Mike Casey :: Random thoughts on Startups

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.

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.

Life is like the fifty dollar note I found on the street yesterday. I don’t know how it got there, but damn I’m going to spend it.

I have had a great long rest over the xmas and new year break and have had the chance to catch up with a lot of old friends and friends of friends. A lot were very interested to hear about my company and how it was going, which was cool as I enjoy talking about startups.

During this time I lost count of the number of times I heard someone say to me “I want to start my own company one day…”, to which I would always reply, “Why not start it today then?”.

The same old reasons always come up.

• “I want to gain more experience first”
• “The economy is still not right”
• “I would, but I need to save money”
• “I don’t want to rush, I want to do it just right”

While all of these excuses, except the last one, are all sensible they are really self inflicted hurdles.

• All the valuable experience is gained when you start a company for the first time
• Some of the most successful companies started in rough economic times. Best way to keep new competition at bay, and make ground on existing and larger companies that are consolidating.
• Bootstrap. Don’t spend any money outside of rent and food until you make money. If you need to lose a few christmas kilos, then stop spending money on food :D
• Your company will never be just right. It will always change in ways you can never predict.

If this decade is your decade then its time to make things happen. People often never get where they want to go because they never start.