out a number of flaws in the prototype; £15 was not seen as affordable despite many similar products retailing for more, the use of Kilner Jars for storing ingredients was increasing costs, both in terms of units produced and delivery, the original box – printed and hand-folded from a library printout – was by no means suitable and we needed to decide on the exact flavour of the doughnuts as well as the inclusion of fresh ingredients like butter and eggs.

As any entrepreneur will tell you, however, this is all part of the research and development involved in launching a new product. Richard Branson sums up some of our thinking, saying “Don’t think what’s the cheapest way to do it or what’s the fastest way to do it…think ‘what’s the most amazing way to do it.”

After 3 Day Startup, our focus turned to putting a professional finish on our product, addressing the feedback of our first pitching panel, the demands of our potential customers (many of whom were students with a sweet tooth but a low budget) while ensuring that we didn’t compromise on our wish-lists for the kit.

As October and November passed by, the Original Doughnut Kit changed quite substantially: we replaced our hefty, white box with a streamlined, sustainable brown Vegware box with built-in handle, Kilner jars were replaced with cheaper equivalents and finally heat-sealed plastic bags, the metal cupcake tray was replaced with a set of larger and taller silicon cases. The recipe changed a number of times too, in part due to a trip to Costco which threw a number of new ingredient options our way (like Caramel sauce – not adopted due to its sweetness) and denied us the chance to include others.

The first two prototypes, produced in November, were tested internally with Hannah testing one set at a Power of Youth event and me the other, over a weekend with my grandparents. Again, the prototype testing revealed some flaws in our product’s design although many of these now focused on the recipe itself. Oven times varied dramatically, doughnuts were dry, the recipe wasn’t clear. These were all resolved, one by one, as the Christmas rush – something we were keen to capitalise on – approached.

The company also took advantage of a number of other opportunities presented to us during the period. Hannah and Arthur attended a doughnut course with the Edinburgh School of Food & Wine, an opportunity to explore the recipe further and discuss the implications of providing dry ingredients to customers. Arthur was offered the chance to discuss our product with food nutritional experts, something of a legal requirement (I, for one, am still trying to identify which ones apply to us).

Pitching to Investors Today, there seems to be a great deal of debate as to whether startup capital is useful or not. Tim Berry writes on Entrepreneur.com that “Service businesses tend to need a lot less capital than product businesses” but I would argue that, for teadough’s Original Doughnut Kit, we needed no startup capital at all.

The reason for this was our initial distribution network – eCommerce. As consumers purchased the kit online, we had access to the funds to produce each kit, before we started to produce them, promising consumers a turnaround of just a few days. The only benefit for us of using startup capital is that of economies of scale; startup capital would allow teadough to buy ingredients in bulk, reducing the cost of each unit produced, and increasing profits per unit.

Regardless of this fact, we believe that pitching is a great way to collect feedback on a product or service (as we discovered at 3 Day Startup), a chance to network with similar-minded business owners and investors and, at least at the University of Edinburgh, the opportunity to win some additional funding (free startup capital).

We first pitched the Original Doughnut Kit at the Santander Pitching Competition finals in late November, offering a number of tempting, free sample doughnuts, to show off the product to both the judges and the assembled audience. While we didn’t win the competition (interestingly, it was won by two other 3 Day Startup attendees), it offered more feedback on our product. Again, the price of the product was called into question (this time we’d pitched it at £12.99) and there seemed to be general confusion as to why we were called teadough given a lack of tea.

Since then, Arthur has continued on the pitching front, presenting the company and product to panels at FOUNDER.org and Angels Den at the Scottish Business Exhibition.

The Final Product: The Original Doughnut Kit December arrived and so does the final part of my teadough story so far. As the semester wound to an end, we redesigned our packaging designs to reflect the new Vegware boxes, recipe cards were redeveloped to suit and the first batches of ingredients were produced. Teabags were acquired too, adding a nice, sophisticated touch to the product while also saving us from any brand inconsistency in the future.

Preorders launched on our website and, much to my delight, we sold at a rate of knots online. Hannah and Arthur also took the product to the University’s Christmas market where it went down a treat. And we’ve been lucky enough to enlist the services of Campfire, an Edinburgh-based video production company run by a friend of Hannah and Arthur’s, who produced a great ad for us (you can view it here), playing on the company’s history and our new product.

What happens when you bring together more than eighty students for forty-eight hours and challenge them to build eight new businesses to pitch to a panel of venture capitalists? This was the challenge set at 3 Day Startup in Edinburgh last weekend when a group of undergraduates and postgraduates from Scotland’s universities came together to develop startup ideas ranging from video applications to Rose oil extraction devices and Celtic wedding consultancies. Here’s how the weekend panned out.

Having participated in the event last year where I joined the Teadough team, this year, I had the pleasure of attending as a mentor. Mentoring is a rewarding experience because it allows one to watch and have an influence on the progression of each group from a startup idea on Friday evening to a fully-fledged pitch on Sunday afternoon. Every team dynamic is different and, as much as one might think there is a ‘right way’ to pitching, every pitch is different at the end of the weekend.

Day 1: The Initial Pitches The one sticking point about 3 Day Startup is that, no matter how many great ideas the group might have, only eight of them can progress through the weekend. Any more than eight would be carnage – and the pitching evening would take three hours at a minimum! Nevertheless, the weekend starts by offering everyone an opportunity to put forward their ideas for the group’s consideration and, as is always the case, this year saw some fascinating and adventurous ideas. Everything from augmented reality experiences to event planning websites, the now common ‘Tinder for X’ style apps to student marketplaces, and tour guide applications – like that of GetGuidEd – to tools offering personal data analytics. After some debate and intense questioning (including my favourite question, ‘what are you hoping to achieve in a weekend?’), eight ideas were chosen and the assembled student entrepreneurs opted to join a team of their choosing. As is often the case, some teams chose to work into the night – I mentored a group in the pub for a fair few hours – while others chose to get some sleep before the weekend ahead.

Day 2: Market Research & Execution Day two started bright and early for the teams with some market research exercises. One of the key elements of the 3 Day Startup weekend is to get out of the building and validate one’s idea by talking to customers. Last year, talking to customers resulted in the Teadough team ditching the iPad recipe app we had planned in favour of a make-your-own doughnut kit, a rather significant change in plan. This year’s teams were spotted out on the Royal Mile and in a number of high-end hotels in Edinburgh, talking to customers and potential suppliers and partners for the future. As one of this year’s entrepreneurs, Kai Yik told me, 3 Day Startup is an opportunity to “learn the right process” of building a startup – if there is such a thing as ‘the right process’.

The rest of the day was spent back at Assembly Roxy – our adopted home for the weekend – in teams, with mentors talking to each team about their findings, how they might evolve to meet the needs of their target market or, in some cases, helping to facilitate a complete pivot in their startup idea. The afternoon also challenged the teams to consider their pitches – in time for a feedback session in the evening – and what they would be looking for from the venture capitalists on Sunday evening. At such an early stage in the game, pitching for an investment would be both premature and highly unlikely to be successful, but mentorship was a key demand from the majority of the teams.

Day 3: Finishing Touches & Demo Night As the team entered the final twenty-four hours of the competition, the pressure of delivering a pitch to a panel of four venture capitalists kicked in. Teams set about re-designing their presentations in response to feedback, pitches were rehearsed and feedback sought from mentors (I, for one, listened to at least fifteen pitches in the course of ten hours) and Maia, our facilitator from 3 Day Startup, gave the teams some last minute tips on responding to panellist questions. The highlight of the third day was the Demo Night, which saw members of the public, including a number of established entrepreneurs, attend alongside our panel of venture capitalists to watch each team pitch their product or service. It was a great evening and showcased just how far the teams had come since Friday evening’s initial team pitches. Some ideas were barely recognisable, others had a much greater level of finesse and some convincing demos and prototypes to ‘wow’ the audience.

Participants’ Views Of course, this is just my opinion and overview of the weekend (and it isn’t the first time I’ve written a post about this event) so I decided to sit down with some of the participants and understand their motives for attending 3 Day Startup this year. For many, the weekend offered the opportunity to be inspired by others’ ideas and immerse oneself in the entrepreneurial environment which exists at the University of Edinburgh. Wai Yee, who described himself as a law student who wanted to run his own business, told me that “3 Day Startup is not just a networking event, it is an opportunity to learn.” Another participant, Filipe, was using the event as an “introduction to the startup scene,” telling me that he now sees himself as an entrepreneur, “someone who can take an idea and make it a reality.” Others, like Elle who participated in the Caledonia Wedding consultancy team, described how the event enabled her to learn new practical skills which she could use as part of her studies.

And will any of the startups born this weekend continue in their journey? This was one of the questions of greatest interest to those of us who attended last year’s event – three of the six companies pitched last year continue to trade today. It wasn’t one hundred percent clear, however, a number of the entrepreneurs seemed keen when asked at the after party. Only time will tell.

There are lots of things students may nag about when living with flats; it’s messy, someone forgot to turn the lights off, someone’s used some of the bread I bought, nobody bothered to clean the bathroom after having a shower…the list is endless and yes, I probably say a lot of these things myself.

This weekend, seventy undergraduate and postgraduate students at the University of Edinburgh are coming together for an intensive, seventy-two hour entrepreneurship challenge which has spread to universities around the globe - 3 Day Startup. The aim of the weekend is to pitch business ideas and work together to make six to eight of them a reality in the allotted time.

Now, I’m not suggesting that we can magic a technology which will clean up your kitchen or bathroom for you. Nor am I announcing a tree which magics bread to replace what your flatmate may have used or a gadget which turns of your lights when you forget. What I am proposing, however, is a technology which reduces the stress of every students’ biggest hate: student finances.

The Problem Consider this: every student has to manage energy bills, internet bills, mobile phone bills, rent payments, student loans, insurance (if you’re like me anyway), groceries and a whole load of other daily expenditures. Consider how much time this might take. A third of survey respondents said that managing student finances can take up to 60 minutes with 50% keeping tabs on them every week. If you’re not diligent about it, you’ll likely get to the end of a semester to find out you’ve no money left. But if we can make the process easier, technology could sort out all of this spending for you, saving you time and effort and allowing you to enjoy more time socialising or getting that coursework done - a desire held by two-thirds of survey respondents.

The Solution My proposal for this weekend’s 3 Day Startup is to create a simple, free and easy-to-use portal to which students can connect their bank accounts, utility accounts and other accounts - allowing the seamless importing of all expenditures and bills to be paid. But the portal would also tackle my biggest pet hate - the sharing of bills - by connecting up user accounts into “households” for each student flat. This way, while Jan, Matt and Lisa have control over their individual finances, their accounts are linked for a year to allow the three of them to pay those responsible for bills on-time and without any hassle, simply by signing up to a direct debit which the portal then processes to the individual who footed the bill. Here’s an example.

The first depiction demonstrates how each member of the household has an account to which they connect their services. Then, in the second depiction, we see how Household member A pays the utility company on behalf of the flat and the portal determines, based on the bill it imported and the amount paid, how much Household members B and C owe member A and, using the direct debit set up when the account was created, withdraws the money from their accounts and transfers it to member A.

User Adoption So how can we entice users to sign up to the service? One solution is to reach out to student estate agents and offer the option to setup the system for each new student rental contract. This means that students avoid a manual signup procedure (as it is performed by the estate agent) and that their property details, rental agreement, etc are already setup in the system. It is even possible that, as part of the direct debits setup with the portal, the rental payments could be taken in the same way as energy payments and be sent directly to the estate agent. Then all that is left is for user details to be sent to each student and for them to setup their bank account and direct debit online.

Making the Solution Profitable So far, the portal does not have any revenue streams attached to it. Charging students to use the system will only result in low adoption levels and estate agents are also unlikely to pay. Instead, I propose that the portal is made profitable by offering utilities providers and others the chance to advertise. This won’t be standard advertising like we see on most blogs, etc. Rather, the portal will look at each user’s bills and, if another, advertising utility company has better rates, the user will be offered the opportunity to switch provider without the hassle of going through the supplier’s website as all of the necessary details will already be stored in the portal. This way, advertising is only displayed when there are money-saving options available to the user and it will be done in a subtle, not intrusive way.

Other Possibilities There is only so much one can accomplish in a weekend but the system has a lot of additional functionality which could be offered. In the future, the portal could offer easy student loan applications, the sharing of groceries bills by uploading the receipt and identifying items, calculating students’ weekly and monthly budgets based on their current spending habits and account details and much more.