Little Lot Story
Posted by Simon Rowell on 7 December 2014
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Letters from the Front – Innovation Story from the front line of commerce: David Hillier is passionate about his idea for a social movement changing the way individuals connect with the brands they love and give back to causes they care about.
The Little Lot app transforms advertising dollars into charitable donations. Brands pay to feature on the wallpaper of a subscriber’s computer or smartphone, and Little Lot donates 75% of that fee to a charity of the subscriber’s choice. This zero-cost daily donation is facilitated through a suite of apps for Windows, Mac, Android and iOS, which serve up three designer wallpapers to your device each day.
David Hillier and his brother and fellow director Steve regularly meet at their local coffee haunt which fuels their best blue sky strategy session. The genesis for Little Lot was sparked at one such meeting when the pair connected the dots between the hundreds of billions of dollars spent on digital advertising, and the expendable income constraint preventing donations by many people who actually want to do more philanthropically.
“Ever since I was first told about the idea by Steve and our co-founder Nelson I was hooked. I was convinced that it was a hugely scalable business that could bring about massive social change. I wanted in immediately!’ recalls David.
“Since getting to market, we’ve had a huge amount of validation in the form of user and client feedback, investment and a few of international awards.”
The brothers were joined in the company by co-founders Nelson Rayner and Bennor McCarthy, and together took the project from a simple but powerful concept all the way through to a market-ready product.
“We have had a lot of good input along the way from people in the advertising, charity and tech industries but all the execution happened in-house.” says David.
David confesses that they may have paid a price for not conducting early market validation work.
“When we launched the first iteration of the initiative (under the name Donate Your Desktop), it was essentially a beta product with no-frills functionality. It simply changed the desktop background on Windows and Mac computers each day with the same wallpaper for our entire audience. Although it was great to get something to market, we had failed to grasp what a personal space this is – and how important it is that the content being display is relevant to the user.
I think if we had taken the time to do a bit more market research we would have spent more time perfecting the product before releasing it.”
Little Lot now includes targeted content and a choice of 3 wallpapers per day and the model has been extended to smartphones.
“For years we have been tweaking our technology, our messaging, our brand, our relationships and our business model. If we knew what we now know, we could have saved 6 months to a year and hundreds of thousands of dollars in getting to market with the right product. That said, we have learned a huge amount from our mistakes and perhaps it is best to have made these mistakes cheaply in a relatively small market.”
David says that they are constantly raising capital and so regularly write and review their business plan.
“This process has become an important part of settling on a strategy and a set of achievable milestones – something which is very important in a start-up. We have hit most of our milestones but sometimes you do realise that you need to change strategy and it’s good to do so. Following a plan just because it’s there is ridiculous.”
Little Lot conducted freedom to operate searches prior to launch and a novelty search to determine whether or not the technology and business concept was patentable. While they decided following advice not to seek patent protection, they do have trade marks and copyright in their software and app code.
“We would obviously like to have a patent but we don’t think it would help that much with protecting us from competition. The tech world is full of disruption and although you may have successfully protected a certain method or form, companies can work around it.”
“I believe our real IP lies in our vision for the product and our understanding of the business. The many mistakes that we have made in our three year journey have given us an incredible feel for our UVP and for how to deliver it.” says David.
Little Lot is almost entirely funded through shareholder capital and sweat equity.
“When you give away 75% of a modest revenue, there are not many other ways. Our business is one that can only really survive long-term at scale. We need to hit around 20,000 users in New Zealand just to break even on the local operation (i.e. not including the development costs of the parent company).”
Little Lot funded its first major redevelopment of the platform (when it moved from Donate Your Desktop to Little Lot) with a Callahan Innovation R&D grant.
“We are extremely grateful for this funding, but it did require a significant pitch and a highly-restrictive timeline and budget which didn’t really fit particularly with a tech start-up which was still figuring out how technology could enable its business model.”
When asked what has been the most difficult hurdle in the innovation process for Little Lot, David cites the critical importance of the overall user experience.
“When we first started we genuinely believed that the strength of our core concept would be enough to make it go viral. We had no idea how critical the overall user experience would be to user acquisition and retention. It’s not that people aren’t prepared to give up this space or don’t like the idea, it’s that if the experience isn’t great, then it’s too easy for people to get bored or just give up on it. Our challenge is to keep innovating the product to make it more engaging while imposing less.”