Author: Alan Jones

The “Do things that don’t scale” mantra for early-stage startups has a flip side; don’t forget it.

The flip side is, “You must also pump enough new customers into the top of the funnel that doing things that don’t scale becomes your biggest problem”.

Otherwise, doing things that don’t scale might become something of a crutch; something you use as a reason to not try growing your customer numbers (sometimes consciously, more commonly unconsciously.)

But… but… what if we like this feeling of control?

I understand the feeling — while the only people using my product are people I’ve concierged onto my platform, while they’re all friends of mine or friends-of-friends, I feel like I have a lot of visibility. I feel like I can minimise the risk that they’ll be disappointed with the product and leave. I feel like I have control. I’m free to pursue my slow journey down the winding trail towards Product That Will Sell Itself Nirvana.

Which is fine if, in the end, you can make it all the way to Nirvana on your own. Something less than one per cent do, but maybe you’ll be The One. If you’re not, you’re going to need to persuade others to get involved, whether as early team members, advisors, investors, accelerators or incubators, or grant administrators.

OK, what do these others want to see from us?

They want to see early evidence of a growing business. The more months your early-stage startup bumps along near zero on the y-axis, (x-axis is labelled “Time”), the harder it’s going to be to prove you’re building a growing business. Your challenge is not to make runway last longer, it is to show growth within the available runway. To show signs that you might be able to get your wheels off the ground, and not stall once in the air.

To get anybody interested in your startup, you will need some metrics going up and to the right. In decreasing order of impact on others, those metrics are:

1. Profit
2. Market share
3. Revenue
4. Customers
5. Waitlist customers who’ve paid a deposit
6. Free trial customers
7. Waitlist email addresses; and
8. Inbound visitors.

Most of us will start at inbound visitors and waitlist email addresses and work back through that list towards profit.

But we don’t have much runway and don’t want to spend our money on marketing

The downside of paid acquisition (compared to those free, non-scaling channels) is that it costs money. It can subtract from your runway. The upside is that it scales way beyond your available concierge time, and when you get it right, and you acquire CAC<LTV customers, it extends your runway.

So you should start experimenting with:

• Creative
• Call to action
• Positioning
• Channel
• Frequency
• Retargeting
• Pricing
• Re-engagement

When?

Now. Certainly before you believe the product is finished, and probably before you think anybody in their right minds would be happy to pay to use it.

This way hopefully you’ll ship a saleable product around the same time you finish learning how to market to customers.

One more thing

Don’t worry about losing the customers who sign up for the previous versions. If the internet is good at anything, it is finding more new customers.

Last week with the cohort, I had several similar conversations with founders and teams about the importance of getting comfortable with taking risks. Risks to startups should be what coffee cups are to coffee shops — once you know how to use them well, you should be knocking them out rapidly, efficiently and almost automatically, if you want to be successful.

A tech company that’s not a startup doesn’t need to rely on taking risks and might even try to ban risk entirely. But in startups, our ability to take smart, measured risks is one of our few advantages. Most of the time, our competitors are more established businesses which outmatch us in terms of capital, people, channel relationships, brand and acquisition marketing budget, and existing customers (in short, almost everything else). But they are not comfortable with taking risks and they don’t know how to take smart risks because they avoid taking any risks at all.

As a startup team, if you’re unwilling or unable to learn how to take smart risks, you’re not a startup, you’re a small traditional business. (Which is fine, but don’t expect to achieve the outsized rewards that successful startups can sometimes get in return for taking risks).

I have a story about smart risk-taking from my own ancient history; a story with not one but two plot twists. I still share it with founders I mentor, more than thirty years later, not because it no longer has the power to embarrass me, but because even though it still embarrasses me, it provides a useful reminder for me to continue to take smart risks.

The pride before the fall

Here’s a photo of me in 1988, at the age of 23, with my close friend Craig, who definitely had better hair! I had a skinny red faux leather tie (which was a $20 knock-off).

In 1988, the internet wasn’t even a dream, and yet I was already a young man, still trying to find my true calling. After dropping out of a science degree, working in a variety of dead-end jobs and then beginning a communications degree, I was a year out from graduating with majors in journalism, media production and public relations. Because it was the Yuppie era of “greed is good” and because I was shallow, vapid and venal, I aspired to a career in PR because graduate salaries were higher than in journalism or media production. “Follow your dreams,” I was told. At the time, my dreams were of money.

In July of that year, the International PR Congress would be held in Melbourne, and it was the first time the industry’s biggest event would come to Australia. I decided I would find a way to get my broke-self to Melbourne from Sydney, and then, at the conference, I would find a way to pitch myself to the most important and influential men (because in 1988 they were all men) running Australia’s biggest PR agencies.

What could go wrong with taking a risk like that?

Somehow I sweet-talked someone from the conference organising committee into posting me a contact list of everybody attending the conference (perhaps, because it was 1988, privacy wasn’t such a big deal, and perhaps because I also bent the truth a little about wanting to interview some of these industry leaders for some sort of university assignment).

Let’s just say a copy of the contact list fell into my hands and I decided to send a copy of my resume, a short ring-bound portfolio of work, and a jaunty, daring, challenging cover letter straight to the bosses of Australia’s two biggest PR agencies, Hill and Knowlton and Royce Consolidated.

What could possibly go wrong with taking a risk like that?

THE FIRST TWIST: The fall

Sadly the cover letter hasn’t survived but I think you can read between the lines of the letter I received in reply.

In my haste to dispatch my mailouts to the two head honchos, I had accidentally swapped the cover letters for each, effectively and irrevocably sending a letter to each of them, but addressed to the biggest rival of each of them. Instead of a jaunty, daring, challenging pitch by a consummate young professional, I had made it abundantly clear that I still had a lot to learn about professionalism.

Oh, the shame!

Needless to say, I wanted to curl up in a tiny ball and hide in abject shame. For a few days I was certain I’d never get a job in the PR industry, that with each passing day, more journalists and PR people would be sharing the story of my slip-up at the many watering holes our industry was essentially reliant upon because we didn’t yet have an internet. Yes, public shame predates the internet!

To make matters worse, I still had to attend the conference in Melbourne. I had persuaded my Dad to lend me his van, and I had hustled Craig and three other friends to share the cost of (in 1988) a 15 hour drive each way. We were all booked in to stay at the cheapest place in Melbourne we could find — the YWCA. We had all shelled out $350 per head for an all-access pass to the conference. There was no way I wasn’t going to this conference, no matter how big a fool I thought I was and no matter how much I feared that everybody would know.

Why my risk was smart

Although I’d embarrassed myself in the eyes of two powerful industry leaders (and possibly their teams) there were still many more fish in the sea. If I’d written to all of the managers of all of the PR agencies attending the conference, that wouldn’t have been a smart risk — there would have been no way to mitigate the damage to my reputation. By aiming high, I’d only damaged my reputation with 5% of my total addressable market. It turns out, the profession had many more things to talk about at the bar each night, than my mistakes. If you know someone who works in PR, you’ll know that both clients and journalists are an inexhaustibly rich vein of foolishness.

A few days into the conference, Craig and our other friend Jeff persuaded me to work through my shame and start networking with potential employers. I was still embarrassed and that really helped, because I shut up (I didn’t want to put my foot in my mouth) so instead, I listened. Turns out, important people really like to be listened to.

I collected a lot of business cards, paid close attention to how people responded to me when I did talk about myself, and I learned a lot more about what employers might actually want, rather than what I thought I had to offer.

I practised much better customer research at the conference than I would have done, if my risk-taking letters had gone to the right people.

The second twist

When we got home from our 15-hour drive back from Melbourne, there was a letter waiting from me, and the return address was from the other major PR agency I had accidentally sent the wrong cover letter and portfolio to. As I reluctantly approached the letter resting on the kitchen bench, all those feelings of shame and bruised young male ego rose up into my throat: was I going to be embarrassed all over again?

I didn’t want to open the letter, but I didn’t really have a choice — if I threw it away unopened it would haunt me forever, and if I postponed opening the letter, it was going to haunt me until I opened it. I decided to get it over with quickly. Carefully, with my eyes half-closed to protect my ego, I opened the envelope and took out the crisply folded letter from Mr Graham Canning, the General Manager of the Sydney branch of the huge international PR firm, Hill and Knowlton.

The letter itself sadly did not survive the many years that have passed since then. But I remember every word, because it turned my fortunes around and I learned so much from the experience.

To paraphrase, Mr Canning wrote that it seemed like I still had a lot to learn about being a public relations professional, but if I was prepared to work the remainder of the year as a part-time, unpaid intern alongside his team, maybe there’d be an entry-level full-time job for me the following year.

Through that internship, I made the connections that started my career. In the entry-level job he offered me the following year, alongside my media relations responsibilities, I volunteered to lead the project to decide what sort of personal computer network the agency should install, because I loved computers and the rest of the agency hated them but realised the days of a typing pool were passing (yes, they had a room full of women typists!). That led to freelancing for Australian Macworld magazine, writing about everything I was learning about being the sysadmin of a Mac-based office LAN (which was still a very new thing in 1989). Becoming the Editor of Australian Macworld magazine took me to San Francisco, where I got my first real taste of Silicon Valley and tech startups, and fell in love with the industry I would one day decide to work in, rather than write about.

Sometimes the mistakes you make when you take risks are what lead to the biggest rewards!

Smart risks have the following attributes:

• You can express them clearly in a hypothesis and design an experiment to test them;
• Your experiment will clearly validate or invalidate your hypothesis, with no ‘maybe’ results;
• They are quick and cheap to perform (like filling a coffee cup);
• If a risk goes wrong, the damage is containable;
• The potential upside of the risk going right is either easily and quickly scalable, or has outsized returns if you can only perform it once.

Remember, you don’t need to build a startup, you can just be a small business. But you’re not building a startup if you’re not taking smart risks frequently.

There’s a massive opportunity in disability tech and it’s easier to address than it might appear.

Disability is bigger than most Australians think, because unless you are or know someone with a disability, you’re not likely to see them. It’s harder to get outdoors, to get to a mall, school or workplace, a restaurant, or holiday destination. You don’t see them, but they are there: about one in four Australians live with a disability, and 2.1 million are of working age. Almost half live on or near the poverty line, largely because only half of them are employed, and only 1 in 3 were able to complete high school. That’s just not good enough, and we can do much, much better.

We live in a world of wearable tech, robotics, 3D printing, smart homes, VR and AR, drones, self-driving cars, machine learning and AI. All these technologies have huge potential for improving the lives of those in our community with a disability. Yet none of these technologies has really made an impact on disability yet, because they’re absent.

I see hardware straight from the ‘80s, single-purpose devices in chunky grey plastic housings, connected to other components with proprietary cables that aren’t interchangeable, compatible or easily replaceable.

I also see prices that will amaze you. You thought Apple products were expensive? The Abilia Lightwriter is a device that helps someone who can’t speak communicate with a computer voice controlled by a keyboard. It does just one thing but it weighs as much as four iPads and costs as much as fourteen of them. An electric wheelchair can cost as much as a family car.

In disability software, it’s the same – software products that aren’t very different from the office software of the 1990s. The user needs to learn how to use the software, instead of making software learn how to help the user.

In the past, we were underfunded, but no longer

The disability part of health has historically been unpopular, underfunded and marginalised. This fosters a charity mindset; you should be grateful there’s something we can offer you, and you should consider yourself lucky there’s funding to make it available.

But Australia is still a lucky country when it comes to a world-class public healthcare system, and the National Disability Insurance Scheme (NDIS) is designed to allow people with a disability to select which solutions they want to buy.

How many other industries do you know in Australia where it might be possible for your customer to get the taxpayer to pay for your product, while retaining the purchase decision power for themselves?

The disability market in Australia is worth $70B, and unlike a fintech or two-sided marketplace startup, disability startups are international from day one – the same kinds of customers with disabilities exist in every nation. In fact, the number of customers in the world with a disability is roughly equal to the population of China.

Solutions for disability also benefit from the movement towards investing in social impact and conscious capital. When you invest in a disability tech startup you’re not just creating monetary value, you’re “making the world a better place”. Led by the $31T transfer of capital to Generation Y, seeking ethical and responsible investment opportunities, tech startups building solutions for disability stand alongside renewables and environmental waste solutions as the three biggest opportunities in tech investment for the future.

Let’s raise the benchmark

A hundred years ago, the goal was: let’s see if we can keep you alive to see your 21st birthday. Fifty years ago, it was: we can find a way for you to get to the shops and back.

Today, the benchmark should be: let’s use technology to allow you to aspire to achieve everything the rest of us can.

Why can’t somebody with a brain injury aspire not just to walk again but to run around the park? Why can’t someone with a speech disability conduct a fluid, fluent, natural conversation with me in our favourite coffee shop?

It’s time we started designing and producing products that are built-to-aspiration.

Alan Jones is an Entrepreneur-in-Residence with Remarkable.

Alan Jones is one of Remarkable’s valued Entrepreneur in Residence. Alan works hands-on with the founders of early-stage startups and new product development teams within the enterprise. He coaches high potential individuals on lean startup skills, product management, pricing, sales, brand experience, growth marketing and capital raising. Alan shares with us the importance of creating a positive social impact and reflects on how Remarkable has contributed to his view.

“I don’t want to live in a world where someone else makes the world a better place better than we do”

Gavin Belson, fictional CEO of Hooli Corp

The concept of making the world a better place through building a successful tech startup is such a commonly-used expression that it’s a trope, a meme and one of the funniest industry insider jokes on the HBO series “Silicon Valley”.

When Gavin Belson says it, he and his company are using every dirty trick they can find to beat their competitors. And Belson is prepared to compromise whatever moral principle is required in order to make the world a better place than his competitors do… or so he believes.

This happens in the real world of tech startups too, of course. Barely a week goes by without unplanned slip-ups such as privacy breaches and malicious hacks exposing private customer data and banking information. Using software and technology hardware can harm our eyesight, affect the quality of our sleep, addict us and make us depressed. They can also cost us a lot of money we can’t afford to spend.

Some tech startup accelerator programs are focused solely on acceleration – helping startup founders make greater progress in less time on turning their idea or prototype into a growth machine. Working hard on validating lean canvas hypotheses, finding and converting customers, exploring marketing and distribution, and of course, raising capital.

The social impact they have on the world (the way they’re going to make the world a better place) may still be important, but it is often deferred until later, because building a viable startup is hard and the most likely outcome is that a startup will fail and shut down before it even has a chance to adversely affect any of its customers.

Although I’ve worked with many accelerators in the past, Remarkable is the first I’ve worked with in which developing a plan for positive social impact is a part of the curriculum and one of the expectations of the program is that each startup graduating from the program develop and implement a plan for achieving a positive social impact.

Frankly, that’s been a difficult adjustment for me to make, even though I’m ideologically left of centre. It’s taken me some time to trust that Remarkable’s commitment to developing a positive social impact is more than just a marketing slogan, to be sacrificed if other program goals need priority.

Much of the art of growing a startup is about developing business processes that are simple enough for a small team to work with, but adaptable enough to scale at the speed of a high-growth business. How we recruit staff, how we drive sales through marketing channels, how we track and report key metrics – they all need to be able to scale rapidly if we hit product/market fit.

If the struggles of Google and Facebook to turn around their social impact teach us anything, it is that positive social impact is much easier to design into a business from scratch than it is to apply as a patch later, when the company is larger. Particularly in the case of Facebook, each successive patch seems to last a shorter period of time, and when the glue holding the patch loses its grip, the corporate culture throws Facebook back into compromising social good in order to make even more money.

At this point, I don’t think anybody really believes that Facebook can change, no matter what measures Mark Zuckerberg announces next. There’s a growing barrier of scepticism and disbelief that Facebook would have to climb over before it would be able to show it was really making positive social impact the core goal of the business.

There’s a great podcast interview with early Facebook employee Dave Morin where he describes an inflexion point in the company’s history, when faced with choosing between safeguarding user privacy and maximising revenue with Facebook’s Pages product, the leadership was divided into two camps: the money camp and the social responsibility camp.

Needless to say, the money faction won. But why did the money faction win?

Going back through the different public versions of Facebook’s history, the reason seems clear to me: creating a positive social impact in the world was a secondary goal at best, an afterthought much of the time, and a marketing slogan the rest of the time. Like the fictional Gavin Belsen, Facebook’s leadership only needed to make it seem like they were making the world a better place because it helped them hire the best people, inspire investors, and win the misplaced trust of users.

If you truly want to make the world a better place, it can’t be a secondary goal.

Sometimes it’s going to be at odds with the rest of your business goals, and you and your team will need courage and determination to choose your impact goals over revenue and customer growth. But as the struggles of the tech giants show, once demoted, your social goals don’t stand a chance. So develop and refine them early and stand by them, or lose them forever.