10 things I learned working for a startup
So it is with some sadness that I announce I am leaving my role as Head of Content for Omny Studio. Excitingly, I’m about to take a new role as Innovation Community Manager for Australia’s leading telecommunications and technology company: Telstra. Which means I’m saying goodbye to the professional world of Podcasts for a while (although, of course I’ll be quietly following the industry from afar).
For those of you who don’t know me — my background is in Radio. I worked for Nova Entertainment in a variety of on-air and off-air roles, across multiple timeslots and in nearly every big city in Australia. But it was my love of digital and a drunken conversation about “where radio is going next” that lead me to have coffee with the founders of the then radio consumer app: Omny. A coffee turned into an unexpected work pitch and I found myself as full-time employee #5 of a startup. That then turned into 2 years, 2 pivots, hiring 2 times the amount of people, 2 more rounds of funding and too many valuable lessons to list here.
On my way out the door, I hope to impart my 10 biggest observations about moving from a big hulking organisation that has existed and will continue to exist for many, many years… to a lean, small, agile startup. This recap is not all beer and skittles. To be clear, these are not necessarily lessons learned from my particular company — it could be from conversations with my coworking space-mates, second-hand war stories or answers to Quora questions. These are the 10 lessons I leave holding the most valuable, so I’d like to write them down: even if it’s just for me. Hopefully, you’ll find some wisdom in them too!
This one took us too long to get right. You have to decide honestly what success looks like for the company you’re trying to make. Sure you could say “active users”, or “profitability” or “revenue” — but that’s a cop-out. Be more brutal with assessing your own performance. Luckily, our CEO is a very intelligent woman — when she first came in, within hours she had a dev building a pivot table in excel that she could then put on a dashboard in the office for all to see.
For us as a Podcast company, there were some basic stats that we needed to easily access:
- How many users do we have?
- How many downloads a month were we serving?
- How much money were we making?
But here’s where it gets interesting. Don’t stop there. Ask yourself some harder questions and start measuring the answers to it:
- How much do you earn from each customer?
- How much time (read: money) does it cost you to get a paying customer?
- How sticky are those customers? Are a lot cancelling (churning)? Or once they start using it do they love it and they stay around for ages?
Pick a metric to improve, do some things to try and improve it, measure it again. Did it work?
Top level questions about your users (how many, how long, how much $$s) turn into deeper questions that you also can measure:
- What % upgrade from free plans to paid plans?
- How much do customers like your platform? How many tweet about it? Refer their friends to it? What do they rate it out of 10?
- How much time (read: money) do you spend supporting one customer?
- How much time (read: money) do you save if customers are able to search for answers and help themselves?
- How can you encourage customers to use it more? (and then earn more money…)
- How many people are you talking to about coming on board this week?
- How much money do you think these potential customers will earn you?
Data isn’t boring
Now you’re measuring everything, what you get next is data. Learning to love data was one of my biggest lessons from working in a startup. Data can validate, vindicate or overrule any decision you want to make.
You can’t argue with the numbers.
My CTO always said “measure twice, cut once.” In other words: whatever you want to do — find a way for data to back it up before you do it. These may be via previous measurements, or if it’s for a future product feature — talk about it to as many customers as possible.
- Do you want this?
- Would you pay this price to have it?
- Is it so useful you’ll commit to paying for it today?
In my experience: your gut + data = a good decision.
The best marketing is content marketing
Someone early in my journey said to me, “you could have the best idea in the world, but it means fuck all if nobody knows it exists.” And with these unvarnished words I began my own journey to discover the importance of marketing in a startup. At first your goal is simply awareness: having potential customers know that you even exist and considering you in their list of options is a win.
Of course we experimented with the usual things: paid ads (search was best for us, because people are looking for something when they Google), social media (talk to your users, competitors, industry leaders and potential customers as friends) and sponsorships (always negotiating with event teams for a “special startup rate”). However, there was one type of marketing that blew me away with its effectiveness: and that was content marketing.
Become an expert in what your customers care about and write about that.
Become friends with people who run the publications your customers read and ask them to republish your informative blog post. Be so educated that people will put you on stage at their conference in front of a room full of potential customers. Your knowledge will more effectively market the product you work for than any branded USB stick in a conference goody bag. Providing useful content that people want to read and share around was hands down the best way to attract new customers.
Lessons from selling B2B
There is no doubt that the big money is in enterprise sales. A few big sales is always better than a lot of small sales. So as we chased the enterprise audio dollar there’s a few things I learned:
“Why should I use your product over your competitors?”
Make sure you have a good answer to this. It gets asked a lot. Luckily for me, our unique feature set was clear and therefore the answer to this was quite easy — we did something noone else in market did.
Just remember: talking to people about your product is easy if you have something that genuinely helps people solve a problem.
It’s much easier to sell making money than spending money
Demonstrate with clear, measurable data how much money your product makes the customer. Slack does this incredibly well with quantifiable productivity increases, Intercom does this with demonstrable efficiency gains, we did it with revenue.
“Based on your download count, with our tech installed, even worst case scenario you can make this much from your podcasts” is a lot better than “we cost this much to use”.
Sales cycles could be slower than you imagine
The hardest part of enterprise sales was decision maker access.
You demo your product to the desired end user… they love it, get excited about it and show it to their Head of Technology. The engineer says, “it looks like a good solution, but better run it by the CEO.” The CEO understandably asks “but how does this make me money?” of which you convince them… but then they say, “Better show it to our new Head of Technology who has come onboard between meeting #2 and meeting #3.” The new CTO is overwhelmed and says, “I’ve just started here! Let me just find my feet, can we talk in 6 months?” You say, “Of course!” and then 3 months later you get a call from them saying, “I just read how Podcasting is exploding and the CEO wants us to have it yesterday, can you come in and show me your product?”
Anyway! For me the answer to this is two-fold — 1) foster relationships with everyone all the time outside of selling your product and 2) put as many potential customers at the ‘top of the funnel’ as possible because of the time required to close one. It’s a numbers game really.
People value (and use) something more if they are paying for it
We tried a free model — we thought delivering ad-supported content would be what people wanted because then we’d only ever be making them money! Surely, the best cost is “nothing”?
However, a customer told me “you’re only ever looking at rev share if one, or both of you need something from the other.”
I would be wary of anyone offering a SaaS product for free: running software has a cost and the bill has to get paid eventually.
These lessons may be specific to our audio content business, but I learned:
- People prefer control than 0 cost.
- People value something more if they are paying for it.
- People use something more if they are spending money to have it.
I’m sure freemium works in some cases, but it didn’t make sense for us. You’d need to have massive scale where the paying customers subsidise the freeloaders!
Running a startup from Australia is challenging
“It’s like we’re doing startups on hard mode”
My co-worker and friend told me that at lunch once and it really stuck with me. This is not to disparage any of the incredible corporate, state and federal initiatives supporting Australia’s bouyant start-up culture but I really did feel like we missed out on a lot by staying at our Melbourne base and being “away from the action” in the US.
For example, for one of our competitors to appear at a highly relevant conference — it would cost a small plane ride and a night at a hotel. For us it was a hugely expensive and disruptive international trip, with 20+ hours of transit and many nights of accomodation and meetings required to justify it. And that’s all without spending a dollar on tickets or event sponsorships to even get you in the room. It felt like because we were Australian, we had to go to a lot more effort to even be discussed in the same breath as our (frankly, less good) competitors. Video conferencing technology and employees willing to work all hours overcame a lot of the challenges, but the tyranny of distance was a very real and present obstacle to our startup’s success.
You are worth exactly one dollar more than what someone else will pay for you
This is a saying I first learned in radio, usually in the context of contract negotiations. However, this is also very true for startups working towards and going through acquisitions.
There are so many metrics you can use to put a price tag on your business (revenue multipliers, growth projections, team value, strategic acquisitions, etc.) but you can think you’re worth whatever you want and that only becomes true the second 2 people want to pay that for you. Or one person who believes you to the extent they don’t want you to check with anyone else if you’re worth more. But who can really avoid that temptation…
The corporate / startup relationship is tumultuous
If you are like me, when you were working in a big office you romanticised startups. The blue-sky thinking, the entrepreneurial spirit, the lean costings, the agile problem solving, the bean bags and the 10am sleep-ins.
On the other hand, startups love receiving the corporate dollar and will usually bend over backwards to get it. The problem arises when a big customer influences product development based on what they in particular want. The locked-in roadmap gets altered slightly because “they’re our biggest customer.” Eventually, the suits notice a couple of mistakes inevitably made on the startup journey and start to worry about the young company going out of business. Then the startups overreact and skittishly argue: “well we won’t go broke if you a) give us more money and b) let us build what we wanted to build in the first place”. Then the corporates carefully retreat and consider “maybe this whole startup thing is too risky… perhaps we shouldn’t put our eggs too firmly in their basket in case they go under.” Now the startup has lost their way and also lost their biggest customer. Confidences erode, nobody communicates, everyone is unhappy.
It is a tale I’ve heard again and again from startup land. It’s what disintegrated my “startups are magical unicorns full of world-changing potential” thinking to simply viewing them as early-stage businesses that mostly fail. This is a very pessimistic view and I am looking forward to my new job, because I think I will be doing a lot of work to tackle the preconceptions, misconceptions and presumptions that both sides of this delicate tango are guilty of.
There is something beautiful to be found in the startup space and some companies are embracing it better than others. Israel seems to have a great thing going with their start-ups, universities, research institutes, venture capitalists, established businesses and government all participating in effective collaborations. I believe corporates have a lot to gain by trusting in the innovation that creates great disruptive, modern products. Likewise, entrepreneurs can learn about the realities of running a business from those in the world who do it best. I am most looking forward to participating in the beautiful mid-point where everyone is happily reaping the benefits of embracing innovation.
It’s much harder than a “normal job”
Oh to be a cog in the machine again!
When I began working at a startup, I was blown away by how much influence I had. In radio, especially when working on digital products, it would take 6 months to get a “maybe”. Here at a startup I could go “you know what would be cool? If it did this.” I’d go home and the next day one of the genius developers would say “what do you think?” and show me my exact idea on their computer. I mean sure, it would be a rough as guts prototype… but it worked!
So that’s the benefit of a startup — it is quick, it is agile… it can tack between 5–6 big ideas a year and not lose too much of it’s overall pace in any given direction. Most importantly, working there — you and your opinion matter. It’s very empowering! I learned so much in 2.5 years by being exposed to so many areas of a business that would normally be a whole persons job at a big corporation. Sales, marketing, growth, fundraising, customer support, strategy, commercialisation, partnerships, events, conference speaking, copy-writing, social media, video editing, product development, finance, corporate governance, HR: I’ve done it all!
So you level up quickly, but the trade off is you lose the ability to switch off.
Someone told me, “being an entrepreneur is like being dropped on an island and only having yourself to escape.”
They are small, myopic, intense, emotional, fast-paced, stressful environments — with little to no guarantee you’ll be there at your desk next month. It’s very tiring. I’m tired. Really… tired.
To shut your laptop lid at 6 pm and not have to shoot off another email until the morning. To do your task well and then have someone praise you with even a small gap before the next one. To feel moderately stable and remotely secure. I’m sure this is “the grass is always greener” thinking, but it is what has driven me back to the big organisation for my next chapter.
Silicon Valley is amazingly accurate
Anyone considering the life of a startup simply must watch the HBO comedy series Silicon Valley. The amount of times the personalities, competitor products, oppositional forces, big bad business bullying, savvy investors, employee’s emotions, representation of women in tech, staff changes, team successes and punch-the-air happy moments mirrored my work life as it was airing in real time was uncanny. That emotional rollercoaster really is what it is like day to day.
I was introduced very early on to the concept of “WFIO” (pronounced “wiffeo”) by one of our co-founders. It stands for “We’re Fucked It’s Over” and anyone in startups has felt it at some point. It’s the moment another company brings out a feature you think is competitive check-mate, when a sure-fire investor pulls out of funding last minute, or when Apple announces it is now offering your exact product for free.
I thought it was “game over” at least 30 times during my couple of years in a startup.
Here’s my advice: it wasn’t over. It keeps going and the industry doesn’t move as quick as your mind does. There’s always another move to play… a customer who will prefer you over your rivals… a competitor to your competitor who took their eye off the ball and doesn’t have time to build what you’ve been working on for 5 years — so will buy you instead. And if worse comes to worst and it does end — the lessons you learned about why something failed are just as valuable as having a successful exit.
I think people should be more open to talking about what’s hard about running a startup. I saw too many burnt out founders tell anyone who asked that “everything’s great, we have heaps of traction and we’re on the up and up!” I genuinely worry about people’s mental health when they wear their stress, tiredness and 15 hour work days as some kind of badge of honour.
Look after yourselves, be kind in business and look for ways to work with and reward innovators and entrepreneurs every day. They probably deserve it.
Feel free to follow along with my journey into the world of innovation here, or stay connected with me on Linkedin.
If I was lucky enough to work with you while I was at Omny Studio: thank you for the most incredible experience of my professional life so far. Hopefully we will work together on something again soon!