Supporting the growth of agile and innovative SMME’s in a collaborative win/win way!
On the 19th & 20th February 2015 I was invited down to Pretoria, South Africa to speak at the InnoLive Conference. The event brought together a diverse range of innovation focused people from all walks for South African life for two days of knowledge sharing, practical advice, interactive sessions, plenty of discussion and shared expertise. The hackathon produced some interesting prototypes as well.
I was invited to speak on the main stage on day 2. The topic, whilst not the most catchy, was one I enjoy talking on: “Supporting the growth of agile and innovative SMME’s in a collaborative win/win way!” In essence, what I was asked to speak about was the role of SME’s within the innovation sphere, the ecosystem in Europe/London that has enabled such a proliferation of new and highly innovative startups to flourish and finally to share my experiences as a startup founder on topics such as taking the plunge, what keep’s a startup CEO awake at night, funding options, culture and team etc.
You can view the slides here from my presentation. However, as I typically present very visual slides they may not work well as a stand alone, I thought I would add some supporting commentary to work alongside them:
The opening explores the nature of the business climate we are in and the pace of change and lack of predictability in many senses around that change. As Richard Branson recently stated “screw business as usual” and whether that is a marketing message or more than that, it is hard to deny that we live in times where the pace of change and predictability of that change is increasingly challenging. Probably impossible to accurately predict. As a result, the age of businesses working to 5 year plans and longer term strategies is dying (if not already dead).
Taking a very tangible example I look at the weather and the fact that despite many experts and many billions of dollars combining, we are still nowhere near being able to accurately predict the weather any meaningful time in the future. Indeed, the conclusion from all scientific research is that it is impossible to do so. The reason for this is that there are too many variables that interact that are all highly complex and unpredictable. If we extrapolate this out and apply it to the business world then the conclusions will be similar.
Take something as simple as a pencil. There is, we can state with almost absolute certainty, no one in the world who knows how to make a pencil. The component parts from mining the raw materials, processing them, forming them and creating the pencil are all such specialist processes, that no one knows all of them. Therefore, no one knows how to make a pencil. We live in an age of anti-complexity, that can drive efficiency and create specialists, but we localise a lot of knowledge and make forecasting and predicting, as a result, inherently more complicated. Accordingly, businesses need to be more agile, more nimble, more acutely able to listen and react than ever before.
This is the backdrop against which many startups, as sector disrupters, will see their opportunity to flourish. Typically an entrepreneur starts a company as they see an opportunity to deliver a product or service better, faster, cheaper, more scalably etc. than the incumbent(s) and see an environment to support this.
In London the ecosystem is forming that is allowing an increasing number of startups to flourish. This has taken considerable time and money to nurture and grow. The ecosystem is a complex interaction of government, funding and access to capital, incentives, people, talent, experience, micro- and macro- economic factors, proximity to clients/customers/etc.
In the main section of the presentation I explore various aspects of entrepreneurial life. The video may not play in the SlideShare but can be viewed here and I paraphrase the remaining points here in a Q&A format:
What drives someone to start their own company?
From my perspective it is part personality, part ego and very much a desire to do things differently. When I left Huddle I knew that I was going to start a company, I didn’t at that time know what it would be and I certainly didn’t have the Wazoku idea in mind. A part of the driver was a firm belief that I was better as my own boss. I was good at all my previous jobs and had performed well. It was time now to write my own story and take centre stage.
As you take those first steps every day is a combination of the new and exciting and the new and terrifying. We had a philosophy from day one to celebrate the small victories as we knew that there would be many bumps pre- and pro-ceeding them. I love the infographic ‘How to be Wise’ as an entrepreneur and each step is one I suspect all startup founders can associate with, laugh along with, have shed a tear at etc.
So how do you get your awesome idea funded?
We live in an amazing time for early stage ventures. However, it is vital in my opinion that the early risk capital (and it doesn’t have to be huge) should come from you and those who know you best. If you cannot persuade friends and family to back your idea then why should a complete stranger? Get early feedback; look for early forms of support (it doesn’t have to all be £cash). That early input will be hugely formative. In my case I sold my apartment and used the proceeds as seed capital. We then did a friends and family round to top up and along with a well researched business plan we set out to raise money. The UK has for some time had the Enterprise Investment Scheme (EIS) and its newer little brother the Seed EIS scheme. These are well worth researching and offer a structure for early businesses to access other forms of early capital with very tax efficient structures for the risk takers on the investment side. At any stage you can of course approach the raft of Venture Capital firms out there and there are now specialist VCs and related incubators etc. in all corners of the world looking for the next big thing to back. The best advice is do your homework, prepare thoroughly, know your numbers and be confident (but not arrogant). After all, there are no unique ideas (or not many!) and all business plans are overly optimistic. As a rule they say half the revenue number, double the cost and double the delivery time. Even that is often generous!
What tools or advice do you draw upon?
There are some great tools and business texts to help in the early days. The ever present Lean Startup that has made Eric Rees famous is a bit of a bible. It is a great guide and certainly a book worth reading. Alongside it the Business Model Canvas and a personal favourite are 1-Minute Goals. I talk a lot about these three business tools so won’t push that agenda here!
What keeps the startup founder awake at night?
Everything! Being more concise I would say the hardest things are (a) knowing how hard to push and how big to think and (b) the people you work with. As you start off the first hire is terrifying, every hire should be adding something, and where possible hire for talent as much as CV or experience.
How do you get those early customers?
We have always been marketing lead. We invested heavily in the very early days of the business in building our online marketing presence and used this as a tool to evaluate the market and build early leads. We could test our concept and prototype with early prospects and get feedback to help steer those early MVP (minimum viable product) developments. It is vital to keep your customer front of mind from day 1, be flexible in terms of your own vision and agenda, and listen more than you speak.
Celebrate success. Find ways to make your customers successful and if possible make them famous for this success. Building these champions is a great way of generating loyal customers and having them become ambassadors for your business. Oh and you live and die by your key hires….so find good people and keep them!