Category Archives: Startups

Let It Bleed: Expert Advice for Building Your Dream #Startup Team

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Building a perfect team while also building a business can make or break any startup venture. Thanks to Startup Victoria, a panel of startup experts came together at last week’s gathering of Lean Startup Melbourne (with generous support from BlueChilli, General Assembly, The X Gene and hosts inspire9) to share their wisdom and insights.

To kick-off, Didier Elzinga, founder and CEO of Culture Amp gave a lightning talk on the theme of why culture eats strategy for lunch (a phrase often attributed to Peter Drucker). In a startup environment, culture is a key asset (especially in the beginning when you might not have much else…) so it’s not something you can easily pivot – in fact, culture is the fulcrum around which the business creates momentum. Most of us understand that our brand is our promise, but we often overlook that our culture is how we deliver it:

“Culture is what you are willing to bleed for, so who are you willing to bleed with?”

Didier then joined fellow panelists Tim Webster, formerly of Uber and now with Kllective, and David Hobson from Elance-oDesk to discuss how to build a successful startup team:

First, the team needs to feel a sense of connectivity, regardless of their workplace logistics. That means having opportunities to get together in person, and not just on conference and video calls. It will also be easier to establish and maintain a positive working environment among remote teams if the organisational intent is clearly stated from the start, backed by relationship building and appropriate communication tools.

Second, hire people for their core skills (hacker, hustler, hipster…) but only if they are also willing to learn, grow and evolve. It’s also essential to hire people in market. Use behavioural interview techniques to help identify the right people – whatever the role. Candidates are less likely to tell you what they think you want to hear; and it’s easier to explore how candidates got from one job to another (not so much what roles they have held).

Third, although you can outsource your IT, accounting, legals, HR etc., don’t outsource your culture. Getting the right fit of people to match what your culture needs is paramount. Set out the issues that aren’t negotiable or that you won’t argue about – but keep realigning with your culture to mitigate the risk of monoculture.

Fourth, focus on the end game – but don’t overlook the need/opportunity to seek new revenue streams. This diversification can be challenging for founders, but if channelled appropriately can result in ‘creative dissent’.

Finally, brand and culture are what customers think about when they hear a company’s name. So, this may require a balance between individual goals, and team and organisational outcomes.

 

Oxygen Ventures brings some fresh air to Australia’s #Startup Community

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Last week, Larry Kestelman’s new investment vehicle, Oxygen Ventures gave 5 local startups the opportunity to bid for a share of A$5 million in funding at the inaugural Big Pitch night in Melbourne (#thebigpitchAUS).

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The Judges at the Big Pitch

 

The #Startup Contenders

Drawn from over 300 applicants, the hopeful candidates (in alphabetical order) were:

Bluesky  Shopping portal for leading fashion and lifestyle brands.

ECAL On-line event and brand marketing calendar launched by E-DIARY.

etaskr Enterprise productivity solution that allows employees to ‘bid’ for in-house projects based on their expertise.

KartSim New go-kart game for PCs, from developer Black Delta.

WeTeachMe Booking platform for short-courses and special interest classes.

After each contestant made a short presentation, they were questioned by a panel of judges, comprising CEOs, entrepreneurs, corporate advisers and business development experts from a range of well-known organizations. Most of the questions related to the startups’ revenue projections, funding requirements and growth opportunities – but some were grilled in more detail about their business models and financial performance to date.

How did the participants fare on the night?

The Joint Winners were ECAL and WeTeachMe – with the People’s Choice Award (based on audience votes) going to KartSim.

My sense is that ECAL came out on top (with A$2.5m of funding) on account of their early success in signing up a number of high-profile sporting franchises in the USA and Australia, demonstrating their growth potential – otherwise with 1 million users, but only $440,000 in revenues, you’d have to think the business model would struggle.

WeTeachMe was successful in attracting A$2m in funding because the business model is simple, it falls into the growth category of lifelong learning, and the platform had already achieved significant productivity gains for its commercial clients. Plus it has the potential to scale up and go international.

With KartSim, I admit I have no interest in computer games, but it would seem to me that with a headful of (virtual) Steam behind it, the developers might be better off tapping into crowdfunding opportunities, as the early interest suggests ready and eager buyers out there, enabling a successful commercial launch without giving up any of the equity.

Feedback from the panel on Bluesky suggested that despite offering a ‘one-stop-shop’ for consumers, the margins generated from the sales commission model would be insufficient to cover fulfilment costs (so it would only ever be a transactional purchasing platform); nor would the retailer aggregation model ever be allowed to encroach on brand or retailer loyalty schemes, thereby limiting the options to develop added-value services for customers.

As for etaskr (which I have featured before), it is still one of the few B2B startups that I have seen, which may make it appear less attractive to potential investors, since there seems to be some wariness around anything that is not consumer-focussed, or that does not play in a 2-sided market. Personally, I think this type of productivity tool is just the sort of tech startup that we need as it taps into the technological, organisational and demographic changes facing the modern workplace, and current attitudes towards job structures, collaboration and employee engagement and retention.

Footnote: What is ‘Disruptive’?


Interestingly, one of the Big Pitch sponsors was Uber (current darling of the startup community – if not of taxi drivers) which has been making presentations around town on what it takes to market a disruptive startup.

For me, there are three key attributes to a #disruptive startup:

  • Technology
  • Business model
  • Market engagement

A business like Uber ticks all three boxes – its proprietary technology comes in the form of the algorithms that track things like customer usage and vehicle capacity (not so much the apps which are similar to other peer-to-peer and #sharedeconomy solutions); the business model is rather like a network of city franchises (a common global platform with local autonomy); and the disruptive market entry strategy is designed to by-pass highly regulated industry structures – although Uber also likes to stress that it is working with taxi regulators.

Of the five startups that competed at the Big Pitch, only etaskr brings an element of disruption, because it is using a technology solution to challenge traditional notions of what a job is, and allows companies to tap into in-house resources that they might not otherwise be aware of. KartSim has some proprietary programming, but at the end of the day is just another computer game. WeTeachMe and Bluesky are trying to bring operational efficiencies to disparate markets, but they are both broker-aggregators, and don’t appear to have proprietary technology or unique business models. And ECAL is a neat content management solution to a problem that companies have been aiming to solve in other sectors – such as travel, education and health services – although it is not trying to break the existing market nexus between suppliers and customers.

But full marks to Oxygen Ventures, its partners, sponsors and the participants themselves for bringing a fresh perspective to the startup pitch night experience.

Health Warning: Entrepreneurship is not all Plain Sailing

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Last month’s gathering of Lean Startup Melbourne was devoted to the emotional and psychological downsides to being an entrepreneur. Whether building a startup or managing a successful corporate career, we are accustomed to reading about business success stories; but while we do learn something about corporate failures, we don’t hear much about the personal cost when things don’t go as planned.

But first, given the seriousness of this topic, if anyone reading this feels in need of help then there are some excellent information and support resources available listed here. There are also some useful reference articles such as this.

The evening’s panel Q&A discussion was preceded by a very moving account from Tom Howard, co-founder of Adioso on his own challenges in building a startup, about which he has written here. Tom’s frank and honest story about dealing with personal struggles while trying to manage investor expectations was neatly summed up in this observation: “Writing essays on our struggle was some of the best marketing.”

The panel members were drawn from a mix of startup, entrepreneurial and corporate backgrounds, and their stories revealed episodes of depression, near-bankruptcy and burn-out – tales possibly all too familiar to some experienced startup veterans in the audience, or merely spectres of what the future may hold for other budding entrepreneurs eager to learn from their peers. One of the panel, Andre Obradovic is now a public speaker on mental health issues, and has channeled his own experiences into advocacy and raising awareness.

If there was one recurring theme that ran through the discussion, it was the surprise at what happened to them – seemingly successful individuals who suddenly encountered severe setbacks (personal, financial, emotional, psychological), that came close to derailing their ability to function in their roles (as people, partners, parents or employers). The positive conclusion was that in recognising what was happening, and doing something about it, these individuals have managed to rebuild their lives and their careers, and are probably all the stronger and more resilient as a result.

Meanwhile, a number of hopeful startups were brave enough on the night to showcase their projects in the evening’s Startup Alley: Influx (outsourced customer support for online businesses), Cloakr (mobile device solution for coat check services), Jutsu (personal goal-setting app), Followus (social media site management for small business) and Brakeboard (braking systems for skateboards).

Finally, the evening’s event was sponsored by a clutch of generous supporters: Mondelēz International, InnovAction, Zendesk, Bluechilli, The X Gene and hosts Inspire9.

 

 

Show me the money! (or: Startup Anxiety…)

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Last week’s Lean Startup Melbourne event was entitled Doubts to Dollars – dealing with early stage uncertainty in startups and drew a crowd of close to 400 people, making this regular forum as THE networking venue for the local startup scene.

Of course, the evening’s festivities would not have been possible without the generous support of our hosts, inspire9, and sponsors BlueChilli, Startup Victoria, the Startup Foundation and the Kussowski Brothers. To kick-off proceedings, Daniel Mumby from the Startup Foundation pitched at older would-be entrepreneurs (“those with responsibilities like families, jobs, mortgages…”) in support of his organisation’s new accelerator program, which kicks off this month, under the banner of “Think and Break Free”. Next, a team of successful entrepreneurs was assembled, to discuss key startup topics, including:

  • Idea
  • Team
  • Finance
  • Product/Market Fit

On the panel were:

  • Sydney Low, co-founder of former Australian ISP, Freeonline back at the dawn of the century. (Check out his YouTube channel for some marketing archeology from the early days of web surfing, when internet access was dial-up, iPhones were a twinkle in Steve Jobs’ eye, and “social media” meant the gossip column in your tabloid newspaper.)
  • Samantha Cobb, who is founding CEO at biotech AdAlta, and who has a background in IP commercialisation.
  • Justin Dry, co-founder at wine startup Vinomofo, and one of the people behind Qwoff, an online community for wine enthusiasts.

The initial discussion covered some of the basics to consider before launching your own startup venture, such as product testing, market analysis, listening to customers, getting honest with yourself, and protecting your IP. There was also a surfing analogy – about timing/positioning yourself to catch and ride the wave, rather than trying to paddle out to the breaker….There were also some very personal observations (including painful lessons) such as how to deal with failure (“keep pivoting, fail fast”), maintaining staff motivation when deals don’t complete, the importance of building prototypes (“even if it’s just a PowerPoint slide”), and the value of having confidants (on the board, and among key investors). However, the evening’s recurring theme, dear to many past, present and future startup founders and entrepreneurs, was all about the money – not just where it comes from in the early days of any startup (angel investors, venture capital and private equity); but how easily it can disappear.

The panel of speakers emphasised the importance of cashflow (i.e., “making payroll”), and knowing how fast or how far your money may need to go in early stage growth and the initial product development stages:

First, assuming you are not fully self-funding, you need to convince an investor of your idea. Both the team and the investors need to believe in the founders.

Second, really challenge your market/product fit – be open to telling people what you are doing so you can get validation. (Note to local startups: the Australian culture, whether it’s the tall-poppy syndrome, or a lack of trust, means people tend to hide new ideas…)

Third, work out what your cash burn rate might need to be. Stick to the capex budget as much as possible, manage the milestones (“next step of value”), and be prepared to double the costs/double the development time. Maybe spend more on marketing than on the product development – better to have an MVP that is bringing in revenue, than waiting for the perfect product that never ships….

Finally, a member of the audience wondered about the best route to establishing a startup: “should I learn to code, work for another startup, or get a job at a big firm?”. The succinct advice from the panel: “just do it.” While it may be tempting to do side projects to keep the money coming in, they may prevent you from making progress (or they become the startup). As one participant put it when describing his own new startup venture: “there is no Plan B; it’s Plan A or bust!”

POSTCRIPT TO JANUARY’S LEAN STARTUP MELBOURNE: In an earlier blog on Lean Startup Melbourne, I discussed some of the obstacles facing local startups in getting funding, and the challenge of engaging institutional investors in the startup community. Two recent developments suggest that debate on this topic is starting to gain some traction:

1) Catherine Livingston, incoming President of the Business Council of Australia, spoke on ABC Radio National about the need to connect institutional funds with domestic assets and investment opportunities that tend to get overlooked by local investors (at about 6′ 15″ into the interview).

2) Westpac bank has called for industry and regulator collaboration to provide better access to financial data on startups, and SMEs in general, in support of developing risk-based funding options for new businesses.