The Rocket Ship Drawing Rant

Here is something that is going to sound maybe a tad negative, but I promise there is also some positive takeaways, so be patient!

My hope is that this slight rant may help some people who are in the process of trying to attract early stage investors prevent an embarrassing situation. Here it goes…

A friend contacted me a couple of weeks ago and said that he had developed a new app, and was looking for some advice. When we met, he made it clear that he was looking for investment and wanted me to point him in the right direction. I asked to see the app, and he said that it was still in development. When I asked what framework he was using, he looked at me with a blank expression. I asked if the ‘coding’ had begun, and he said that it had not. “So what do you have?” I asked. “The designs” he replied “and they need polishing” he added.

Okay, rant time! …. Let’s be totally clear, designs are not enough (in the real world) to claim you have built something unless the end product is a drawing. Therefore, the app that you claim to have ‘built’ is as real as if I drew a picture of a rocket ship, and expected to use it to fly me and all my friends to the moon.

When you are making/drawing a shiny mock-up, you are not limited by real life. So you can literally do anything without actually thinking about the ‘how’. I promise you that any developer will tell you that the challenges starts with the code, not to mention when you actually take the product market.

I am not saying it’s not a good idea to make shiny mock ups. In fact, making something that looks ‘real’ is a really good way to lock your idea down and get early feedback. However, if you are after investment you need to go a few steps further. As a bare minimum you should have:

1. Software Specification: This is a document that outlines the features of the software and essentially demonstrates how the product will behave. I would also include wireframes to show every part of the user journey has really been thought through.

2. Architectural Overview: If you are not a developer, then you will need one for this part. This document is the ‘how’. You don’t need to write code, but you do need to show that you are actually able to build this ‘rocket ship’ if you had the money. This is also your chance to highlight how you would overcome common failures like over complicated registration processes or poor security standards.

So let me summarise! Showing you have an idea means next to nothing. However showing you have a clear plan to execute the idea makes a huge difference.

I hope this has in some way helped. I would love to hear other people’s stories. Has anyone ever got investment from mockups alone? Leave a comment below.

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Bad Exam Results? Startup Entrepreneurs Rise Up!

Today is A-level results day. I am sure there are plenty of people either celebrating or commiserating. If you did well, then great. If not then hopefully I can help put some perspective on the matter.

 

One thing I remember about when I was at school (94-99) was being told that without qualifications I stood ‘no chance’ in life. My parents were told the same thing, and young adults are still being told this today. Apart from the obvious reason teachers say this (they are targeted on results), they are also likely to have spent their entire lives in the education system, so to accept any other option could devalue the work they have put in.

 

Personally, I hated school and did not continue into colleage or university. I actually believe that children are forced to learn too quickly, and this puts their relationship with education at risk. My feelings on this mean I lean maybe a little bit towards the far left, so keep this in mind as you read on!

 

Clearly there are some jobs that absolutely require certain qualifications, and rightfully so as these tend to be jobs where health is involved. Whether that be physical health, mental health or general safety such as a structural engineer.

 

However, in most other jobs it is about getting your foot in the door and then working hard. The issue is getting your foot in the door.

 

To do this, you have to be persistent and committed to walking from door to door pestering companies to employ you. Don’t do something passive like send a letter and then hope for a response. If you really want something, go and make it happen. Would you take the same approach if you were waiting for tickets to your favourite sporting event, or music concert? No, you would relentlessly call the ticket office and go and wait in line all night if need be. Look at how many people queue up when an iPhone is released!

 

I know this sounds mad, but if someone had turned up at E-Tale HQ at 7 am and waited at the doors for me, then demanded that I allow them to give me a presentation on why I should employ them, I would have found them a job even if I was not hiring. This would show a huge demonstration that they have the drive to get up, turn-up and execute a plan. So why not pick 30 companies you would like to work for and try it? Stalk the CEO on Twitter, find out what projects they are working on, contact them and demand a job (politely). Trust me any CEO of a startup company will admire your courage and persistence. If they don’t, then you would not want to work for them anyway.

 

The truth is that it’s hard to make it through life with or without A-Levels. The myth that the grades alone will get you a job is pure fiction. For me as an employer, I only see qualifications as a demonstration that someone can apply themselves. If they don’t have qualifications, I personally will take any other proof of this. This could be a personal project, charity work, raising children or even writing a book. Look at the founder of dating site ‘Plenty of Fish’. He started that company as something to use on his CV to show he had skills. He sold this company this year for $575 million…. in cash!

 

I left school and decided university was not for me, for numerous reasons. I went onto set up my own startup company and sold it a few years later. It probably equalled the same amount of stress and hard work that University brings, but it was the right thing for me to do.

 

So what I am saying here is that qualifications are one factor, but they are not the only factor. If your grades are good, then great. If they are not good then maybe take this as a sign that structured education is not for you and get out and crack on immediately. I promise you that if you look hard enough, you will find plenty of people like me who are always looking for the next startup superstar!

 

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Managing a Team Through an Acquisition

I wanted to write this week about a topic that is pretty much always in the forefront of my mind, and that is my team. While this is going to sound like a total cliché, it is true that you are only as good as your team. If one member is underperforming, then you are underperforming. This is especially true when you are selling your business!

When beginning the process of selling your company, one thing that should not be missed is aligning your team to the desire of the exiting. It goes without saying that your potential buyer will need to feel confident that things are not going to crumble when they become the new owner.

I have seen a number of people sell their companies and within 12 months everything has fallen to pieces! A very common reason for this is that the leadership team lose faith. The reality is that they are now part of a bigger entity, and they have just seen ‘the owners cash out’. So it’s not unreasonable that they will feel somewhat disheartened.  Well, luckily for you, this does not need to be the case. In fact, it is very possible to create an environment that will ensure everyone is not only aligned for the sale, but remain used for years ‘Post Sale’.

Let’s start with sharing the love (Shares)! Giving away shares is very complicated. If you decide just to give shares away to anyone who works for you, you will be in for a big surprise. Owning shares comes with lots of different rights and these rights don’t end with employment. So, if you decide to give a percentage of your company’s shares to someone, they will own these until the end of time. This is not a great methodology to motivate staff as your headcount will change, and if you can’t claim the shares back, you won’t have many left after a few years. So what is the solution?

In the UK, you can use what is called an EMI scheme. This essentially grants key staff a certain amount of shares. Then at the point the company is sold, they can realise the value. If they leave before this happens, then they cannot claim access to the shares. This means only the guys at the finish line get the medals!

Also, they are only required to pay tax based on the share price at the point the shares were granted. So if they work for five years and the shares become worth millions, they will only pay tax on the value of the shares when they received them. If the shares are granted when the company is new, or not making profit, I suggest applying to HMRC to get a certificate to confirm they are worth nothing. This will prevent a potentially ugly tax debate later on.

Read about EMI schemes at the HMRC website by clicking here

This may all sound great, but these shares need to make enough money to motivate the team to share your desired outcome. This means some frank discussions need to take place. Start by agreeing on what the expected valuation is and make sure the shares ‘Make Sense’. If your Sales Director made 100K in his last year and he has 1% of the shares. Then you decide to sell for 1m. They will make 10k! Hardly enough to make him motivated to sell. In fact this is more likely to demotivate them.

As a rule of thumb, I would be aiming to achieve two years of salary as a payout. This amount will always be life changing and motivate that individual to help the company sale go through. Also, keep in mind that if they qualify, they are likely to only pay 10% tax under entrepreneur’s tax relief. In summary, agree on a compelling percentage and the price you are willing to sell for.

Read about entrepreneurs tax relief on the GOV UK website by clicking here

One of the key reasons you need your teams alignment throughout the sale process is how intense DD is likely to be. Unless you are and have been an absolute saint, you are going to need to locate important documents, answer difficult question and attend meeting with your potential buyers. This will be very tough if your team would rather you didn’t sell!

Presuming that all goes well, what about once the company has been sold? In Addition to your team’s normal compensation plan, the ideal situation is to have some kind of performance based bonus structure. Typically, this will be linked to the post sale financial targets. Again, this figure needs to be compelling and ensure that the team will not leave when they are tempted away. Remember that once you sell, this will become public information and your team will be hot property. Headhunters from near and far will be approaching them, and it’s likely they will be able to command a premium now that have been part of a successful acquisition.

In addition, they will have just been given a fair sum of money. This means they are also prime candidates to leave and set up their own businesses, and this presents a huge risk to you.

My guess is that your team are a critical part of your success, so if you plan to continue that success into the acquisition, you will need them by your side.

It is also a good idea to dedicate time to speak with your team post sale on a regular basis to discuss how happy they are and how they feel the integration is going. I know that our team remain extremely tight and communicate almost daily.

Finally, I have learned that life is about sharing success. Nothing is more rewarding than seeing a loyal team buying their new houses, new cars or even just going on a well deserved break. These type of life changing events are what make it all worthwhile. If that wasn’t enough to convince you, think about any future teams that you will want to build. A history of helping others is far more likely to encourage others to join you on your journey, than a track record of only looking after number one!

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Is startup culture a corruption?

I read a news article recently titled ‘Start-up culture is corrupting our youth, and killing real entrepreneurship’ by The Guardian. You can read it here: http://www.telegraph.co.uk/technology/11765609/Start-up-culture-is-corrupting-our-youth-and-killing-real-entrepreneurship.html

Coming from the startup world myself, I can agree that there is an element of delusions from some people in the startup community. However, the concept of it corrupting the youth is a bit mad.

One of two things will happen:

1. They will fail and learn it’s not that easy.
2. They will go on to be a success.

As The Guardian states, more than half of today’s youth would ideally want to start their own business. They’re inspired by entrepreneurs before them such as Richard Branson, Mark Zuckerberg and Bill Gates. They rush straight out of school or university with what they think is a great idea, without having any backbone behind it. A key lesson we should learn from this is if we want entrepreneurship and startups to thrive, why don’t our schools offer lessons in it?

I disagree that startup or entrepreneurialism is dead, in recent years alone there has been a boom in small businesses starting up. Yes, the notion of what a startup or entrepreneur is may have changed, but if we are comparing it to Richard Branson, he started out nearly 40 years ago. Times are modernising, and we have come a long way since the 1970’s.

This notion that a kid starts an app and then gets the £50m worth of investment that’s needed straight away is also somewhat naive. I think it’s natural that as the big companies get bigger, there is more need for small startups to provide more nimble and innovative technology.

We shouldn’t see startup culture as a corruption but more of a chance for future generations. Some of the greatest inventions and products come from young entrepreneurs, so why are we so quick to judge a culture that everyone may not be so clear on?

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Why does Apple feel the need to take over EVERYTHING?

Firstly, I love Apple. I use an iPhone, I love my MacBook Air – However, Apple Music is one step too far for me.

The reason I think this? The music streaming service I love is Spotify and Apple is basically taking their idea, re-branding it and passing it off as something new and original.

Spotify is one of the greatest music services on our market today, but it is also one of the greatest startups ever. Spotify has been around for years and not only offers a subscription service but by partnering with Facebook also offered a free version with adverts included instead.

Spotify for its day and age was a completely original idea and it was a game changer. It has many positives going for it, personalised playlists and the ability to connect with friends and artists who use various platforms whether that be Apple, Microsoft or Android.

Apple have introduced ‘Apple Music’ this year, trying to lure Spotify’s users over to their service with the promise of a three month free trial, then subscribing for £9.99 a month thereafter, which is the same price as Spotify might I add!

Apple Music has certainly had it’s fair share of PR during its launch thanks to Taylor Swift banning her music unless she gained royalties, she also pulled the same stunt with Spotify but they didn’t react to her demands.

I still haven’t seen for myself why Apple Music is so great or how it is any different to Spotify? After all if you’re one of the guys planning to make the switch, you’re giving up all your old playlists, artist and friend connections you may have made and you’re still paying the same price? It just doesn’t make sense!

The basics of Apple Music are also the same as Spotify, they’ve taken the same features and rearranged them. However, Apple Music will be a new learning experience, just like using any new service, they’ve managed to distance themselves just enough from Spotify to show they haven’t completely copied them.

I just don’t understand the sudden hype over a service which has already been around for a number of years under a different name. The only reason I can come up with is because Apple’s name is on it. If Microsoft or Android had introduced this service would it be receiving the same attention? Probably not.

I’d stick with Spotify, it’s never let us down so far and being one of the most successful startups ever, I know it’s a safe, reliable service.

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Boris backs start-ups!

I tweeted earlier this week (link below) about a fantastic initiative backed by Boris Johnson on supporting startups that will produce technologies, which will help with regenerating London.

The competition encourages entrepreneurs and small businesses to pitch to organisations involved in the regeneration project, their idea must be original and creative enough, to be able to successfully cope with London’s ever growing demands, such as the increasing population.

Ideas already suggested range from smartphone and tablet applications that will aid local people, communities and businesses, giving them the opportunity to interact with one another and also improve their engagement.

The deadline for the competition is today!! So if it is something that interests you, make sure you get your ideas in soon! Sole traders, individuals, public sector bodies, small businesses, academic institutes and large companies are all eligible to pitch their ideas for a chance of winning.

I’m excited to find out the shortlisted options and then the overall winner of the competition, there are so many good start-ups that don’t get the recognition or publicity they deserve. I know from my own experience how hard getting off the ground can be, so dont ignore this opportunity as it could really be the boost you are looking for.

This isn’t the first time Boris has backed technology or start-ups, he’s already pledged £25 million to the ‘London Co-Investment Fund’ which hopes to provide 2,600 new jobs and invest in more than 150 small business in the capital.

Boris speaking in 2014 said that the capitals technology industry was: ”flourishing” and that the city was a “hotbed of talented young and ambitious people buzzing with exciting ideas who are setting up new companies in their droves”.

Hats off to you Boris, you are pushing London in the right direction…

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Hello!

Hopefully you have already read my bio to get to know a bit about me, but I wanted to give an insight into what I want to achieve from this blog…

I want to be able to give my own perspective on the current technology market and trends, based on my own knowledge from being an entrepreneur myself after working for a technology company for a number of years. I have lots of thoughts I want to share and I am equally keen to hear others thoughts too!

Something that’s interested me for quite a while now is how growing technology could be used by large, major brands, how these trends will impact their businesses but also how these trends could be capitalised on and monetised.

This blog will hopefully be a space where I can share examples of how technology is moving forwards and being used, I also have a passion for technology and start-up businesses, I will be attending a number of events over the next year and will be sure to blog about them.

I would love to hear any feedback about my blog and I hope you enjoy the material I post, I’m aiming to update once a week  at least, so please check back!

Brad