Inspirational Women Leaders of Tech: Esther Gons Of GroundControl On The Five Things You Need to Know in Order to Create a Very Successful Tech Company
An Interview With Penny Bauder
… If there is not a clear indication of people happily using your product and coming back to do it again, there is no point in scaling in the first place. — I think premature scaling is one of the biggest mistakes and causes of failure for corporate Startups. “You just have to throw money at it and it will fly” is one of the things I hear a lot when there is some validation of revenue or market but no clear understanding of value proposition or sales strategy yet.
As a part of my series about “Lessons From Inspirational Women Leaders in Tech”, I had the pleasure of interviewing Esther Gons.
Esther Gons is the founder and CEO of GroundControl, innovation software that focuses heavily on innovation accounting and helps corporate startup teams with the development of new business models and the author of Innovation Accounting: A Practical Guide for Measuring Your Innovation Ecosystem’s Performance and The Corporate Startup: How Established Companies Can Develop Successful Innovation Ecosystems. She is an international speaker on topics of corporate innovation, innovation accounting, portfolio management and startups, and a respected expert appearing as a guest on numerous podcasts that focus on innovation. Gons has a background in technology and has been an entrepreneur for over 20 years mentoring several hundred startups. She was recently named to Inside Outside’s 2022 Watchlist: Women in Innovation.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
My career has always been about pioneering and being an entrepreneur more than anything else. While writing my Final Thesis in Information Science at university, I already worked with clients like HP. At some point, I was allowed to set up an entirely new platform — a platform to sell HP products but in a completely new way. I worked as an outside entrepreneur with a development agency and a Marketing agency.
We developed a fantastic platform for working from home. It had so many new features that hadn’t been seen before; Personal login profiles, Real-time widgets on traffic and stock market (mind you, this was the 2000s we are talking about), blogposts to offer information for employees, and managers regarding the benefits and how to manage it. The platform provided all the HP products you would need to furnish your home office, like computers and printers, but it also offered furniture and other equipment.
We worked for nearly two years to build this platform, spending a large amount of HP dollars. I was immensely proud of this endeavor. So, imagine my nerves and excitement when it was time to launch the platform! ‘You never guess what happened next!’
NOTHING! Nobody flocked to the platform to eagerly inform themselves on working from home. Managers did not suddenly allow them even to do this. And most importantly, nobody bought HP products, or those of the other partners, through the platform. When HP and Compaq merged a year later, they reviewed the project and decided to pull the plug.
Looking back, we can safely say that the ‘working from home’ future we betted on was not in sight at that point yet. ;) But it set me on the path of understanding that this kind of innovation might need a different approach. When Steve Blank introduced Customer Development and Lean Startup, this was something that felt so obvious for everything I was doing that I fully embraced this. Everything I am doing today evolved from that, basically.
Can you share the most interesting story that happened to you since you began at your company?
We started Next Amsterdam- the company from which GroundControl evolved- as a Startup Studio model, helping Startups in the very early stages. Our goal was to help them invest in them differently in a way that was more honest to the startups and would help them along rather than push them towards quick wins. I had worked as a founding mentor with the local Rockstart accelerator for a couple of years, developing the lean startup curriculum and mentoring the startups. I learned that sticking to the process of learning is hard as a Startup; you always need an outside push to keep you focused. I also learned that focusing on scaling too early is one of the reasons startups fail. To remedy both pain points, we developed the Next Canvas.
Since our goal was to help Startups move forward, we put the Next Canvas out there for everyone to use. The canvas provides the process for moving from an idea towards a business model. It gives you some hierarchical focus in a completely non-linear journey.
But the Next Canvas became a hit on its own, unbeknownst to us. Rather than with Startups, companies were downloading it. Companies that were trying to set up a process for innovation internally. The Next Canvas, also mentioned in the Innovation Accounting and The Corporate Startup book, is downloaded worldwide. For free, since we didn’t think to capitalize on it.
The more I worked with larger companies who asked for my help, the more I realized that this framework made fame for itself. With this in mind, we decided to leave the canvas as a free download on all of our sites anyway. It is the basis of our Software Tool, GroundControl, and it makes sense as an Innovation Framework across industries. Helping Startups within companies and outside can only lead to more change. Change we so desperately need right now.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
I think it was the optimistic notion that investing in Startups could make you rich. We thought that as a pre-seed investor, the amount of upside of one lucky shot would be enough to account for the rest of the investments and we started investing from our balance sheet. The money we earned from working with Corporates we invested back into Startups.
Pretty soon, we had 6 Startups in our portfolio when we realized; if they are all early stage and the average timeline of a successful startup is between 6 to 12 years to get your money back, how are we going to earn money meanwhile?
And though our methodology and process proved a big help, Startups are still a high-risk and, more importantly, long timeline betting game. You need numbers and a single-minded focus to pull that off. That is when we realized we had to choose between either helping startups full time and raising a fund to do this, or helping companies full time with setting up the system to start their startups.
We pivoted towards the latter.
Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?
I think every entrepreneur, at some point, feels about giving up. People often underestimate the pressure that entrepreneurs are under. Financial insecurity, responsibility for employees, taking a lot of risks. People always tend to see the creative, innovative space you are in and think it is all an amazing and exciting journey. But that is because most people only notice Startups when they are starting to become an overnight success. But what seems overnight to them is a 5-to-7-year rollercoaster of hardship and endurance for the entrepreneur.
Sometimes I ask myself why I didn’t become an employee at some big company earning a lot of money. Yet, my internal motivation to drive change and prove things can be done differently is stronger than anything else. That slightly unrealistic but unwavering belief in your vision keeps every (startup) entrepreneur going despite what others say — finding those customers that tell you how it changed everything for them and then wanting to give that to the rest of the world.
And just as that starts to catch on, I usually see something utterly new happening and begin to focus on that. I can’t help it; I am a pioneer for life.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
Funnily enough, it is not a mentor or Business person that gave me a break or helped me open doors. Instead, I think my co-founder is the one that comes to mind here. We pulled each other through some of the most challenging times and can make snap decisions together regarding direction or strategy. In addition, he did not doubt my vision and trusted me enough to jump with me. Finally, seeing how my voice was not always taken as seriously as his, he was the one who insisted I became the CEO.
It was a realization of the inequality in the system for women that made him even more determent to trust in me as an entrepreneur.
We were sitting at yet another table with Board members and Innovation managers. Strategy sessions and chats about how we could help set up internal venture-building capabilities. My co-founder usually accompanies me to be able to get notes and answer team questions since I have the expertise in strategy. After a while, he noticed that he was the one being answered whenever I asked questions. Just as he was being asked how he liked writing the books -The Corporate Startup and Innovation Accounting- which no, he didn’t ;)-
He was appalled by the disregard of my knowledgeability and decided that being equal co-founders was not enough even though we did not discuss any ‘function’ names as a Startup before. From that moment, I became the CEO of our company.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Do something new or scary every day.” My mom taught us this. I think it is the most important lesson we all need to be able to have a growth mindset. You need to be curious, keep learning, and do stuff that seems scary or not nice. Whenever I encounter something unknown or new, I do not shy away from it but try to understand the perspective and learn. Or I simply set out to do it. Even when it is scary at first, or something I cannot do at all.
As an entrepreneur, it gave me the superpower I needed to succeed. When you need something done, even when it is scary, or you do not know how, you go and try. Not only did that help me understand that things are primarily scary because they are new. As a result, I also have mastered many skills over the years. For instance, I had to teach myself InDesign to create the visual structure I wanted for the books -The Corporate Startup and Innovation Accounting-
Ok super. Thank you for all that. Let’s now shift to the main focus of our interview. We’d love to learn a bit about your company. What is the pain point that your company is helping to address?
Companies that want to pursue (disruptive) innovation and internal venture building as a means of change and growth have two main pain points: mindset and proving the value of that innovation. Our SaaS platform changes mindset through a systematic approach to innovation that helps teams disrupt old routines and create a new one needed for high-risk innovation. While doing that, the platform keeps track of important indicators that show the value of the innovation funnel through visual insights and reports. The reports contain more relevant indicators than the lagging financial indicators that cannot show the value of the explorative character of disruptive innovation.
Essentially it is hard for companies to implement a new system when the existing system is equally relevant and embedded in every company’s process. Yet this is precisely what is needed if you want your innovation to move beyond incremental. Our tool provides the structure, framework, and relevant indicators to start a second system for disruptive innovation.
What do you think makes your company stand out? Can you share a story?
We are servicing a unique niche of companies across industries that understand they need a different way of dealing with internal venture building than they do with digitization projects. On top of that, we are in a very early market. Early evangelists are working according to these new methods, but many companies are still in the early stages of realizing that. Most companies want to see the results first rather than try it themselves. The results only show after a couple of years, it will always be a high-risk business. This system will be a means to control that risk.
I believe we are at the beginning of a wave of brave companies that will want to embark on internal venture building to stay on top of ever-accelerating change to remain relevant for their customers and the planet.
Are you working on any exciting new projects now? How do you think that will help people?
A couple, actually. I am looking into the world of blockchain, NFT’s, and crypto to understand how they can help change the current systems. I see a lot of potential for grassroots movements to do things differently. For now, I am just joining fun projects to see how these communities work to reach the things they set out to do. I think grassroots movements and the communities driving them will be how we will achieve the next biggest changes. Blockchain is a powerful way to enable these communities beyond the current systems.
I am also working on our Next Canvas. Of course, the tool itself will always be a free resource as it has helped so many companies and startups. Still, I am considering explaining more about how to use it, and how to keep continuously experimenting. This could be in the form of another book, or perhaps an online course, or both.
Let’s zoom out a bit and talk in more broad terms. Are you currently satisfied with the status quo regarding women in Tech? What specific changes do you think are needed to change the status quo?
That is a rhetorical question for sure ;).
Although there is awareness, we need to do more to enable faster change. The hardest part is that the people who are not feeling the pain are being asked to overcome the biases they were not aware they had.
It is part system part structural behavior that is normalized. We need to break down the structure and show that different behavior can lead to results just as well. We need to enforce this because this will not happen by itself or overnight. If you want new behavior or mindset, the only thing that works is to rigorously adhere to it, until it becomes a habit. Only then can you let go a little and bring back flexibility. It is like the new teacher in the new classroom at the beginning of the year.
So, actively looking for qualified women, even though qualified men are available, is necessary simply because we tend to see men as qualified sooner than women with the same CV. Quota could be a tool to do this. But there are other means as well. We need to understand that what we are doing is not trying to ‘discriminate’ against our male colleagues; instead, we are trying to overcome structural biases.
In your opinion, what are the biggest challenges faced by women in Tech that aren’t typically faced by their male counterparts? What would you suggest to address this?
-Proving your knowledgeability or being taken seriously.
The number of encounters with people asking me if I read my own book. People assuming me to be the coffee lady in an investment round or the assistant in a strategy session. Do not get me started!
Do not assume anything! One of the lessons a startup looking for investment learned the hard way when they gossiped around me, assuming I was just the lady making tea. It is something we all should realize.
-Raising large rounds for your tech Startup
Bragging less and asking for realistic numbers does not mean you are not ambitious. I think the rise of female investment funds is an excellent development. Not just one female investor on a fund, but a fund raised by and executed by women. It is essential to understand all perspectives, and this is a way to achieve that.
-Having fewer sponsors, mentors (or role models even)
This is one of the questions you ask here in the interview. I, for one, found this a tricky question. I have fought many battles without a sponsor. Or mentor. I have acted as a mentor or sponsor for other women in later years. Allowing others a chance is so important.
Even though we might not want more rules, I think the only way to battle toxic environments is with regulations. Rules can be communicated upfront. It is easier to police with rules and easier to adhere to them if you know what to expect. It makes sense to have more than one woman on a team. Being the odd one out will not help change dynamics or perspectives.
What would you advise to another tech leader who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth or sales and “restart their engines”?
Let’s start by stating that a ‘standstill’ is not always bad. We are pushed towards perpetual growth by our shareholders or investors, but we need to ask ourselves how realistic this is. I would instead look at perpetual relevance. We really need to ask is; Do we still offer our clients value?
Look at what is happening and understand the why behind it. There can be many reasons for a standstill. For example, has your specific market reached its peak? If this is the case, it is only natural there is a standstill in growth. You have the choice to sustain this, trying to improve and enhance value for customers where needed, or grow despite the saturated market. At this point, be realistic and ask if it is feasible or logical to move into another market?
But if your product has lost relevance because of the rapidly changing context, it makes sense to address the standstill. Understand what is changing and what people need from you. When you understand that, you can decide to improve your current business or find new ones. (Or both)
In your specific industry what methods have you found to be most effective in order to find and attract the right customers? Can you share any stories or examples?
Understanding the JTBD of your customer is vital. What is it that they are trying to get done in the first place? Your solution should offer them value. If you are doing something completely new like we are, it doesn’t mean you are building something they would necessarily say they want. As an entrepreneur, it is your job to interpret what your customers need to solve their problems in the best possible way.
That means talking to real people, understanding their problems, and trying to help them. I literally talk to people on LinkedIn that need help with their Innovation Strategy and offer them free calls. I listen to their problems and their perspective and offer advice. Sometimes, I point them towards other people’s books, tools, or services. Others I teach them how to do things themselves. And at times, it is someone I can help through our services. But always, I learn something that helps my company or me.
We have many blog posts with knowledgeable content rather than having salespeople do cold calling with companies. In addition, I give workshops and masterclasses to help set up internal venture-building capabilities and portfolio management for innovation.
Based on your experience, can you share 3 or 4 strategies to give your customers the best possible user experience and customer service?
- Simplify, what you can do or not do in a product or service should be clear. Too many options only confuse people.
- Onboarding is often underestimated, but an intuitive and fun onboarding strategy makes all the difference. Understanding what people need to make the most out of your service is essential.
- Honesty, Be honest with your customer.
- Co-creation, we listen to feedback. When something makes sense, we involve the client in building the feature or testing it. The same goes for our implementation services. If the customer is not committed or not ‘doing’ it themselves, it will never happen. And for innovation to succeed, they need to be doing the work themselves, not us!
As you likely know, this HBR article demonstrates that studies have shown that retaining customers can be far more lucrative than finding new ones. Do you use any specific initiatives to limit customer attrition or customer churn? Can you share some of your advice from your experience about how to limit customer churn?
I always use the ‘Happy Customer loop’ by Ash Maurya. It is a simple drawing showing what is essential in terms of metrics in the early revenue towards scale phases of a ‘lean’ Startup. In this schematic, he says that it doesn’t make sense to put a lot of money into acquisition if your customer is not showing they are happy with the value you are bringing. Because that means you are simply throwing money away.
Your focus should therefore be on measuring retention and referral first. Those are the indicators of offering value to your customer, thus making them ‘happy.’ Even if you have clear revenue coming in, focusing on retention and referral (depending on your growth engine) will improve your offering. Only when it is clear that it works does it make sense to start optimizing on acquisition.
We only look at churn to learn what customers are relevant to us and how we can improve the value we offer by actually talking to people that no longer use our service. Then, we use retention metrics to steer on rather than churn metrics. We look at the value that we offer users to have them come back rather than how we can avoid more people falling off.
Here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to create a very successful tech company? Please share a story or an example for each.
- Make sure you understand what people truly need before building anything. — Building a scalable and safe backend when you do not know if your product or service will sell in the first place is a waste of valuable time and money. ‘You are building to learn, not to scale’ is something that is very valuable to understand in the early years of your startup.
- Your tech knowledge should be inside your company, especially if you want to move and pivot fast in the beginning. -Your first attempts at a solution are not the final product. Everything depends on you and your team being able to move quickly and change things when needed. Either teach yourself some code, or learn to work with no-code tools, or find someone to join your team who can. You do not have the money to pay someone to do that for you. That will simply be too expensive to maintain.
- Test, test, test, pivot, and do not be afraid to fail. — Failing means you will probably learn the most. When we argue as co-founders about what we think customers might want, we never argue long. It is not important what we assume; we need to understand what the customer really thinks or needs. We design an experiment to test it rather than argue.
- Understand why you want or need funding before you decide to raise it. — Funding is one of those things that every startup is supposed to get before starting. But funding will also mean investors. Make sure that you understand why you feel you need funding. Can you prove revenue without raising, do it! Do you need capital to build Tech or scale fast? Funding makes sense.
- If there is not a clear indication of people happily using your product and coming back to do it again, there is no point in scaling in the first place. — I think premature scaling is one of the biggest mistakes and causes of failure for corporate Startups. “You just have to throw money at it and it will fly” is one of the things I hear a lot when there is some validation of revenue or market but no clear understanding of value proposition or sales strategy yet.
Wonderful. We are nearly done. Here are the final “meaty” questions of our discussion. You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
If everyone, including big companies, would always consider first, “Is this something we should want for the planet or the people in it,” rather than how much is this going to make, save or cost me (or just because we can). If we would take that responsibility collectively, without thinking, “but they aren’t doing anything, so why should we?” It would get us so much further, so much faster.
And I am not saying that that means we all need to be perfect in our sustainable behavior. Some things are hard to resist. We are talking about change. If we feel we need to give up everything all the time, it also stretches our flexibility. It is enough to understand that some things you do might harm our environment and that it is essential to balance your decisions accordingly. If everyone would at least consciously consider our planet or the impact on the people on it in every choice they are making, it would make all the difference in the world.
We are very blessed that very prominent leaders read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch with, and why? He or she might just see this if we tag them :-)
I would love to hear more about her journey and perspective in the tech and investor world. She has endured hardships, and I assume so many biases and is still this flexible and optimistic.
Thank you so much for this. This was very inspirational, and we wish you only continued success!