Growing a Company - Iain Mac Donald, Skillpages.com
Last night I attended the 2011 Campus Company Development Programme Awards Evening in Nova UCD, the Innovation and Technology Transfer Centre for spinout companies from college research.
While the judges were deliberating on the final presentations, the audience was treated to a presentation my Iain Mac Donald, the founder of Skillpages.com (Iain was the founder and CEO of Perlico that was acquired by Vodafone Ireland for €80M back in 2007).
Iain’s presentation described, in his opinion, the 10 key elements to growing a company, and I’m going to attempt to paraphrase the best I can.
1. Choose Your Market Carefully
Iain pointed out that you must choose a market that is available to you right now. Ask yourself, is it easy to get a customer? Is there an existing engagement in the sector already? It could take two/three, even ten years before you engage them. That’s just too long!
If your market is already educated, your company can capitalize on the benefits of not having to waste valuable money on educating them about your sector.
2. Vision
Have you asked yourself what your personal ambition is? What do you want to achieve out of the company you’ve just started, the company you get up out of bed early every morning for, the company you work long long hours for…it has to be a passion of yours from the beginning!
Think big. Big vision! Take over the world vision! You’ll know what goals you can achieve and when you’ll be able to achieve them.
Your company may pivot from time to time but your vision will kind of stay the same.
3. Do One Thing Brilliantly
Iain describes this as how you and your company will succeed. What is that one thing your company does amazingly? Well conquer it and be the market leaders!
4. Beware of “Experts”
Now this was really interesting point, and one that I have tried to learn fast as a young entrepreneur: You have to be aware of who your talking to and what opinions they give about what you’re working on.
Are they feeding you an expert opinion or are they absolute wafflers?
You’re intelligent: so listen as much as you can and then form your own opinions. Who were the people that influenced you correctly over time?…they are the experts, be nice to them.
Find those experts that believe in you and most importantly, that they have your personal best interests at heart.
5. Hire The Right People
This is a common theme that all CEO’s will talk to you about.
How do you actually hire the right people? Iain simply says you have to sell them on your vision. If you don’t know what’s going on, how do you expect to get people on board.
Hire the people who have “been there, haven’t done that”. The people who have been number 2, who worked for their boss and always thought they could do it better or differently, the people who’d love to take on the responsibility.
These are the people who will make your company.
Don’t be fooled, building a team is difficult and hard. I’m trying to do it with our latest startup and I believe it is the most important thing to get right.
6. Expect Uncertainty
I kinda missed out on this one, distracted by the twitter stream no doubt but here’s a picture of a sign post:
7. Integrity
Plain and simple, but you have to treat your staff, advisors, investors with the upmost respect (you know “Do onto others..” etc).
Pay your bills on time including your taxes and wages. It’s hard to do but Iain recommends doing it right because it will pay off in the end.
8. Work, Very, Very Hard
When you make the choice of starting a company, you have made the decision that requires sacrifices.
Iain stressed that you must prepare yourself mentally. The long days and nights behind your desk, 4hr sleeps, lunches on the go, meetings and meetings, elevator pitches to everyone you speak to…it all takes it’s tole on you. By preparing for it you can pace yourself so you don’t burn out.
Iain also notes that the sacrifices will delivers huge personal gratification, and from a personal point of view, I would not be doing anything different that what I’m doing right now.
9. Get a Good Wife/Husband/Partner
In the life of an entreprenuer, Iain comments that you really need the support of your partner. They need to understand what you are doing and what you trying to achieve with your company. Yes it will be tough and strenuous at times, but try to make it up by simply being in charge of cooking sometime during the week, or by promising that you will make it up after a certain project has ended.
I’ll go as far as saying that you also need to have the support of your family and friends.
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Iain’s final point was one that he spent the most time talking about. He says it is the fundamental and absolutely important decision that can be made for your new company…
10. Start!
Get yourself your business cards. Put the logo on it. It’s official - this is my company and this is what I’m doing. Once you put yourself out there and do that, everything changes.
People will respect you for it and you have made a decision that will change your life, for the good.
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Another few points worth mentioning during the Q/A, Iain made a differentiation between investors and backers: noting that backers are primarily those who support your long term vision.
When asked how Skillpages get their users, Iain highlight 4 key steps: SEO, PR, Paid Activity (such as advertising in a new city etc) but most importantly, viral activity. Ask yourself, in particular if you are an online company, what are the viral points within your site, and why would someone share this content with a friend. By enabling this feature, you will be able to increase traffic and sales.
Iain added that the way they primarily get new users, is that they’ve created a value for the customer. Just think about that for a moment…are you creating real value for your customer? If so, then of course they would suggest it to a friend. Now harness that within your own site.
Finally, Chris asked a question on how Skillpages differentiated themselves to competition in the market place including the likes of LinkedIn. Iain responded to say that the competition is not the problem, you just have to be better that the competition!
You can find Iain on Skillpages here: http://www.skillpages.com/imd
Freemium Is Dead
I discovered Jason Tryfon the last night, the CEO of @vital_insights. He had a number of really cool and intersting posts on his website, but one in particular post from June 2010 stood out in my mind.
Jason explores the link between the venture capital market and new emerging companies with a freemium model gathering users. Is it sustainable, is it investable and is it the right way to build a company? Read on…
The venture capital market in the past two years has been interesting, to say the least. On a whole, transactions are way down, and what intrigues me the most – from a preliminary perspective – is that the valuations for intellectual property are reaching its tipping point, or an emerging bubble. My fear is that when this bubble bursts – and it will – there will be lots of collateral damage.
I see the problem in these stratospheric valuations, being served up as venture capitalists clamber and climb over each other to lead deals, typically revolving around a social media-esque company. Has anyone learned anything over the last 24 months?
Few, if any of these companies have monetized, let alone exit. Most of the start-ups recently launched are yielding mega-million dollar valuations with no revenue.
Here’s what I don’t understand: millions of dollars for NO revenue, NO earnings, NO EBITDA, NO cash flow and most importantly, NO assets? Software code, which seems to be the foundation of these valuations, holds no monetary value, at least in the financial sector. A concept or idea being sold certainly warrants some blue sky, and a patent or two definitely helps. However, the actual investment into the company is being made on something without a tangible net worth and worst of all, it isn’t making any money.
Business 101 clearly stipulates that in order to make money, you need to spend less than you made.
The rules have changed, at least in the Silicon Valley, where the less one makes, the more it maintains its SUBSTANTIAL value. It becomes an interesting market where anactual business with income, revenue, and a strong EBITDA are constantly passed over by venture capitalists, private equity and angels.
They continue to wait for the next big social media winner. Case in point: Foursquare and we can’t ever forget Facebook and Twitter.
Foursquare has recently turned down a $100 million acquisition offer. Personally, I’m still struggling to find any value in this company, even with its shiny new “geo-location” technology. The whole concept of Foresquare is annoying and I have yet to meet a person that cares if their friends “checked- in” to a Walmart, Dairy Queen, or McDonalds. And it’s not just me. Critics abound, with TIME magazine touting the social media company one of the WORSTinventions ever.
Yet, after all the indifference and lack of widespread acceptance, where did this valuation come from? What exactly was worth $100M? The data? Geo-location data? To be honest, that data isn’t worth much. Advertising agencies aren’t paying the premiums like they were 2 to 4 years ago for this kind of data. It’s strictly a commodity. Even bigger questions surround both the Facebook and Twitter valuations at $15B and $1B, respectively. These two have had years to monetize and develop a profitable business plan and neither has accomplished a thing. Sure, there have been hints and even an executive hire for a “VP of Monetization”, but nothing has come to fruition. Want to know why? Freemium is dead.
Long gone is the business model of inducing users with a free membership to one day (hopefully) converting them to paying subscribers – that is so 2008 and so done. For example, Facebook launches an insignificant user interface change and thousands of Facebook pages emerge containing a ton of users protesting the Poke removal feature. Good luck charging these folks to post pictures.
I can easily point to hundreds of overinflated deals in the Silicon Valley that will continue to bring false hopes for their investors, their funds and themselves, but I won’t. The bubble is about to break open and big names are going to fall and like the subprime mortgage crisis, there will be damage. Will this problem ever get fixed? I’m not sure. One suggestion for the capital community: release your addiction to social media. While the concept and business models are important, it’s the value of nothing that needs to be considered and changed.
Follow Jason on Twitter at @jasontryfon and you can find his post on his own website here.
