Category: Q&a

Expanding? Questions to ask yourself.

5/5/2019

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Am I ready?
How much do I know about the market I'm going to/into?
Do I have sufficient resources? (capital and team and plan?)
Who has done this before that I might be able to talk to?
Are there any conferences in this space that I could attend?
Where do I focus?
Have I learnt enough from my recon trips?
What don’t i know?
Do I have a market map? Eg: who invests in my space? Partners? Competitors?
What do I want from the Kiwi Landing Pad?

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Q: What was your approach to funding Spotlight Reporting?

2/20/2018

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Richard Francis
CEO & Founder
Spotlight Reporting

A: “We bootstrapped those first three years as I mentioned. We had a successful consultancy so had little bit of money we could throw at. The little nugget of genius we had was seeing a gap in the Xero ecosystem shortly after we’d launched Spotlight Reporting. We were chatting to Hamish Edwards, the co-founder of Xero, and thought we could build workpapers that are online. So we built the first workpapers set - which is about as exciting as it sounds - but is a very useful tool for an accountant. Rod [Drury] basically said ‘we need that don’t we. Name your price’. It was very early stage so we settled on - public knowledge - $800K, and put that money back into Spotlight. So Julie [Richard’s co-founder, and wife] and I have put everything into it. We had the big mortgage, and all that stuff.

When we were talking to Xero about potentially being acquired, I thought ‘why don’t we raise a similar amount of money and really go to that next stage?’ We ended up getting some great early stage investors, and 3 years in did a seed round of $1.3M. David Wilson, Vend director and major Xero shareholder was one of our backers, as was Craig Winkler, MYOB founder and major shareholder Xero, and so was Graham Shaw, Director of PushPay, Gentrack, Rightway. So we had these cool guys - there is lots of others I can mention - who got in early and that allowed me to hire the next 10 people to seed offices in the UK, San Francisco and Australia more thoroughly.

My accounting background has been useful in understanding the SaaS metrics. I understand the formula that drives our business and I’m very clear on our strategy. But I’ve also got that fiscal management thing going on. The beauty of that is we’ve looked after the money. We do lots of cool things, spend a lot on events and all that. But shareholders money matters. It’s other people’s life savings. Get a CFO in. Get an accountant. Make sure you look after shareholders money. There is a guy at SaaStr who said ‘every dollar of shareholders money matters. And every dollar we spend I want to see ROI’. It might sound extreme, but I think that’s quite important. We’ve all seen founders do a round, and blow the money on shit, or lose it through really poor or loose management. The business either goes under, or needs emergency funding, or a down round. A lot of that is not actually down to the company itself or the product not being that good. But it’s just drinking the kool-aid and getting out there and spending the money on shit.”

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Q: What were some of the scaling and operational mistakes you made (at the time of adding 20 employees a week)?

8/9/2017

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Victoria Ransom
CoFounder @ Wildfire
(acquired by Google in 2012)

A: There were so many. In particular, our desire to stay ‘flat’. We hated anything that had any slight smell of bureaucracy or ‘large company-ness’. But [we learnt] when you’re growing at that rate you need leadership. We kept the organisation too flat. When we did need leaders we promoted people, leaving capability gaps.

Our sales organisation was a good example of this. We needed managers to support our sales people, so we promoted some of our best salespeople. This worked well for the most part. Except we lacked the depth for active salespeople to move into managerial roles. We saw a drop in sales for a few months until we got a handle on that.

The other learning was around the things that you think suck. Your employees want performance management and to get regular reviews. You think they suck, but they matter to your employees. [We made mistakes with] the some of the things that relate to hiring and developing your employees. Along with firing them at the right time!

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Q: How did you figure this all out? The lifetime of the business was four years. You were busy scaling the business, getting customers and hiring four hundred people. It doesn’t leave you that much time to learn. What did you do as a founder to figure

8/9/2017

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Victoria Ransom
CoFounder @ Wildfire

A: We did a lot of 'on the fly' learning. I remember the first day back at work each year. I'd say ‘okay, my new year's resolution is to spend more time reading in the business’. I’d spend the first week while it was still kind of quiet doing lots of reading, and it felt amazing. Then week two rolled around, and everything was chaos again. You're making decisions on the go and all that flies out the window. So, the truth is I didn’t spend a whole lot of time reading management books or blogs. And I also - to my detriment - didn’t spend an awful lot of time cultivating mentors. I didn’t feel like I had the time for it. I wouldn't advise that, it was just me.

We did work well as a team. There was a lot of smart people in the room. When challenges came along we had the kind of culture where we’d sit down and hash them out. If you have a few smart people in the room and you’re willing to listen to each other it’s amazing what you can figure out. We also made lots of mistakes along the way; you have to when you’re moving that fast. We made mistakes, reacted, fixed them and learnt from them.

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Q: Can you talk about doing business in Japan? The ethos, and what it is like to do business there?

6/28/2017

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Jonny Hendriksen
Founder & CEO
Shuttlerock
Previously ValueClick

A: All in all I ended up in Japan for 21 years, so a long long time. 21 years in Japan has taught me a few things. The Japanese are always very much team first. Take the Japanese football team, it’s taken many years to be good at football. They always famously used to pass the ball around in front of the goal, because no one wanted to step out of the group and score. They used to bring in Brazilian coaches, and the biggest thing they were having to teach the Japanese was to go on their own. There is a time and a place to forget the rest of the group, and go score a goal. I guess the same can be said with regards to Japanese society and groups; that they’re very aware of the team.

Because there is so much history in Japan there are a lot of rules in society. I think Japanese find it very relaxing to come to NZ or go overseas because they’re not so constrained. In Japan there are a lot of rules to abide by, so when you first arrive in Japan for a foreigner you can wonder whether you’re doing the right thing or not.

They’re very big on communication. Even for us, we’ve got a wonderful team in Japan but it’s all about going and meeting someone in person; it’s very much face to face. It’s going to be very difficult to do business in Japan through a website or from afar, because it’s really all about relationships. After 5pm business is huge, so you’ll be going out quite regularly with clients. You really build up some long term friendships. The Japanese will do business and do business for a long time but I think they don’t jump into relationships as quickly as we might do in the West. I think they do want to find out more about you as a person. It means a lot to them to know who they’re doing business with. So they really spend the time to understand who you are, and based on that they’ll build a relationship.

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Q: What’s some advice for founders and teams who don’t know what they don’t know? What should they focus on to get ahead of the curve?

5/24/2017

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Rod Drury
CEO & Founder
Xero

A: Building a mental model of your industry. How things work. Who the key people are. How you get to see them. With Aftermail, we knew getting on the Gartner magic quadrant and having the analysts understand what we are doing was really important. So who are the analysts? Ring them up. Are they speaking at a conference? Can you meet them face to face? Can you ask them out to lunch?

I was pretty ruthless at that networking. I remember going to the angel investment conference before we raised any money. I was thinking where’s all the money? Oh, all those people are together, they have a conference. They had an event at Black Barn and when I got up to speak I said I’m so disappointed there’s no cheeky founders here. Any cheeky founder would have done the mapping and worked out that all the money was going to be at an event in Hawkes Bay for two or three days, that’s where you want to be to build that relationship. The money you want to raise in New Zealand will come from people in that room. So working out how to get in there.

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Q: How do you handle the movement of people who are only suited at certain stages of growth and maturity at Xero?

5/24/2017

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Rod Drury
CEO & Founder
Xero

A: If you’re a public company and your results go out every 6 months then you’ve got to make moves. One of the interesting - and hard - parts about Xero is that we’re growing so quickly that people who’re great at certain level might not be right for the next. We tend to have those conversations pretty early. For people who haven’t been right, they’re usually valued inside our network so we help them to get their next job and keep their career moving. We care about all of our family. But there are a few people where we’re at just might not be the right place for them. They may be halfway to where they need to be but if we replace them it’s going to get rid of the job they had. We try to be very human about that, make sure they’re not financially effected too much. We’re very positive and proactive about getting them into their next opportunity, and it’s exciting to see how they flourish.

We also sometimes get people to change careers inside the business. Quite a few people bounce around inside the business until they find their thing, and then they’re off and running. We also occasionally hire over the top. While that can be traumatic, 9 times out of 10 the feedback a few months later is that they’re enjoying work much more learning from someone. All those dynamics are things we care about and are working on all the time.

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Q: How do you make sure you get the nourishment you need in terms of intellectual conversations, and keeping a view on what’s coming ahead?

5/24/2017

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Rod Drury
Founder & CEO
Xero

A: We have people right through all levels of the business that really get it. You naturally build those relationships and so get a lot of that internally. If you do find people from other companies you look forward to those interactions. CEO’s share a lot of stuff. I just had a text from Mike Cannon-Brookes yesterday, wanting to benchmark some policies they were doing. So you just ping it straight back on a text. There is lots of support in the network. We’re all time poor so we don’t want to reinvent the wheel, so we ask for help quite often. When you find people that are stimulating, push back, and have a good perspective, it’s really interesting.

Some tips on this. I’ll see one of my staff and they’ll say ‘hey Rod, how are you?’ And I often think doesn’t really matter, does it? Ask me a question or something relevant. When you’ve got fifty people asking you how you are it gets a bit tiring. But if someone says ‘hey Rod, I’ve got a problem or what do you think?’ That’s really interesting. Asking questions is a great way to connect and just get to it, because you don’t have time for pleasantries when you’ve got lots of people. At a certain size there is this asymmetry where everyone wants to talk to you, but you’ve heard every conversation - unless someone blows you away and it’s really interesting. So consider that perspective if you want to network with important people. Ask them a question that makes them think. Chit chat isn’t really that interesting, we’re all too busy.

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Q: What has been the most useful investor for you, and how have they had the biggest impact?

12/14/2016

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Rich Chetwynd
CEO & Founder
ThisData.

A: Early investors were really key; they helped me better understand the investment landscape, how to navigate it, and how to raise capital. More recently we’ve added a few investors who our smallest investors, but they have really high impact. They’ve been really helpful for their network and introductions. They’re literally our smallest investors but probably the most useful for making progress in the US. These three investors are all based in the US and they’ve all helped with introductions, guidance, or various different things that I wanted to achieve. When they asked to put a bit of money in the business we didn’t really need it. But we agreed to allow them to join on the condition that they can help with x. It’s so important that you’re not just getting money; that there is an cherry on top.

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Q: What has your approach been to raising money? And how is it different being a first time founder?

12/14/2016

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Rich Chetwynd
CEO & Founder
ThisData

A: For me I had never raised money before. I’d built and sold a company and that was great, but I’d never raised money before. It was the classic case of ‘ask for advice and you’ll get money, ask for money and you’ll get advice.’ There wasn’t any funny business going on there, I just really wanted the help. So I found the single person I knew who had a lot of experience raising money, and I went and asked that person if they’d be interested helping me put it together. Then ultimately they ended up putting in money as well. That person was really key; I didn’t need their money but I really needed their help. And they helped me work out what that initial valuation might be, how much we should raise, who we should raise from, as well as opening a few doors and making a few connections. That’s is how I started off on that raising journey.

There are so many questions when you go out to raise money. You’re all obsessed about what you want to do and how you’re going to change the world; and you need x dollars to do so. But then there is are sorts of other things that come into play. How do we value this opportunity? What sort of investors do we want? What are the timelines we’re looking at? How do we put together good terms?

One of the things that also came up for me was to stop thinking about the first round. To start thinking about what the subsequent rounds actually looked like. You can get hung up thinking it’s all about that first round of money, but once you’re on the capital raising buzz it’s hard to get off it. You have to spend the money, but then if you haven’t hit the targets you’re still spending the money. So you’ve eventually got to trim your costs, raise more money, or more likely both.

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Expanding? Questions to ask yourself.

Q: What was your approach to funding Spotlight Reporting?

Q: What were some of the scaling and operational mistakes you made (at the time of adding 20 employees a week)?

Q: How did you figure this all out? The lifetime of the business was four years. You were busy scaling the business, getting customers and hiring four hundred people. It doesn’t leave you that much time to learn. What did you do as a founder to figure

Q: Can you talk about doing business in Japan? The ethos, and what it is like to do business there?

Q: What’s some advice for founders and teams who don’t know what they don’t know? What should they focus on to get ahead of the curve?

Q: How do you handle the movement of people who are only suited at certain stages of growth and maturity at Xero?

Q: How do you make sure you get the nourishment you need in terms of intellectual conversations, and keeping a view on what’s coming ahead?

Q: What has been the most useful investor for you, and how have they had the biggest impact?

Q: What has your approach been to raising money? And how is it different being a first time founder?

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