Pivot or Die - Adventures of a Startup

What If It Doesn't Work..?

2011-10-29T11:22:00.000+01:00

My response to this question is usually, "...but what if it does?!"

I have sat across the table from a number of people while on this journey and been amazed that the question about success or failure is frankly always about the potential for failure.

Show me an entrepreneur that invests money, time, blood, sweat and tears into a venture with failure as their endgame? Which is not to say that an enterprise cannot fail, but I would argue that failure is an irrelevant descriptor. For me, there are simply levels of success.

First and foremost, a business startup is an educational experience. You will always walk away wiser, smarter, and better prepared for the next thing. Doesn't sound like a failure...

You will also walk away with a network of supporters and advisers, your business partners and possibly one or more investors. You will have constructed a business with infrastructure, both operational and technical. All of these are assets which can be re-used in your next venture. Still doesn't sound like failure.

Having established a solid foundation for the previous business, you have the ability to pivot, to exploit a spin-off or evolution of your previous idea or to deliver the next one on the list. Whatever you choose to do, the startup time for the next one will be shorter, and you will be smarter. Begins to sound more like success as the likely outcome. And this is what you take into the room every time - you sell yourself, your team, your perseverance and your passion for your business. Challenge anyone who posits failure as the most likely possibility.

It is rare that I have ever been confronted by a potential customer, commercial partner, or even investor that looks at the proposition and asks, "What if this succeeds, what if this goes according to or even close to plan?"

Getting them to ask that question should be your goal. You have to leave the people in the room feeling like they could end up being the guys who didn't sign The Beatles!

My Precious

2011-07-05T17:17:00.000+01:00

Someone once told me that a start-up business is 10% idea and 90% execution. Whether that is scientific or otherwise, there are certainly many entrepreneurs out there that, like the infamous character Gollum in Lord of the Rings, prefer to hide away, deep underground, quietly polishing their idea and gazing upon it fondly.

While at the very beginning that isn't so much of a problem, there does come a time when, if you wish to succeed, your "precious" must be exposed to the harsh light of day and the scrutiny of others.

It isn't easy to take that step however. Entrepreneurs and start-ups will often worry about someone stealing their idea and delivering it before they do. Yet how likely is that to actually happen? After all, you have spent many months honing your concept, doing the research, talking to potential customers, running focus groups, developing a proof of concept, talking to lawyers, bankers, government funding sources, angel investors and so on. For a competitor, unless they have lots of money, time and resources available to them, then it is all work that has to be recreated to get to the same stage as you - by which time you will be even further ahead.

Certainly, do all you can to protect your concept. For example, get your lawyer to prepare a custom NDA for you rather than use something you found on the web; as much as possible get one signed prior to having a conversation with anyone. The value of an NDA can vary, but it is better to have it than not and demonstrates due diligence to those who care.

More importantly though is to demonstrate the value in you, your team AND your idea to potential partners and customers. If it is good, the combination will be hard for a competitor to replicate. And try to find relationships that create a barrier to entry for potential competitors.

But at the end of the day, you have to put yourself and your idea out there and be prepared for whatever comes next.

Document Everything...

2011-07-05T11:18:00.002+01:00

I once worked with a company that helped troubled businesses turn around or successful businesses prepare for sale. A recurring theme when they reviewed such businesses was that they rarely had complete documentation that could explain to a prospective buyer what they did, who was responsible, how everything worked, etc. The end result was often a lowering of the final valuation and ultimately a loss to those exiting the organisation.

The lesson to be learned here is that the time to document everything is as it happens. Most startups operate with such velocity that you will likely never get the chance to go back and do it later - unless your startup venture is to build a time machine of course!

Documenting as you go adds value to the business, it adds credibility to the operation, and it helps the management team to satisfy the information demands from lawyers, accountants, potential investors, banks, suppliers and so on.

One of the key areas that is often overlooked is around decisions made about the business and how it operates. Im most cases, your business is of course a legal entity and as such there are certain decisions that must be documented and recorded for legal reasons. (Noting of course that I am not a lawyer and this does not constitue legal advice). The lack of proper documentation in this area is usually only considered when for example the tax inspector shows up and asks why your Directors are all traveling in business class. You of course repsond that it is company policy. To which the inspector asks to see the policy... Ooops!

You get the idea. So, stop reading this, think about what you are doing today to run your business, and then write it down. Even documenting the smallest aspect of your operation could one day make you money...

Is it Legal?

2011-03-14T20:47:00.002Z

One thing I wish I had done earlier was establish the legal structure of the company and select legal representation. That's not to say that delaying the choice has caused any major problems but in hindsight choosing sooner could have yielded some very useful benefits and possibly accelerated the whole process.

What are the benefits? Well, putting aside the fact that a good law firm will be able to handle pretty much all of your early stage legal work, they can also provide you with access to their network. That could mean meetings with influencers and decision makers you otherwise would not meet. They can support your efforts by providing use of their facilities for important meetings and events (which are probably a lot nicer than yours right now, if you have any at all). And of course, you will be sure that you have a solid legal framework for operating your business going forward. At the very least this means you will have a custom, appropriate NDA to use rather than the free one you found on Google!

Ultimately your choice of firm will depend on your Business, your target markets and the products or services you deliver. For us, that meant a firm with a solid corporate practice and strong technology and IP skills.

Good luck...

Team Player

2011-02-04T20:11:00.000Z

It is simply impossible to execute a startup business on your own. There aren't enough hours in the day. You probably already have job or are running a business, doing the thing that keeps the lights on while you dream about bringing your great idea to fruition. You need help...

So, you talk to family and friends about your idea; maybe some of them get excited enough to spend some more time brainstorming with you. Maybe you have some great professional colleagues who share your vision, your passion. Wherever you find them, it is crucial to realise that you need a team to build a successful business, and what better pool of people to draw upon than that which contains the people you know best?

So, decide which skills you need, identify the people that are most interested, and are willing and able to take the journey with you. That of course means sharing the risk, both professionally and financially, and sharing the load.

Don't be afraid to tackle the hard topics - get everything out in the open, make your feelings known, layout your vision for the organisation you are building and where you want it to go. Then they will make their personal requirements known, they will openly discuss what needs to be done, who will do it, what it will take, and how the financial aspects will be handled.

It doesn't mean going into the arrangement blindly, trusting that everyone will behave as they should. The best people will accept the need for formal, binding legal arrangements, and they will happily sign an agreement to that end.

Then the real work can begin. Next step - get a lawyer. Until the next time, as always - thanks for reading.

Commercialise, Commercialise, Commercialise.

2011-02-01T11:19:00.000Z

I chose to commercialise the concept. What does that mean? Well, beginning at the same point as everyone else, I thought I saw a gap in the market for a service that would address a pain point I perceived as being an issue for a substantially large enough group as to make the whole adventure worthwhile. However, instead of moving straight to building my "widget" and then looking for investors to support it (and hopefully customers willing to buy it), I decided to reverse that order of events.

To get there, I followed these steps:

Continually refine and develop the concept
Seeking input from mentors/advisors
Making assumptions, using anecdote, THEN
Acquiring real market research and data BY
Talking to potential customers and understanding their business and their needs
Identifying the scale of the product or service

This all leads to the goal which is customers and/or strategic commercial partners (i.e. whatever is applicable to your business model) that are willing to do one of the following:

Officially endorse your product or service (and provide some level of support going forward)
Sign a letter of intent to be a customer/partner on delivery of your product or service
Sign a commercial agreement (i.e. become a customer/partner right now)

The point of achieving any or all of the above is that, in doing so, you add value to your organisation BEFORE you go looking for investment. In simple terms, share price is up, therefore you get more and giveaway less. In broader terms, you also end up with a very well-formed proposition for your potential investors and that makes the next steps that little bit easier.

My next post will look in detail at some of the steps above. In the meantime, thanks for reading.

If I Build It, They Will Come...

2011-01-30T10:49:00.001Z

It's not just baseball fields - many of the startups you know and love took exactly this approach. Usually that meant the founding team were already skilled developers, so they could burn the candle at both ends (i.e. they already had day jobs they weren't ready to give up) to get v1.0 out the door at almost zero cost.
They could enlist friends, friends of friends, family, contacts, anyone they could think of to be beta testers. From that group they would hope to convert some testers to paying customers. Meanwhile, they would use every possible cheap and cheerful new media and viral marketing trick in the book to get the word out and find some new paying customers. That's of course assuming they didn't offer a Freemium option (which presents a whole new set of challenges; a discussion for another time however).

In any case, growth is typically organic, the plan isn't always obvious, and when it comes to getting angel investment to extend the available runway, or Series A funding to sustain growth, the overall value of the organisation is much lower than it might be and thus the founders end up giving away much more than they should.

This approach does tick some of the right boxes:

It creates a real product very quickly at minimal cost
If there are paying customers, it demonstrates that there is some level of demand
Paying customers generate revenues, which investors like to see

Then again:

The problem and pain that the product was designed to address were based on anecdote rather than data from market research and talking to customers
When the founders began to build it, they had no idea anyone would want it
The proposition grew organically and likely sporadically rather than evolving into a well-formed concept that would survive scrutiny by potential investors

Being in a position to take this approach is predicated on either i) enough money to sustain the development through to the first paying customers, or ii) having a skilled development team that costs the organisation nothing.

If neither of those apply to you, then commercialising the concept is the right (and possibly only) option available. And the topic for my next post. Thanks for reading.

Stuff to Consider...

2011-01-28T10:03:00.005Z

I have a lot of history to cover with this blog. About 19 months has passed, from the very first "light bulb" moment to where the business is now. Along the way, there have been some critical decisions, some delays, quite a bit of slippage, and numerous right-turns (hence "Pivot or Die").

That said, if you can't learn from each mistake or, more importantly, can't tell when you are making them, then a startup probably isn't the right idea for you.

There have also been a lot of positive and rewarding moments - finding people who want to join you because they like your idea, pitching and pitching and pitching the idea to potential partners and customers, getting feedback that says, "Yes, you've got something."

I'll provide detail on various important topics in future posts, but in the meantime (and in no particular order), consider these:

Right at the start, decide whether you want to commercialise the idea or take the "If I build it they will come" approach.
Find people you trust to be your co-founders - you can't do this alone
Get legal representation early
Document everything - you won't have time later
Polish your idea, keep it safe, but don't hide it away for too long
Find a mentor, find trusted advisors
Identify your customers and find out what they actually want
Be prepared to change (idea, direction, methods, etc.)

Food for thought I hope. My next post will cover the commercialise vs. build question. Thanks for reading.

Hoping you find this useful...

2011-01-27T16:33:00.000Z

Admittedly, I don't have a lot of time for blogging. What with having a day job, the role of CEO for a startup venture and all that entails, and of course trying to have a life in general.

Anyway, I will be posting thoughts and musings particular to my adventures in the startup world. Hopefully those of you who are either pursuing you dream already or are seriously contemplating a change will find something useful here and maybe you will avoid some of the pitfalls I have encountered and the various mis-steps made along the way...