Going global? Start local

28 October 2014

Smartphone App makes inroads into Brisbane

Last week saw the launch of home-grown mobile app Haystack, which promises business cards without the paper. Expected to be the next global tech success story to come out of Brisbane, the Haystack app stores and automatically updates the business cards you receive, and lets you share your own business card directly from your phone.

Haystack Founder and CEO Ran Heimann shares some advice for other tech start-ups looking to go global.

Have you ever wondered how technology companies manage to cut through the noise and get new products into the hands of the right set of customers? How do you think that your favourite smartphone app got global traction? The typical answer is because “it’s just good” or “it does exactly what I need it to do”. But somebody, somewhere had to download that app and start using it to find how good it was and they had to tell somebody else about it until knowledge of this great new app reached you somehow. Launching a new app to a crowded market is a little different to launching a new brand of toothpaste. For toothpaste, I’d go for a TV ad – lots of smiling kids munching on Nutella sandwiches supplied by a slightly indulgent mum who cares enough to make sure teeth are cleaned properly afterwards. I’d try and buy some eye-level supermarket shelf space for a few weeks and offer my toothpaste at a bargain price point, hoping that time-poor shoppers would throw my toothpaste in the shopping trolley without thinking. At that point, I have a family of users for my toothpaste and if they like it, they may remember it and buy it again.

For smartphone apps – there are now specialist media advertising agencies that will actually guarantee you a certain number of downloads, but what they can’t guarantee you is that people will actually use the dowloaded app, which makes it a little different from the toothpaste situation. These agencies are experts at buying media in all the right places and encouraging consumers to click through and download apps. They can sprinkle advertising over traditional and digital media and, by using cookies in the app, can even measure which channels are working and pour effort into those. For a particular geographic and demographic target, they can provide you a fixed price for a quoted number of downloads. Say I want 100,000 downloads in Berlin from 16 to 25 year-olds – that apparently is pretty straightforward and involves buying targeted media advertising from mobile phone companies with supporting billboards. What about 200,000 downloads across the US? Even easier and also very cheap, requiring no physical advertising, although the “user quality may not be all that great”. 300,000 in Hong Kong? Easy Peasy Lemon Squeezy. And 500,000 downloads in Australia? That apparently is Difficult, Difficult, Lemon, Difficult!!! It costs at least $2 million and there is no guarantee of the quality of the users or even any actual users at all.

I had been researching the different agencies that do this stuff for over a year by the time I came to actually meet with one. On various trips to Israel, London, Silicon Valley and New York, I had worked my connections hard to try and meet up with anyone who could point me in the right direction. Someone at Google gave me a solid short list to work from. A friend of a friend who writes on technology for the New York Times also gave me his perspective of which agencies were good at using traditional media in the mix. Having accepted in my mind that we were going to have to spend a lot of money to get critical mass of downloads in Australia, I wanted to make sure that our money was going to be spent with the right agency. The first problem – none of them even has an office in Australia.

Eventually I made contact with a Boston-based agency that seemed to be the best of the bunch and we exchanged some phone calls and long emails. Just when it looked like I was going to have to go to Boston to talk business, a couple of their main guys visited Australia. They had decided to run some breakfast seminars in Melbourne, Sydney and (amazingly) Brisbane to gauge the readiness for the market for their services. Fellow Haystack founder Brian Gillespie and I met with them one night in an upstairs bar in Sydney. They told us straight that Australia did not have anywhere near a big enough app development market for them to open an office, here so if we wanted to deal with them it would be through their Singapore office. They were also clear that they dealt in the science of downloads and left the art of app useability to people like Haystack. The way they said this made us feel like creative geniuses for a while until we started to realise that what they were actually saying was – paying us millions of dollars for downloads doesn’t guarantee that a single person will actually use your app. This worried me because I knew from my previous dealings with Silicon Valley investors that usage of 40 per cent is the magic threshold for app engagement. For example, having 1000 downloads with 400 people using it is more attractive to most investors than 100,000 downloads with 10,000 people using. I had to admit that the boys from Boston knew their stuff when it came to app downloads, but what was clearly working for EA games and Sony looked a little expensive for Haystack. We decided that we were going to find another way to get our 500,000 downloads in Australia without having to find $2 million.

A few months before launch, I had interviewed an English guy for the role of Chief Marketing Officer at Haystack. During our conversations about global roll-out, he talked about his view that the US would never manage to convince its citizens to adopt the $1 coin until it stopped sprinkling its marketing budget evenly and ineffectually across the nation. His view was that if the US Government poured its marketing budget into one small town in the Midwest, then soon the entire town would be using dollar coins and guess what… businesses in neighbouring towns would start accepting dollar coins too. Before long, the entire state would be using dollar coins and after that gravity would prevail and the country could ditch the $1 note. The point he was making was that Haystack didn’t necessarily need to sprinkle multimedia advertising across the world to achieve global market penetration. I started working on that idea and resolved to launch Haystack in Brisbane, the city where most of the Haystack team had lived for the past 10 years and where some of us had big personal networks. We reasoned that Brisbane was the right size for Haystack – big enough to have a vibrant business economy, but small enough to allow Haystack to make connections to most organisations of any reasonable size. The Brisbane business community is also well connected with Sydney and Melbourne. If we could get critical mass, say 100,000 users in Brisbane, contagion would take Haystack to Melbourne and Sydney and then to the rest of Australia and beyond.

Social media seemed the obvious place to start and six months out we had all sorts of grand plans. With eight weeks to go however, it became clear that when it comes to social media; there are strategies and there are plans and then there is action. We were big on strategies, even bigger on plans but almost zero on action. For example, I had always planned to write a blog but kept putting it off because the product development was so intense and so were all the other things I have been writing about like developing corporate partners, finding talent, tax structuring, trademarking and it goes on. We had hired various people to give us some social marketing firepower but all we really got was lots of advice about the need to get some content together for people to want to read. Problem was we had no real Haystack-generated content so there was no option but to take some time to generate that content (and so the Haystack blog was born).Smartphone App makes inroads into Brisbane

QUT also became central to our roll-out plans. Almost all of the Haystack team are QUT graduates, and the university had already supported us by inviting Haystack to locate our offices in its Creative Industries Precinct in Kelvin Grove. We knew some senior university people and so we organised a few lunches and demonstrated Haystack. We knew from our test marketing with QUT students that Haystack would be a good way for them to receive contact details from their lecturers and it looks as if we will have great initial momentum from 45,000 staff and students. We also started working our personal networks in large companies and government departments across Brisbane. At this stage we felt as if we had momentum. We met with the team at The Lord Mayor’s Office at Brisbane City Council to show them how they could eliminate paper business cards and they loved it. We met with a number of large companies that I had consulted to, and they all seemed to like it too. Our investors were also working hard and introducing Haystack to organisations in their networks. In the space of a few days, three very big companies all agreed to roll-out Haystack to all their staff at launch and we started to feel that our “Take Brisbane” strategy was achievable. Back at HQ, the brand team started creating and pre-loading a higher proportion of Brisbane-based brands on to Haystack. I also had an idea that we needed some physical venues for Haystack on the week of launch and where better than the cafes and restaurants across the CBD, where more business cards are exchanged than anywhere else in the city. Pretty quickly we had recruited our first few venues, and from that point we felt we really could take Brisbane with our ground army. At that point we abandoned, for good, any ideas of buying downloads from the Boston boys.

Judging by Brisbane’s response to our launch on October 21, we made the right decision. The local support and feedback we have received has been nothing short of amazing. I like to think we have helped Brisbane to take its first step towards becoming the first city in the world to give old paper business cards the flick. Our networks have mobilised, and with the support of organisations including QUT, PwC, Brisbane City Council and Brisbane Marketing, we have made significant inroads into penetrating the Brisbane CBD with our technology.

Smartphone App makes inroads into Brisbane

As our app downloads continue to grow daily and we step a little closer to realising our dream of a world without paper business cards, I am certain that our decision to launch locally was the best decision to set us up for future global success.

Ran Heimann

Co-founder and CEO at Haystack

Haystack was started by a team of three brothers who believed it was time for business cards to be disrupted. After two years of development, the addition of a fourth founder, the backing of investors who understood the big task at hand, and joined by a team of the most talented individuals they had ever met, they launched their service to the world in October 2014. The Haystack app is available to download from the Australian Apple App Store or Google Play.

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