50 lessons from 50 successful founders, investors and industry experts (Part 2/5)
*This is Part 2 of a 5 part series where we explore the lessons learnt from the first 50 interviews of The Startup Playbook Podcast. You can view Part 1 here.
Continuing on from the previous post — I have been fortunate to interview some incredible founders, investors and experts within the startup and business world. To celebrate the launch of our 50th podcast episode, I am going back to each of the first 50 interviews and taking out my one key lesson from each guest I have on the show. Here are lessons 11–20:
Lesson 11 — Tristan Pollock (500 Startups) on understanding investors
Tristan Pollock has had an extremely interesting career to date. He exited his first company, Social Earth, a “social impact media business” (think Huffington Post for social impact” which he sold in 2012.
He then Co-founded his second business — Storefront, the world’s leading online marketplace for renting short term retail space. Storefront raised funding from celebrities such as Gary Vaynerchuk and Nas, with Storefront counting other influencers like Kanye West as clients of their platform. Tristan was also named by Forbes as one of their 30 Under 3o for 2015.
Aside from raising capital from influencers, Storefront also raised funds from 500 Startups, where Tristan currently spends most of his time as the Entrepreneur-In-Residence and Venture Partner. 500 Startups is a leading global venture capital seed fund and startup accelerator, managing over $200M in assets and has invested in 1300+ technology start-ups. I’m personally very excited about 500 Startups opening their “500 Melbourne” office later this year!
With such a varied career to date and the unique insights Tristan has seen from being on on all sides of the table, we covered a lot of different topics in the interview including his insights on building marketplaces, getting celebrity and influencer investors, what companies looking to raise funding in the US need to do and his thoughts on opportunities in verticals such as Vice Tech.
My personal takeaway from Tristan’s interview was in being empathetic to what investor’s look for or in Tristan’s words “understanding the goals” of the people on the other side of the table.
As many of the other investors I have interviewed have mentioned, the value of most investors isn’t just about the capital they provide, but rather the experience, connections and other forms of assistance that an investor can help with.
For this reason, investors focus on particular verticals, business models etc because not only do they have a unique insight into those particular areas allowing them to understand the opportunity better, but it also means that they will be able to help the founders and the business a lot more effectively through their experience.
You can listen to the full interview with Tristan where we discuss; funding, marketplaces and sex, drugs & rock’n’roll of Silicon Valley here.
Lesson 12 — Adir Shiffman (Catapult Sports) on being self aware
Building and taking one successful business to exit can be a lifelong journey, but Adir Shiffman has made a habit of doing this, launching close to a dozen companies with several of them exiting successfully.
His best known success would be through his current role as the Chairman of Catapult Sports — the world leader in wearable athlete analytics for elite sport. Catapult Sports provides their hardware and software to the elite teams in the AFL, EPL, NFL and NBA. Catapult Sports IPO’ed in December 2014 and since then has gone on to acquire 3 different companies, cementing their position as the world leader in the industry.
Adir is a wealth of knowledge in building and scaling companies and during our interview we covered everything from the need of a unique selling point to the pros and cons of an IPO and his experience in working with Mark Cuban who is an investor in his business.
One of my own personal learnings not just from the podcast but from running my own startup, StageLabel, (which I spoke about on the Pathways Podcast) is how important it is to be self aware and know your own strengths and weaknesses.
This was something that Adir brought up multiple times during our conversation. He used the simple philosophy of:
“how do I make my Monday mornings feel like Sunday mornings”
to make what would be a difficult decision for most in giving up his qualifications in Medicine and a practicing MD to go into business.
After running several businesses, he took stock of his own strengths and weaknesses to identify where he would be better off to delegate or find others to fulfil significant roles within his companies that would allow him to devote his time, energy and unique skills to make a bigger impact on the business.
“5 years ago I realised that being a day to day CEO is not my calling and there are other people who are better at that than me” — Adir Shiffman
Again this would be a difficult realisation for some founders, but Adir has used this insight to focus on the role of “Chairman” at Catapult, allowing him to help steer the company whilst hiring experienced and accomplished CEO’s such as Joe Powell to run the company day to day.
You can listen to my full interview with Adir here where we discuss; his transition from MD to startups, how to find your strengths, the 3 skill that every startup needs, the challenges of scaling, why having a point of difference is important, how and when to acquire companies, the pros and cons of an IPO and getting investment from Mark Cuban.
Lesson 13 — Peter Huynh (Qualgro) on the metrics and characteristics that investors look for
Peter Huynh is currently the Co-Founder and Partner of US$50M fund Qualgro VC which invests in technology startups in SE Asia, India, Australia and New Zealand.
When we spoke on the podcast, the fund had launched a year prior and had already made 11 investments in its’ first year, in tech startups based in Singapore, Malaysia, India, Indonesia, Myanmar and Australia.
Prior to Qualgro, Peter was a Co-Founder of Optus-Innov8, a Corporate VC investing in early-stage Australian technology startups, and part of Singtel Innov8, Singtel Group’s $250M corporate VC fund. He has also led Technology M&A transactions for SingTel Group Digital Life. Peter is also an Investor/Mentor at Startmate, regarded as Australia’s most successful accelerator program.
One of the common questions I get asked in meetings with founders is what do investors look for in making investment decisions? As you will see through the individual interviews with VC’s/ investors on the podcast, everyone has a slightly different process and focus. In the interview Peter mentions some of the specifics that he looks for and how it changes as the company continues to grow:
For seed stage businesses, investors don’t have as many data points, so Peter says that he is looking at the direction of the company or more specifically — “looking at whether directionally the team will continue to win, is the growth directionally on pace”. Essentially, he is looking at whether he believes the company and team have the potential to scale. Another important factor he looks for is the engagement of the users of the platform/ product and whether they act as advocates of the business.
As businesses continue to grow and scale, investors have more information and data sets to work with when analysing businesses. At the Series A stage investors, are looking at more factors such as; the core team, the market the business operates in, traction developed and the underlying technology that powers the platform. They also take a look at financial state of the business and the terms of the round.
The main difference between Seed stage and Growth/ Scale stage is the shift from potential growth towards looking for indication of proven execution in those areas. This comes in many different forms and varies depending on the business model, but in terms of metrics and questions investors have for founders based around traction, they are;
- Whats the CAC (Customer Acquisition Cost)?
- What’s the ratio between CAC and LTV (Life Time Value)?
- What channels are working?
- What channels aren’t working (and why) ?
- What has been tested?
In the full interview we discuss how corporates can get involved with startups, the challenges of doing business in SE Asia, Why good investors focus on long term vs short term aligned interests and why referrals and reputation are so important to investors. You can listen to the full interview with Peter here.
Lesson 14 — Ben Chan (Envato) on playing to your own strengths
Ask anyone who has tried and they will tell you that building successful marketplaces is one of the hardest things to do. Envato hasn’t just built a successful marketplace, they own and operate several successful marketplaces such as themeforest, audiojungle and videohive. To date they have paid out over $400M to users of their platform since launching 10 years ago with an ambitious goal to hit $1Billion in payouts over the next 10 years.
For the podcast, I interviewed Ben Chan, the Executive GM of Envato, to find out their process (and secret formula) for launching successful marketplaces.
Ben said that it all starts with deeply understanding your customers and their behaviour. Once you know your customers intimately, you have an understanding of what products each type of customer is looking for to solve their unique set of pain points.
Some of the areas that Envato looks at knowing about customers are;
- Their geography? i.e. where are they located? As freelancers are they mobile or are they based out of one geographical location?
- What is their spend profile? i.e. how often and how much are they currently willing to spend on products
- Where do they come from? i.e. what sources and channel do these sources of customers come from
Once you have identified the right type of target market, you want to look at distribution strategies and again there is a different launch strategy for each product.
For a target market that is highly engaged with “Envato Market” a large part of the initial focus would be to spread the word to the members of their community who are part of the target market.
For other types of audiences, Envato looks at engaging with partners or looking at paid acquisition channels/ strategies to drive growth for new products.
In the full interview, Ben shares what startups can learn from corporates, how startups change during different stages of growth, hiring and leadership in fast growing teams, the importance of having mentors and how to launch a successful marketplace. You can listen to the full interview here.
Lesson 15 — Ash Maurya (Lean Canvas) on starting with an offer
The “Lean Startup Methodology” and “MVP (Minimum Viable Product)” have become fairly common phrases and processes within the startup ecosystem and have become the standard starting point when looking to turn ideas and concepts into businesses.
Ash Maurya is one of the men who led this movement and he literally wrote the book on applying lean methodology to startups. Ash is the Founder of LeanStack and WiredReach, author of Running Lean and Scaling Lean and the creator of the Lean Canvas.
Even though Lean Startup Methodology and MVP’s are fairly common phrases, they are often misunderstood by founders and so I was excited to chat with Ash and pick his brains on the common misconceptions behind the processes and how to follow them correctly.
My key takeaway from the chat with Ash was that the biggest advantage that startups have is speed and that creating an MVP is still a time consuming exercise. His recommendation was that before deciding to build an MVP, you should start with an offer.
By starting with an offer, you can find whether the value proposition of what you are creating is something that resonates with your potential audience before writing a line of code. His process for doing this is:
Start with an offer
1. Value Proposition — make a promise to customers and see engagement
2. Demo — take them through a story (not a product)
3. Pricing — there is no business in the business model without revenue
Through this process you get to test the value proposition, the potential solution and see whether it offers enough value for customers to want to pay for the product (actions speak louder than words!)
In the full episode, Ash Talks about, the value of timeboxing, countering the innovator bias, how to ask the right questions and applying lean methodology to a scaling business.You can listen to the full interview here.
Lesson 16 — Sam Wong (Blackbird Ventures) on selling to the sellable
Sam Wong is currently a Partner at the StartMate accelerator program and Head of Operations at Blackbird Ventures — a $200M fund and one of the leading Venture Capital firms in the country.
She started her career as a lawyer, before joining Surf Stitch as the Global Product Manager, growing the company from 40 to 300+ employees. She then founded CapacityHQ, a marketplace for legal consultants that helped firms and corporates deal with surge capacity requirements. CapacityHQ went through the Startmate program before exiting the company just 14 months after launching.
In the interview we spoke about various facets of her career such as the pros/ cons of accelerator programs, the challenges of growth stage startups and why Blackbird VC focuses on investing in companies that think globally from day 1.
My biggest insight from the interview with Sam is to sell to people who are ready (and looking) for your product/ service. Her marketplace catered to people who were able to fill surge capacity requirements at firms who by nature would need to have a flexible working arrangement.
Instead of focusing her energy and resources in trying to convince people who were used to a traditional working structure, she focused on new mothers or people returning from overseas who had the skills to do the job but were in a unique position in their availability to fill on demand requirements for firms.
This insight and strategy allowed Sam and her team to build traction quickly for the business before selling the company just 14 months after founding it.
You can listen to the full interview with Sam here.
Lesson 17 — Tom Ellis (Mai Capital) on the importance of being good at something
Over the last few years, China has become a larger focus for Australian startups, particularly those teams looking to take advantage of the geographical proximity and opportunities that the country presents.
One of the funds that are in a unique position to take advantage of this is Mai Capital, an investment fund that focuses on investment opportunities looking to break into the Chinese market.
I got to chat with Tom Ellis, Investment Director of Mai Capital. Prior to his role with Mai Capital, Tom was the Director of Business Relations at Crosstivity and spent a number of years in corporate banking, including co-managing over $1BN before he was 21.
In the interview we covered a lot of topics including; the opportunities and challenges of the Chinese market, what he looks for in investment opportunities and the importance of being coachable.
My biggest learning from this interview was the emphasis that Tom puts on being founders and businesses to be extremely good at something before thinking about expanding/ scaling a business.
It’s not about saying your market size is $10B and you will get 2% of it, but saying who your 35 customers are, how you will get to them and how you will get a greater size of wallet — Tom Ellis
Tom’s point was that expanding too quickly puts a lot of stress on operations and brings up a lot of weaknesses and breaking points for a business. His recommendation is to ensure that you have a very solid foundation of your product, offering and understanding of your customer base before looking at international expansion or trying to scale operations.
In the full interview, Tom shares; the importance of being coachable, the importance of solving problems, what he looks for in investment opportunities and the opportunities for startups in the Chinese market. You can listen to the full interview with Tom here.
Lesson 18 — Jodie Fox (Shoes of Prey) on listening to customers
Shoes of Prey is one of the biggest startup success stories to come out of Australia in recent memory. When I spoke with Co-founder and Chief Creative Officer of Shoes Of Prey — Jodie Fox, the company had raised US$24.6M, had over 6 million pairs of shoes designed on their site and had opened* offline stores with David Jones (Australia) and Nordstrom (US). *They have since had a change in strategy and shut their retail stores.
One of the common challenges that founders struggle with is deciding between various feature and deciding what to include in their product and what to leave out. Jodie mentioned that this was no different for Shoes of Prey, especially at the beginning of their journey
Their unique business model where women could go online and create customised, one-off shoes designed to their specifications created opportunities and challenges. The biggest challenge was ensuring that they were able to get the right sizing for each customer.
Jodie and her co-founders looked at solving this problem in a variety of (expensive) ways such as sending their users memory foam, which would then imprint their footprint and allow their manufacturers to create a customised product but the economics of that solution wouldn’t work.
In the end they went to the simplest and best solution — simply ask the customers their standard shoe sizes!
By listening to their customers, they were able to save a lot of money, focus their energy and resources on areas that were more important and most importantly, gave the customers exactly what they were looking for!
You can listen to the full interview with Jodie where we talk about building teams, working with influencers, the power of offline marketing and following Seth Godin’s Purple Cow philosophy here.
Lesson 19 — Ben Dunphy (Blue Sky Venture Capital) on the value of boards
ben dunphy is the Investment Director at Blue Sky Venture Capital, a late stage fund that has a portfolio that includes companies such as Shoes of Prey, Vinomofo and aCommerce.
As companies mature over time their challenges, culture and growth evolve. Ben mentions that as companies mature they transition away from high growth to seeing a natural decay in top line growth rate and more focus on increasing margins and the unit economics of the business.
This transition can be a difficult one for founders and this is where advisors and boards become useful. Ben mentions that the function of the board should not be to involve itself into the day-to-day decision making — that should be left to the founders of the business.
Where boards become extremely useful is to provide a sense check and offer opinion… and be there for larger decision such as budgets and large expenditures where it’s good to have 2nd and 3rd opinions in place — Ben Dunphy
In short a good board offers checks and balances to founders and an opportunity to step away and look at the bigger picture of the business.
In the full interview with Ben we talk about why it’s important to create long term value, the metrics that VC’s look for, choosing between multiple options and finding the right valuation for companies. You can listen to the full interview here.
Lesson 20 — Paul Bennetts & Kaushik Sen (Spaceship) on starting with the biggest challenges
Arguably the most exciting startup to launch in the last 12 months was Spaceship, a mobile only superannuation fund that has technology as a core focus of it’s investment mandate. I got to sit down with two of the co-founders of Spaceship — Paul Bennetts and Kaushik Sen for the podcast.
Each week I meet with somewhere between 5–10 startup founders and one of the common stumbling blocks for most is how to turn their idea into a (hopefully successful) business.
In the interview Paul and Kaushik spoke about how they turned “an idea on a sheet of paper” to receiving backing from some of the biggest industry heavyweights and influencers, with a $1.6M seed round. They have since closed a following $19.5M round from Peter Theil and Co.
Paul and Kaushik spoke about how they approached the problem by looking at the biggest barriers that they needed to overcome to realise the true opportunity for their concept. Without overcoming the stringent regulations in place, it would have been close to impossible for them to launch the idea successfully into the market.
By focusing on their biggest barrier first, they were able to quickly get to a go-no-go decision with the idea and see if it was an idea worth pursuing. Once they had crossed this hurdle, it made the investment decision (I assume) a lot easier for investors to jump behind and they were able to capitalise on the opportunity by pooling together others that shared the vision for the product, the business and the founders.
You can find the full interview with Paul and Kaushik here.
If you enjoyed this…
You can find Part 1 here. Follow me on Medium, Twitter or LinkedIn to be notified of Part 3 of this blog series. In the meantime, checkout The Startup Playbook Podcast on iTunes, Soundcloud or Stitcher or head to startupplaybook.co for the full interviews and curated tools and resources for startup founders
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