What we’ve been up to: a Phase One update

In one of his many invaluable essays, Paul Graham called out that if you hear from a startup regularly, it’s a signal of them surviving — which could lead to them thriving. On that note, I realise it’s been a while since we updated you on what Phase One has been up to. In short — heaps! Here is a snapshot of our story over the last two months.

TLDR:

• We have shifted to an even more internal founder community focus, from an external general community focus.
• We have begun bringing on board Product and Growth mentors like Shipra, Jai, Josh, Carol, Rohan, Prashant and Elise to mentor our startups — watch out for their intros.
• We have nearly closed our fund — exciting!
• We have helped seed and grow Startup Club New Zealand.

At Phase One, our mission is to make New Zealand an even happier place by transforming the startup ecosystem. We have built an incubator from ground zero with founder and product first focussed first principles in mind, are about to close our fund to support the early-stage startups, have created a community and helped seed a countrywide startup sector-focussed university student club.

It all started post coming home early last year, after a decade in startup land in Australia, having been a part of the early green shoots of the Aussie ecosystem and seeing it become a tremendous wave of economic value in just a few years. The lessons from building my own startup and my time as an early leader at Canva, Airtasker and Simply Wall St have been significant. The opportunity to build teams and to drive a range of programs and decisions across people, product, growth, design, engineering and finance in early-stage and scaleups was an unreal learning experience. I’ve also had the opportunity to mentor many startups as a mentor on Startmate and other channels.

Connecting the dots backwards, the key lessons for me were that founders who are problem and customer-obsessed build the capability to build a great product — something that solves a customer problem incredibly well. This takes way more time than a founder thinks it will — it takes around 12 to 18 months of customer focus (not fretting too much about hiring, fundraising etc). So you need to have access to a personal runway of around 12 to 24 months (adding a bit of buffer) to understand the problem and you ideally want to start without taking any investment because that will impact the customer and problem discovery process. On top of all this — having clarity of your end-state vision is the battery which helps you to keep going.

Melanie Perkins @ Canva and Alistar Bentley @ Simply Wall St were tremendous customer and product oriented CEOs who also learnt the mechanics of building a growth engine and “how to build a company”. But It all starts with “do you have a product that a customer group loves?”. If you get there, everything is on the cards.

I believe most startups fail because they spend a lot of time doing a whole bunch of other things like worrying about raising, hiring and not enough time with the customer (including building an unvalidated solution they think will work), basically ‘playing startup’. The only validation that matters is customer love and then as you grow — a happy team.

I have personal experience on this front, having made the mistake of just not understanding the customer and problem well enough. The love that customers have for the product you have built is the fuel that helps a founder achieve their big vision.

To ensure that more Kiwi founders have access to the know-how and are disciplined around product focus, we created an incubator (yeah, seriously). One of our primary goals from this incubator is to ensure that Kiwi founders have the know-how, space and support to build a product that customers love. As mentioned earlier we believe it takes 12 to 24 months. The general pattern we see is 3 to 6 months of focussed customer interviews to get to Minimum Viable Product with a group of users, after which you focus even more on the engagement of these users with your product (closed beta) to build a Minimum Lovable Product. Once you have that; then you launch and you are off to the races.

We spent most of last year learning about the problems and challenges that Kiwi founders face and trialling different solutions. We ran regular external community sessions and fireside chats to help founders connect and to get up close insight into their key issues. While this was useful for the startup ecosystem in general, we realised there was an opportunity to be even more focussed and targeted, delivering greater value to the startups that we were working with.

As a result, we decided to focus all our energy on our incubation program. This was a strategic shift, and I’m glad to report that it’s paying off.

The Phase One incubation program gives startups access to two key benefits:

• Being partnered with a product/growth focussed mentor
• Being part of a community of Kiwi startups that are nurtured to provide support, share stories and guide each other

Our mentors are the real deal. They know what building a great product looks like, how to run great customer interviews, what metrics to look out for etc. They are committed to sharing this knowledge and it’s great to see our startups learn and grow through their exposure to these SMEs.

Our community experience encompasses four elements — a regular weekly catch up, ‘heart to heart’ sessions with other founders, social hangs and an online community. Our participants tell us that the lessons, sport and encouragement they’ve received from this community have been invaluable, and we’re confident that this will only get stronger and more turbocharged as the network grows and matures.

It’s taken a while to steer the ship from the earlier external focus to delivering on a pure play internal founder focus. It has been fantastic to bring on board top mentors to partner with our startups, and to see and hear about the value created by the relationships for both the founder and the mentor getting a lot out of it. Over the next few weeks, we’ll be sharing more details of our startups and mentors through our social media channels.

We are also in the final stages of closing out our fund, which will invest in startups that are progressing well in the incubator. Some exciting news to come on this front, so watch out for announcements in the near future.

We know that a sustainable ecosystem needs early investment in talent. To that end, I’m very pleased that we have helped seed and support ‘Startup Club New Zealand’ — a student-driven club committed to ensuring that NZ students understand the startup curriculum, have early opportunities to participate in the startup world, and have even greater access to jobs in the sector.

Thank you again for all your support in pursuit of our mission. I’m excited about what’s ahead for Phase One and for the NZ ecosystem, and look forward to sharing further details with you shortly.