I was lucky enough to moderate a fantastic panel at www.spacesworks.com for London Tech Week recently, on Innovation and start-ups: The agile start-up to grown up business or, in plainer English, ‘how to grow a start-up and not go bust’!
As someone who has worked in a start-up, now runs one and has mentored several others, I understand that when you work in a start-up, every day brings new challenges. The challenge we set ourselves was to see if we could find some common pitfalls and, more importantly, some proven answers.
Leaders from four amazing start-ups joined me on the panel, all at different stages of development, all with different challenges, but all with a great perspective on the challenges they have faced and indeed are facing today.
First up was Naveed Akram, founder of www.vestd.com a groundbreaking marketplace bringing experts and start-ups together in exchange for tradable equity. Vestd are not disrupting a business model, they are creating a whole new category, “the equity economy”. Vestd currently comprises six people.
Next up was Kat Knocker, head of Product and Customer Experience, www.tails.com. Tails.com delivers tailor-made dog food right to your door. People (and their dogs) love them, but they need to break people’s shopping habits. Once on board, the product usually does the talking. Tails comprises 45 people, growing fast.
Making the shortest trip as a www.spaceswork.com tenant was Jonathan Chong, chief technology officer at www.trubeapp.com. Trubeapp delivers personal training at a time and place that’s convenient to you, managed through your phone wherever you are. Trubeapp.com comprises around ten folks as we go to print.
Last, but definitely not least, was Joe Griston, from www.freelancer.com. Freelancer.com is a global market place connecting freelance talent and the people who need things done. Freelance.com has IPO’d, gone global and has around 450 working for it.
(Also check out our video shorts from the panelists when asked them: “What is the single most important piece of advice you would give a growing start-up based on your experiences?”)
What did we learn about start-ups?
Not unexpectedly it turns out that different companies, at different growth stages, had different challenges. Blow the house down, little piggy!
Anyway, here are our top eight recommendations to keep your start-up on track (although most of the advice will serve any business):
1. Start it with a KISS (Keep It Simple Stupid)
The panel members were unanimous on our Number One piece of advice. When you’re establishing a tech-based start-up, don’t overcomplicate things. Really commit to the Minimum Viable Product (MVP) approach in the early days as you won’t really know what your exact customer needs are. As you grow you’ll develop a more robust product roadmap, but make sure it stays flexible and directly proportional to customer benefits and/or revenue generation.
Hear it as it was – video panel highlights on this topic
2. Build a strong culture
While all the panelists agreed that culture was key, it was more of a ‘thing’ in the larger businesses. When you’re a small team, culture usually takes care of itself (providing the founders have a healthy perspective, of course), but as you grow it requires effort to keep the culture intact. At www.freelancer.com it was one of Joe’s key areas of focus.
3. Stay Focused
Naveed from Vestd felt that their key challenge was staying focused and being clear on their mission. Distractions and opportunities beckoned from various quarters, but answering those calls was a path to distraction and failure. This was reiterated by everyone in the panel, but Vestd – the baby business on the panel and perhaps still finding their feet to some extent – felt this the most.
Listen to Naveed on staying focused
4. Be smart with money
Probably the perennial issue for start-ups. Cash. There were a lot of perspectives on this from the panel reflecting their different stages of development and/or how they personally were financed and, ultimately, every start-up will have different needs depending on their business model. However, the panel did agree that regardless of the source of money, planning ahead and taking the right amount of money was key.
This wasn’t simply because of the hard realities of cash flow and burn rate, but because every time you have to chase more investment, it takes up a huge amount of time and effort (and adds intense stress) and effectively diverts leadership resource away from more important issues. That’s not to say that you should take bad deals too early, but be aware of the distraction further raises bring and the effect that often has on growth.
5. Seek to employ the best talent you can afford
As start-ups grow they need to hire, but this is often the time when cashflow is under the most pressure and, given that people costs are normally number one or number two in terms of costs (the other being tech infrastructure depending on your business model), its tempting to go looking for deals.
However, great talent is vastly better than good talent and the difference in performance is considerably more than the difference in cost. Start-ups need to invest in the best person they can afford for a given role (including equity for some roles) if they are to grow as fast as they can. One point often missed when considering people performance is that average performance needs to be managed, taking up the time of your leadership team that could be better used elsewhere. Consider taking the Netflix approach, who famously said: “We reward average performance with a generous severance package!” Better still, just hire for great performance.
Another aspect of talent was making sure that the individual understood the dynamics of working for a start-up, especially if their track record is based on larger enterprises. Getting every piece of value out of the team/budget you manage is key and takes a certain mindset that even experienced high performers from an enterprise background find hard to replicate.
Hear Joe on how freelancer.com interviews for marketers
6. Getting reach to scale and move away from being a start-up
Given that a start-up is defined as ‘a temporary organisation designed to search for a repeatable and scalable business model’, it is therefore the role of a start-up team to stop the business being a start-up!
Although there are many facets to this, essentially we are talking about scale, which brings many challenges. Understanding early on how you will scale your tech, your marketing and your customer service are all crucial. Don’t wait for an infection point and suddenly be wondering what’s next. Plan in advance and understand the implications in terms of costs and resources.
Listen to Joe and Kat of scale and reach
7. Be unrelentingly customer focused
Start-ups only succeed if they can acquire enough customers AND keep them. To do so you need to focus relentlessly on the (changing) needs of your customers. This isn’t just in terms of the core features of your product or service, although that is key, but also about how you manage every interaction as you grow. For example, customer service/support is often not given much consideration during the early start-up phase. After all, when you have a few hundred customers who can be managed relatively manually, why worry? But as you grow, the demands from customers tend to grow exponentially and many start-ups have suffered from not having a suitable infrastructure in place.
8. Keep your commitments flexible
Our final recommendation is fairly generic, but still critical and often forgotten. Any successful start-up leader will tell you that you really don’t know what’s coming next month or next year, so make sure that wherever possible you keep your commitments flexible and scalable (up or down). From your tech stack or office space, to marketing and people, it makes sense to have flexibility built in. Sometimes, that can mean higher short term costs, but usually saves you in the medium long terms as you don’t need to break leases or pay severance.
Many more points were covered during the panel, but these eight stood out. If there is a tweetable summary then perhaps this would be mine:
Focus where it matters, stay flexible, keep it simple and be unrelenting in your search for excellence #startupsuccess
Finally, check out our video shorts from the panelists. We asked them: “What is the single most important piece of advice you would give a growing start-up based on your experiences?”
This event was sponsored by www.Regus.com and hosted by www.Spacesworks.com, a working community space for thinkers, achievers and imaginers.
