Although I count myself as young (30 next year) I have been very lucky to have worked across the whole startup ecosystem. At aged 23, I launched an eSports platforms RealSport, which scaled to 9.5million monthly users and was acquired by Gfinity in 2018. After exiting I began angel investing, which has enabled me to meet a host of successful company founders. It has given me great insight into what, I believe, are the key things tech startup founders need to keep in mind as they scale:
Making mistakes is inevitable. It’s going to happen. The key is making them quickly and learning from them. You are better off making 100 good decisions and one mistake in a month, than agonizing over five good decisions over the same period, but not getting anything wrong. It enables you to progress at a much faster rate.
When mistakes do happen, you need to ensure you have a clear process in place. Firstly, you need to psychologically get over it. Don’t agonize or try and find someone to blame. Secondly, look for learnings. Often things don’t work because of timing – was the product wrong, or was it launched at the wrong time? You don’t always have to throw the baby out of the bathwater. Thirdly, and crucially, put a process in place so you don’t make the same mistake again.
It's also important to audit what went wrong and be hyper-realistic about how you came to a bad decision. Only through being genuinely self-aware and honest with yourself can you really learn from these mistakes.
Fast decision making is a hallmark of an entrepreneurial business. There’s a host of business books about staying ‘lean’ and ‘agile’ as you scale. It sounds obvious but it’s so easy to get wrong – as more people come on board and responsibilities get shared, it’s easy for bureaucracy to creep in. Make sure that you keep the startup ‘fast decision making’ at the heart of the company, and that everyone knows that you don’t want to agonize over perfection – you need to keep the fast pace.
After all, trying to be perfect is just going to waste valuable time and resource. Things don’t have to be perfect; they just need to be improving. If you wait for say, the product, to be perfect, you risk losing the first-mover advantage. Investors expect the MVP that you present to be a first iteration – typically all first rounds of funding are expected to be invested in developing the product so that it’s a true market fit with what customers need (and are, crucially) happy to pay for.
Set culture from the beginning
A company’s culture cannot be manufactured. You can hire an expensive marketing agency to come in a brainstorm some blue-sky values and branding, but just writing them on your wall next to a fancy new logo means nothing if isn’t authentic. Your true culture is reflection of your behavior, and it will be reflected and repeated from everyone in the organization as it grows.
That’s why it’s important to get it right from day one, because a culture is hard to change once it has become embedded. You need to be clear on what your values are and what type of company you want to run. Think of your own personality – do you want it to be fun, energetic and open-minded? Or are you someone who finds honesty, dependability and commitment more important? Ultimately, you need to be true to yourself. It’s much easier to have a culture that truly reflective of what you believe and feel, rather than what you think would sound good, as you will struggle delivering it in practice.
A defined culture also makes hiring much easier. Hard skills can be taught, but soft skills cannot. If you hire people that don’t respect and share your values, you’ll live to regret it.
Think strategically about investment
Most technology companies need some form of funding to get off the ground. However, there are a huge number of options, which can be highly time-consuming for a founder that hasn’t been through the process before. Unfortunately, it’s not as simple to have a great MVP and a great potential for growth.
Getting in front of the right investors is not a straight-forward process unless, of course, you went to an Oxbridge university so you can access their alumni groups, or if you’ve ever worked in the City, at an investment bank or VC. There’s an acute class, race and location bias, which is why startups with all-male (presumably well-connected) founding teams raise 91 percent of the venture capital in the UK.
In the era of Covid it’s increasingly difficult to get into the scene, as all the standard networking events have been cancelled. Many founders will want to start with angel investors who typically provide first seed funding. This ecosystem has similar issues. Angels are normally stuck getting pitches from the same sources, but investment is normally done part-time they don’t have the time or resource to change the model – and they certainly don’t have scope to respond to the hundreds of prospective pitches they get on LinkedIn.
As a founder of a tech startup, you need to think strategically about investment. Thoroughly research funding options and online marketplaces that are geared to democratize funding and level the playing field.
Hire NEDs, at the right time
Richard Branson famously said: “Surround yourself with people that are smarter than you and your business will thrive.” Yes, you might have had the idea, and you have the passion and the vision, but it will be the people you bring in that will help you with the execution.
Every tech CEO I have spoken with has said they wish they had brought in experts sooner. They could be a NED, advisor or mentor – as long as they have the industry-specific knowledge, experience and network that will help you get off the ground. The main reason for not doing this sooner is the worry these individuals will cost too much, at a time when the startup doesn’t have funds to spare. This needn’t be a hurdle.
Money doesn’t have to be a stumbling block. There are a host of experienced individuals who are exiting the corporate world and wanting to change pace with a start-up, These individuals have decades of experience and bulging black books. Many are happy to turn their skills and network into an asset, which can be used to get equity. Getting ‘skin in the startup game’ is a great opportunity for both parties.
Stay customer focused
The last lesson is perhaps the most important. As you scale the business you must not forget the most important people you are serving – your customers. It’s so easy to get distracted by internal politics, engineering decisions and fundraising, but without customers it’s all for naught.
Customers need to be at the heart of your growth journey – starting with their feedback that will shape the initial product – to ensuring that you have implemented a customer-experience program that constantly keeps the pulse of their satisfaction. Industry stats vary, but acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. Make sure that as you grow, your customers always feel valued.
Roei Samuel, serial entrepreneur, Connectd