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10 START-UP MISTAKES IN 10 MINUTES
| Date post: | 08-Jan-2017 |
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Small Business & Entrepreneurship |
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10 START-UP
MISTAKES IN
10 MINUTES
My start-up experience
1997-2001: Netucate (eLearning)
2001-2002: Einstein Learning (TV/Digital Media)
2002-2010: PIXELearning (serious games)
2010-2012: Soshi Games (social games)
2012: DNA Interactive (mobile games)
2013-14: EveryonesPlaying (mobile game discovery tech)
People
Projects
150
~150
Revenue
£3mFunding
£1.5m
Mentor/advisor at several accelerators & incubators (inc. Game Founders,
Estonia)
Funding advisor & support for games & creative tech. biz’s (Tenshi
Ventures, UK)
+ been through multiple start-up, growth training & support schemes
No #1
“Not grasping opportunities the moment
they present themselves”
?
No #2
“Trying to do too much
(over-stretching)”
Entrepreneurs = ideas, excitement, energy & enthusiasm
BUT! Trying to do everything = not doing any one thing well!
Netucate Online (eLearning development services)
Had ‘OK’ service-based revenues.
Would have grown steadily as we learned and got better.
Tried to fund development of very ambitious ‘eLearning personalisation platform’
Put key staff onto a speculative project that we didn’t have funds to bring to market.
Spend loads of time trying to get angel funding.
Stopped winning consulting projects & revenue dried up.
Investors never committed & ran out of money
Made 8 people redundant and closed company 2 days before Christmas 2001.
No #3
“Chasing the money
(instead of focusing on delivery)”
Get caught up with pitching to VCs & angels & listening to advisors who all want a piece of a
successful exit = end up making up business plans you don’t believe in, cant convincingly sell
and cannot deliver upon
PIXELearning (videogames for training)
Planned services, products and authoring platforms.
Hugely ambitious sales forecasts, extremely unlikely to deliver.
Early stage investors bring pressure to create the story so that valuations go up and their
seed investments grow quickly.
VCs want to hear ambitious stories and see plans for big exists.
Media propagate success stories/expectations.
Incubators/accelerators are guilty of setting unreal expectations too.
Easy to get caught up (planning for the exit, counting the $$$)
Keep grounded. Focus should be on building a meaningful, sustainable business. Success
comes from that.
No #4
“Forgetting what the customers want
(& will pay for)”
Business is simple…
1. Do/make something that someone wants
2. Sell it for more £$€ than it cost to make
3. Repeat
PIXELearning. Existing tech & revenues. Raised £225k seed funding
Carried away with what could do not what should do.
Tried to build a HUGE web-based business simulation platform (stupidly complex
simulation model, rich media, highly configurable by non-developers)
WAY TOO AMBITOUS + NO CLIENTS ASKING FOR IT
6 months & £150k wasted
Very common mistake by indie games studios. Pour heart and souls (and all their £) into
the games they would want to play only to find there isn’t a customer base.
HUGE waste of time, effort, skills and money.
No #5
“Not taking enough risks”
Little companies need to punch above their weight and take BIG risks if they are going to
overtake established businesses in the same space.
Try to do things the same way (e.g. game development) without ‘big company’ working
capital, sales, marketing, development resource, infrastructure etc = likely to fail.
Soshi Games (F2P social games partnering with music industry)
Early players took risks & grew into huge businesses e.g. Zynga, Playdom & Playfish
We had early successes but it was going to take patience (and funding)
Investors were risk-averse
Pushed for quick revenues from familiar business models (service, advertising)
Ended up as just another custom game development studio
Lost identity & momentum
FAILED**
** 2 years after I left
No #6
“Taking too many (personal) risks”
Persistence is a key entrepreneur attribute but sometimes you have to stop, slow down, re-
prioritise or change direction.
PIXELearning (videogames for training)
I was determined to move from work for hire and create OTS content and technology-
based revenue (bigger margins, sexier business, get venture capital etc)
Much harder/took longer than ever imagined
Used credit cards, unsecured loans, re-mortgage, overdrafts, borrowed from parents +
sold my motorbike
Borrowed to pay company bills (staff=guilt)
Borrowed to support own family whilst not taking income
= £75k debt
7 years to clear + 2 years for credit history to recover
Can be extremely stressful
“Are we poor this month Dad?”
No #7
“Trying to innovate too early”
You want to create/massively disrupt a market
…Very hard if you are a boot-strapped start-up in a market dominated by billion dollar
international corporations
PIXELearning (videogames for training)
We were trying to sell complex ‘videogames for learning’ solutions
Customers were still struggling to adopt simplistic eLearning
Took much longer than we expected to get real traction
Then the world economy collapsed in 2007/8!
Kept company alive (personal debt!) but lost momentum & many others entered market
We probably would have done much better if we’d been less ambitious
Start-ups need to innovate (is their edge) but you need to have appropriate resources to
support you to be there in the long-run.
No #8
“Trying to do everything yourself”
(and forgetting the ME time)
An entrepreneur needs to understand all aspects of the business
…You don’t need to do/control everything
PIXELearning & Soshi Games
7am to 7pm, + evenings + weekends for 10 years
‘Busy = productive’
‘If you want something doing well do it yourself’.
‘Be first in, last out’ – example for the staff
You will burn out
Your family life will suffer
Specialists will get things done quicker
Get people in. Trust them. Support then but let them do their job.
Your focus = building a business …DO THAT!
Only when I stopped this pattern did I realise!
No #9
“Hiring out of desperation”
You need people who are right for your business.
Soshi Games (social music games)
Built team, tech and processes around experienced lead dev
Hugely impressive (at the start) but a poor manager, irrational & negative.
Not suited to a start-up environment.
We tried to accommodate him for fear of losing our only ‘tech star’
Incurred incur cost & disruption, almost lost funding deal
Replaced straight away with expensive contractor
Used us as a short term gap filler = massive disruption again when he left
Take time to find people who are a genuinely good fit for your organisation as well as
decent at their job. Sometimes the stars burn out too quickly!
No #10
“Failing to always be selling”
Sell stuff or die!
Einstein Channel Plc (Digital TV channel)
Science & technology programming + digital
Strong appeal to male 18-35 demographic.
Raised £12m on AIM
Advertising business model required hitting 16 countries in 2 years.
Achieved only 2, one of which they paid £500k/year to be on (SKY).
50+ people focussed on content creation.
2 people focussed on business development.
Tried to fix too late. £12m burnt!
My division, Einstein Consulting, was the only profitable part of the biz! I spent 2/3rds of
my time finding or with customers.
PS You don’t need to be a ‘salesman’ to sell.
Everyone fails!
Take chances.
Make mistakes.
Learn from them.
…..don’t repeat
them!
Quaking boughs above my head.
In morning wind, the sky was red.
I could have stayed at home today…
Quaking boughs above my head.
In morning wind, the sky was red.
I could have stayed at home today…
…but wisdom comes to
those that stray.
