How to reduce startup overheads by over 60% (or “why I moved my business 1,400 miles to the other side of Europe”)
Neil is the CEO and co-founder of RampTshirts.com, the world’s fastest, smartest t-shirt ordering site for teams and events.
Starting from scratch?
Almost exactly 12 months ago, in early January 2016, one of my co-founders, Dafydd, and I left a cold, wet Cardiff at 5am to trundle down the M4 to start our first day on the Ignite accelerator in London, a three month programme that we hoped would grow (no, if i’m being honest, save) our business. At the same time, our CTO was making the even more tortuous journey from Sofia, Bulgaria. We stopped at Leigh Delamere services as the darkness lifted, checked the status of Milen’s flight, and drank possibly the worst coffee I’ve ever tasted as news of David Bowie’s death started to filter through.
I didn’t realise that this inauspicious moment would be the start of the oddest, most brilliant, exciting, exhausting 12 months of my life. I would become a *much* better entrepreneur, I would end a 12 year relationship, I would live in 7 different homes in three different countries, and I would move myself and my business 1,400 miles away to the other side of Europe.
At that point I had literally no idea what I was in for.
Today, 51 weeks after the untimely death of one of music’s great individuals, I’m sat in a sundrenched co-working space in snowy Sofia, Bulgaria. My startup has grown 60% in the last 6 months, we’ve just taken on our first Bulgarian employee, and we’ve never been more hopeful or focused.
A few months before starting on the accelerator, I’d been in my car listening to a conference call that was telling me that an investment deal that I’d worked on for almost a year had died at the very last moment. In the space of five minutes I’d suddenly gone from being on the verge of my startup having hundreds of thousands of pounds in the bank, to being £20k in debt.
We’d made some naive decisions, put too many eggs in that investment basket, and suddenly found ourselves in a precarious situation. We’d built a smart, lean, profitable business, but we’d never quite worked out how to scale it, and all of a sudden we were in the position of not generating enough profit to sustain the commitments we’d foolishly made before the cash was in the bank.
The point of investment in most tech businesses is to give them a “runway”. In other words, to buy them time to figure out how to “take off”. Many of the big tech startups that you will have heard of (Uber, Twitter, SoundCloud to name a few), are currently technically operating at a loss, propped up by people and funds that believe that they will find the formula they need to become massively profitable. And that’s why we’d sought investment. We had a sound business, but needed more time and “fuel” to help us make it fly.
14 months down the line from that failed deal, we’re actually *happy* that the investment fell through. Although we’re still paying the price for it financially and emotionally, I’m confident that if we’d landed this investment deal that would have valued us in the millions of pounds, we’d not have used the money in a wise way. We just didn’t have access to the insight, experience, and wisdom of how to grow our very specific type of company in the way that it needed to be grown. And we applied to Ignite because we thought it was our best chance of getting just that, at a time when that kind of thing was very thin on the ground in the otherwise wonderful city of Cardiff.
The Accelerator
So 12 months ago Milen, Dafydd and I found ourselves in TechHub in London, still reeling from the Bowie news and the awful coffee, on our first day in the accelerator, almost as a last throw of the dice. The Ignite CEO, Paul Smith, is going through his slide deck of things that we should never do under any circumstances if we want to build a successful startup. Daf and I exchange guilty glances at almost every slide. Oh well, at least we know not to do that, that and that again!
It’s impossible to describe just how transformative, exhausting, energising, exciting, heart-breaking, fun, and emboldening it is to take part in Ignite (and presumably most other comparable accelerators). Those three months fundamentally changed who we were as entrepreneurs, and how we operate. Among the many benefits, two stand out….
Firstly, the access to people:
- Those who’ve sold startups for tens of millions of pounds just drop in for a chat. Having Alex from Hassle.com give us an hour of her time to just talk through her experience and mistakes on their way to selling for €32 million is one of those sessions I’ll never forget.
- Fellow entrepreneurs just six months ahead of you on the “journey” are always free for a coffee. Chatting to Stan from Headliner.io over coffee planted a seed that eventually resulted in the launch of RampTshirts.com
- Need to speak to someone about something as specific as content marketing in a successful B2B two-sided marketplace? The accelerator’s network will enable you to be on the phone to someone relevant within 24hrs who wants to help you. You just can’t buy that kind of thing.
Secondly, the insight:
- The first month sees you in non-stop workshops, talks and mentoring.
- You’ll come to resent them, as they take you away from “work”.
- You’ll then realise how absolutely vital most of them were, and how you wished you’d paid more attention. Made more notes.
- I can’t think of a single business, small or large, that would not benefit from going through this process.
There’s no eureka moment, though. There wasn’t for me, at least. What happened was a slow, steady, drip-drip. A percolation. A clarification. Until it was kind of obvious what we needed to do next. And how we needed to do it.
And that’s the key. The how is so important. It seems quite trendy to talk about the “why” of your business these days. But so much about building a startup is about discovering the processes that work for you. You need to be solving a sizeable problem in a sizeable market, of course. But if your business success is predicated on having 100,000 users, or generating £1 million in revenue, to be profitable then it’s going to be a long, long journey. You only need to be navigating a few degrees off course when you set sail from the UK, and it could see you land in Cuba, not New York.
And Ignite showed us time and time again how we’d failed to scale our business. We’d focused on the wrong things, counted the wrong metrics (or often just plain didn’t realise the importance of some metrics!), made the wrong decisions, put all our effort into many, many things that were never going to bring us the results we thought they would.
But those workshops, fraught conversations, sleepless nights, and hours of customers research phone calls, all resulted in us making a decision to solve a problem that was becoming clear that our industry had….
We decide to build a quick and dirty version of what is now the world’s fastest and smartest way to order t-shirts for teams or events — RampTshirts.com.
We apply everything we knew about our market, the huge amount of customer data we’d collected in previous years, and what we’d extracted from all those research conversations, by using the principles we now knew by heart, but wish we’d been taught five years previously.
Within DAYS we’re feeling validated by a few early (small!) sales. But within weeks we’re generating thousands of pounds a month in revenue, we get a fantastic launch on Product Hunt, and there’s a bit of a buzz about us.
But we also know that it won’t last. This is going to be a long old grind. Probably years and years of it. And we need to have strategies for the short, medium, and long term. We know that growth will inevitably slow a little as we burn through experiment after experiment in an effort to find out what works.
Spring 2016 — the programme ends. We’re elated and exhausted. What next? We’ve got a new revenue stream, we’re growing, and we’re validating something that we think could be much bigger than our original vision.
What next??
Of course, we’ve never had anything less than big visions for what we’ve built with our existing platforms (which are in a similar market), but being on an accelerator changed the way we think about what we can achieve and, more importantly, how we’re going to get there. Every time we came up with a vision for the business, they got us to quantify it. Then they asked us how we’re going to get there. And they won’t let go. They are very literally invested in us now, and they continue to prove that they are going to be there for us through thick and thin. There’s not a week that goes past where I don’t check in with the Ignite team. And not a day goes by when there isn’t a flurry of activity on the group Whatsapp, where the other 10 startups on the cohort share their success, failures, queries, advice, thoughts, and stupid, stupid jokes (you know who are!). This kind of “kinship” can’t be bought, and it’s invaluable.
Of the other nine startups on the programme with us, some go on to raise seed rounds, some will spend many more months “validating” before following that path. And some will crash and burn a few months on. But we’re lucky. Our business model means we are generating revenue already. Even taking into account the money we’re paying out because of the failed investment deal, we can survive on the money we have coming in. But only just.
A few weeks later we get invited to spend a week with Google as part of their Best Of British programme at Campus. It gives us another solid week of great insight, access to mentoring, and a chance to reflect in among other great startups.
But we can’t avoid the inevitable. We need to take a big strategic decision about our growth.
We think that our best chance of growth comes from sales (duh!) and marketing automation — the process of acquiring more customers via online ads, blog posts, social media, emails etc etc.
But we only have the resources to do both of these if we have cash behind us. I.e. we’d have to raise investment. And we’ve oh-so-recently been burned by that exhausting, soul-sapping marathon. We know from bitter experience that as we’re a small team going through the investment process again would be time consuming, painful, and come at a cost to the energy we put into growth. We only had the resources to take on one of these strategies properly.
After much hand-wringing and soul searching we decide to concentrate on the marketing automation. But where is the best place we can base ourselves in order to get the most out of every dollar we generate? Is it London or our hometown of Cardiff?
London or Cardiff?
London? Cardiff?
…
…
We moved to Sofia.
Saywhat?!?
Not London, not Cardiff? Bulgaria!
I can’t remember who proposed it in the first place, but we immediately kick ourselves that is hasn’t been mooted before.
Things start to add up. It’s where Milen, our CTO, lives with his young family. There’s access to great talent at half the price of the UK. The desk costs are much lower. We get away from all the distractions of social commitments, personal projects, and the “hey, fancy a coffee at 3pm” culture into which it’s easy to be sucked. We’ve operated as a distributed team for a long time now, so working from anywhere is comfortable for us.
i move to bulgaria!
September 2016 — I excitedly and nervously get on a plane to a country I’ve never before visited, and where I speak less than 5 words of the language, with our COO Dafydd to follow soon after. 70% of everything I own has been sold or donated, and the majority of the remainder is now in storage on a trading estate in Cardiff. There’s no going back.
The following few months see me go through every emotion under the sun. Excitement and despair, loneliness and the joy of solitude, novelty and boredom. I get featured on the Bulgarian national news (yes, really!).
But the benefits to the business are soon plain to see. Not everything goes to plan, and things take longer than we’d like, but I find myself full of renewed energy and focus, and I can put in long, long days without feeling tired or lethargic. And just being able to be in the same room as Milen, rather than have him as an ever-present Skype voice, is a huge boost for productivity and decision making.
So, here’s the killer fact for us:
When you only need to generate hundreds, not thousands, of pounds of profit a week you can breathe. You can take your time to make the right decision. You’re not chasing the “quick win” of a much-needed sale that takes you away from your key mission, just so that you can pay your extortionate rent next month. That doesn’t mean you can take your foot off the pedal. You still work 12+ hour days, and never, ever stop thinking about how to make things better. It just means you are not acting out of desperation. You’re doing what’s right.
Of course, we still f**k up as often as we did when we were running around the gold-paved streets of London. But the costs are lower, and the risk is mitigated. And Ramptshirts.com is already generating more revenue than our other two services combined, which have both been running for several years!
Plus, Sofia has a great quality of life, a burgeoning startup scene, and very low cost of living. Plus we’re in a fantastic co-working space with much better coffee than Leigh Delamere services!
After rent, bills etc, my spending money is about £100 a week. I eat out (and drink out!) pretty much whenever I want, and don’t have to watch what I spend. I’m a tiny financial burden on our company now.
Is moving to another country easy? No, of course not. It’s really bloody challenging.On top of this, living overseas is exhilarating, and comes with added cognitive benefits. Novelty is good for you and your creativity. Learning a new language, equally so. And anything that puts you outside your comfort zone, and exposes you to new thoughts, ideas and concepts, is massively beneficial to you in the long term. Both as an entrepreneur, and as a human being.
Is it worthwhile? For me, for us? 100% yes. Our revenue is climbing despite less time spent cold selling — we’re now generating tens of thousands of dollars a month of revenue. We’re putting in place systems and processes that will make us more efficient, more profitable, and more successful for years to come.
Of course, moving to another country is just not feasible, or sensible, for everyone. But for us it proved to be a great catalyst. In terms of focus, energy, and creativity.
We started the year with crap coffee, David Bowie’s death, and the drudgery of the wet M4. Our business was bumping along the bottom. Ignite was a fantastic motivator and clarifier for us, but we had no idea that it would end up here — drinking fantastic coffee in the best coworking space in central Europe, and considering going snowboarding up nearby Vitosha mountain this weekend. After eating and drinking our fill for about £10 of course.
We don’t know where we’re going to be in 12 months, but if 2017 is only half as good as 2016 then we’re in for an amazing ride.
Come visit!
Neil, Dafydd & Milen
You can read more about Ramp Tshirts on our blog here, or experience the world’s fastest, smartest t-shirt ordering site here!
Originally published at ramptshirts.com on January 4, 2017.
