SBA

Through the eye of The Needle

Christine and David moved to the island in 2012, bringing their business, “The Needle”, with them. As the island wishes to encourage more technology entrepreneurs to relocate here I thought it would be useful to have a chat and discover how the experience of bringing an Internet business to the Isle of Man has been for them.

Neither Christine nor David are IT professionals; Christine’s background is sales and marketing, particularly in the recruitment industry, whilst David is a consulting engineer specialising in digital television products and services. It is probably not surprising that their business, The Needle, is an innovative and market-leading solution to assist recruiters in screening candidates through the use of the Internet to capture structured video interviews.

Development of The Needle started in early 2011 whilst Christine and David were living in Leeds. Using local software developers they managed the development of the first release of the solution, going live in February 2012 at the same time as they moved to the island. Coming here was a lifestyle choice, both wanted to leave the UK and considered several other locations before opting for our wet and windy rock. That personal commitment to the island is probably just as well, as the couple admit they have experienced many difficulties developing the business here which would not have been such challenges had they stayed in the UK.

Firstly technical staff - the technologies used in creating The Needle are not common here, the island’s skill pool is weak in Internet technologies, and throwing online video processing into the mix has made recruiting very difficult. Eventually David and Christine compromised and took on a local developer with Internet technology skills and an appetite for learning, who taught himself the more obscure technologies needed. When he decided to move on he introduced The Needle to another Manx developer with similar skills who likewise has taught himself the missing pieces needed for the solution. Recruiting “off the shelf” locally has simply not been possible, and The Needle’s latest addition to the technical team will join them soon from off island.

Developing The Needle needs more than a one or two man technology team, so they have resorted to outsourcing development, initially to the UK and latterly the Ukraine where there is an abundance of highly skilled and qualified technical talent. Using outsourcing enabled David and Christine to re-engineer the system completely for release two, in August 2013, using more appropriate technologies and moving the big processing from their own servers into the cloud. Along the way they learned that tight specification and continual management of the outsourced developers is essential, and that software development costs on the island for the skills they need are very high - more than double the cost of expert developers in the Ukraine, and around fifty percent more expensive than in the UK.

More recently The Needle has widened access for interviewees by introducing mobile apps, starting with the Apple platform, followed in March this year by a version supporting Android devices. Development for both was again outsourced to a UK software house to find the specialist knowledge needed for video capture on mobile platforms.

Most of the solution is now hosted in the Cloud, however corporate customer concerns about data protection are leading The Needle to think about hosting more in the UK. Without a regulatory need to hold data in the Isle of Man the significantly higher hosting and datacomms costs here would be difficult to justify and a further drain on financial resources.

Cost is, as for most startups, a significant challenge and the availability of money to invest in product development and marketing has been a throttle to the speed of growth. The customers are there, but limited resources mean that time to market for enhancements is slower than it should be, and they can only engage with a limited number of customers at any one time. The high cost of operating from the isle of man - developers, travel, hosting and telecommunications etc. has been a constraint, but the flip side of that has been the poor availability of investors. Unlike many early-stage tech businesses The Needle has been revenue-generating pretty much since it launched with a couple of big corporate customers coming on early, but island based investors seem unenthusiastic and UK based investors want investments that qualify for the UK EIS and SEIS schemes to maximise their tax reliefs. The net effect of high costs and low external investment has significantly reduced the growth rate the business could achieve, with development and growth being funded between personal savings, early stage revenues and David’s consulting income.

The majority of sales work is off-island, with a small team in the UK led by Christine who spends a large proportion of her time travelling. Some sales can be achieved remotely via videoconferencing and remote presentations, but in general these are for smaller customers, the large corporates expect to meet face to face. Some of the sales are complex to deliver because The Needle must be integrated into the client’s existing recruitment platform, which is often operated by a third party. These integrations require the development of special interfaces to enable the systems to exchange data and for the recruitment platform to incorporate The Needle as part of a seamless experience for candidates.

Despite the added complexities and costs of operating from the island The Needle is successful, is creating a new paradigm for candidate screening, and is increasingly being adopted by large corporate employers. Recruitment agencies were slower to come on board, but they too are starting to see the sense of using video as a candidate screening tool to enhance the proposition for their customers. The Needle is creating a new market, and whilst it has competitors and development has been slower than desired, Christine and David are able to keep the product in front of the pack by having an innate understanding of their customers needs through their previous experiences.

Overall and despite the challenges The Needle is a good news story for IoM. Christine and David have plans to expand further; whilst the IoM team will never be massive it will double or triple in scale and employ the services of other professions on the island. Those of us who aspire to see more such technology-based businesses coming to the island, and I’m one, need to take on the lessons from The Needle’s experiences. The island needs to address the SME investment problem - developing technology is slow and cash-hungry. A number of previous tech startups which have come to the island have failed only because they ran out of dosh before the finish line. We need to address the skills problem, and this is not simply a matter of training - we need more diversity of skills in cloud platforms and technologies, web programming languages, app development, cyber security, and other aspects of IT which are rarely found in corporate IT departments. And we need to address our cost base; hosting and datacomms costs which are 60% more expensive that the equivalent quality in the UK are not helpful, and our labour costs are comparatively high. Whilst few people want to see personal incomes fall we can improve labour competitiveness by improving efficiency in the way we work, but we will need to skill up and be smarter in order to justify our high costs in a global market. As with many start-ups, tax is not a problem although David and Christine obviously hope that one day the island’s low tax regime will pay back on the high investment they have made in bringing their business to the island.

The Needle can be found athttps://theneedleonline.com, and it’s well worth a look. Existing clients include household names such as Clydesdale & Yorkshire Banks, Youngs Seafood, Casio Electronics, University of London, and Badenoch & Clark, as well as many smaller companies including a few local businesses. It should be particularly relevant to local employers who need to bring in skills from off-island because video screening really does help to fill the gaps between the CV and the candidate, saving the hassle, time and expense wasted in interviewing those who looked so wonderful on paper but disappoint in the flesh.