Startups London Guest Post: What I wish I knew
Guest Post: This post originally appeared on www.groupaymatt.com and was written by@Groupaymatt one of the co-founders of GrouPAY, an exciting London-based startup. GrouPAY is a way of collecting money online from groups of friends, sports clubs and societies, and SMEs who need to organise their finances and accounts.
Hi I’m Matt, a 23 year old first-time entrepreneur planning on blogging about my experiences of starting and running a tech start-up. Planning is a good word actually as this post has been in the offing ever since I started, about 9 months ago, but I’ve only just got round to writing it. The plan (there’s that word again) was to write a regular blog about everything I was experiencing and learning as I launched a company, to give an insight into what it really means to be an entrepreneur. Unfortunately (or fortunately, depending on how you look at it) I’ve been extremely busy and haven’t found the time, however, with new found resolve I recently decided that I should just get on with it (even if it does mean writing blog posts at 4am) as I hope that what I’ve learnt over the past months will be useful to current or prospective entrepreneurs and quite eye-opening to everyone else with real jobs.
I always intended to run my own business from a young age and embarked upon various schemes (for some of these ‘scams’ might be a more appropriate word) over the years including running (but not starting) a fairly successful small company whilst at school which supplied waiters and bar staff to private and corporate events. I never doubted that I should go to university and get a good degree (Law from Oxford in case you’re wondering) and obviously follow this up with a couple of years at a great company (McKinsey & Co.) to gain experience of the real world before going it alone. Now whilst I would not change either of these experiences for the world – they were both fantastic places which had a profound and positive influence on the person that I am today – and would encourage anyone else fortunate enough to have the opportunity to do either, to grasp it with both hands, there is one important thing that I would say: they really didn’t prepare me for this and never could have, I sincerely believe that the only way to prepare for or learn about doing a start-up is by doing a start-up.
To that end what I think is really interesting is that a couple of years before I started there were three things that I was absolutely certain of. First, I would do it alone, why give away 50% of the equity unnecessarily when I could do it all myself anyway? Second, once I’d come up with a great idea I would keep it to myself, telling anyone about my fantastic idea would just risk them stealing it. Third, whilst I appreciated the risks involved and the probability of calamitous failure I thought that I was a smart, driven guy who was passionate about starting his own business and that provided I got a bit of luck I would be extremely successful.
So what do I think now?
On the first, I actually remember having an argument with one of my co-founders the first time I met him about the value of working with other people. So maybe he won that time… There are two key points that I now realise. 1) Starting and running a business, particularly in the tech sphere, requires a number of very different skillsets which are extremely rare for any one person to have. For a tech start-up (where the tech is fairly crucial i.e., GrouPAY not Groupon) there are three fairly distinct roles: Development (writing the code behind the website which makes it perform the functions you ask it to); Design (creating the visual interface of the website – what you as a user see when you look at it); and Distribution (for me this includes two key elements, gaining users through marketing and sales, and retaining them through great customer service. (NB. these three D’s were stolen from Saul Klein (of Skype, Lovebox and Index Ventures fame.) In short, I can only do one of these so without my co-founders I could not possibly have done a tech-startup which requires all three. 2) Doing a start-up is such an emotional rollercoaster that you need other people to keep you from getting off. Because you have so much invested in it, it really is your baby that people are calling ugly when they don’t like your idea or don’t want your product. You can’t help but be capricious and can go from being on top of the world to wanting to jack it all in in the space of one meeting. Its a bit like walking down a dark, dangerous alley at night, on your own you’re absolutely bricking it whereas just by virtue of having someone else with you you feel completely safe.
The second is the most common and in my opinion most stupid mistake you will see entrepreneurs making and I’m so glad that I realised that before I started. The fact is that there is very little risk of someone abandoning everything they’re doing in their life right now to pursue your poorly formed and yet untested idea. And even if they did, what’s the problem? There’s probably already 3 or 4 other people or teams working on the same idea in garages around the country. Furthermore, its only by sharing your idea with lots of other people and listening to their concerns and taking on their feedback that you’ll really be able to evolve it. I am pretty confident that most of the best bits of GrouPAY were other people’s ideas, we were just smart enough to listen. Ultimately, the success or failure of any business rests not on the idea but the execution, the idea just sets the parameters within which you’re working. To me that means that at the end of the day you’ve just got to back yourself, and if you don’t then you may as well forget about it. Whatever you do, forget about the NDA and just speak to people.
You’ve got an idea, the first thing to do is test it. To me that means 1) find out if anyone actually has the problem you’re looking to solve: speak to the kind of people you see using it and find out what they think, even better speak to the first 10 people that you would expect to use it and see what they think, do they have that problem? Would they use your solution?; 2) what is the minimum version of that solution you could develop that would deliver some value to them? Got it? Cool, now make it and get them to use it (this could be just a splash page with a brief description, a coming soon message and then a sign-up form where interested people can submit their details; then if you pursue it further it could be a pared down or non-scaleable version of what you could see yourself making as your final solution, just anything that delivers value and you can get out and test quickly. Also at some point during 1) think very briefly about the space you're in, is it sufficiently large and fertile that you could make the kind of returns you're looking for? You don't need to know exactly what your business model will be, you just need to know that there could be one]
This brings me nicely on to my third certainty, that whilst I appreciated probability would suggest I was going to fail, I would not. Despite it being perhaps the most naive of all three, unlike the other two long-abandoned certainties I still retain this one. Being honest I think the day that you don’t is the day your start-up fails. Whilst I accept that the stats say that only 20% of start-ups succeed (think about that for a second, as obvious as it is that means 80% fail!). Furthermore, that is far from my personal definition of success. Assuming that (a rather generous) 1% of start-ups achieve what I have set out to, would give me a 99% chance of failure. I wonder how many people appreciate that when they set-out? So, I hear you ask, what makes me think that I’m going to overcome these overwhelmingly slim odds? Maybe this is where having got into Oxford or McKinsey does come in useful, both involved emerging successfully from a pool of talented candidates despite a similarly scary probability of failure. But I’m not sure that is it. Being totally honest I don’t think there is much behind it that is more concrete than sheer steely conviction. Or maybe it’s just that whilst I appreciate and understand these stats, if you look at it from a different angle it all becomes so very simple: do I believe that with my co-founders I can build something that people want, let them know about its existence and convince them to use it (and get someone to pay for it in some way)? Absolutely.
What makes me think that? To go full-circle, I said at the beginning that I firmly believe that the only way to learn about doing a start-up is by doing a start-up; the corollary of that for me is that you’ll only know how good you are at doing a start-up once you’re doing a start-up. So the fact is that when I started out, it probably was just steely conviction allied to a passion for and interest in what we were doing. However, the way that I think about start-ups and being an entrepreneur now, is so radically different to just a few short months ago that I think without previous experience or specific expertise, having anything more than conviction, passion and interest is impossible (and quite possibly delusional). Now that we’ve been doing it for a while I think we’ve shown the first signs that we’re actually pretty good at it. We are certainly not perfect but we are a balanced team that in the space of 5 months has learnt a hell of a lot at the same time as having created (and gone through multiple “user-led” iterations of) a product which has been used to collect £50k for real users, signed a deal with a UK bank which allows us to do some really exciting stuff for our users and raised an angel round of funding from renowned investors. We’ve certainly not succeeded yet but we’re making a go of it and will continue to do so.
