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These days, establishing a tech startup is all the rage. I have come across many people trying their hand at all sorts of startups — ranging from online butler services to food apps. You name it and I would not be surprised if there is already a startup out there doing it.
Having founded my own startup and taking it public in three years, I can share with aspiring founders that the startup journey is not an easy one. Along the way, I have encountered as many successes as there were near misses. Under the glossy surface are sweat, tears, and bruises.
So if you are thinking of beginning your own venture, here are some of the things that all aspiring startup entrepreneurs should know.
There is a saying, “the grass is greener where you water it.” When it comes to running a startup, the key to success is having enough money. Having a great idea is not good enough – how many of you have thought of doing a ride-sharing app, a home-sharing app, or even a food app? What distinguishes a successful startup from an average one is execution, and having enough funds to get things done is a critical component under execution.
If you think about it, some of the largest names in tech, say, Airbnb, Grab, Uber, etc., are able to grow solely because they are very well-funded. Therefore, if you do not pay attention to investor relations or learn how to raise funds from the onset, it will be a challenge for your company to quickly scale up. Unfortunately, not many of us have rich relatives or worked for an investment bank/venture capital firm to have the right connections at the onset, so the next best thing to focus on is …
Mark Cuban once said “sales cures all.” In my view, this is absolutely true. Whenever you pitch to an investor, one of the questions that they often ask is, “How much is your burn?” or “How long is your runway?”
What they are essentially trying to find out is how long can your company operate based on the amount of funds it has. For startups that are burning money, the only way for them to survive is through constant fund raising. When they stop, or if an anticipated investment fails to materialise, the startup is as good as toast. On the other hand, if your startup is able to make enough money to cover expenses, the “runway” will be infinite. This means that your company will be able to survive without any investors coming onboard.
In fact, that was something that CoAssets went through not too long ago. Right after the IPO at end 2016, the proceeds were invested in regional growth as well as developing certain competencies. All in, several hundred thousands of dollars were invested, and the heads of the respective business units promised huge returns.
Unfortunately, results fell short and those business units failed to deliver. I eventually intervened, cut the non-performing business units as well as non-essential cost, and focussed on making money. Together with my management team and staff, we managed to turn the situation around in just two months. Were we solely dependent on finding investors to bail us out, we would be finished by now. However, by focussing on cost control and revenue generation, we are definitely in a much better place today than several months ago. Therefore you will never go wrong by focusing on making money.
As a young startup founder in 2013, I actively sought out the advice of people in the tech field. When my company was growing and we are looking to list, I also consulted people who were seemingly more experienced that I was. Even after listing, I tried to find talent to staff the management team and leaned on them for advice. After all, it is the “unknown unknowns” that often kill a company, and I tried to cover as much base as possible.
However, over time, I learnt that not all advice is good advice. As the saying goes, “The road to hell is paved with good intentions.” Quite often, I get advice from people who may not know my business well or, worse still, have an ulterior motive. At times, even consultants get things wrong and I have been on the receiving end of bad (paid) advice.
Fortunately, I live to tell the tale and I have wisened up since. As a result of all the bad experiences and near misses, I am much more discerning in taking advice from others. When someone gives me a suggestion, I will filter it by asking myself whether the person has the relevant experience (i.e. done it before) and whether he/she has to live with the consequences if the advice goes bad.
In other words, if the advisor was a successful entrepreneur or VC himself, I will be all ears. On the other hand, if the person is advising on something he/she has not done before, I will be polite but remain skeptical. I have found that relying on these two questions cuts through the noise and I am ultimately able to focus on the gems.
In the last three years, I have learnt a lot and I have observed that one common trait of people who do well is their grit. Working in a startup is akin to running a very long marathon where bad days outnumber good ones. Building a great platform is about pushing boundaries and a lot of work is naturally involved.
Compounding to the challenge, success is not linear. What this means is that despite putting in effort, it is highly unlikely that a founder will see instant market validation. Based on statistics from Fortune.com, 90 per cent of startups eventually fail, and those who are not committed will eventually give up. On the other hand, those who are gritty enough to keep trying may eventually reach a tipping point where things start to fall in place and “exponential growth” happens.
Therein lies the key challenge as, ultimately, no one knows when that tipping point will be. But do know that as long as you do not give up, you live to fight another day and that elusive success may be right there waiting for you …
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