Paperclip makes its own marketplace
Entrepreneur Rich Wooley decided to leave his job in the City and return to Wales to launch his own tech start-up after growing tired of the same old routine.
It has now been three years since that day and his tech start-up Paperclip, a location-based trading app, is now attracting thousands of users every week from across the UK.
Now, after being named as one of Wales’ top tech firms to watch for 2017, he caught up with BQ to tell us about his journey so far, from coming up with the idea all the way through to raising finance and building his own online marketplace…
What does Paperclip do?
Paperclip is a marketplace for buying, selling, swapping and freecycling your unloved items with other people around you, available on iPhone and Android with thousands of items added each week.
The key difference between us and other marketplaces is that you can join local buy/sell groups with others (and make your own private marketplace with family, friends, or your football team).
Other differentiators include; we’re totally free, there are no prices on our marketplace, and you can see everyone else’s items around you on a handy map view.
What inspired you to launch the business?
Prior to launching Paperclip, I worked in London at a boutique asset management consultancy. After a few years I was on the verge of buying a house, and suddenly it hit me… ‘where do I go from here?’
It felt like the next step was a wife and kid to go with the burden of a mortgage, so I got scared and took a year out from my career to pursue some of the ideas I’d had whilst working.
Paperclip was one of those ideas, although at the time it was ‘tinder for swapping items’ – an admittedly short-sighted concept with next to no commercial viability.
However, this didn’t stop us placing second at London Startup Weekend when I pitched the idea in June 2014, I guess it was the few pints that I’d had before getting onstage.
Did you receive any support?
In terms of guidance, a few experienced entrepreneurs came forwards after the competition and offered their support.
Some of the advice they gave me was truly valuable, and I often share the same advice when mentoring early stage start-ups (things like SEIS, stock option vesting agreements, and other things that are important to get right when starting out).
Some of the advice I arrogantly dismissed, and now regret not having followed it!
How did you fund the business?
I was fortunate enough to receive £20,000 from a New York-based hedge about two months after the competition, which helped get the MVP off the ground.
Following this, I spent about a year tweaking the product (moving away from ‘tinder for swapping items’ to a full-blown marketplace offering’), and went around the houses, raising £40,000 over the course of a year from friends, family, and a crowdfunding TV show on Dave, hosted by Jason Manford.
Once our version 1.0 was out on iPhone and Android (approximately 18 months into the journey), I decided to go for institutional funding.
I had been speaking with a number of investors prior along the way, including the fund manager at the Welsh tech seed fund, Finance Wales.
When everything came together, we received a reasonable chunk of investment to really go for it with a 12 month runway. This was the break we needed to prove ourselves.
Once we reached the end of that runway, we had some strong growth and retention, and it was the signal for another round of funding (our second institutional).
Again, I spent six months prospecting investors (they call it ‘kissing frogs’) and were lucky to be introduced to some experienced London-based investors.
In the meantime, our v2.0 of the app was designed and developed. We completed the round back in March 2017, and finally released v2.0 in May.
I’m from Wales originally, and after having left my job in London, I decided to move home for a bit to save some money.
My friend in London generously allowed me to stay in his spare room whenever I wanted so it was back and forth quite a lot while I ‘acclimatised’.
As soon as I moved back, I looked up what kind of support was available in the area and was pleasantly surprised!
In the time that I had been away, Wales now had a budding tech scene, with tons of support for Welsh tech start-ups – even its own tech seed fund!
Why do you think the country’s tech sector is performing so well?
I think there are a number of reasons why the Wales tech sector is blossoming. I think this is a combination of the people, the culture, and the short and long-term support available.
Initiatives like the Accelerated Growth Programme allows high growth potential start-ups to overcome barriers to growth by paying for services that otherwise might be crippling to an early stage start-up, such as legal, accounting, recruitment and marketing.
Jobs Growth Wales means you can get an intern on a six-month placement and receive half of their salary back, lessening the risk for new hires. The SME job creation grants, and many other Welsh Government backed initiatives mean there are longer term benefits for Welsh start-ups as well; if you plan to create 20+ jobs in Wales over the next few years, you’ll receive substantial support.
Ultimately, what I’m seeing now is that the Welsh tech seed fund (Finance Wales) is investing heavily in some impressive start-ups; and the more these start-ups grow in prominence (their successes being widely publicised throughout the tech scene), the more would-be entrepreneurs with ‘just an idea’ are inspired to take the leap and follow their passion.
How has the company grown?
When we first launched in 2015, we were faced with a huge task; building a marketplace. It’s always difficult with marketplaces, as you have the classic ‘chicken and egg’ problem.
With us, it was hard to get items on the platform when there were no buyers, and it was hard to get buyers when there were no items.
However, once we had overcome this (with a lot of hard work), we really started to grow. The first 1,000 downloads took months, and now we get that daily.
We see thousands of items added each week, and we’re seeing more and more added each week.
For the rest of the year, we’ll concentrate on getting as many people making and joining micro-marketplaces based on their interests through Paperclip Groups.
What do you put this success down to?
I know it sounds cliché, but I would say what success we’ve had is down to perseverance, a strong team, and luck.
Alongside that, we’ve been incredibly resourceful with our time and networks, and have had some great support from Welsh initiatives setup to help us grow.
We listen carefully to user feedback, and it’s always exciting – and educational – to watch a first-time user go through the onboarding process and use Paperclip.
By constantly responding to user feedback, we’re confident in offering a marketplace that user’s truly want and get pleasure out of using.
We feel that traditional marketplaces have turned their back on their end-users – this is one of the reasons we launched Paperclip, to provide innovation where others have sat on their monopolies and simply stopped listening.
What are your plans for the future?
The overarching vision is to make Paperclip a household name, similar in stature to the likes of eBay and Gumtree.
We see Paperclip Groups as something of a game-changer for the industry; the data and user feedback points towards it, and we’ll continue to refine it according to user feedback and changing marketplace conditions.
In the short-term, our plans are to fully integrate a payment gateway like PayPal, and we’re in talks with CitySprint and some other logistics firms to provide delivery.
We’ve got some exciting partnerships in the pipeline that will be firmed up imminently, so we see that as a powerful way of growing.
Finally, if you could give three nuggets of advice to an aspiring entrepreneur, what would they be?
If I could give three pieces of advice to an aspiring entrepreneur, I would say;
- Make sure that there’s a real problem that you’re aiming to solve, and if there is one, make sure it is both commercially viable, and has a large enough target market to justify
- Someone once told me “when starting out with your business, always triple your timelines and double your cost estimations” – I took that with a pinch of salt at the time, being that dangerous combination of arrogant and naïve. It happened and I wish I’d listened. I’m less arrogant now, in fact I’d say I’m nearly humble. For me, and anyone kicking off a tech startup; never underestimate the power of design, and don’t be impatient; at first I thought I could design the app using a combination of PowerPoint and UX prototyping tools. However, I kept adding to the spec and it ended up costing money and time. If I had consulted with a designer at the first step of the build process life would have been a lot easier
- Listen to advice, get yourself a mentor. Find someone on LinkedIn that has built, raised, sold a business before – preferably in a similar industry. This will help immensely; they’ll be able to share all of their mistakes and steer you away from potential pitfalls. However, do beware of predatory advisors that ask for cash or sweat equity – true legends will help you because they want to.
Published: 08 June 2017