Throw away that startup script…

OK, let’s imagine you just happen to bump into someone on the street you know slightly, and they ask the drainingly obvious question: how’s your startup going? What should you say?

Just as with newlyweds being asked how’s married life?, there’s a huge temptation to stay bang on script by giving a TechCrunch-style answer, with every notable keyword stressed in just the right way:-

• “It’s going brilliantly”
• “We had a great meeting with customers last week”
• “The prototype’s looking fantastic”
• “We’re starting to get mentions in the press”
• etc

All of which may well be true, but reeling such stuff out doesn’t move your thinking beyond startup clichés. You see, the way you talk about your company in general helps shape your instincts when presenting with investors (and, indeed, with suppliers, clients, customers, and end users) in particular. So, think of every random conversation not as a rehearsal for drafting your next breathlessly progressivist Wired-style press release, but as an opportunity to better connect with the people connected to you who would like to support you.

I think that if you want to cultivate long-term, rewarding, sustainable relationships with these people, you need to write your own script. If you stopped to think about it, your startup probably has twenty or thirty angles on what it’s doing (and its own unique struggle to move forward) that other people would find pretty fascinating. Few people are genuinely exposed to the realities of entrepreneurship, preferring instead to loosely fantasize about ‘working for themselves‘ (hint: however you’re employed, you always work for other people, specifically your customers), so even the simplest insight into what you’re doing can be quite an eye-opener.

For example, my own startup (Nanodome)’s list of twenty or thirty such things would include:

• lessons to learn from James Dyson’s mistakes
• what’s so cool about Henry vacuum cleaners
• why Taiwanese engineers are so great
• why Coalition entrepreneurship rhetoric annoys me so much
• the politics of global electronics
• what it feels like working in a financial vacuum
• the wobbly future of security cameras
• business schools and the missing decades
• Silicon Roundabout roustabouts
• why OpenCoffee rocks, etc.

All of which is simply stuff on my mind every day that affects how I do what I do, and that alters where I’m trying to get to: really, the locked doors, compromises, mismatches and ‘life hacks’ that you won’t find on the business pages.

Yet these things are the very ones you need  to teach yourself to talk about – the network of insights and angles that make you and your startup unique. Practise doing this, and very quickly you’ll find that presentations and pitches become a pleasure – people will approach you after your timeslot has finished to hear the rest of the story. Take pleasure and joy in communicating these, and you’ll find that everyone will find it much easier to “tune in” to your world. Throw away that startup PR script, write your own!

Besides, who’s to say that the person you meet in the street might not secretly be looking to invest in your company? You honestly never know!

The sucky Tao of bootstrapping…

As UK angel startup investors doggedly continue their ingenious strategy of, ummm, not actually investing in startups, many UK entrepreneurs are having instead to follow what people such as Paul Grant promote as the “bootstrapping” path – for really, how far towards critical mass can you get your company using just ingenuity, oxygen, and the contents of your piggybank? Quite a long way is the answer.

However, the startup advisors and bloggers who happily suggest this don’t usually take into account the second part of the business equation: timing. You see, opportunity breaks down into three basic things – timing, money, and execution. Hence bootstrapping is built on the thinnest of notional sands: the false idea that opportunities are happy to sit around forever twiddling their thumbs while you’re slowly bootstrapping to try to take advantage of them.

What a load of nonsense!

Ideas change, technologies change, cultures change, markets change, policies change… everything changes. In fact, the speed of change is arguably trending faster all the time, making windows of opportunity narrow year-on-year.

It’s entirely true that successful startups have always had to be lean(-spirited) and mean(-fisted), but people who go around saying things like “startup costs are trending towards zero” (and I’ve been seeing this a lot over the last year or so) are helping to contribute to the converse of the equation – which is that without money, startup execution time trends past the ever-narrowing opportunity window.

I suspect that all this talk of bootstrapping has helped people to forget the whole point of angel investment – that it’s not there to build miserly and slowly, but to build economically and fast. It’s less about avoiding waste (although that’s always a help) than about reaching speed – it’s about (literally) capitalizing on opportunities, not bootstrapping past them.

In my last industry, big computer game development was largely crippled because the volatility of publishers was so great (and the contracts so one-sided) that developers had honestly no idea whether a given development title’s eventual publisher would even want a game in that genre. Here we have an analogous situation, in that UK angels’ analysis paralysis is now extending beyond the length of most opportunity windows – by the time they’ve managed to steel themselves for the trauma of writing a cheque, the chances are pretty high that whatever opportunity their investee company is aiming at has passed by.

Perhaps pivots are the natural reaction to this: is the real reason startups need to pivot so much because angelic indecision causes opportunities to be missed? How many startups get funded quickly enough to really hit the market they’re originally aiming at? Very few, I’d guess…

technology changes,

“Executive Summary” or “Angel Flyer”?

Last Friday, I went to one of Paul Grant’s startup seminars at the British Library: this was an all-dayer, and featured no-punches-pulled insert sessions from an angel investor (Colin Coghlan) and a specialist startup lawyer (William Robins from Keystone Law). It was very good to get a rather more ‘political’ take (in terms of influence & negotiation) on the UK angel-entrepreneur interface (from Colin) and on term sheets (from William): in both cases, what I learned was the kind of thing you just don’t find in books or websites. Perhaps the most valuable knowledge ends up ‘tacit’ simply because it’s hard to find a way to write it down, eh?

Anyway, another highlight of the day (apart from exits, which I’ll blog about another time) was Paul Grant’s discussion of how to write effective executive summaries. But… having heard his reasoning and seen the example he gave (a cycle helmet company, which I found fascinating because I started up a children’s protective headware company a few years ago), I can’t help but think that there’s silently been a presentation step change behind the scenes. To be blunt, a startup shouldn’t really consider anything like the stuff Paul is talking about to be an “executive summary” for anything apart from scrawnily historical reasons, because….

1. …it’s not aimed at any “executive” (i.e. a senior manager in a corporation)
2. …it’s not a “summary” (i.e. a succinct, neutral-tone rendering of a tree-killingly-thick business plan)

Let’s be clear: whereas traditional MBA / VC-centric business plan writing is withering on the vine, the new funding mindset has it that competition and customers all change so rapidly that startups need to prefer agility over strategy to survive (and hopefully thrive). Given this, a properly contemporary startup may well not ever have (or need) a conventional business plan, preferring instead to start small & loop fast. But whatever company you’re trying to build and however you’re trying to do it, you still need something more than sheer telepathy to get your story across – even if business plans are dead, information still has to flow.

Hence, I think the kind of document Paul is talking about might more usefully be thought of as a one-page sales flyer targeted at angels, using page layout conventions to structure verifiable financial information. Yup, it’s an “angel flyer” (pun deliberate), and the right kind of application to use to construct your own one would be a desktop publishing programme, such as (the open source) Scribus. As Paul sees it, such a document needs to cover exits, the market pain/problem, opportunity, past company milestones, management profile, and basic financials.

As with all financial promotions, UK entrepreneurs have to comply closely with the terms of the FSMA (2000), which of course means disclaimers aplenty (don’t forget to read the FSMA 2005 amendments relating to High Net Worth Individuals too).

Having just migrated my startup’s traditional (double-spaced, neutral language, business-plan-centric) executive summary over to something close to Paul Grant’s suggested (DTP’ed, sales-tinged language, iteration-centric) angel flyer format, the advantages and disadvantages are pretty clear to me: what you gain in improved information density and presentation, you lose in focus.

Really, an angel flyer feels to me a bit like a YouTube video pitch and a PowerPoint presentation crunched down and welded together by a salesman: which is not to say it’s a bad thing per se, but rather that it’s trying to harvest the best body-parts of the business plan corpse, the pitch deck corpse and the live pitch corpse, and to then assemble them together (Victor Frankenstein-style!) into a hybridized living thing. “It Lives!”, yes: but I suspect it’s not yet a beautiful genre.

But perhaps we’re just at the start of a whole new business art form here: in years to come, maybe angel flyers will become not only studied and refined but also celebrated and collected. So, if your own angel flyer is still a little ragged round the edges, relax – good art always takes time to perfect, eh? 🙂