In 2014, I launched CityFALCON from my bedroom, raised £200K in seed funding, hired a few people, and started to build a scalable product (full article on year 1 here). But I had never imagined what awaited us in year 2 in 2015. On the upside, we received several awards and recognition from Twitter, UBS, Standard Bank, Level39, and the Ministry of Ontario. We continued building our product, scaled up the business with more than 15 employees, got feedback from early adopters, got some early user traction, and raised our second seed round. On this journey, I learned quite a few things that I’d like to share with you.
The purpose of this article is to be candid and is not in any way to offend anyone. I’ve been told NOT to write such articles when we are looking to raise funds, but I’m hoping that by being honest, it can help other entrepreneurs and stakeholders.
- There are NO rules, only experiences – As entrepreneurs, we are disrupting industries and busting through old practices and the status quo. Despite our disruptive role, we’re told by ‘start-up experts,’ investors, and other entrepreneurs the rules to the game. During my time I’ve heard, “you need to have a co-founder”, “you can’t target B2C and B2B at the same time,” and other rules that I am currently breaking. At the same time, data from research companies comes out and outlines trends that attempt to tell you what helps a start-up succeed and what derails them.
Having run the business for two years, I wish it was all so black and white – there are no rules to this game. During my first year running the business, I took these rules and followed them as stringently as I could. Now I’m in a position where I still value and respect people’s opinions and views, but I don’t treat them as rules. The real learning in the start-up world comes from experience. Other people’s experience can be helpful, but the only rules you’ll learn come from your own. The points below all come my experience as an entrepreneur.
- Don’t compromise on physical fitness – It’s tempting to skip your training session to clear your inbox or finish that investor deck, but you shouldn’t. This is not a sprint but a marathon. I’ve been guilty of this, and I’ve had to reprioritize and keep reminding myself that personal health is important. I even bought a Fitbit wearable to keep reminding me to move.
- No book, amount of investing or advisory/consulting can help you start a business – If the keys to success were really buried in any one person’s brain, we would all know about it by now. The only way is to live it, try hard, make mistakes and fail fast if required.
- Success = Hard Work + Timing + Luck – There are a lot of quotes and idioms around success and effort. Most of them say something like success is 99% effort and 1% timing and luck. While it’s important to work hard, almost no one starts a business with the intention of taking it easy. In reality, it’s probably closer to 50-50. For example, I worked hard to get investors on board, but had I not got my first investor when I did we wouldn’t be here today.
- Most events, and conferences are a distraction – I really suck at networking, but I know it’s important, so I tried to leave my comfort zone to attend some events out of the hundreds in London each year. To be blunt: when you’re in execution mode, most of them have been a waste of time for me. The events that worked really well for us were where we got to showcase our offerings. Now I usually decline event invitations.
- Most users are willing to give feedback, all you to do is ask – My presumption when starting the business was that most people are very busy, and it’s unlikely you’ll get a lot of feedback from users. But surprisingly, we have received detailed feedback from more than 70 users on our platform. All we had to do was ask.
- One of the biggest challenges was to keep motivating people – We entrepreneurs are crazy and can be very demanding. Sometimes we expect everyone on our team to work like we do, but this is not going to happen. Different people will have varying factors that motivate them. One thing I’ve learned is that you can’t always motivate people with money. In fact, I lost one of my star developers in 2015 because I didn’t realise he was motivated solely by the quality of work. Money, and everything else was secondary.
- There are things you have to do even though you don’t get credit for them – While building a tech company, there are many things hidden from the consumer and investors. They can’t see these things on the site, but they are vital. Testing your code, building scalable infrastructure and writing clean, readable code are just a few things that are important for the long term sustainability of the business, and even important for acquisition down the road.
- Fundraising is a bigger b*tch than I thought – “There is a lot of liquidity in the markets!,” “Record fundraising! Especially in fintech!” All bullcrap! There is an abundance of start-up funding in the UK, but it’s not all there for you. I could dedicate an entire article to this subject, so I did.
- “Standards” may not be fair – While we try to disrupt other industries, the biggest disruption is required in the fundraising process – the term sheets, alignment of risk/reward, etc. Most VCs today demand upside of common equity but downside protection of debt by using clauses such as liquidation preference in the term sheets. Even some accelerators will throw in warrants in the fine print of the contracts. Most entrepreneurs are told that these are the standards, but remember most of these are not fair to you and the people who trust you: your employees and early stage investors. Unfortunately, most of us have to accept these terms because they have become standard, but please do remember that these are not fair.
- The founder will have to be the user experience person for a complicated (fintech) product – People who are good in both finance and tech are hard to find. Even if you find them, they’re typically unaffordable because they’re in such high demand. This means the work you’ll want those people for will fall on you.
- UK (and maybe Europe) are not the best place for scalable product companies – Most people outside of Silicon Valley have a hard time understanding the difference between a product and a service company. There is massive upside to product companies, but service companies can start taking in revenue sooner, sometimes in the first month. On the other hand, product companies need to burn cash early to actually build the product. Due to a lack of resources, and the inherent risk involved with product companies, the UK and Europe aren’t the best places to launch a product start-up. Detailed article here.
- Stay lean and look to break-even fast – When I started the company, my forecasted burn-rate reached £50K per month. This was because I was sold the idea that capital is easy and cheap. Now that I’ve woken up, I keep my burn-rate low so that I can break even faster and don’t have to rely on raising capital.
- Have plans B and C, and you’ll sleep at night – Giving up is not an option, but it’s important to accept defeat if you were wrong in your hypothesis. Last year fundraising had been tough. So in order to get much needed rest, I kept coming up with plans B and C. Plan B is to get a part-time consultancy job and pay the company’s bills myself.
- Entrepreneurs may not always get the benefits / credit we deserve – There is a serious misalignment of benefits between investors and entrepreneurs in the UK. Case in point, entrepreneurs do NOT get any SEIS/EIS benefits if they hold more than 30% in the company. Also, not many people understand the concept of opportunity cost, and value cash investment over investment of time and dedication. More info here.
I’m still happy I did it – It’s been a tough ride but worth every penny – making decisions every hour, building a product, cultivating a team, and pushing yourself to limit everyday. It’s stressful, difficult, but an absolute thrill.