Friday 20 April 7.30pm. Back from a long run in my most tranquil place. The red, gold and black Rosemarkie beach. My brain speed is still a hundred miles an hour. Thoughts forming and then breaking into splinters every second. I am still coming down from the adrenaline rush of EIE18. If you are reading this and spoke to me Thursday night or Friday morning - apologies. Chat was indiscriminate, overflowing stream of words and ideas.
This is an unusual feeling for me nowadays. One of the depressing aspects of experience (ie old age) is that not much feels new or thrilling. Too often I think I have seen it all before. So its a tribute to the tiny but brilliant team at Informatics Ventures. Ronnie, Steve, Danny and Jane pulled off an event and an experience with quite an impact.
As a result, what follows is a bit random. It my first attempt at reflection based on the few fragments of my own thought process I could catch. I have tried to translate them into English but not to impose any structure.
More than a day
As a company you live the EIE idea of more than a day. The scale of support and learning the team put together is incredible. Not everything works for everyone. But I bet each person that pitched came off stage reflecting on a few key things.
I guess if there’s a theme to this post its that personal experience. We tend to judge the event by its whole impact. But each individual entrepreneur benefits and grows in their own way. Trees not forest if you like.
A minute in time and a cold beer
I have done a lot of pitching and presenting. I am really comfortable speaking to bigger audiences on much more complex topics. I thought I had reached the stage of my life when rehearsing was not only unnecessary. It actually took away from my performance.
Having a fixed time of one minute changes that. You need to rehearse and practice. You need to simplify and clarify. You need to hook your audience. You will feel the pressure.
(Feedback note: Whoever you are, when you step off that stage you are ready for a cold beer.)
Values not details
Attention to detail is often evidence of professionalism and excellence. True excellence comes from values. The EIE team don’t have the capacity to get every single detail right. Yet the event is still world class. Detail alone is not enough, its values that count.
Maryanne Johnston is the personal pitch coach. I was in a proper grumpy old man mood the day I worked with MJ. (Apologies again Maryanne). She didn’t let it bother her, gave me the attention and coaching I needed and got the results (I hope!) The quality and confidence of the people on stage was a tribute to her coaching.
EIE has jumped about a bit during its 10 years. The ’18 staging was held in the McEwan Hall. After refurbishment, it looks beautiful. The combination of stunning architecture, history and connection to Edinburgh Uni is perfect. I hope they are able to keep it there.
EIO - O for Opportunity - Money isn't everything
I have never been a big fan of the last word in the acronym - Exploit?! The purpose of the event is to connect companies with investors. That’s cool. I spent the day listening and talking on behalf of a company. I took away a whole lot more than connections to potential investors. How about a name change?
Resources, sponsors and telling the story
I have already mentioned a couple of times, the EIE team is small. Each and every one of them does a great job. And the whole event is a perfect illustration of a forgotten principle. The best innovation comes when resources are most constrained.
Once you have a great product though, opportunities - that word again - open up. I am grateful to all the sponsors. But this thing is so good. We could be pulling in the really big names. Why not Google or Goldman Sachs or GE?
To do that we need to tell a story. And it needs to be different from the Scottish norm. Too often I hear about what Scotland needs from the rest of the world. EIE is something which would be a great opportunity for anyone. So let’s make it about what we can give not what we can get.
Nearly forgot - Triscribe
I was there pitching Triscribe. We are building analytics based on electronic prescribing data from NHS hospitals. Our software tackles problems like prescription errors and antibiotic usage. Its part of a global digital health movement. Data has the potential to bring more benefits than any amount of new drugs over the next 10 years.
I walked away more convinced than ever that Triscribe can do great things. I hope plenty of other entrepreneurs did the same.
NOT The Chairman's View
I applied for EIE18 to help Triscribe. But it was also a chance to put myself in other's shoes. The footwear of the entrepreneurs and founders I am lucky to spend most of my working time with.
Its been a profound learning experience about myself. That will make me a little bit better in all the roles I play. A perfect highland morning on the incomparable links at Royal Dornoch has cleared my mind a bit. Enough to write this post. Time will help me absorb it more.
My thanks again to everyone who makes it possible.
Tech entrepreneurs love data. That makes sense but in a startup there is no reliable source of data. Every decision is made with a hundred unknowns. Instead of seeking false assurance in benchmarks and the like, keep it simple and flexible. Remember that everything is an experiment.
I spent a couple of hours on Thursday last listening to two early stage entrepreneurs. It was in a virtual board format run by Edinburgh Innovations. One company had leapt forward since I last saw them by winning their first big overseas contract. The other had slowed down as a free competitor emerged in a key market area. I could come back in two months and the roles might be reversed again.
On the train home I chatted with a good friend and experienced entrepreneur who is working on a new business idea. His challenges were the same as the newbies we had seen earlier. Is there a market for this product? How should he price it? What features are needed for an MVP?
His solution was natural and right. Get out and experiment with potential customers. The idea of a startup experiment crystallised in Eric Ries famous book The Lean Startup. Its a strong concept and has found many uses. Yet it only begins to describe the experimental nature of a new business with a new product aimed at solving a new problem. In this world everything is an experiment.
Product and Market
The experiment idea is built around testing for product market fit. For most startups product and market are the twin obsessions. That is as it should be. There is no other way of validating your idea. You must build some sort of product and find some people willing to pay for it.
The hard part is judging the outcome of these experiments. Have you found a real market or just a few early adopters? Which features do you need to expand you customer base? Will big companies pay more for your product?
In every case you are making choices based on limited data. But those decisions are life and death for your business. Its easy to forget all the other unknowns that affect your chances of success.
The biggest distraction from your focus is not uncertainty about product or market. Its money. How much runway do you have? When will your next round close? Which investors do you want to work with? How fast will sales turn into cash flow? Can you meet the payroll next month? Is it worth pursuing that large but slow enterprise customer?
None of this feels much like an experiment. Don’t be deceived:
Investors will tell you they invest in teams above all. Getting to MVP, raising money, growing all depend on finding and building a team. Chances are everyone in that team is an experiment of sorts.
Many founders have never run a business before. A fair number have never built or sold a product either. Even an experienced entrepreneur may be new to the market. And as the business grows, the role of CEO is quite different from that of entrepreneur.
Everyone you hire brings some of the same edge. Its one of the reasons why early stage companies are keen on “proven” performers in areas like sales. Trouble is no-one is proven in this situation. You don’t know the exact job definition. You don’t know who you are selling to, what you are building or the answers to a thousand other questions.
That’s why I prize the ability to listen, learn and grow above having a CV that ticks all the boxes.
Between solid evidence and pure guesswork
So at every moment you have a series of experiments running in product, market, money and people. They all interact with each other in multiple ways. No matter how well you design your starting hypotheses, you are not going to know for sure what is working and what is not.
Some things can be so messy they feel like a complete guess. That’s not a comfortable feeling so you bury yourself in all sorts of data. And find that there is no clear evidence. How do you make decisions in that environment?
What not to do
One temptation is to reach for benchmarks. Google is a great management consultant as well as a top doctor. A quick search seems to tell you what is expected of a startup SaaS business.
I am not a fan of benchmarking. To be specific, I hate using benchmarks to set targets. Its negative and counter productive.
Don’t get me wrong. If you can find a proper, comparable data source (not easy!) then comparing your outcomes to that source can be useful. But only as a way to ask the right questions. As soon as it becomes something to aim at, you are damaging your business.
The Chairman's View
There is no data led, evidence based solution to big strategic choices. This is true however big and established your business. Roger L Martin explains this in the Big Lie of Strategic Planning. If that is too academic for you watch this 3 minute video about Honda instead.
In an early stage SaaS or any startup every choice is a big one so everything becomes an experiment. You are in the world of emergent strategy. This is fancy language for making decisions based on three things:
A startup is not a comfortable or safe environment. You have to stay focused and flexible. There is no formula. Build a strategy based on conscious choice. Keep it simple but never believe it is perfect or even right. Be prepared to change in response to new learning from all those experiments.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.