Startup of the Week: Taking on the big dogs with Tapdaq

Do you like playing a bit of Candy Crush on the Tube? Perhaps you're a total addict. And perhaps you're not aware of the furious bidding war going on to secure advertising on such smash hit mobile games. Uhh, you're so apathetic aren't you, you big mobile gamer. Oh no, don't worry, just ignore me. Keep tapping away on that touchscreen.

Excuse me. For a minute there, I lost myself. Where was I?

Ah yes, Startup of the Week. In more casual fashion than usual. Though this is no reflection on our featured entrepreneur this week, whose work ethic is far from laid back. 23-year old Ted Nash has been creating online companies from the age of 12, including anonymous gossip forum LittleGossip.com, search engine SurfPony.com, and cloud storage platform UploadPod.com - all before his 15th birthday. I'm not sure I could even construct a PowerPoint presentation at that age, so kudos to you Mr Nash.

Now Ted is the man behind Tapdaq, a community-driven mobile advertising exchange for independent developers. Launched in response to the ever escalating cost-per-install advertising arms race, which has now completely isolated the vast majority of the independent mobile developer community, the platform circumvents the need for cash spend, by operating via its own dedicated currency, daq.

The company recently completed a $1.4 million (£870,000) seed funding round, led by VC firm Balderton Capital and confirmed former AdMob EMEA managing director Russell Buckley as its new chairman, who will now work alongside the founding team.

Without further ado then.

The idea

How did the idea for Tapdaq come about?

It came about purely from a problem that I had myself. I've always been, ever since I was 12 years old, hacking projects and products together, and the app store launched and I pushed an application out. At the time, there were only about 30,000 apps in the store, so it was relatively easy to cut through the noise, and now of course there's more than 1.3 million, so even apps which are far more brilliant and engaging than mine were, they just are not generating any awareness, simply because there's so much noise now.

I left News Corporation after spending 18 months there and started building some applications to try and replicate some of the success I had as a teenager, but the reality was that there was so much more competition, it was much much harder to get any awareness, and I thought to myself, "I can't be the only one thinking about and hitting this problem."

The independent developer community is a very close-knit one, and I spent a lot of time communicating with other developers, trying to arrange deals where we'd exchange installs with each other to try and generate traffic, and I realised that there's actually no consolidated communication channel, if you will, for this type of activity to take place. So I parked my current applications and went away and tried to work out the best way to solve the problem. And that's where the idea of Tapdaq came about.

The development

How did it develop from an idea into a business?

So I have worked with two people for a long time now – Dom Bratcher and Nick Reffit. Nick is a CTO. He's been coding all his life and is extremely capable in that area, and obviously you can't build a tech product without someone who has that understanding, that capability. So whilst Dom and I work very hard from a business development / product strategy and development perspective, Nick is very much the person who's engineered the entire system. So, without those two guys who I've built a lot of businesses with previously... I say businesses – a mix of projects and products, majority failed, some modest successes. So, with Nick and Dom by my side, we were able to really take it from just an idea to a reality.

The people

What do you look for in the people that you hire?

I really do learn a huge amount and make a lot of mistakes. We all do, on a weekly basis. It's such a fast-paced environment. The biggest challenge is, without a doubt, people. I think both managing upwards and also downwards too, and what I mean by that is, from an adviser/investor perspective, bringing them all on board to share a single vision can be quite a difficult thing to do because everyone can be relatively opinionated. That isn't necessarily a bad thing, but it is a challenge. But also recruiting – bringing incredibly gifted people to really share your vision and want to become a part of it, is again a difficult thing to do, and I think from a European perspective it can be very difficult to highlight some of the best talent.

I always look for people who are what I called "T-shaped", which means that, if you look at a capital T, it's a broad straight line, and that to me signifies the skillset. So they can be a generalist in a number of areas which is actually really needed in the early stages because you're still trying to work out what developments that you're going to build on. But as you grow and as you scale, and as you go from three people to 10, to 50, to 100, there's no more room for generalists, and then the stem of the T would be their specialism. So, for example, developers that we really reach out to and try and work with, we look for those T-shaped individuals in the early stages, but as we grow you'll very much be focused on relative specialities.

The effect

What do you think is the effect of Tapdaq on the app market?

Well, to give you an example, our youngest developer on the platform is about 12 years old, and our oldest is nearing 90. So, there's a huge variety of developers, and the reason they join Tapdaq is because they see it as a platform where they can get a lot of insight and feedback from a community of app developers who are interested in making better applications, but are also interested in highlighting and pushing awareness to some of the best ones, whereas these mobile ad networks – which, by the way are incredibly profitable businesses with some incredible people running them – run on a cost-per-install model and a real-time bidding exchange.

So, for example, you have King and you have Super Cell, two of the biggest publishers, owning Candy Crush and Clash of Clans. Bidding against each other, they are raising the cost-per-install for absolutely everyone else because they're buying all the inventory and bidding off each other, and the lifetime value of one of their users may be anything from $2.50 up to $4. The reality is though, that the majority of the app store's lifetime value is a lot lot less than that, not necessarily because there are any worse games or worse developers.

These independent developers could be individuals working out of their bedrooms in Romania. That doesn't necessarily mean they're making worse applications. What they really lack is the funding and the knowledge from a market perspective to give it any awareness. So, what they use Tapdaq for is to find a community of other similar independent developers and work with each other to basically pool users, and start to exchange installs with one another to start generating awareness, so they can start to prove or disprove traction on their product.

The reaction

Have you had any reaction from these large companies that buy up all the inventory?

We haven't, and we don't necessarily appeal to those guys, which is fine. I think it's fair to say that guys like Chartboost – as an example – who are doing incredibly well, have two main advertisers; again King and Supercell, and one really huge publisher, and between those three companies they probably make up almost a dangerously large part of their business.

Obviously, those networks make money taking a commission out of every install they generate for the advertisers. So it's very difficult for them to move away from that model because all of a sudden, if they start giving cost-per-motion and enabling a very transparent marketplace for developers, then actually their main business model with the commercials behind what the investors bought into don't actually work anymore.

So we haven't seen any change from bigger mobile ad networks, but in terms of the big big advertisers as well, because there is no price here, it really has levelled the playing field. You could be King and you could come on to Tapdaq, but the reality is that you are no more important than an independent developer in his bedroom in Middle East Asia, and I really believe that this is an important step to happen, for sure.

The lesson

What advice would you have for would-be entrepreneurs?

One thing that is really important to realise, at least it certainly has been for me, is that I wouldn't be where I am now in the position I am with Tapdaq if it wasn't for a few people, and actually a conversation that I've had with many other entrepreneurs is that there are a few people in your life that will change your life forever, but the hard part – something that most people never do – is finding them.

So I'd say one of the most important aspects of being an entrepreneur is getting outside of your comfort zone. No-one really feels comfortable getting outside of their comfort zone, going to events or networking, where they don't necessarily want to, but the reality is that you have to get other people who are influential in the vertical you are trying to tackle, in order to really validate your idea to other potential investors, potential customers of your product and things like that. So, my biggest piece of advice is really understand that a few people will change your life forever, and when you do step outside your comfort zone, amazing things can, and often do, happen.

The age question

As a young entrepreneur, do you find that there's a difference in attitude or culture between you and older people in the industry?

I think the biggest discrepancy between my generation – the millennials as we're called – and the older generation, such as my parents, is that we were born into a digital era and they moved into one. That's really important because issues like privacy are a massive issue for people of my parents age, and actually even when you look at even the younger generation to me, it's clear that their ideas of privacy have completed changed. You have a lot of people saying "I don't really understand Twitter" and "Why would I bother using Snapchat?" Yes, of course everyone is allowed an opiniong, but the reality is that Snapchat sends 400 million photos every day, I believe – more than any other paradigm put together, including Facebook, Instagram and Whatsapp, yet the older generation just don't seem to understand it.

That can prevent them from moving into interesting opportunities with their business and older more legacy-based businesses, and I always use something like News Corporation as a great example of a company that, in my eyes, I was brought in there to seek forgiveness, as opposed to asking permission, and try and disrupt the company and build really innovative products. But the reality is that there are so many decision-makers in there who are from a very different generation, and that really stifles and stagnates growth of these big companies.

So I think that's the biggest issue between the age gap. In terms of "Are younger people better entrepreneurs?" then no, absolutely not, I think anyone of any age can become an absolutely brilliant entrepreneur. I'm a big believer in entrepreneurialism and a big believer of an individual if they have the audacity, motivation and drive to build something of the moment, of their own, then I think they very much should be supported in that, regardless of their age.

The future

What's next for Tapdaq?

Again, we really believe in what we're doing. We are arguably one of the fastest growing communities out there of independent developers, and I believe we can become the biggest, and hopefully not just on mobile devices. I think mobile is growing and growing, but web is still entrusting, and who knows what might happen in terms of wearables and the big push into robotics and hardware. But at the moment, our core is acquiring more and more developers into this community, exposing more brilliant applications and taking these applications to the top of the chart, because those are the real case studies that are going to fuel more and more growth.

From an inside perspective, when I look at my operational activities within the company, we've hired some absolutely incredible people who are really hoping to build the platform for these developers. One thing I would say is that the vision's very clear, in terms of where we want to be and why we exist. Between now and five years, 10 years, 15 years down the track, it's going to be very interesting to see what the actual product looks like, because I have no doubt in my mind that when you listen to your users, and you build your product from user feedback, so as long as we remain transparent to our users, sculpting our company direction then I think we've got a really interesting and successful future ahead of us.

Look out for our next Startup of the Week feature, next week, and of course if you're part of a growing business yourself, let us know using the Contact tab below.

Image credit: Gamespot