I’m now 3/4 of the way through my tech accelerator course and, I have to tell you, it’s like being beat up over the head with a hammer every day.
I’ve built incredibly successful businesses from the ground up with nothing more than a bank overdraft (oh, those were the days…) and hard work. I never had to do a business plan, work out all the nitty gritty details of how and why and when.
Back when my ex-husband and I started our PR company we worked from home. He had a desk and a fax machine and a telephone that allowed him to hear when he had an incoming call and switch from one line to another. That was it.
I remember our accountant, a retired Financial Director, that we had found through Thomsons Directory, coming for the first time to see us. He walked up three flights of stairs to find this empty space save for the desk, chair and a small, old sofa that had been left in our house by the previous owner.
I could tell from the look on his face that he thought the whole set-up was a bit Mickey Mouse (which it was) and that we might both be a little crazy to think that we could run a PR company this way.
A couple of years later we were renting a small office on the same road on which we lived with six staff. Three years after that we had renovated an abandoned electroplating factory in North London into a modern, architect designed office building with a dozen staff.
By then we were turning over more than a million pounds and my accountant was telling his other clients about us. The biggest names in entertainment were giving us their business. All this without ever committing to paper cash flows and forecasts, and all the stuff that comes with running most companies.
Learning on the job
Over the past few weeks it feels like I’ve crammed a business degree into a few short months.
Along the way, I’ve pillaged my phone book for anyone that I have ever met in my career that may be able to give me some guidance and help me to negotiate the tech start-up landscape. I feel I need as much support as possible to understand what’s going on here because it’s not what you read about in the papers.
We have all read stories about the WhatsApp purchase and Twitter valuations and so on, but the reality in the UK is that investors here aren’t really interested in those kinds of businesses.
That’s why, aside from Skype and Moshi Monsters, we have no other big tech success stories. We live on a small island and the unfortunate reality is that the majority of the investment community has a small island mentality.
Most UK tech investors, unlike their U.S. counterparts, have acquired their money through graft, just like I did when I ran my PR agency. Work hard, grow your client base, charge what you can get and keep going. They simply cannot conceive that valuations can depend solely on the number of eyeballs, that ongoing engaged usage of something that is free can be worth billions.
Time and time again in our course we hear, ‘Where’s your revenue stream?’ It has become a mantra that has become something of a joke amongst my classmates. Like so many others, I believed and still do, that if my app is to succeed it needs to do so on the merit of its content and its benefit to others.
Finger on the trigger
My user base, the very discriminating 18-35 year old Londoner, is simply going to press ‘delete’ if they feel I’m trying to push them towards spending money too quickly.
And pressing ‘delete’ is what we all fear because we all know how easy it is get turned off a digital product. Too many push notifications. Press delete. Too many ads. Press delete. Facebook logins that require me to give away all my information. Press delete. Clunky sign-up procedures. Press delete. And on. And on. And on.
It’s incredibly easy to get discouraged by the tech startup scene here. Silicon Valley and the investment ecosystem over there is just so different from our own ‘Silicon Roundabout.’
An American friend of mine, who had a successful startup in the Valley years ago and is now starting one over here said that over there it’s all about scale and eyeballs.
Most investors have not grafted to have made their money but through stocks and shares. Gambling and risk taking are seen as part of the process. It’s a clique mentality. Bob puts his money into SnapChat or whatever and his friend Bill thinks that’s probably a good thing to do too because the last time Bob put his money into something he made a few million. And so it goes.
I spoke in my earlier post about the meet-up events and the youngsters that dominate such places. But it’s not just the nonsense and the Mickey Mouse attitude that goes on there, it’s this constant feeling that we’re not working on building the future but replicating the past.
When in Rome
As far as the UK investor is concerned, my digital product is the same as any other product. How much is my customer willing to pay for it? I could invent the next instant messaging platform and the typical UK investor would still want to know where’s the revenue stream.
Needless to say, I’m not an idiot. When in Rome blah blah blah. So if you want to know. Yes, we’ve got a revenue stream. Yes, it doesn’t compromise my product and my users.
The SEIS scheme, for what it’s worth, does at least allow investors to claim a good part of their money back in tax relief. And a friend pointed out that if I ask for small amounts of money and can get all the SEIS paperwork done in the next two weeks, our investors can have 50% back in tax relief this year end.
In the past few days I’ve raised £20k in this way. It’s not a fortune but we don’t need much to keep innovating. And if running a business taught me anything, it was to keep it lean.
The good news is that Frugl is now live. I think it looks great and is getting very positive user feedback. So if you’ve got an iPhone and want to give it a go, please download it here. And if you want to invest in future Frugl, you know where to find me…