Top Tip 5: Seek success in repeated failure

I’ve struggled with this, embracing failure. I’ve struggled mainly because I failed to understand what it means (intentional pun!) . Failure as a word, for my generation of Irish GenX, is not to be tolerated or considered. To fail was to be labeled a Failure, a badge not easily shaken off. Plough on, regardless - never a backward step. The misplaced arrogance of most founders is to follow their initial design and implantation vision without allowing missteps and learning. Randy Bean, author of the book Fail Fast, Learn Faster discusses how early innovation needs to be comfortable coupled with failure:

‘I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten.'

This is not a transitional phase, it’s a cultural pillar.

A couple of years ago I consulted with a large organization that was struggling to implement their new strategy, which demanded a few process transformations from functional leaders. Overall, there appeared to be a paralysis through analysis which I assumed was a fear of failure. So, I built confidence, removed risk, and created early wins. Still, there was little progress. Then, in a private lunch with one stakeholder, he let it slip. It wasn’t a fear of failure, it was a standoff not to be the first to fail. Such was the culture, that first to fail would take all the attention and potential consequence - including in turned out - failure loading ‘ Hey I only failed because he did, if his project had been a success, so would mine!’ Failure in attempting was culturally discouraged to the point of generating a standoff and progress standstill.

Leaders need to visibly embed innovation and failure into our start-up culture. Its sounds so weird even writing it - ‘encourage failure, why would I do that!’ Jeff Bezos's 2015 shareholder report made a remarkable statement of what he expects from his teams:

“One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it will work, it’s not an experiment. Most large organizations embrace the idea of invention but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten.”

Both leaders, Bean and Bezos emphasize that the company’s appetite for failure is in culture, the DNA of the company which in a start-up is set by the Founder.

Let me finish on a positive story. During COVID, I asked one of teh Santcifly team members who was responsible for customer communications (which had dropped off a cliff), to come up with 5 processes we could improve for either better results or efficacy when the market returned. The first month she did five. Next six, then eight, by month four she was coming to me with 10 innovations and ideas, all small Type Two stuff, she wanted to trail that month. Some worked, most didn’t, but so what! We were learning so fast, it was brilliant and highly motivational during a tough period to be in travel tech.

Ask yourself; which expression would you be most comfortable putting on your whiteboard this month:

‘Move fast and break things’ or ‘Perfection is in our grasp’. If we do not easily accept our failures and willingness to try again, how are we encouraging innovation and learning in others? Acclaim and reward innovation and attempts over outcomes, personally and with your team.

Top Tip 3 &4: Be a nowner! No ownership – buy nothing. rent, barter or borrow everything!

Ok, so this is my very basic attempt to create a word..a Nowner. A person who conscientiously owns nothing avoids fixed asset purchases.

It was Polonius in Hamlet said his son departing for College; ' Neither a borrower nor a lender be'. B*llox to that - Its exactly what you want to be!

This will be short because you either get it or refuse to. The expression ‘cash is king’ is used so often it has become white noise and we don't apply it correctly.

For every purchase and every resource in your start-up, you need to apply a simple RoI rule. How long until it delivers a directly attributable return on the spend?

The office furniture, the printer, the PC, the new app feature, attending the big conference, the exhibition?

Anytime the RoI is longer than your cashflow runway ( i.e. how long you have until you need more money/investment) you simply must do without, or get it cheaper

Living in the wonderful world of SAAS generally means so much of a modern business tech and finance set-up is a monthly fee, with great deals on sign up ( note this is where incubators, accelerators and aggregators are very useful. A good example is https://www.getproven.com/

No one expects a start-up to have office space. Use flexible contracts at we-work style organisations. Hotel lobbies are the new town square, find one you like, join their loyalty program ( eg. Hilton Honors) and tip well. Free desk, wifi and professional meeting area. If you’re nice, they might even let you use the gym;).

Build your product in increments linked to either increased AOV ( Average Order value) or LTV (Lifetime value). Remember done is better than perfect.

This rule needs to be applied to every new hire. Its essential that every salary is adding RoI. Add to the cost of sale, not the overhead. Outsource non-core activities until the cost is stable enough to run the ROI rule over it.

Hack: Anything you still want to do, even though it breaks this rule, you should consider as R&D budget and not BAU. It will help with how your end-of-year audit looks and your tax return.

The overlooked art of barter.

Pretty much everything you want as a start-up can be bartered for. You just have to be a little bit more creative and ballsy :). I’ve always looked at this as if I don't ask, we’ll never know. Some big barters I’ve done in the past:

• The telephone switch for a 100 seat contact centre in exchange for free customer support for the telco ( we were a bureau so this was so easy - a super deal!)
• The MVP for a new App in exchange for Sales Strategy Consultancy ( we just agreed a fair day rate ofr both activities)
• Book-keeping including all finance tax returns in exchange for office space for the accountant to run his business
• SEO and Digital Marketing in exchange for call centre lead generation

Over 20 years, I’ve always loved a good exchange of services. But none of them come close to the best barter of all time; The guy who painted the Facebook offices and took shares in lieu of the payment, a $200 million paint job. True story! Google it :)

Barter has the added bonuses of no taxes, well almost - ask your accountant :), its super fast to get started, and if done right, it can lead to a regular client or supplier relationship.

Try it! What do you need? What have you got that a potential vender might want? Then ask them; ‘*Hey would you be interested in an exchange of services?’ * it's that simple. Let me know how you get on.

Second Tip: Use your network, Ask them what they want before you tell them what you think they need.

Image by wirestock

I’ll get straight to it, if your network can’t help your start-up, you’ve got the wrong idea! Your network as it stands today needs to be either customers, champions, advocates or promoters. Not investors, co-developers or supportive suppliers. No good, they are a given. You must have direct, end-of-the-phone access to real paying customers that match your customer profile and unless your profile is a mom of a self-starter creator, it's not your mom!

You might think I’m over-simplifying. But I promise you, if you can’t reach the MVP stage with some commercial traction with your existing network, success will be a strong combination of luck and persistence, which you need anyway! Don't be discouraged If you may be a recent graduate with a limited network and need a senior decision-maker. Can you be introduced today? Lots of senior people are very happy to give time to a graduate with an idea. How many of these introductions can you get from friends and family? Take as many as possible. Ask the hard questions:

If you build it, will they buy it? What does that first order look like? Do you own the budget or can you introduce me to who does? Would they buy from a start-up? What do they currently use, purchased where?

Believe it or not, it’s easier to get answers to these questions at the product idea stage than at any other time, because you are so obviously not selling anything and correctly managed are inviting your potential prospect to help design the offer. Don't waste this vital pre-launch time and activity.

Now here's another thought. Try for a moment to be a magpie entrepreneur.

When I was growing up we were often told to close the windows in unoccupied bedrooms to ‘keep the magpies out’. Folklore had it that magpies would fly in and steal shiny things, like expensive rings. I not so sure if that's true, but they are known to visit other birds' nests and steal their best twigs. Where am I going with this? You don't have to come up with a fresh idea yourself! You can take one that's already out there and do it better! 9 out 10 of the best ideas and business successes we have seen in the last ten years have taken an existing market that was being served badly and applied new logic to it. Google, Facebook, Spotify, and Netflix, all had precurses. A very astute investor, Mark from San Francisco once told me ‘ Be the pilgrim, not the pioneer, pilgrims lose their fingers, pioneers die of exposure’ spoken like a true 49er!

The very best advice I have for a would-be entrepreneur is the idea is really only 10-20% of the success recipe. Customer traction is the flour in the cake - the bulk ingredient and essential. ‘Duh’ I hear you say. OK, well then start with that. Instead of going to your network with your idea, go to them with three questions, two ears and a blank page ( As my dad would say):

1. Is there any process or solution that you rely on today that is not currently being serviced well by your current suppliers?
2. Is that a growth area for your business?
3. If I could provide you with a consistent service at a competitive price, would you let me pitch for and what would a pilot (POC) order look like?

To conclude our second tip: Use your network, ask them what they want before you tell them what you think they need. Before you commit to your idea:

1. Identify and categorize your network into customers and influencers
2. Meet as many as possible and pitch them, pre-development/production is the best time, when they can influence your MVP.
3. Be a magpie. If you have a network, ask them what they want - listen to where others are failing and steal their market.

Tip No.1: Pick a Pain with a Budget

I wish I’d applied this law more regularly to my start-up creation. It's pretty simple, know what pain your product/service resolves, and secondly, does this pain have a budget, and can I get access to the person who owns that budget? This is critical! There are many things organizations should do, but don't. There may also be many people working in that organization that may love your offering and can see its application but don't own the budget for it and therefore are reduced to influencers at best. I’ve even encountered people evangelizing the benefits of My start-up, Sanctifly, yet refusing to make an introduction to the decision maker, citing that ‘it’s against company policy’. A strange policy but there you go - Pain with Budget and an identified, reachable budget owner. Be careful not to pitch a solution requiring a decision-maker that's too senior in an enterprise (I.e. company of 1000+ staff). This is a really tough initial target market. More on that later. First the pain. The more pain the better! And the lower budget you can resolve that pain, the more disruptive you can be. Hey, we all want to travel first class, but most of us don't have the budget! I deliberately use the word Pain because I believe start-ups should challenge their proposition to identify what it resolves and what's the ‘pain’ endured by ‘going without.’ Be a pill, not a vitamin. Don't be a nice-to-have. Some simple everyday examples are Solution Pain to be without Health Insurance Credit card clearance Cloud data storage (SAAS) Music / Movie Steaming Club membership

The principle of this ‘Magic Matrix’ remains the same. There are four quadrants: Low pain/Low Budget, High Pain/ Low Budget, High Pain/High Budget, and High Budget/Little Pain.

In there really is one killer block you want to be in: High Pain/Low Budget. The joint seconds (Low Budget/Low Pain and High of Pain, High Budget) are really far behind and place a huge demand on your marketing or staying power to get the niche traction you need to survive, but you’ll never be a ‘killer app’.

Think about all the global brands and unicorns over the last 10 years and apply them to the matrix. B2C Offers like Spotify, Amazon Prime, Netflix, Revolut, and Robinhood, and B2B offers like Stripe, Stack, and Dropbox all follow the same set of rules; really low budget (financial and tech) cost of entry, no risk terms and typically an initial commitment of only one month. They also offer huge onboarding support ( the Collison install is stuff of legend and the go to model for so many) and massive product benefits straight out of the box: Take credit cards payment platforms, music and movies on demand, free deliveries, international banking. I’m old enough to remember that getting registered with a bank to take credit cards was a 60-day process with lots of forms and normally a holding deposit. It's now less than a day! The pain relief and benefits are enormous! These essential onboarding product features are crucial to reducing the pain point and moving any product or service into the killer green quadrant.

Recently we had to drink this cool aid at my start-up Stanctifly. If I'm honest, Sanctifly falls into the low-pain box. Upgrading our travel downtime and traveler wellness for employers is not seen as a high pain or need purchase. Neither is music and movies on demand, and that didn’t work out too bad for Spotify and Netflix! So, I need to ensure that we do not fall into the High-Budget box as well. That’s the death nail. When we launched five years ago, we set our price and model copying the market leader: an annual membership Budgeting $295. We did ok, and sold a couple thousand. Today, we’ve flipped it completely; we are less than $10 per month, cancel anytime. Simple and very familiar to consumers. Even with the pandemic restart the travel industry went through, we now count our members in the tens of thousands. Exercise. Where does your start-up fit in the matrix? Are you middle of the box or on a boarder? Where do your competitors and comparators fit? Who is the current market leader? It's an interesting exercise to put all the competitors into the matrix, even if you apply an unconscious bias, it can tell a story. A real acid test is to ask others, potential customers, to place you somewhere in the graph. A Pattern always immerges. Good, now the next step. The more pain, the more budget is possible One solution I believe is about to shift boxes is carbon accounting solutions. Today, many organizations see the requirement to track their GHG ( GreenHouse Gases) and record their progress in reducing them, appears like a High-Budget/Low Pain issue - where is the RoI in the significant work and change? But organizations that continue to ignore do so at their pearl. Most western countries have signed up for GHG/ ESG goals of reducing carbon emissions by 51% in 2018 vs. 2030. Big Business have already restricted their supplier and tender responses to compliant companies and investors are taking it seriously, only putting their money into responsible organisations. This burning platform will need to box shift - The solution that can go to Low Budget whilst the pain moves to High Pain will be the disruptive leader. A few options are working towards this, so an interesting space.

Another area in shift is insurance. Typically an annual cost for most households and organsations with a limited tangible connection between behavior, activity, and the underwriter during the term. In fact, how we buy and pay for our car, home, life, and health insurance has not changed that much in the last 100 years. I can see new disruptors like Vitality and YuLife are taking a fresh approach to reward good behavior, but still, it looks like an opportunity to do so much more, particularly in home and property. I use the word Budget and not Cost deliberately. The cost or price of your offer is a singular force or metrix. The budget needs to allow for a lot more. Planning, onboarding, transition, decoupling from an existing solution. Cost evaluation comes after the budget has been allocated. No budget, the cost is irrelevant. All of these factors should be considered in determining your solution’s budget. You can give it away, but if the non-financial costs are too high, companies may still not bite. Also, note the planning phase; even if it's low budget/high pain, you still need to find the budget holder in the company. Very few products can create a budget mid-year. If your product or solution is not in the forecast with finance, it doesn’t matter how good value it is - it's not going to get purchased. This is especially true the larger the organization. Enterprise sales might look like the pot of gold, but they are the hardest and longest-won sales any start-up will ever gain. There have been many super software solutions developed that died an early death because they couldn't get to the budget owner or disrupt the incumbent enough to get the necessary traction. Having a great solution at the right price is only half the battle! So, even if you can defend your position as a low-Budget/high-pain solution, you need to know with absolution certainty you can get to the decision maker ( budget holder), and that they have an allocated budget for your offering. This normally means you have an incumbent vendor ( existing provider), which means you need to disrupt. And that's a different day's work.

Pick a Pain with a budget Know what quadrant you fit in If not green, can you put pressure on it to move it closer Identify the budget holder That budget exists, and it is greater than your total cost to implement.

Before you cash in your secure jobs chips, meet with a couple of these budget holders. Remove as many variables as possible in your proposition before you burst out of the blocks.