Saturday, 29 August 2009

Two and half years on: what I have learnt as an entrepreneur

By Tim

Two and a half years ago Keith and I started Yoosk, a participative media platform which exists to make open and constructive conversations with our leaders a part of everyday life. Why on earth I did, I often wonder but I think I have an idea and I’ll write about it soon.

We are still going and starting to thrive. The number of start ups that make it through the two year barrier is, I believe, about 10%. So the odds have been stacked against us as a business.

The odds against Yoosk’s success as a product have been even greater: we were the first dedicated platform for holding large scale Q and As between our leaders and the public. How could a tiny two man team get a good number of senior ministers and scores of MPs and other public figures to agree to hold direct online conversations with the public? Persistence, luck and love.

There are broadly two types of entrepreneur: those who have funds they can afford to lose and those who don’t.

Truly innovative ideas often need a long time to get in the air and well funded entrepreneurs clearly have the advantages of more thrust and a longer runway. But there are certain things an underfunded entrepreneur can do to keep laying runway in front of them while they are waiting for the revenue or funding tanker in the distance to arrive. Too often of course, the tanker stays a far off speck and then it is time to call it a day. Knowing when is the trick.

When I’m asked how we have managed to get to where we are now, I usually give the answer: persistence, luck and my wife’s salary and love. Sorry if that sounds corny but they are probably the most concrete facts I can give.

But on top of these, I think there are five other factors that are essential to the success of an underfunded entrepreneur. In brackets below, I have added their close cousins: bullshitting, narcissm, ligging, incompetence and denial.

There's a thin line separating the two and about once a week, I wake up at 4am in the morning and spend the next few hours convinced I am a bullshitting narcissist, desperately ligging around town in a state of utter denial without a real clue as to what I am doing.....

1. The ability to build credibility (bullshitting)

If you don’t have an existing reputation within your market (your potential customers) or your industry (your competitors and potential investors), then do not underestimate the size of the mountain you have to climb in earning one.

The low barriers to entry in digital media especially, mean that entrepreneurs with no background in their chosen market or industry are able to innovate and deploy products which while they might be great ideas, do not have easy access to buyers or investors. That was us to a certain extent: we had limited background in government communications or IT (our market) and no real news industry experience when we first started .

It doesn’t necessarily mean that we don’t have the talent or insight of people who do come from those backgrounds. It doesn’t mean we haven’t been able to learn quickly about a new area (which frankly, no one quite yet understands anyway). It does mean that we couldn’t readily prove we have the knowledge and talent: we had no track record. Now we do, two years of runway later.

Mistake: not trading equity for a credible team member at an earlier stage.

Success: building a knowledge base and track record in a new and growing industry, finally attracting credible advisers.

2. The ability to build visibility (narcissism)

Here’s where well funded entrepreneurs have a key advantage, even if they do not have a significant reputation in their chosen market or industry. They can splurge on the promotion of their new product at an early stage and attain visibility. Underfunded entrepreneurs who have credibility can usually leverage this to attain a degree of early visibility too. The media understandably like experts, they like track records. For those who are both unfunded and without credibility, attaining visibility is very difficult.

Why is visibility good? It might bring you a user base at an early stage but there are many examples of early growth in traffic that never materialise into a sustainable model. The main initial gain to be made from visibility is connectedness, plus a bit of credibility.

So how to get visibility? Here are the options I’ve identified, although there may be more:

1. Splurge and be damned. The results never seem worth the money but PR people have the contacts and are more likely to get coverage than you are, no matter how good you might be at writing press releases. Avoid press release services that write a release for you and send out to a database with no follow up like the plague.

2. Write to the journalists and bloggers yourself. Very few will answer, you will probably get branded a spammer and you could waste huge amounts of time and morale better spent writing to customers. You’ll get a couple of articles though- how you take advantage of that coverage is important.

3. Self-publish and network like there’s no tomorrow. Use Twitter, blog about your market and industry. This too can take an enormous amount of time away from contacting customers. You’ll get noticed in time but will it be worth it?

4. Cultivate a handful of friendly journalists. Treat them as customers for new angles they can sell to their editor. They are not duty bound to buy your story not matter how ‘new’ and groundbreaking you think it is.

5. Get a really good publicist interested in your business and give them equity

Mistake: we haven’t really focused on any of the above, or found the right combination. We’ve wasted a lot of time and still haven’t cracked it.

Success: only the fact that I now understand the above options a little more clearly after two years. We’ve got some coverage but nothing game changing.

3. The ability to build connectedness (ligging)

To steal a bit from Nick Hornby...Some people have a natural disposition for networking: they are just plain nice, energetic and good to be with and to know. People who brood on ideas, who have a rage inside them strong enough to risk their livelihoods shoving those ideas down the throats are others, are not generally of this disposition. I am not of this disposition. A very small number of entrepreneurs are and you can now watch them with envy doing their stuff on Twitter every day. Don’t get envious like me, just watch and learn.

Mistakes: Not learning more quickly the value of strong networks and how they work.

Success: I’m getting better as I become more credible in the eyes of those I seek to network with.

4. Learning (incompetence)

It’s difficult to say anything about this without stating the obvious. Or getting lost in clich├ęs: but here are two anyway:

1. The success of any start up depends on you being able to fall forwards continually and learn every time.

2. It is the mistakes that you don’t know you are making, that are the biggest danger: Donald Rumsfeld’s unknown unknowns or Nicholas Nassim Taleb’s Black Swans.

Mistake: the same depressing mistake of recruiting people who couldn’t or wouldn’t deliver.

Success: after some howlers, we’ve found a convincing business model and are getting better at recruitment.

5. Stamina (denial)

It’s a long haul. It is only persistence which will enable you to find the very precious few openings or the handful of wonderful open-minded people willing to give you a chance. There must be any number of start ups that have given up when success was around the corner. But these will always be outnumbered by the hapless entrepreneurs who lost far more time and money than they needed to on businesses that were never going to work.

This is what keeps me awake at 4am for the other six nights a week: that I might be one of the 'hapless' .

Mistake: getting my family into this mess

Success: keeping them in it

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