UK tech entrepreneurs’ advice: Why problems are not a problem
You hear it often enough, if your starting point is ‘how am I going to make money?,’ then your starting point might be your end point too. It’s the wrong way to look at things. And that’s the first advice for UK tech entrepreneurs, it’s better instead, to focus on problems that you can solve. Better still, seek to solve a problem you feel passionate about.
Ross Mason, founder of MuleSoft, reckons that the “ability to recognise where there is a problem, and rather than simply complaining about it, actively work towards finding a solution, is a crucial quality for entrepreneurs.”
The starting point
So that’s the starting point, the first piece of advice for UK tech entrepreneurs, find a problem you can solve.
Then there is the issue of planning. A business plan is important, but so is being close to your customers. So you need to plan, and you need to test your idea, but that means you must occasionally be willing to change direction, or pivot, the plans might then go out of the window.
The business plan and runway
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Daniel Kroening, Co-founder and CEO of Oxford University spin-out, AI for code company, Diffblue says: “The key things to consider when you are setting up a tech business is setting out a strong business plan. There isn’t an area that hasn’t been touched by technology nowadays, so building a product that addresses a gap in the market or a specific business challenge is always a good bet. Once you’ve defined your business strategy, engaging investors can be a slow and difficult process.”
By contrast, Nikolaus Suehr, co-founder of KASKO’s advice for UK tech entrepreneurs is to remember your runway. He explains: “It might seem obvious, but so many fail to remember their runway. You are hopefully, still small, lean and ready to grow, business is going well, and the product is solid. Good. But you are still in your infancy, one or two late payments, which we all know can happen for a multitude of reasons, and you are suddenly looking at late payments to staff, scrambled conversations with investors and the likes. From day one, we have had runway at the top of the reading list, we know where we are, what our predictions are and what we can afford. I would rather grow steadily and securely. Protect your downsides and quickly identify potential added value, the runway end will get further and further into the future. Another way to say this, is have a solid business plan and pick your moments carefully.”
That takes us to people. Simon Hill, CEO, at Wazoku, has advice for UK tech entrepreneurs, which is to “never forget that it is really all about the people. Without the right team, no start-up will succeed in the long-term. I tried right from the start to bring in great people, which isn’t easy when you’re so driven and you don’t offer that much money. But those people are the people that really make a business, not the founder or anybody else.”
On this theme, Edward Woodcock co-founder of insurance for freelance business, Dinghy, says: “Consider hiring talent from around the world — beyond just local talent. There’s some outstanding talent on platforms like Upwork and People Per Hour, and you get a wider mix of views, backgrounds and skill sets for creating solutions to problems. At Dinghy we outsource development work to dev’s in the Ukraine utilising Upwork, receiving world class work in return. It is also important to get your team together as soon as possible — investors love a solid team — and hire well. Make sure you are not the smartest person in the room and hire those who ask questions, not yes men. If necessary fire fast, if someone is not fit for a start-up, you have to back yourself to make big decisions.”
“Don’t hire mercenaries,” says Nikolaus Suehr. “You have funding in the bank, great stuff. Being VC backed is sexy, but in the start-up world, not to mention tech start-ups, the tides of change come thick and fast. Where possible, promoting internally rewards loyalty —- it is not hard to come by these days, but there are mercenaries out there. Rock stars that don’t fit the team will be detrimental internally, and do you think they are the types that will stick around when stuff goes wrong? Henry Ford summarised it well: ‘If everyone is moving forward together, then success takes care of itself.’”
Lean startup for tech entrepreneurs
Advice for UK tech entrepreneurs: think global but start small
“Don’t be reckless when it comes to global expansion,” says Simon Hill. “We have expanded successfully to Denmark and when it comes to foreign expansion I try and take as lean and agile an approach as possible. I have seen many UK start-ups try and expand into the US in particular, throwing lots of money and resource at it. This is just too risky in a market that you don’t know fully; money gets wasted, bad hires are made, offices are closed and it can really set a business back.
“Denmark is not going to bring in mega plaudits in the way the US would, but it’s worked well for us. It’s a good way to test the whether things you put in place — the processes, tools, people and everything else — are really ready to scale. You go back to the basics of what it takes to get the initial business off the ground, the same levels of pain, complexity, and challenge that it was when you first started. So test somewhere that’s perhaps a little bit safer, but also relevant to what you are doing.”
“Don’t grow too quickly,” says Nikolaus Suehr. “Doing well is good, but nail what you have prior to growing. For
every start-up that hires their two-hundredth team player by the end of Q1, there are a thousand who didn’t. Growing too fast will stretch the runway and risk diluting the culture there is before it has really got settled. Grow your team
once you have your first customer(s) and proven your MVP (minimum viable product.) Then, bring someone in that knows the space, the client/partner/customer pool.
Edward Woodcock says that before you even start considering raising money, make sure you Have a great story to tell. “The story may be one or more of the founders backgrounds, the idea itself or some established success of the product already. A great story will help customers pick your business over a competitor, and will help investors to understand that you are the right team to be delivering this. For example, the founders of Dinghy met at Simply Business where they quickly realised that changing the world of insurance from within was going to be impossible. They would have to build a brand new tech-led company to revolutionise business insurance. Which is the genesis of a story that led to raising investment and launching the product. Craft ‘your story’ early and practice pitching to friends, family and any experts you can get in front of.”
“My advice to UK tech entrepreneurs,” says Daniel Kroening, “is to think outside the box when it comes to attracting investment. Instead of focusing on the biggest venture capital funds, you can consider more niche opportunities such as R&D initiatives.
For example, one way to receive funding is by partnering with universities such as the University of Oxford, which has initiatives and provides seed funding for academics and researchers who have created truly innovative products. This is how I set up Diffblue. Our company received $22 million in Series A funding in the beginning, which was led by Goldman Sachs and supported by Oxford Sciences Innovations (OSI), and the Oxford Technology and Innovations Fund (OTIF).”
Nikolaus Suehr, says don’t hide things. Transparency with your colleagues, customers, friends, anyone, is one of the pillars of our operation at KASKO. We strive to be transparent as it is vital for a natural culture. We invest in the people early – in essence, treat those around you in the same manner as you would want to be treated yourself.”
Edward Woodcock says: “don’t hinder yourself by spending any time in ‘stealth mode’ — there are a few very rare times it’s valid to be in stealth mode, but the majority of the time it just means you are not involving enough customers, nor marketing your business appropriately.”
And finally: “Look after yourself,” says Edward Woodcock. You will be expected to lead a team and report to investors, so it’s imperative to look after your mind and body. Work smart; many entrepreneurs fall into the trap of thinking hours on the clock mean you are doing all you can. Often you would be better advised to take a step back, and the ideas will start to flow again. Sleep well, for everything else will suffer without this, and carve out family/friend time. It is vital to have people close to you that aren’t involved in your business.”