THE BLOG

Six Things I've Learnt From Six Years in Startups

24/12/2014 03:33 GMT | Updated 22/02/2015 10:59 GMT

I never took a normal job after university. I went into tech startups instead; fin-tech to be precise, in London.

Six years on, someone recently asked me what I'd learnt from choosing that path.

I knew I'd learnt a lot, but I stuggled to come back with a well thought out answer. So I thought about it, then it seemed like a good idea to codify my thoughts by writing a blog post.

These are the six most important things I've learned from my six years in startups.

It's all about the team and founder chemistry

The small team of founders and the chemistry between them is everything.

I really see now why smart investors look for good founding teams, then good products and markets.

The startup journey is truly intense and volatile and you need to ride this with your fellow founders, who you end up spending way more time with than WAGs, friends and family. The relationship with your founders is put under more pressure than any other in your life and often these relationships breakdown.

You need to rate your partners, respect them and like them as much as is possible given what you'll go through with them. It'll never be perfect but it has to work.

Just working out that a potential founder passes the 'airport test' - that you could spend fours hours with them talking BS in a departure lounge - isn't enough.

Ben Horowitz put it really well in his book - The Hard Thing About Hard Things - when he argued that:

"Most business relationships become too tense to tolerate or not tense enough to be productive after a while. Either people challenge each other to the point where they don't like each other or they become complacent about each other's feedback and no longer benefit from the relationship."

The only way to understand if you can really do a startup with someone is give it a try though.

It's about achieving maximal output for minimal input

Being an entrepreneur is about creating great products, opening up new markets and all the rest. But, it's also about creating great companies and shareholder value.

The levers you pull need to make big things happen. There's no point digging your own little trench like a martyr.

When they're on fire, great entrepreneurs create incredible things with few resources.

There's an art to this game that few ever really get. I haven't executed as artfully yet... though I hope to.

My startups experience - especially a fin-tech one I co-founded - were exercises in pushing elephants up the stairs.

I wasn't being smart enough. And, for all the money, team and support, we weren't in a sweet spot, creating a great product. We worked really hard, but in a straightjacket.

Felix Dennis would have advised that the light wasn't worth the candle and he'd have been right.

Working in startups is living in what Nassim Taleb calls Extremistan - a land of power laws and non-linear effects. In otherwords, you're working in an environment where if you do things really smartly, fantastic results and outsized gains sit within reach. You're trying to build/find your own Black Swan.

Are you early? Are you in a sweet spot? Are you solving a real problem? Is it really a great idea?

If it's all just too hard, it might be because old Felix is right and you need to look for the next thing.

Choosing large market landgrabs or profitable niches?

I've heard it contrasted that there are startup opportunities to grab large, popular markets and smaller but profitable, niche opportunities.

Google, Facebook and AirBnB are obvious examples of the former. Tim Ferriss prefers the more niche markets, which can be pursued without such needs for fund-raising and large teams of expensive people.

There are pros and cons of both approaches. Having been focused more on the former; I'm inclined to look at the later next time.

It's for this reason.

To try and 'take the market' in a large, popular, mainstream space, all that money you need to raise - to finance the team, offices, hardware, marketing, etc - comes at a price. You have to give away lots of equity and after a number of funding rounds you and your partners will not control the company anymore.

If you're on your entrenpreneurial journey because you're a freedom seeker, perhaps a Libertarian, losing control of the company means losing control of your working environment. This is losing control of the environment you will spend most of your time in, during your waking life.

Shares equal voting rights, which equals control.

You don't work for yourself or own your company when you're sitting on 7% in the cap table, no matter how great your idea and VC backers.

If I had the opportunity to make small amounts of money, a few million, or tens of millions, in either scenario, I'd take the profitable niche thanks.

You'll probably never make what Larry and Sergey made, but you'll always control your company... and if you're good and lucky you might make ten, twenty bucks plus.

Nothing is more humbling and character building...

... than doing your startup

You get humbled and slapped about every day, but it makes you a better person.

You're rowing a tiny little boat in the huge waves and seas of fortune and fate. Emotionally it's like living the life of an AIM stock... there's volatility everywhere!

I was fortunate, perhaps spoilt, in my priveleged English upbringing. Private school, university and relatively little struggle growing up.

Maybe I still see the world through a middle class Western lens still, but hopefully I have better perspective of things, more character and more humility now. Hopefully I'm more hungry and determined too.

This is the nature of your journey. You need to make peace with it.

Tough things in life can be purifying and self-improving. Doing a business will benefit you in many ways you won't end up putting on your CV.

Doing a startup is a better investment than doing an MBA

Doing an MBA or spending some time in the startup game? This is an on-going debate.

Once more I'm with Tim Ferris on this. Startup experience trumps classroom learning IMHO.

I've spent about the same money in a number of years in startups - seeing it as an investment in my career - as I could have spent on an MBA from a good business school in the UK or US.

But, I've learnt by deduction, by doing and by making mistakes. I've also learnt a skill set (digital marketing/strategy), which enables me to work in lots of other startups... and other environments too.

Learning in the classroom, is learning via induction, it's theory and dare I say it, it's canned startup experience. (Yes, I know some school like Stanford have loads of good practical projects, but most others don't)

If both options cost you $100,000, but doing a startup delivers more powerful learnings, sector specific knowledge and contacts, in my mind this is the best option every time.

My experience in London will not be representative, but I have lots of ex-consulting, MBA mates wanting to get into startups, but not finding it that easy because they get told they don't have a specific skill set.

If you do a startup - and fund your life with that $100,000 - focusing on a skill set you want to leave with, you'll probably have more options open to you. You will also have a much more exciting time.

Application and determination trump skills alone

There are lots of smart, brilliant people in startups. There are also lots of poseurs, fakers and tech socialites.

It's a glitzy place to work now... though it was different six years ago.

But to execute really well you need to work with people who love what they do and prove it day-in-day-out with great application and perseverence.

Nine til five is unlikley to cut it. Especially if you're product isn't that unique and there are other teams in the Valley or somewhere else working harder than you.

You and your partners need to be curious, massively determined and it helps if your culture is a bit 'us against the world'. Mark Suster talks about hiring for attitude, over aptitude and he's right.

Commentators write that these essential startup qualities are often found in outsiders, be they immigrants, or people that simply perceive themselves as misfits and square pegs in round holes.

I think they're right.

Think of what Steve Jobs and his teams achieved. Great vision and product thinking, granted, but executed with Herculean work ethic and a 'them against us' mentality.

Those are my top six learnings from my journey so far. I hope they add some value to yours.

Agree with me? Disagree and can put it better? Add your opinions and let it rip in the comments! Spread the wealth.