Add another layer to your #Business literacy. We at Serebral360° would love to know if the Forbes – Entrepreneurs article was helpful, leave a comment, like and share. Let’s dive in and discuss the information and put it to use to grow your business. #BusinessStrategy #ContentMarketing #WebDevelopment #BrandStrategy
Info@serebral360.com 762.333.1807 www.serebral360.com
Grap a copy of our NEW Business Stratgety Books #FFSS VOL1 and #FFSS VOL2
Earlier this week, I sat down with Faisal Butt, Emoov’s earliest investor, to discuss the lessons that startup founders and their backers (regardless of the sector they are in) can learn from failures such as this one. The article which was the product of that conversation generated a lot of dialogue on and offline, and I was pleased to see it maintain the constructive tone that Faisal had set – failure is not an ‘F-word’, but should be a catalyst for growth.
I’ve since had the opportunity to have a similar conversation with Russell Quirk, founder and CEO of Emoov. He agreed to share his thoughts – exclusively for this column – on startup failure and the lessons that founders should learn from his mistakes. I say his mistakes because Russell was adamant that, no matter the roles that others may have played in Emoov’s demise, as founder and CEO he is fully responsible for all decisions that were made.
This, perhaps, is the first major lessons all founders (or wannabe founders) should learn from Russell. Being a founder (especially one without co-founders) is a very lonely place to be. Founders are ultimately responsible for everything that happens to their startups, whether they had a hand on it or not, and they need to embrace that responsibility. They also need to embrace failure. Similarly to Faisal, Russell believes that failure should not be stigmatized and that the pervasive unwillingness to discuss failure in the UK is toxic and destructive. Failure should be embraced as a way to learn and develop one’s expertise and should be used as a stepping stone for future successes, rather than be seen as marking the demise of one’s career.
Off the back of these two key points, I asked Russell to share his top tips for founders, from the height of his experience as someone who disrupted a market that had never seen tech before, achieved success beyond his expectations, and then lost it all. Here are Russell’s 6 top lessons to learn from a founder’s failures.
Fail as often as you can
It depends on the type of failure, of course. Though nobody is suggesting that going bust is a good thing, in the startup world founders should be encouraged to take risks. You are trying to go where nobody has gone before, to break records, to scale new heights, and that cannot be done without a healthy appetite for risk! Pioneers need to be brave. In Russell’s words, “put your head above the parapet and put yourself out there to build your business and better yourself. Though you will be in the glare of your investors, the media, your staff, you should still push envelopes, and you should be able to talk about it when it doesn’t work out”.
Park your ego at the door
As the saying goes, there is no I in team. Time and time again, failure is completely ego related as ideas are pushed, invested in, supported even when they are flopping, simply because ego blinds people to the idea that they could be wrong about something that felt so right. Russell reckons that having a better gender balance on the board would have helped Emoov with this issue. Though I’m not too sure about that (having met my fair share of ego-driven alpha females) I am definitely on board with the principle that ego is a killer and that there need to be mechanisms in place to restrain it. One solution could be implementing strict fact-and-data driven metrics around strategic decision making, A/B testing and the like.
Don’t get cracked out on growth
I was completely consumed by the question of growth. When you are in an environment where startups like Deliveroo, Revolut, Transferwise are reaching unicorn status with mind-boggling speed, it’s easy to become convinced that it’s the only route possible for you, too. You think you will reach a billion dollar valuation within two years, and focus on that at the expense of everything else. In total, we raised £ 29 million, and I would definitely spend it differently now. At the time, I didn’t because the conventional wisdom was that you needed to focus on growth to get more investment and to grow more. I would do things differently today, conserving more money and targeting my bottom line.
Russell’s words reflect something I have seen time and again on the startup scene. It always follows the same trajectory: first movers focus on growth and growth alone to secure market share and then worry about profitability later. Those that follow (or those that are outpaced, as is the case with PurpleBricks’ success in the online agency market that Faisal explained so well in our interview) fight a race to the bottom in a market that is overcrowded and most fail. Naturally, growth is important but I would argue that it is even more important to erect barriers to entry, or perhaps find a profitable niche and make it your own, before targeting further expansion. For more on this, see my “Seven things you should consider before investing in a proptech startup” article!
Solve real problems, don’t fight windmills
In other words, don’t be a solution looking for a problem. “We spent seven million pounds on tech,” says Russell, “when in actual fact we could have delivered the same customer experience with an expenditure of one.” Emoov poured cash into technology it didn’t need and into its marketing spend when it could have been conserved and spent more wisely as the additional costs didn’t increase revenue or improve customer experience. This is the problem in an overcrowded market and one must resist the temptation to needlessly splash cash that will be sorely missed later on.
A neutral board is a great board
Investors. Can’t live with them, can’t live without them! A lot has been written (by myself included) about the importance of picking the ‘right’ investors that can fuel a company’s growth and help guide it to success. Russell goes a step further. He believes that every business, in order to be successful, must have an element of neutrality. As is only fair, those who put in more money have the loudest voice, but this sometimes results in decisions being made that are in the best interests of the vocal shareholders, but not necessarily those of the business itself. Russell’s suggestion is bringing in non-executive directors as soon as outside money requests a seat on the board, and that the chairperson is one of these outsiders.
Don’t blame Brexit for your problems!
And finally, my favorite. Don’t blame Brexit, blame yourself! Russell prides himself on never once using Brexit to explain away his and Emoov’s problems. After all, we all knew it was coming, and statistically since the Brexit vote prices and sales volumes across the UK as a whole have not gone down.
These were Russell Quirk’s 6 top lessons to learn from a founder’s failures.
In parting, I asked him to also share his thoughts on what the future holds for the online hybrid agency sector. In Russell’s own words,
I think the fixed fee arm’s length estate agency service which the sector is known for has a ceiling, and PurpleBricks will gobble it up. It will never make up more than 15% of the agency market in the UK. Purple Bricks, Yopa, Emoov, Housesimple have raised £ 400 million altogether, and yet their share of the market has practically stopped growing and will probably not grow further. Rentals are not a viable alternative for your typical online agency business because landlords are a more sophisticated consumer than home sellers, so there isn’t much room for growth in that area.
We can probably look forward to a lot more consolidation in the space, and PurpleBricks appears to be the clear winner.
December 15, 2018 at 01:17PM
Forbes – Entrepreneurs