Mike Casey :: Random thoughts on Startups

I was at a great startup party on Saturday with some of my great startup mates including @davidsoul, @tjoosgirl (Kim Chen), @mia_will (Michelle Williams), @rosshill and @trindaz (David Trindall), @aussie_ian (Ian Cumming) to name a few. It was heaps of fun but probably the most interesting conversation I had was with Ross Hill.

Why ask permission to do anything? In school we are taught to ask for permission for everything, but in the start up space, if you ask permission you will never get anywhere!

This especially applies to sales. If you get on the phone and call someone for the first time you are breaking this permission barrier. This is what actually makes it difficult.

Don’t ask permission, only for forgiveness. You will find you never actually have to apologise.

p.s. Andy Morris didn’t get a mention because he doesn’t have a twitter account. Get onto it loser!

I was having an interesting discussion with my Dad when I was back in New Zealand about entrepreneurial awards. While I have always been for them, he was actually quite against them and he had some pretty good points.

1. Dad became an entrepreneur because he was sick of his future being held to someone else’s discretion. The great thing about your own business is that only one thing really matters; your bottom line!
2. The award trap: spending too much time applying and competing for awards and neglecting your business. (Also applies for government grants!)
3. Winners have a tendency to go to seed. I have not seen this myself, but Dad could name at least a couple of award winners that ended up being nothing but hot air.

The lesson I learned was simply not to go after them. If they come to you great, but don’t spend time and energy on them that you could be spending on your business! Definitely don’t dwell on them if you miss out on one and don’t get cocky if you win one :)

Well not really, its actually a pretty informal mashup of start-ups that are now in our office. I am looking forward to having the same sort of energy in there we had nearly a year ago when we first moved in with TJOOS and both our businesses were in heavy growth phase.

Now that TJOOS has be acquired we are the largest company at 90 Pitt Street and I am very excited to see a number of smaller companies coming to contribute to the startup madness, energy and enjoyment.

• Constrex - Jason runs a software company that provides desktop software to the construction industry
• JNTS Consulting - Jo runs an HR consulting company that trains SMEs on basic HR functions.
• Adlibre - Andrew runs a open source consulting company, will no doubt be very handy to most of the people in our office!
• OrionVM - Sheng and Alex have started a hosting company, so anyone who is looking for cheap and reliable aussie hosting should get in touch.
• The Entourage - Francis and Jack run training and resources company for people who are looking to take the entrepreneurial leap for the first time.

I am really excited about the next 6 months, and seeing some of these companies grow, and others conquer the hardest task of all… getting their first customer!

Well not quite, but I was having a chat with a business mentor down in Canberra a couple of weeks ago. He has a new hobby, and that is trying to fit entrepreneurial innovation into economic models.

Now we all know what supply and demand is, and we all know how they look on a curve.

Entrepreneurs screw this up. They create supply out of nothing and demand out of nothing. LOL

It seems I am developing a bit of a knack for encouraging people to start companies, which to be honest, I am kind of proud of.

I used to coach Tim Robinson in underwater hockey back in 2002 - 2006 when he was in high school and I was slacking my way through my university degree.

When I was in Wellington a couple of weeks ago I saw him randomly in a car park and ended up having a quick 10 minute conversation about starting companies. It turns out he knew a bit about GradConnection from our advertising in New Zealand, so I was stoaked about that.

To cut a long story short, he was thinking of taking the plunge himself. So a couple of days later I sat down and gave him a crash course in how to run an online company. This crash course involved

• Google (SEO)
• Google Analytics
• Google Adsense
• Google Webmaster Tools
• Woopra
• Wordpress

My advice was simple. Release something straight away, whether it be a blog or a splash site. This way google can find out about it sooner and will increase your google love when the time comes to release it properly. To summarise, this is how I would do things in Tim’s shoes

1. Register a domain
2. Release a splash site
3. Start a personal blog
4. Install Analytics / Woopra
5. Start cold calling
6. All the other admin crap like registering a company, getting a TFN (These are important once you have something, but don’t get bogged down in this stuff until you are certain you are going to have something valuable)

Good luck Tim, I know you are going to nail it.

All the guys involved in GradConnection have just finished a big two day work shop to define our strategy for the next financial year. To be honest it was great fun, having a good laugh, with a good bunch of mates. I have never associated business with pleasure nearly as much as I have over the last couple of days.

The big topic of discussion was around when we should look at expanding our technology beyond the current New Zealand and Australian markets that our company operates in. Something I never thought I would be doing a couple of years ago when I was still a graduate myself.

Essentially there is a big carrot. Overseas markets are larger and the budgets are bigger. Here are some key points we came up with

• Brand Penetration - look after the market you are in, they should always come first no matter what. Only expand when your brand is strong enough not to require a founder 100% of the time.
• Business Development, by team members that are not founders of the company only works well when your brand is known and established.
• Overseas markets are hard. Just because you are established in one market does not mean you have a greater chance of success in another market.
• Never use operational budget in one market for expansion into another.
• Companies that operate in different markets are much more valuable to investors and acquirers. This is because your model is proven to work with different establishments, cultures and currencies. It makes the potential for further expansion much more realistic.
• A sale in one market can directly lead to a sale in another market, especially when dealing in B2B sales with international organisations.

If you have ever read Crossing that Chasm you will know about early pragmatists vs conservatives. I would suggest that you would only want to look at overseas expansion once you are well etched into the conservative part of the market.

All in all I am incredibly fond of the market in Australia, and the people I have met during my time on GradConnection. These sorts of decisions are not all about money. They include lifestyle, friends, family and personal growth.

So last night we went to an interesting talk put on by Ernst and Young about commercialisation. There was a panel of three, Hamish Hawthorn who is the CEO of ATP Innovations, Damian Kay who is the MD of Telcoinabox and Jamie Munday; a commercialisation expert from EY .

Government grants make me bored, so I was glad to see it was only a small part of the evening :)

I asked the question about when you should turn your revenue into profit and when you should invest it back into your company. This is something that has been playing on my mind for a while. All I want to do is reinvest our hard earned income back to make GradConnection bigger and better, but is this going to hinder the company’s long term financial success?

The answer is No. First of all, the advice given was to always reinvest back into the company. Damian was being paid less than his senior staff for the majority his business lifetime. It is also important to note that profit on the balance sheet will not make your company worth more. As long as you can demonstrate positive outgoings, whether via salary, reinvestment or profit it doesn’t really matter where the money goes when the time comes to get a valuation.

Hamish also had a very interesting point around lifestyle vs asset companies. Do you want to build a business to maintain a lifestyle, or to sell? This effects what you do with your revenue.

GradConnection is taking over the lease from Tjoos in the coming weeks and we plan to create a very informal incubator where a number of small to medium sized start ups share office space, ideas and grow together.

I’m pretty excited about it, as we will have a few new startups coming in with members who are experts in

• International Outsourcing
• Hosting
• Web Marketing
• Programming
• Sales

The goal is simple, to outgrow the space. Then perhaps we look for something bigger and better.

Keep you posted.

Mike

Today was a first for me, as we were contacted for the first time by a VC firm in California to talk about our company. It was a pretty interesting experience, and one that I am hoping we will get to repeat a few times this year. To summarise, they really liked what we were doing and where we are heading at GradConnection but it is still too early for them to invest in us.

What it did make me realise was 

• The VC market is huge, this VC fund had 800 million USD alone and there are hundreds of similar firms
• Private equity VCs are the best - not at mercy of interest rates
• Be responsible with your growth - don’t jump before you can swim

When it comes down to it, if you run your company well, people will want to invest. The point is that you must have a well defined strategy for this investment. It is easy to bleed money and when you are being offered lots of money it pays to have thought about how you are going to spend it.

 

I met Andrew Morris when I started playing rugby for St Ives (Suburb in the North of Sydney). We immediately had a great series of conversations about starting tech companies on a rugby trip down to the sticks of New South Wales.

I am proud to see that Andy has come a long way in the last couple of months, and as of yesterday, he has resigned from work to start his own company. What I admire most about his move is

• He has not idea what he is going to do - he just realises that you have to commit to something in order to make it happen.
• He has given his employer 3 months notice, which gives him plenty of time to adjust while still making the commitment and he is not going to burn any bridges.
• He can see that there is really no risk in quitting your job, he can always find a new one if things don’t work out.
• He listens to me nag him so much that he eventually takes the plunge.

Good shit Andy! Wish you all the best.

Andy is going to blog about his startup adventure on his tumblr.