1) Those first 10 years, before the first round of investment….if you had a time machine, would you do anything differently during that period? Perhaps to bring the first round of investment forward? Or do you feel those years were fundamental to the foundation of the business?
There are lots of things I would do differently if I had my time again, but I probably wouldn’t have brought the investment forward. In my view, too many companies attempt to get investment too early in their life. You should really only get in venture capital investment when you have both a product that you know customers want and that you know how to sell. Then you can safely add more fuel to the fire and grow your company well. Get in too much investment too early and you have to give up a larger proportion of your company to help fund the mistakes you make whilst learning.We correctly understood the way the market for call centre technology would go way back in 2000 when we started the company, however, it took until 2009 for the market to catch up and customers beyond super early adopters to want our product. When we got our first investment we still didn’t understand how to sell our product, and that cost us dearly, but the expertise we brought in helped us learn how to sell it.
2) If you could go back and tell yourself some key things before that first round of investment, what would they be?
In the first ten years before investment we made lots of mistakes. As leaders, we pretty much made every mistake you possibly could. We held on to responsibilities way too long and were terrible micro-managers because we felt no one could do the job as well as we did. We failed to invest in our people by keeping their skills up to date and helping them develop. Also, we didn’t think about company culture at all and made some terrible hiring mistakes because of it.
We should have also paid more attention on bringing in expertise on how to sell our product. We made the mistake of hiring industry experts that didn’t understand SaaS. Only later did we hire SaaS experts and teach them about the industry. It’s easy to teach someone the details of a particular technology, it’s harder to find someone who understands your type and stage of business. People that did well at a large corporation are going to find it very difficult to adjust to working at a startup.
My final bit of advice would be to read more. There are lots of good books out there on how to build businesses, how to build teams and how to be a leader. Now there are a lot more resources available than when I started, but that’s no real excuse. Books are a fantastic source of wisdom.
3) If you could go back and tell yourself some key things AFTER that early investment, what would they be?
Get ready and prepare yourself for change and make sure you are ready to level up to where you need to be for that next stage in the growth of your startup. As a company grows and changes you do need different skills and different ways of working. Do what you can to surround yourself with people better than yourself and learn from them.
4) Did having money in the bank change the direction of the company in any way?
Having money in the bank and having investors that supported us made one big difference to NewVoiceMedia. It gave us the resources and it gave us the gravitas to go out and hire experienced people that had built a successful SaaS company before. This really professionalised the company a lot.
A startup goes through many stages in its lifecycle and needs different people at different stages in its lifecycle. A good metaphor for this I’ve come across recently is the Commando, Infantry, Police metaphor (originally from Accidental Empires by Robert X. Cringley). At this stage, we were making that transition from Commando to Infantry.In brief, this idea is that you need a different approach, and probably different people, at different stages in a companies lifecycle.At the beginning, the Commando phase, you need to be fast and cheap and not worry too much about professionalism or breaking things, it’s all about speed and discovery.In the Infantry phase, once the bridgehead is established, you need more people, you need to create and define the process as you need to make it repeatable whilst still expanding and exploiting the breakthrough.Finally comes the Police phase where it’s all about growing by bringing in efficiency and economies of scale, not conquering new business areas. For more on this idea see https://blog.codinghorror.com/commandos-infantry-and-police/.
At all stages, it’s best if you have some people that have done it before and have a least a mental template they can apply on what needs to be done next.
5) NVM negotiated quite a few rounds of investment, before eventually the U.S. company Vonage acquired it at the end of 2018. How did those rounds of investment feel different to each other over time?
In the first round of investment, it was much more about the team and technology. Did we deeply understand the sector we were in, did we have the experience and the did the technology we have work and would it be able to scale to where we needed it to be? The next few rounds were more focussed on did the customers we have love the technology, could we acquire more and could we hold on to the customers we had. The final rounds were much more about the metrics of the business, could we grow efficiently and how quickly could we grow.
In lots of ways, it became easier to raise money over time as we had more proof points about how far we had come.
6) Looking back, what do you think were the metrics or heuristics that gave you the best insights or, with hindsight, were the most benefit to keep track of?
The most important metric I look at is employee satisfaction. My reasoning is as follows – at the end of the day businesses need to make money. To make money you need to keep your existing customers and sell more stuff. Keeping customers is easier than attracting new ones, so you want to hold onto them and you want to sell them more things. Getting new customers is easier if existing customers recommend you – customers are your best salespeople. This all means that to sell more stuff you need happy customers, normally measured by using NPS (Net Promoter Scores). To have happy customers you need to have happy, motivated employees that understand your customers. The best way to measure this is to use employee satisfaction metrics.
If you want to look into this further then a good source of employee satisfaction questions is the Gallup employee satisfaction survey questions.
7) I remember the culture at NVM being really exciting – at times, it felt like ANYTHING was possible! Was that something that was always the case, or did it ebb and flow and change? If so, in what way?
I think this was always the case although it did naturally ebb and flow at times. In the beginning, this was easier as there was so much possibility and communication was easier, but that was probably driven by pure belief. Later it maybe became easier to believe as we could see tangible success, but at the same time it took more communication and effort to keep the belief flowing.
Building a successful startup is about achieving the highly improbable rather than achieving the impossible. Statistically most startups will fail and often it’s about self belief. Just like high-performance athletes, to be truly great you need to know that you will win. Not doubting that you are good enough or being desperate to win, just knowing that you will find a way and you will win.You need to have that belief and you need to let it seep out and infect those around you and inspire them with that same confidence and can do attitude. This is one of the most important jobs of a leader, you need to out there inspiring people. This doesn’t need to be doing lots of “rah-rah!” talks, it can be through your actions and it can be through storytelling.
It’s no accident that “cult” and “culture” share the same root.
8) what is your key piece of advice for someone on the verge of getting that first big (relatively speaking) injection of cash?
When you are thinking about getting that first round of investment think of it as a marriage. You are going to be working closely with these people for a decade or more – building a business takes time, there is rarely an overnight success. You are going to be with them when the times are good and you are going to be with them when times are truly horrible. Do you trust them, do they bring you value beyond access to money and will they stick by you when the bad times come around? The best investors will be able to give you a lot of advice and be able to introduce you to much wider networks that can give you support and bring you business.
9) You are now working with several exciting startups -What is it that attracts you to the kind of companies that you work with?
For me a big attraction is about being able to learn new things. I get to see lots of new exciting business ideas, to learn so much about different areas of technology and to learn new ways of helping people develop their businesses.
10) So having built a company from 2 people to around 450 employees when it was sold, Would you ever do it again?
I would never say never on this. It is very hard work and the experience last time round did nearly break me on a couple of occasions but I do love the thrill of creating something. I’ve met so many amazing people through building NewVoiceMedia, had such wonderful experiences and have learned and grown so much that I don’t regret a day of it.
At the moment I’m getting my thrills vicariously by helping others on the first steps of this journey. Depending upon how things develop I may stay as I am, I may get more heavily involved.
11) Given your experience in this arena, what have you done / changed / prepared that will make ‘next time’ a little easier?
Other the years I’ve developed a lot and have a lot more experience. I now have a better idea on how to manage and motivate people, I’ve got a much wider network of people I can draw on and I have a much wider breadth of experience. All of this would make next time a lot easier and give me a much higher chance of success.
At the same time coming at something the first time people often have more energy and start out without preconceptions. Often with age and experience, you can be weighed down with so many reasons why things can’t possibly work and if you have more family responsibilities you have more to lose if things go wrong. If you are young (or young at heart) you can approach things with a fresh pair of eyes and you have less downside if you make mistakes.
12) If there is an entrepreneur out there reading this who thinks they could do with some sage words from you, where can they get hold of you for an initial conversation about working together?
I don’t claim to know all the answers but I’ve been around the block a bit and made plenty of cock-ups so there is a good chance I’ve seen a similar problem before. If I don’t know the answer to something there is a good chance that I know someone who does, so please feel free to get in touch.