Getting through tough times

Sometimes the world changes on you.

It’s not your fault. It’s nobody’s fault. Even if it was, blaming someone else doesn’t remove the fact that the world has changed anyway.

What does matter is how you deal with it and the actions you take to ensure you are still around after the current crisis recedes.

Better yet, how you position yourself to take advantage of any new opportunities that may exist, and then be in a great place to grow in the new world that will exist afterwards.

The current Covid-19 pandemic reminds me an event that blew up my world 20 years ago…

Easter 2000 – Dotcom Crash

By Easter 2000, our fledgling startup business ‘aussiehome.com’ was barely 4 months old. We had a website, some trial customers, some staff and an office.

We had raised about $200K from ourselves and a dozen investors before we launched at the end of 1999. As the New Millennium dawned, we only had $70K in the bank, perhaps a few months cash runway.

With the enthusiasm of the times, we immediately opened up a second round of funding, at a 50% higher valuation to boot.

Then the world changed. On a dime. Overnight.

The collapse of the NASDAQ index in New York (down 25% in a week in mid April) heralded the effective popping of the ‘dotcom bubble’, which had built up over the previous years.

The Emperor’s New Clothes has been exposed. Most of these shiny new internet startup businesses (‘dotcoms’) had nothing to show for it bar some nice offices, fancy websites and dwindling revenue growth. They were wildly unprofitable and had been burning cash like there was no tomorrow.

For most of them, there was no tomorrow. 98% of them would go out of business that year.

We’d been following the dotcom playbook. Get big quick. Profits will come later. Our investors had asked us to ‘spend more money quickly’ as it was a land grab. Those times were over.

Among the wreckage, we read gloating headlines from newspapers (who’d always felt threatened by the rise of the internet, and rightfully so) decrying the latest collapse, and the end of the e-business this and i-business that.

But we felt we had a business.

My co-founder Nick and I looked at each other and agreed: “We need to build this business from today assuming we will never raise another cent.”

And we did. After some crucial support from a couple of new investors and a top up from our largest initial backer to tie us over, we did not raise another cent for 6 years. We would be paying dividends by then in any case.

Business 1.0

Perhaps our business started on that day. The day we realised that there was no ‘new business paradigm’ or internet nirvana to chase. We had to put our heads down and win business, listen to our customers, help them solve their problems and get them to pay. Develop new products.

We had to make tough decisions. We were open and honest with our staff. No sugar coating it. We could not promise to pay their full salaries, but we promised to pay them what we could. Nick and I would not take a salary for 9 months. We’d push through this and give it the best chance of surviving and coming out the other side.

A few staff left, but most stayed. We saw it as our collective responsibility to the business, to each other, and to our shareholders to give it our best shot.

The Good Side of the Downturn

One glimmer of hope – it was unlikely we would be hassled by any new competitors also trying to win the ‘online real estate race’. Whoever was already in the market would be in the market. Most would not survive. We wanted to be the among the few that did.

Two decades on, I am talking to startups and small business owners who have had their world turn upside down.

Although it might not seem like it when you’re suddenly plunged in to a crisis like this, there’s actually quite a bit good news.

We are all in the same boat. And we know what we have to do. Self isolate. Work from home (if you can). Wash your hands. See what business you can do, under these conditions. Work out if there are new opportunities out there, if you can help. If not, then hunker down, wait it out, the best you can.

It’s not our fault. Playing the blame game is a waste of energy. You’ll need all your energy to get through this, and to re-build after.

During the down time (if that’s what has to happen), think about what you can change, any dead wood you can cast aside, and what you have to protect. Those great employees you have – how are you going to be able to keep them? Your core team. You’ll need them. And they need you right now. They need something to do. How can you – as a team – get through the dark times?

Because you can get through it.

And when you do get through it, you will look back on it as an important time, in many respects.

Looking back, not in anger

Looking back at the Year 2000, it was one hell of a tough year. There were disagreements, arguments, sleepless nights, anxiety, … but we got through it.

If we’d just raised loads of money and spent our way to success, I doubt we would have really built a real business at all. The fact that our fledgling business got smashed at its most vulnerable time and we somehow survived brought us immense pride in the years that followed.

We may look back on them as dark times, but it sure taught us the meaning of team work. What cash burn meant. How to rally together, make tough choices.

No one would have blamed us if we’d been forced to shut down. Most dotcoms did that year.

Advice for the new reality

When the world changes, your plans need to change. A new reality dawns, and then the choice becomes clear. Are we going to throw in the towel, or give this thing the best chance to be around at the end of it? Even if we fail to rescue it, at least we would have given it the best shot. We may just ride this mother out.

So to all those startups and businesses out there right now, I give the following advice….

  1. ACT – This may seem like the worst of times, but you have it in your power to react to the situation and chart a realistic path through it.
  2. GALVANISE your team. Be honest and open, and work together to give yourself the best chance of coming out the other side.
  3. Make STRONG decisions now based on the new reality. If you have to cut staff, salaries and other costs, do it with understanding, kindly, and in consultation with your people.
  4. CUT dead wood first; anything that is not going to be part of the future reality, why are you doing it anyway?
  5. RELEASE – Business can be hard, frenetic and stressful – once you have fresh plans in place, if you have to down tools a bit, what’s so bad about that? Embrace the relative quiet. Reacquaint yourself with family, householders, friends – online perhaps or the random ‘checking in’ phone call – board games, books, walking, bike rides, exercise, healthy eating…
  6. OPPORTUNITIES – what fresh ideas are created in this period? Restaurants go fully home delivery, companies switch to hand sanitiser production, events companies move to webinars, other companies realise what they can do with a distributed team working from home.

The world has changed, perhaps forever. Even after this crisis, we would all be changed to some degree.

One thing I do know. If you can get through this, and come out more efficient, flexible and responsive the other side, you may look back at this period one day and think that although you never want to go through it again, there were good things that came out of it.

I know our team was tighter as a result of the experiences of the year 2000 and into 2001. We bonded in battle. We all understood the importance of cash flow, the value of great customers and being nimble enough to respond to their needs.

Fresh ideas, new products

In the midst of the darkest period, we opened up web development as an income source in mid 2000. This was not mentioned in our original business plan a year earlier. Yet it became a third of our business over time, and cleverly ‘locked in’ our customers to some degree by coding their site into our back end platform.

In mid 2001 we launched ‘The Life‘ magazine, a full colour glossy fortnightly print product full of real estate listings. We were an online business. In no way had we envisaged we’d be doing print! Yet it worked, helped win more clients and for 5 years became a staple of our business, another third of revenues.

By mid 2001, 18 months after launch, with growing monthly subscriptions revenues, web development and now print we had a sustainable business and were cash flow positive.

We never went back to spending more than we earned. By 2005 we were paying dividends to our loyal shareholders out of profits. We never raised a cent in equity until mid 2006, and that was mainly to give our initial investors an exit opportunity and refresh the board. 4 years later we sold the business 100% and all staff got jobs in the new organisation.

None of this would have happened if we’d gone under shortly after the dotcom crash of 2000.

~~

MAIN PHOTO by Pixabay from Pexels

Cold Calling

In the seventh post of this series, I cast my mind back 20 years to when I co-founded a tech startup …

So there we were. We’d launched our new tech onto an unsuspecting world.

A few early (aka brave) customers were trialling it. Likewise some brave staff members and investors were on board. Here we go!

Did we think the world would suddenly stop what it’s doing and turn to our exciting, new service? The world does not work like that. It’s too busy doing its thing, using the same services it’s been using. Why change?

Startups do not take off on their own accord. They simply don’t. Not even the ones that scale later. They all spend many years in the wilderness, stumbling around the foothills, before climbing the mountain peak.

Perhaps that’s as it should be. For many reasons.

Overnight successes tend not to stick. Slow, organic growth is the one that multiplies, multiples upon multiples, hockey stick style. But before this, come years of travail and learning.

Once you become mind-blowingly successful – if that happens at all – you will look back on these early months and years as perhaps the greatest of times. They may have felt like the worst of times at the time, but later you may look back at their simplicity, their honest hopefulness as the most purest of times.

Scale up

So how do you get those first few customers on board, and grow this thing towards cash flow positivity and profitability?

If you are in the B2B (business to business) world – selling a service to businesses – then cold calling may be part of it. At least initially.

Cold calling. Even the name of it can send shivers down the spine of the most ardent entrepreneur or salesperson. It can make the strongest feel weak, bring on a nervous twitch, and keep many awake at night.

But it has to be done.

I did it. Perhaps you did it. It’s a badge of honour.

Some people seem to love it (“go on, hit me again!” they say as they reach for the next phone number). Most ordinary people would rather endure a severe root canal than have to cold call prospective clients.

Why? It’s probably something to do with the fear of rejection. It’s too personal. Too brutal. Too final. It’s your baby, after all.

It shouldn’t be cold

The first thing to note about cold calling is that it doesn’t have to be cold at all.

Pure cold calling is phoning up a potential customer, out of the blue, hoping to gain their attention, explaining what you have on offer and then trying to convince them to take a meeting with you.

Note – they need to be available to take your call at the precise moment you ring them. Ring them at the office? How and why will you be put through? (“What’s it regarding please?…. Would he/she know what it’s regarding…?” the gatekeeper will ask).

So, call on the mobile (if you can get it)?

No, no, no!

Really – does anyone think this is going to work? That’s akin to walking up to some random stranger in a supermarket and shouting ‘BUY MY PRODUCT NOW!’

Do you really believe that person will be ready to take your sales call, at that specific moment, and then be ready to buy your offering, or at least set up a meeting? What universe are you living in?

So don’t cold call. Not cold anyway.

Do your research, prep the call, make it a warm lead.

PPPPPP

Prior preparation prevents p*&% poor performance, as they say.

You would (should) have a list of potential targets. Maybe they are obvious prospective clients. The right type of business, in the right market, location, bracket… fine. At least give them the common courtesy of contacting them first, with a brief (2 paragraph) email or letter (yes, letters can still work) explaining the problems your solution is solving for the potential customer.

Start that first communication with a question that resonates with them. (“Do you need to increase your consulting business leads…?”). Make it plain, short and simple. Not salesy. Honest. Mention that you will be calling in the next few days.

That first communication gives you a hook to start your follow up (warm) call with. (“I sent you an email/letter a few days ago briefly outlining the problem we solve for you, and wanted to see if how we can help you…”).

Don’t give them an easy out. Don’t ask questions with Yes/No answers. Ask open, leading questions. Be calm, authoritative. State facts.

One salesperson I employed used to send a lovely 2 paragraph letter, addressed to the key decision-maker (do the research to find our their name, title, address), and enclosed a tea bag and chocolate frog in the envelope. The letter invited the person to take a break, make a cup of tea, enjoy the chocolate and consider the contents of the letter for a moment.

When the salesperson rang up a day or so later, they would say – to the gatekeeper – “it’s about the letter he/she received this week, just following up on this…”, and when the prospect came on the phone the letter would be mentioned, and if the prospect feigned ignorance (“What letter?”) the chocolate frog and tea bag would be brought up.

“Agh, THAT letter! Yes, I remember…”

A disarming technique, and now the prospect would have a moment to listen to the pitch. The real point of the call would be to make a connection, briefly reiterate the solution and find a time in the diary for a meeting. The eventual ‘pitch’ and ‘sale’ would then take place face to face.

Time consuming? Sure, but great relationships could be forged.

A cold call disaster

I remember cold calling within the first fortnight of the business.

I rang the prospect and launched into my spiel. As I got into my third sentence, hardly stopping for breath, the person interrupted me and said:

“Please stop talking now. If you carry on speaking, I will put the phone down. Email me no more than two paragraphs on what you are selling, and IF I am interested, then I will call you. DO NOT CALL ME AGAIN!

Ouch.

A few learnings here. Firstly, I had not warmed up the prospect. I had called them completely cold. Interrupted their day. They were not best pleased. (Remember, prospects are people too. They might be having a very bad day.)

Second, I had closed off any other approaches to them in the future. I was forbidden from contacting them any more. Not a great outcome.

Third, I had been told off. I felt bad. Memories of reprimands from dark, sarcastic school teachers flashed through my brain. A sharp pang hit my heart. Not a nice feeling.

This hit and miss approach to selling is not only nerve-wracking, it’s inefficient.

Make cold calling a game

As time went on, we hired a sales manager. Three of us – the 2 co-founders and head of sales – took the Yellow Pages (remember?) and divided up our category (real estate agents, in our case) into 3, and would devote an hour a day to cold calling our own lists.

We found that if we did it in the morning, we would be up for it, more energetic, and could pump ourselves up before the hour of calls. Usually between 10am and 11am.

Afterwards, we could get on with our day, and reward each other after the hour was over. We would celebrate if anyone had managed to bag an appointment, and compare notes on how we’d gone. We even developed cheat cards, and would listen in as each of us called a prospect, holding up a flash card if we needed some help.

We made it a game. We had fun. We were calling real estate agents remember, some of the most hard nosed sales people out there. (Strangely, they admired our tenacity, and were rarely rude.)

There’s only positives from cold calling

Another way to overcome any reticence and nerves when making the call is to remember that you can be no worse off after the call than before, no matter what the outcome.

At worst, one more prospective client knew about you and your service. At best, you secured a meeting with a prospective client in the diary.

Even a ‘no’ is never a ‘no’, it’s just a ‘not now’. If we were met with an ardent negative reaction, we would say ‘OK; not a problem; but can we ring you again in three months, and give you an update on how we are going and see if we can help you in some way?’

Who could say no to that? They did not really expect us to ring them in 3 months time. But we would. We’d add that into our database or calendar (what we would call a CRM these days) and it would remind us to ring them again in 3 months’ time. On the dot.

We’d have some fun with it. ‘You said we could ring again in 3 months! Do you have some time in your diary to discuss what we are doing, and whether this could work for you and your business? Since we last spoke, x number of < customers > have joined us….’

From cold to hot

Six months or so after the abrupt (“Don’t call me, I’ll call you”) phone call alluded to above, the person in question walked into our office in Nedlands.

I greeted him with a smile – I knew instantly who he was – and asked if I could help.

“How do I get these properties onto your website?” he said, pointing to the brochures he was holding.

Most of his competitors were already listing on our site, he said. He realised he had to be on there too. His own clients were now demanding it. (Cue: happy dance.)

He had no recollection of the previous conversation (I only brought it up with him many years later at one of our Christmas parties, to which he laughed loudly, apologising if he’d been rude.) He became a client for life. A fierce defender of our site, even when larger, well backed competitors came to town.

Cold (or warm) calling is a badge of honour. Startups probably have to do it. in order to raise money, to win new clients. After a while, it won’t be required anymore. But you’ll look back and smile at a time when it was necessary. You’ll have some scars from it – sure – but you’ll also win some of your most ardent clients and admirers as well.

DO’S AND DONT’S OF COLD CALLING

1. Don’t do it cold – prepare a warm list
2. Contact them first by letter/email
3. Pick a time of day to do it, and do it every day
4. Make it fun, encourage each other
5. Don’t let them off the hook, ask open questions
6. Talk about value, not price
7. Don’t try and sell, just get the meeting
8. Reward yourself after you’ve done your calls
9. Follow up – the no’s only mean ‘not now’
10. Learn and improve your script and calling techniques

Go for it.

~~~

Photo by Markus Spiske temporausch.com from Pexels

Launch Day!

On the morning of the 6th December 1999, I took the 99 bus from near my house down to the aussiehome.com office in Nedlands, getting off one stop early to pick up the copy of the local newspaper.

There it was on the front page of the Business section, an article (with a photo) right slap in the centre, about a new online real estate website.

I recognised the photo of Nick and I, in a staged pose looking at the home page on one of those boxy 1990s monitors. The timing of the camera exposure only caught the bottom half of the screen.

How else do you show dotcom entrepreneurs?

What’s interesting about the piece is that it was written by Mark Pownall, who was working at The West then, but within a year had moved to WA Business News (somewhere I would move to 13 years later to work with Mark… he later followed me as CEO of the company in 2017.)

One correction – it says we had $70K of seed capital; we’d actually raised almost three times that, but had spent about $70K on the tech. Maybe that was how the confusion arose. Anyway, there we were.

I walked up to the office staring at the article, and showed it to some of our team members. We better make sure the site was up and running today, because you only get one chance to make a first impression.

It had been a frenzied few months since resigning my teaching job; yet I was still teaching, and popping in and out of school to run various errands, visiting and trying to win some early clients, spending as much time as possible to get the site ready in time for our launch date.

We had made it. It was now public. We would live or die on whether people looking for homes would find and use the site, and return. Would they like the site, be able to work the mapping, and then refer the site to others?

At least now the site was live, so we could hit up real estate agents, and demo it live. No more rushing around with laptops showing them a ‘fake’ site. We could ring them up, ask them to jump online and there it was. There were properties from their competitors. Would they like to be on board too? We’d give them a three month, no obligation free trial. Why not give it ago? We’d even put the properties on for them. Keep them updated (via fax!)

It was part exciting, part terrifying. Our reputations, our investors’ money, everything was on the line. But we can got there.

Now, for the hard bit…

~~~

Vale Professor André Morkel

One of the best educators, mentors and human beings I have ever met passed away last month. He had a huge impact on my life…

Walking into my first MBA (Master in Business Administration) class at UWA in September 1997, I was a mixture of raw nerves and excitement.

The semi-circular main lecture hall was packed to the gunnels, as we anticipated the arrival of the Professor who would be taking us for Entrepreneurship.

Entering the room, Prof André Morkel raised an eyebrow and both arms as if to invite the first contribution. He needn’t say a word. Hands started shooting up in the air, and a lively case study discussion ensued.

As each new point was made, the Professor would make a point of adding it to a white board. He started with 3 massive side by side blank boards. Within an hour and a half, they were chock full of information. He barely paused for breath, as the contributions kept coming.

I was madly scribbling notes and trying to keep up with it all. It was vibrant, exciting, slightly nerve-wracking, and brilliant.

This was my first introduction to the ‘case study’ approach of learning business. Read the case study (they were typically 40 pages long, with loads of accounting and finance data), prepare some questions, analyse the case, be ready to contribute. As in the famous Harvard MBA, ‘air time’ mattered. Come unprepared, and you floundered.

It was dizzying, electric stuff.

If this is what the MBA is going to be like, then I’m, going to love it!’ I thought to myself.

Little did I know I had lucked out on my first unit. I had won the lottery of having André Morkel as my lecturer. And yet he never lectured. Not once. He facilitated discussion of deep cases, journal extracts and brought in top notch guest speakers. I learnt so much.

I was a school teacher myself, an educator of sorts. I marvelled at this fantastic approach to teaching and learning.

Although the other lecturers varied in skill and interest, none could top André – he walked away with ‘Best Lecturer’ prizes year after year.

At a graduation party I held in my house a few months after finishing the course, André attended as a guest. He walked right up to Nick – a fellow grad I’d got to know during the course – and said: “You need to stay here and do something.” He’d seen something in my fellow migrant friend Nick during those Entrepreneurship classes.

Nick replied: “Well, Charlie and I have an idea. Can we come and discuss it with you?

A few days later we find ourselves sitting in André’s study discussing the idea for an online real estate business that would become aussiehome.com.

Our idea was very basic, not well thought through, and André gave us some pointers. “Come back and see me when it’s a bit more developed,” he said.

Which we did, a few weeks later. At this point, he rose in his leather chair and became quite animated, talking through how the business could work, the revenue model and all the rest. He wanted to see spreadsheets, with assumptions, scenarios.

A few months later, he walked into our brand new office, a few days before our launch, with a cheque to invest. For years after, he always gave of his time, took our calls, listened to our crazed ideas, ran whiteboard sessions. He was patient, encouraging, open and honest.

Having someone like that on your side from the outset was a major boost for us. The business took a while to find its legs and become profitable, but when it did, we delighted in mailing André his first (of many subsequent) dividend cheques, and then a few years later, his sale proceeds.

It was sad to hear of André’s passing last month, but good to catch up with his friends and family (and Nick) again, after many years, at a beautiful funeral ceremony. André was 87, and leaves wife Barbara, four sons, many grandchildren, colleagues, friends and admirers. The chapel was packed. Standing room only. A fitting tribute to a wonderful man. A giant. He touched so many lives, for the better, and he will be missed by countless people, probably far more that he could have realised.

Incredible that it was 20 years ago (this week) that he invested (time and money) in us. Aged 67, when others would think of retirement, he was actively encouraging others and even having a punt on a couple of overseas born newly minted graduates with a business idea.

Thank you André. Rest in Peace.

Resigning my job

It was the 9th of the 9th ’99 when I walked into the headmaster’s study and handed in my letter of resignation…

Twenty years ago today.

It was a big step. I felt I had to give this crazy new tech startup a go, and it was before we had kids, so felt it was a good time to take a risk. If it didn’t work, I could always return to teaching. Teaching was not going away.

I had landed an amazing job at a top school though, so the decision was not straightforward. Getting back in would not be a walk in the park, should the new venture fail.

But failure was the farthest thing from my mind.

I was in a romance with the new idea, the technology, the opportunity and the time felt right. We had to get out there before someone else did this. We were originally going to launch in February 2000, but we’d pulled that back to December 1999. Three months to launch!

We had a business plan, we had a rinky dink proof of concept (on a floppy disk – remember them?). It was now time to sign up some brave real estate agents as customers, raise some seed capital, build the first version of the aussiehome.com property portal and launch this baby.

I still had a job til the end of December, so funds would still be coming in. I had savings in the bank and my wife had a job in the city.

If I knew then what I know now I would have certainly done a lot of things differently, but I have to take my hat off to that school teacher 20 years ago who gave it a red hot go, resigned their job, took the leap and launched into that pre-launch period with gusto.

Sometimes you have to jump into the unknown. Take a measured risk. I knew I was not happy with teaching, so this new venture had to be tried. I had to ‘get it out of my system’, but in the moment I felt nothing but conviction that we would make a success of it.

A map-based real estate website, which would make property searching much easier, paid for by monthly subscription fees from real estate agencies, plus perhaps some third party advertising too.

How could we fail?!

~~

PHOTO: https://stocksnap.io/photo/UJCAEUARJZ

Bubble, meet another bubble

I was speaking at a business breakfast the other day, and the subject of the morning was ‘creating an enterprise culture in WA‘.

With our long history in successful resources and other entrepreneurial ventures, one might think that we had a great enterprise culture already.

And we do. If you want to develop a mine, Western Australia is probably the best place to do that from. The capital and investment bankers are here, the lawyers, accountants, exploration and commercialisation people are all here and they all have buckets of experience. We even have two mining billionaires, two of richest people in the country, including the richest woman.

The WA economy is worth about $235B, and about $70B of this is mining – that’s 30%. The largest sector, a sizeable chunk. Many other states and countries would love to have this undeniable source of riches.

But what I was talking about, was the early stage tech sector, which often gets ignored in all this entrepreneurial talk.

In the era of digital foreign invaders such as Google, Facebook, Airbnb, Netflix, Amazon, Apple, Uber and others, where are the Australian scalable businesses that can grow to multi millions and even billions on an idea and some lines of code? Businesses that can create enormous wealth, jobs and capital in a fairly short time frame (such as under 5 years).

OK, you may have thought of Canva (now based in Sydney) or Atlassian (also Sydney, and listed on the NASDAQ). Name ten others. Three. One.

I am genuinely worried about the Australian-owned tech economy we are going to leave our children. Nothing wrong with the digital vikings, I use them all, but, relative to their size, they don’t create many Aussie jobs or pay much tax in this country (hence contribute less to the broader economy, such as building roads, schools and hospitals, yet they are taking advantage of that very infrastructure).

We (as a country, state and community) need to do all we can to help our own brave Aussie scalable tech businesses along. They can do amazing things in a relatively short period of time. If given a helping hand.

They often don’t need much money to get them going, and yet can scale (or fail) fast. You may not have to wait years and years for approvals, plying multi millions in just to see if there’s something there. Often, a 6-figure sum is more than enough to get them out there, if not a 5-figure sum.

And the upside is tremendous. Canva got going 7 years ago and is now worth over $3B.

So, there I was rabbiting on about this, and I mentioned the fact that while over $9B was invested in all WA businesses in 2018, only 0.3% of this made its way to early stage tech businesses.

One of the audience members then shot to their feet to deplore my statistic (“I don’t know where you got that from…” … err from Business News and Techboard actually – see full sources below) and they felt there was plenty of investment in innovation and we were a fantastic economy doing great things.

While I agree with the positive sentiment (I love WA, the economy and the life here), I was a little bemused for a second. They did not like the stat, they so they were simply choosing to ignore it (fake news, obviously). In the era of Trump, this is what we have come to.

Which brings me to the point. We all live in our own bubbles, gathering information that the internet and social media already knows we like (we’ve previously clicked on it, liked it, searched for it, read it… so it sends us more stuff like that).

When we are confronted with some data that contradicts our world view, it’s uncomfortable. Our natural inclination is to rail against the source, query the author, or just flatly refute it.

The speaker from the floor was a well-healed stock broker. He’d done various ASX/mining deals before and was no doubt extremely well off. Had he had any experience with early stage tech startups, that were pre-revenue? Had he visited a co-working space? Been to a meetup? Had he sat down with startups to hear their views, and see what they were doing? Had he invested in them?

I doubt it.

But then again, what do I know about his world either? Have I done ASX mining deals? No. Do I live and work with junior miners, and truly understand what they do? No.

My bubble (which is predominantly early state scalable tech startups – I love em!) and his bubble (ASX listed junior mining exploration and commercialisation businesses) rarely meet. We rarely talk. We rarely listen to each other.

Even though we inhabit the same city, breathe the same air, drive down the same roads and sometimes frequent the very same breakfast events, we move in very different circles.

I reckon we could each help each other. But it starts with listening, and being open to data that may not conform with your existing world view, and decades of experience. I am open to this. I’d love to know more about his world. Perhaps I could teach him about mine.

Bubbles need to meet other bubbles. When they do that they pop, and something quite new happens.

~~

PHOTO: by Pixabay from Pexels

SOURCES

  1.  “Goldman, Freehills top deal tables”, Mark Beyer, Business News, 21 Jan, 2019
  2. “Australian Startups and Young Tech Companies Funding Report”, Techboard, 31 Jan 2019

What’s in a name?

In the fourth post of this series, I recall 20 years ago when we decided on a name for our startup, and the issues it then caused for the next decade…

Before the idea, there was context, an unforgettable comedic event before we talked to people we trusted about our idea.

Now, a few weeks on in mid 1999, we were actually thinking seriously about forming a business, raising funds and building a prototype.

We jumped on the ASIC website to buy ‘aussiehome.com Pty Ltd’ business name (having landed on ‘aussiehome.com’ as the best website domain a few days earlier).

We gave ourselves 50% ownership each, and with the company now formally established, we could set up a bank account to hold our initial seed capital. We valued the business at $1M (nice round number) post money, and would look to sell 20% to investors for $200K if we could.

Before that, we needed a business plan, and a rinky dink prototype of the site.

I remember being up in Exmouth during that mid year winter school holidays. I was still teaching, and had somehow agreed to go on a Year 9 camp. In order to get emails, I had to climb onto the tin roof of where we were staying to get reception, so I could contact co-founder Nick.

Weirdly, 20 years on, I’ve just been back to Exmouth again for the first time since 1999. Memories of that time flood back. Exmouth had just had a cyclone back then, and I remember farmers asking us if we’d seen any sheep out in the bay or on the islands. Apparently 50,000 had be swept out to sea during the storm.

Everything was moving fast. Within a few weeks we had bashed out a very ugly html prototype, and had the first draft of our business plan. We went back to our MBA professor, and he seemed interested in investing. He gave us a few names to follow up on, and we would go and show our demo and idea to several high net worth people around town.

One meeting would become three more as we asked for more introductions.

Looking back, I’m sure we made sensible decisions during this time, but there was certainly some gaps in our knowledge. We failed to set up a shareholder’s agreement between us (mistake), as we rather naively presumed all would be well. Or perhaps did not give it a thought? Later, when things got tough, we had no clear exit for either of us. We were locked in.

The name ‘aussiehome.com’ would continue to cause confusion with ‘Aussie Home Loans’ (or ‘Aussie’ or ‘Aussiehomes’) for years and years. Even nine years after the sale of the business, friends of mine still get the name wrong.

It’s aussiehome.com, not aussiehomes.com, I still say. So many people said they could not find our site, because of the confusion over our domain name.

We did not realise the high profile name of the ‘Aussie’ brand would create issues for us. Oddly, we never heard from Aussie Home Loans. They would never complain about our brand name being so close to theirs. We even approached them in the early days to see if they’d like to partner, and they ignored us.

And so we marched on. I thought the name was distinctive, clear and cool. Very Aussie.

A year on, there was even an ASX-listed Perth company called ‘Aussie’. They did a quick IPO (or back door listing? I can’t recall) but did not last long. We remember having a few chats with them, but it went nowhere, and they got bought out by Aussie Homes anyway.

Years later, I was speaking at an event, and even had a clear type written intro the MC would read out to introduce me.

“Ladies and gentleman”, said the announcer, “Please welcome Charlie Cunningham, from Aussie Home Loans.”

Agh well. Twas my cross to bear.

~~

These days, I speak about naming and trademarks every now and again – here’s my slide deck on the very subject.

Photo by Matthew T Rader from Pexels

Markets are conversations

In the third post of this series, I recall 20 years ago when conversations with various people massaged ‘an idea for a business’ into a business itself …

Before the idea was born, there was context. Then – spookily – an unforgettable comedic event would herald the idea.

Now, the idea needs testing. Could it become an actual business? What problem would be solved for customers, and why would they pay? What did the existing market look like? Were there any competitors and threats (there always are)? What skills and experience would we need on board if we are to launch this thing? Who would build it? How much money would we need to get this off the ground?

A gazillion such questions occupied our thoughts in those early weeks and months in mid-1999.

I was still teaching – but the buzz had gone out of it for me. My co-founder Nick did some relief teaching at the same school, and we chipped away at the idea in our spare time. I would drive to his place one evening a week or he to mine, and we’d spend a half day every weekend on it.

We drew out some sample pages for what we wanted in a map-based property search website. We researched existing sites, and map data, and the tech behind mapping (which is GIS, apparently). Nick even walked onto UWA campus and knocked on the door of a GIS Professor. She told him that what we wanted to do was eminently possible.

We approached our former MBA professors, to see if we were ‘mad’ or actually had something that might have legs. One of them sat us down in his leather sofa’d study in Nedlands surrounded by shelves of hard back volumes. We showed him our one page of bullet points for what we had called ‘Real Simple’.

We wanted to “make real estate simple”. Make it easy to find properties for sale or rent, all on interactive, zoomable maps of Perth.

You’d be able to see the properties (colour coded depending on whether they were for sale or rent) on maps, plus see the local parks, schools, roads and transport routes. All the things people actually want to see when they are choosing a place to live. After all, we figured, people buy into the lifestyle of the suburb, as much as the property itself.

The Professor made encouraging noises, but there was much work to be done. He wanted to see a proper business plan, cash flow projections. ‘Come back with something a little more fleshed out, and we can discuss it,’ he said.

Unfortunately, the ‘realsimple.com’ domain name was already being used by a Californian IT company. Today, it seems to be a home and lifestyle magazine.

We thought ‘PerthHome.com’ would be good, the domains were available, but the 2 ‘h’s in the middle looked odd, and you could hardly go with ‘Perthome.com’. Anyway, we thought the idea had potential beyond just Perth, so we landed on ‘aussiehome.com’.

We liked the ring of it, and we could play on the ‘aussie’-ness of the brand. (‘Want to find your next Aussie home?’) The .com was available, so we grabbed it. Later the ‘.com.au’ domain also became available, so we had both.

We then set up the business using the ASIC website, aussiehome.com Pty Ltd, with Nick and I as 50:50 shareholders. We decided to put a few thousand up each to cover admin and other out of pocket expenses.

Looking back now, we were a little too trusting. How well did I know Nick, or he know me? Going into business is a big step, and I’m not sure we had “the conversation” about each other’s rights and expectations. We certainly did not draw up a shareholder’s agreement between us, nor had any exit plan, should, for any reason, one of us want to leave.

Naive you might say. A mistake, certainly. It would later turn out, when things got very tough in those early trading months and years in 2000 and 2001, that we both felt ‘stuck’ with the business and each other. There was no exit, no way out, except to make it a success. Perhaps that drove us on. Maybe it was brilliant, in hindsight, or we just got lucky..?

For now though, it felt like the start of an exciting new adventure. We weren’t thinking of the worse case, we were solving problems and pushing it forward.

We spoke with people we trusted about the idea, and after each conversation we’d learn something more about our business. Talking it out really helped. As a general rule, people don’t steal your idea. They are busy living their own lives. Pick who you tell, for sure, but don’t keep everything to yourself.

I would later learn this through the excellent ‘Cluetrain Manifesto‘ book, which was published that same year. It would come to define markets as just as ‘series of conversations’ between people. If you think about it, every market is just people talking with each other, persuading each other, selling to each other, buying from each other (or not).

During these weeks and months – it took 7 months from that Dame Edna night to our official launch in December that year – I had the feeling that something would eventually derail us. A door would be closed in our face, and we’d think ‘Agh well, it was a good idea, but it was not going to work.’

Quite the opposite happened. We seemed to open every door put in our way. And so we marched on.

As hard as we looked, we could not find a map-based property website anywhere (in the world). This was 6 years before Google Maps was launched (interestingly, in Sydney, Australia).

Property websites, such as they were, had very little content on them, hardly any listings, and seemed to be out of date and very clunky to use. Certainly in Western Australia, there was little direct online competition to concern us. We were more worried about someone else getting out there with our idea, than the incumbents. Or perhaps the main newspapers getting in on the act. They would have most to lose, and could have owned this space if they wanted to. As it would turn out, they didn’t, much to their cost.

As we researched the tech, we found a local GIS consulting company that could build a prototype for around $50-$70K. Take an isolated mining town like Perth and there you shall find GIS expertise. We happened to living in a global GIS centre.

We figured we needed to raise $125K or so to have enough get us to launch. We wrote various drafts of a business plan, and spent more time on the tech, acquiring the required map databsets and the like.

As two co-founders we had a lot of energy and drive for the project, but between us we had little or no experience in real estate, technology or business. Nick had done property deals before, but was mainly a hedge fund dealer and investor. I was an Economics teacher. We had few contacts in business or real estate in WA. We had few business connections in Perth.

But one thing we could do was talk. And so we did…

~~~

Before the idea

The first in a series of posts about 1999 – the year I went from being an Economics teacher to dotcom entrepreneur…

‘It was 20 years ago today’ the Beatles famously sang on Sergeant Pepper in 1967. Well, more than half a century later I’m reminiscing and musing about 1999, 20 years ago.

1999 turned out to be quite a pivotal year for me. I had completed a full time MBA course at UWA the year before, which I did on first arriving in Perth, WA, from having lived and worked in Singapore since 1990.

By January 1999, the MBA course over and I was back in a full time teaching role. Lisa and I were DINKIES (double income, no kids), as she worked in the city.

I remember my parents coming for a visit and they were blown away by Perth.

‘You’ve landed on your feet here son,‘ said Dad, as we walked across the endless cricket ovals of Hale School, where I was Head of the Commerce.

I was coaching cricket too, and often the headmaster (and former Australian cricketer himself) John Inverarity would wander down to the nets to make some comments to the batsmen. Usually he would be accompanied by some legend or other of the game, such as Dennis Lillee, Geoff Marsh or even Barry Richards (who lived locally, and whose eldest son was in the 1st XI). I was just this rather average club cricketer from England. I sure had landed on my feet.

So 1999 was supposed to be the year I would relax back into a teaching role, after the previous two years spent emigrating, completing an MBA, fixing up our house, making new friends and settling into life in a new country.

Yet, by the end of it, I was running a tech startup (or ‘dotcom’ as they were then known).

Before an Idea… the Context

Remember 1999? The Y2K bug? The Dotcom Billionaires? GST being passed into law in 1999 (it would come into effect July 2000). John Howard PM. Richard Court Premier of WA. The referendum on moving from a monarchy to a republic went down. A certain Malcolm Turnbull was running the republican case. The Aussies won the cricket world cup (they were in the middle of a 16 year run of beating all comers). Stars Wars came out of hiding with the terrible Phantom Menace prequel, yet it topped the box office that year. The Sixth Sense and Toy Story 2 were also huge, as were The Matrix, American Beauty and Fight Club. Britney ruled supreme. The President was impeached (but not convicted). There was a shocking school shooting at Columbine. Sadly, some things have not changed in 20 years.

Having bought our first house when we moved to Perth two years earlier, I’d been amazed by the pain staking process of having to wait for the weekend papers (which had minimal information on each property listing, often no price or address), then trawling around the home opens, week after week. It was grossly inefficient, and only by chance really did we alight on the one we bought, courtesy of a great real estate agent, who then became a good friend, and colleague, Phil Knight. We still live in the same house today.

By 1999, dotcoms were being set up all the time, all over the place. The news was full of stories of the latest dotcom venture, billionaire, investor, and the rush to the ‘new millennium’. Boring old traditional bricks and mortar businesses were out of fashion. Every new business would most likely have an ‘e’ or ‘i’ in front of it and a ‘.com’ behind it, so we saw edocs.com, ebusiness.com, inature.com, etoys.com, boo.com, … gazillions were raised (and spent) by these and thousands of other businesses, worldwide. eBay, Amazon, Yahoo and others soared. The race was on. Share markets rose, the new millennium came and went (Y2K was not an issue) and stocks kept rising.

Certainly real estate was ripe for disruption. (It still is.) The information on listings was mainly held by the agents, with scant glimpses released by the weekend and local papers. Internet sites (such as existed in 1999) were limited and held a small proportion of the listings. They were clunky to use, and none showed where the properties actually were.

Push Me Pull You

Around this time I received a letter from UWA Business School that would stir up all these thoughts together.

Incredibly, the letter told me that I had topped the MBA, and after the formal graduation ceremony that April I would receive my award at a ceremony a few weeks later. This blew me away. I’d topped few classes at school, but nothing like this. My scores were set against all the clever business and professional people in Perth, and I had actually topped the whole blooming MBA graduating class of 1999.

‘This has currency’, I thought, ‘And next year there will be a new top graduate. For the moment, and for the next few months, I am it.’

As we moved towards the end of that first term I was somehow not having a good time at school. I can’t put my finger on why, but teaching was not doing it for me anymore.

I grew frustrated and bored. The students would simply regurgitate the class notes in boringly repetitive essays, and yet attain marks that would easily allow them to sail into UWA on a BComm course, which is where most of them were heading. A cardboard cutout could be teaching them. Or a trained monkey. The zing of teaching had gone. I was ready for a new challenge.

On holiday in Esperance in Easter 1999, Lisa and I were walking down a beautiful white sandy beach, and I stopped for a minute and said, “I don’t want to teach anymore… I want to go and do something else.”

It felt good to say it out loud.

Instead of trying to persuade me otherwise, or tell me I was being an idiot, Lisa simply said, “Go do it.”

[TIP: Don’t try and start a new business without an amazingly supportive partner.]

Trouble was, I had no idea what other thing I could do.

The traditional route for the MBA grad was to go into consulting, but how could I consult to business when I’d not done one myself? What other jobs were there for ex-teachers? I’d not gone into the MBA looking for a career change anyway. My idea was that it would be a good feather in my cap when I go for a headmaster interview. Head teachers end up running fairly large organisations. An MBA would be useful.

Should I now turn my back on the career I’d been building over the past 13 years?

I was confused, and frustrated. And at precisely this moment, Lisa and I would have a night out at the Regal Theatre that would open the next door…

To be continued…

~~

Photo by rawpixel.com

NEXT: Dame Edna pulls me on stage

A Dog’s Brexit – or why you don’t give students a vote on homework

Watching the fall out from the 2016 Brexit vote has been met with increasing alarm and bewilderment. No matter what side of the debate you are on.

The increasingly entrenched tribal views of each side of the Brexit question have added to the mess. No one is listening anymore. Hard, extreme core groups are facing off against each other, making it hard to see a sensible way forward or any palatable compromise that can get passed by the UK parliament that is also acceptable to the 27 EU member nations, and that also honours the ‘Leave’ result of 3 years ago.

At this stage, no one knows what the end result will be. At the time of writing almost anything is possible: from a no deal crash out of the EU, to a managed exit with some kind of deal, to a long delay, to a total change of mind and remaining in the EU.

The poor British public are losing the will to live – they are either saying “get on with Brexit!” or “for goodness sake, stop this Brexit madness!”

It’s an extremely complex issue, as global and regional trade, business and politics are intertwined in all kinds of ways. Hundreds of thousands of companies in Europe rely (and have been built up on) free movement of goods, people and services over the past 45 years, and to rip that up is very destabilising.

Even more so, when those businesses have no idea what the final outcome of all this wrangling will be. Uncertainty is the greatest killer of business.

What happens to the millions of Europeans who have settled in the EU, and those Brits who have done likewise in Europe? What happens at the Northern Ireland/Irish border, and what implications does this have for the 1998 peace deal (‘The Good Friday Agreement’)? What about Gibraltar?

It is for these precise reasons  – and many more – that a complex issue such as Britain’s membership of the EU should never have been boiled down to such a simplistic choice of Leave or Remain in 2016.

Lunatics taking over the asylum

It’s akin to asking school students whether they would like to ban homework or not.

I bet if you held that vote in pretty much any school, it would come down on the side of ‘Leave’.

“We want to take our lives back!” you could hear the Leaver camp scream. “It’s a golden, new future that awaits us – we can do this!” they would argue. “Imagine all the time you would have now to do those other things you can do, like social media, listening to music and going to parties?!”

Sounds like much more fun. I am sure it would get up. It’s easy to bash things that are difficult to understand. Even easier if you want to stick it to those in power.

No doubt there’d some some brave souls arguing the benefits of remaining with homework, the educational benefits, the long term lessons it teaches in working independently, solving problems yourself and solidifying your understanding. The study skills it teaches. The self reliance. The confidence. The feedback on learning it provides.

But they’d be drowned out by the leave populists. Why not try it? What’s to lose?

On the Leave side, there may even be some arguing against homework stating its adverse impacts on education, how only the richest kids have nice study areas at home and how divisive this is. And how mean it is to set homework which some students can’t complete. But mostly, the Leave arguments would be based on emotion, not facts.

“I don’t really accept your alleged ‘facts’ about the benefits of homework,” a Leave proponent would say, “I am more interested in how homework makes students feel.”

And so, when it comes down to it, on polling day, a majority vote to ban homework. Great celebrations ensue. The lazies love it. They can’t quite believe it.

But it’s not long before issues start to take hold.

So we’ve voted against homework, does that mean all work done at home is banned (Hard Leave) or just that teachers can’t set and grade homework (Soft)? It was not all that clear. Leave meant different things to different people.

Parents and teachers bemoan a further dumbing down of an entire generation of students, and the results the school can deliver. The older students are only a year out from uni anyway so aren’t as bothered. It’s the youngest ones that will suffer.

The implication of banning bright, studious pupils from doing work at home is becoming hard to implement. There’s a back lash against the vote, and the decision to even hold it in the first place.

(It was only held to appease a noisy hard core of teachers who had had enough of marking homework. The head teacher had been pressured to hold a ‘put up or shut up’ in or out vote. That head teacher has since resigned and the much-harangued successor is now feeling duty bound to follow through on the decision.)

A mass exodus of families starts as they move out of the school catchment area, selling their houses and buying in other suburbs where the local schools still have homework. House prices fall around the school.

Sounds crazy right?

The Real Politic

Politicians are elected to make decisions in a representative democracy.

This means they represent their constituents and make decisions on behalf of the people. It’s why they are there. They don’t go back to their people every time they have a decision to make. The public have their own lives to live, and differ among themselves anyway.

Politicians are then held to account at the ballot box every few years. They make the decisions and vote on behalf of the people, for what they believe is in their best interests.

The referendum was flawed from the outset. Even leavers could not agree on (nor know) what they were leaving for, and how that would be arranged. No one is happy. One lesson from the mess is not to ask a simple question to a complex issue; especially if those answering it have little idea of the long term consequences, or understand what’s good for them.

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Photo by Deeana Creates from Pexels