Loving the Underdog! PART1: The 800lb gorilla

I recently helped organise a startup competition in our City. There were five startups pitching.  Several of them are attempting to take on much, much larger entrenched competitors. It seems like madness! They’re competitors are stronger, have more resources and many more customers. But, sooner or later, a startup has no choice. They have to fight the 800 pound gorilla!! Despite the odds, startups can and do beat their massive competitors.

You’ve gotta Love the startup underdog’s sheer audaciousness and courage against the odds!

If a startup is lucky enough to find a gap in the market, they will attract copy-cats. Initially most of them will be other startups. Mostly there’s little point in startups competing with startups, as they both have nothing to loose. Startups are quick to change, nimble and have a low-cost base. It’s almost best to ignore other startups playing in the same field.

With traction and time other copy-cats will be big powerful competitors. With customers and revenue streams, larger companies have the luxury of time. They have power. Startups don’t! If startups persistently compete against big players they will either be acquired or squeezed out of the market. Of course, if funded, the VC’s love the ‘acquire now’ option.

Just today I see startup Slideshare is taking dominant Cisco and Citrix head in the on-line meetings market. At our startup competition the winner Go-Dine is competing against the very well established Opentable. And Annot8, one of the finalists,  is completing against Google!! My website performance monitoring startup is also increasing competing against our much larger competitors.

It seems like a no win situation!!

So how on earth can a startup win against the 800lb gorilla..?

1. Find their weak points – Often large dominate market leaders become bloated with the fat of large profits. They have not explored new channels or markets. This is when a nimble startup can attack!
2. Go niche – Much large competitors can be avoided by going deep into a niche market where the play is too small for a large company.
3. Attack their profits – There is probably a product or service where the 800lb gorilla is making their fattest profits. Attack this treasure chest and weaken their position.
4. Forget them – It’s easy to get obsessed by the competition. Focus on the customers and their needs, not what the competitors are doing.
5. Out innovate them – This is making the most of their weak points. Re-define the market! It’s a challenge without significant resources i.e. major funding but it can be done. And when it is, the profit are huge. VC’s love this approach.

Startups have little choice but to stand and flight using their limited resources.  The founders can’t just tuck tail and run when they they’re up against a large competitor. Startups can and do win against the 8o0lb gorilla’s. Just look at Mint v’s Intuit or Dyson v’s Hoover, the list goes on and on. This is the way of our evolutionary economics system. Startups change everything!!

Next post in ‘Loving the Underdog’ series: PART2 – City of creation

Here’s a few good posts on startups v’s bigger competitors:

• The big company vs a bootstrap – Bijan Sabet
• Startups play poker, big companies play chess – Don Dodge
• Understanding How The Innovator’s Dilemma Affects You – Mark Suste
• Telling the 800-lb Gorilla to Shove it up his Ass – Jason Cohen

 

My latest Pitch

Here’s my latest startup pitch (kindly recorded by Lucy Hewlitt of techfluff.tv) – its only 2:40 seconds long. My elevator pitch has got alot better over the last year and a half.

I talk about what our service does, how we are different and how our service has been received. Lucy also asks me how we are funded.

After pitching our service 100’s of times its got much better but there’s always room for improvement 😉

Startups: Keep it secret, keep it safe..

I hear this from entrepeneurs all the time: “I’m keeping my startup idea secret”.   In my opinion and that of others, don’t! Talk about your idea to almost anyone who will listen.  Everyone! Investors, entrepreneurs, friends, ex-coworkers, etc. In fact, anyone! Why? Because the more people you talk too, the more you will learn.

In Eric Karjaluoto classic post ‘Why your web startup will fail’, Eric says: ‘No one is looking at you. No one is listening to you. Even if you create a portable fountain-of-youth, your startup’s biggest challenge will be to get anyone to pay attention. Really–it’s that hard.’ You therefore have to talk to lots of people and there’s a ton of benefits when you listen to their responses:

1. Evolution – Others will give the idea refinement and improvement suggestions.
2. Make better – By taking to people you will discover flaws and hopefully correct them.
3. Learn – You’ll understand a lot more about the sector and industry you’re aiming at.
4. Competitors – You will learn about competitive products that exist or are being built.
5. Find needs – You will gauge people’s excitement level for the product and for various features.
6. Practice – You’ll refine your all important sales and investor pitch.
7. Bad idea – You might even discover your idea is a bad idea and save yourself a world of pain.

Despite the clear benefits there’s always the counter argument: “but someone will steal my idea”. In reality there are, at most, a handful of people in the world who might actually drop everything and copy your idea. Unfortunately, most people will think your idea suck’s.  However his does not mean your idea is stupid. Entrepreneurship is about seeing needs that other don’t always understand immediately. So, who’s going to copy you..?

1. The big company employee – They or their company will steal your idea. Not likely! Their employers normally have a product in the market and its hard to change direction, particularly for big companies. They are personally in a big company because its safe. Are they really going to leave their fat paycheck for the unknown.. I doubt it!
2. Other entrepreneurs – Most founders, who are going to build something, are already working on their project and are highly unlikely to drop everything to copy you.  Even if they are in the idea generation phase, high integrity entrepreneurs are unlikely to copy your idea.
3. VC’s –  They will either like your idea or not. If they like it and like you enough, you’ll get funded.  VC’s prefer to fund an existing teams than taking an idea and building a team.  The team owns it! The one risk is if they have entrepreneurs workingon a similar project.  But most VCs will disclose this first and let you decide.

The handful of people in the world who might copy your idea are entrepreneurs just starting up with a very similar idea.  Don’t worry competition is good and their will always be smart founders out there with similar ideas. Remember ideas are cheap and execution is everything. Also remember, an idea changes as it grows.

Finally, the conversation moves onto the NDA (Non-Disclosure Agreement) – “I’ll tell you if you sign an NDA”. Unfortunately this blows everything:

1. Shows inexperience – Few experienced entrepreneurs or VCs will sign them.  Asking them to is widely considered a sign of inexperience.
2. Consequences – There value is not clear unless you are a big company. Are you really going to spend years suing someone who signed an NDA and broke it?
3. Time – As a startup you don’t have much time. Don’t waste it writing unnecessary documents.

Ideas grow and branch off in unexpected ways when they’re given the light of day. Don’t keep them secret to protect them. Talk to everyone who will listen and you’ll probably learn a thing or two 😉

Geek ‘n Rolla: Love & Money?

Love was defiantly in the air at this years Techcrunch Geek ‘n Rolla. The tech event, on its second year, had a strong focus on Venture Capital and real world startup experiences. The talks highlighted VC’s love of huge exits and startup entrepreneurs love of making great things. Unfortunately, these two paths to love don’t always meet. But often they both need each other to survive and grow. If you want a full debrief of the event Inma Martinez , Joao Belo and of course Mike Butcher at TechCrunch, have great detailed writeups.

In Tommy Ahlers‘s talk he compared a startup exit  to finding love and Eden Ventures described engaging with VC’s as romance. Tommy went on to say “don’t build a startup to sell out.” I’ve heard this before – if you just focus on the money you won’t get anywhere. In the subsequent panel discussion Saul Klein of Index Ventures went onto say “Most entrepreneurs are not looking for an exit, they’re looking to create a great product and change the world in some way”.

Jason Trost reminded us how much startups are “rollacoaster of a ride” and “to be ready for the hard knocks”. He also quoted the cold fact “that 7 out of 10 startups fail”. So why are startup founders willing to throw life savings, time and a personal life at an idea. It’s because Entrepreneurs love doing what they want to do! They love the freedom to create

The startup new product pitches of the day were: Cortexica; Cutefund.com; Decibel; DriveK; GameCreds.com; Gigaboxx; Graph.me; iGlue; LinkCloud.org; Musiio; Pownum; SongHi; and Stripped Finance. Well done guys for have the passion to follow your dreams. And congratulations to Cortexica for winning over the judges and Graph.me for the audience vote. Tamlin Magee has a great write up all the pitches.

Most of these startups have spent many months, or years,  and much money building their  products. Love of startups is why the speakers,  the pitchers and several of the audience were willing to drive across Europe for this event when all the planes had stopped. Well done Mike Butcher for making it these events such a focal point for European tech startups!

In Ewan McLeod’s talk on “The disruptive opportunities for startups in mobile, and getting traction fast” he pleaded with mobile phone app startups to stop their love affair with iPhone app development and look at the market measures.   “But love is blind and lovers cannot see, the pretty follies that themselves commit; For if they could, Cupid himself would blush” (William Shakespeare, “The Merchant of Venice”). This is where the VC’s kicks in!! They have to see the reality of money or at least the potential of it. “We’re looking for exit values of $300-400million dollars” Katie Turner, Eden Ventures.

However software startups are not about the money at the beginning. They can’t be – There is no money.. only an idea, a massive loss and very few customers, if any! Employees tend to focus on monthly paychecks but startup founders have to draw their strength and measures from elsewhere. Ultimately you have to do what you really love to do. Startup founders really have to enjoy and relish the startup challenge.  “I love sales” said the charismatic and slightly wacky  Morten Lund in his entertaining talk.

Without a rush of customers throwing money at a product startup founders have to deal with the VC devil to grow  their startup and continue to create. They then have to dance to the pipers tune and move towards a liquidity event. The good news is that once a VC is onboard they’re on the entrepreneurs side, just as long as the founders are moving towards that big exit 😉

Techcrunch Europas Awards: And the winner is..

The creme of UK and Europe’s Tech startup community were at  Techcrunch’s Europas Awards last night. The inaugural event was held at the highly  fashionable Delfina in London. We also had guests from across the pond, including Sarah Lacy and a very hoarse Scoble. An endless stream of beer, wine and Tech startup high energy made for a great evenings entertainment. The evening started with six startup pitches, followed by a panel discussion and then the awards.

The Awards are up (image source)

The Pitches

First to pitch was Bernhard Niesner from Busuu with their Language learning and community app. Bernhard gave a energetic pitch with  amusing Austrian humor. Next up was Heikki Haldre from Fit.me a Virtual fitting Room app. A female from the audience had the crowd in stitches when she commented that most women don’t know their breast size. You can image the follow on comments.. Philipp Hubertus  Mohr from Comufy pitched their award winning personal communication aggregator.

Pitchero will help the UK find the next Jonny Wilkinson according to Mark Fletcher who gave a fast paced tour of their sport community websites app. The next pitch was from GigLocator who launch next week. James Proud gave a very relaxed, honest and friendly pitch. The crowd loved it. Last up was Ravi Sharma from Emarket with their CMG on-line exchange site.

Some great pitches and new European startups. BREAKING NEWS: Mike Butcher announced a European startup league table based on YouNoodle results. Way d’go Mike. A Champions league!!

The Panel

After the pitches a distinguished panel discussed the European startup scene:

• Stefan Glaenzer, from Last.FM feels that Europe is 3-4 years behind The Valley and falling further back. Stefan believes we need to focus more on sales and marketing. However we do need to keep in mind that Silicon Valley is in its own bubble.
• Sarah Lacy, author & TechCrunch editor, is on a world entrepreneurship and Innovation tour. Sarah’s visiting many emerging markets including India and China. Sarah sees demand increasing from non Western markets and Silicon Valley slipping back.
• Michael Birch, co-founder of Bebo and Brent Hoberman, MyDeco’s, announced they are setting up PROfounders Capital. This is an investment fund for startups. Its run by experienced founders for startups founders. Nice idea.
• Tariq Krim, founder of Netvibes – Tariq talked about the need to think globally with your startup.

It seems from the discussion we’ve come along way in Europe but have much further to go in today’s global economy.

The Awards

Spotify scooped up the most awards. They won: Best Web Application; Best Startup Founder(s); Best New Startup; and “The Europas GRAND PRIX”.

Alistair Mitchell & Andy McLoughlin, Huddle founders, win
The Best B2B category (source)

The full list of categories and winners are:

1. Best Bootstrapped Startup (less than 3 years old) – Soup.io
2. Best Design – Songkick
3. Best Social Innovation (benefits society, EMEA) – Mendeley
4. Best Cleantech / Environmental Startup (EMEA) – Alertme
5. Best European Hardware / Real World Gadget (EMEA) – Poken
6. Best Entertainment App or Service (EMEA) – SoundCloud
7. Best Mobile Startup (EMEA) – Nimbuzz
8. Best Mobile Application (EMEA)  – Spinvox
9. Best Web Application Or Service (EMEA) – Spotify
10. Best Enterprise / B2B Startup (EMEA) – Huddle
11. Best Startup Founder(s) – Daniel Ek and Martin Lorentzon, jointly for Spotify
12. Best Investor (VC or Angel fund, EMEA) – The Accelerator Group
13. Best Investor Personality (EMEA) – Yossi Vardi
14. Best New Startup, Summer 2008-2009 – Spotify
15. “The Europas GRAND PRIX” – Spotify

It was an evening of much fun and frolicking:

Mike on high!! (source)

Well done  to all the pitchers for their efforts and congratulations to the Award winners. Mike and his team did a wonderful job of organising this fabulous event. Until next year. Our startup may even enter with our new website monitoring app..

Pitching 2.0+ : A clear, concise & complete message

It’s not as easy as you think getting your pitch/message down to a few very clear and concise words. I’m pitching our website monitoring startup again. This Pitch is part of a national Pitch competition. Click the links to see my last pitches: Understanding Pitching and Learning to Pitch. We’ve been short listed based on our application form. All the hard work we’ve been putting into our Website messaging is really starting to come through. Our message must be improving.

Churchill. Good with words.

Like a marketing strapline a pitch needs to be boiled down to a very few key words. It says what your company does and what you stand for. This message is then developed into longer pitches to include more and more detail as required. 3 second, 30 second, 3 minute pitches, etc. Its a bit like a pyramid of descriptions with the shortest and simplest pitch at the top. This structure brings consistency and clarity. Ultimately the culture of a startup is formed around the principle messages and values formed by the founders. In this way employees, customers and investors understand what your company stands for.

How we get on today at The Pitch competition is important but its not critical. Its the journey that’s the useful part. Improving, testing and refining our message is the reason to pitch. Although the £50,000 worth of prizes would be nice. This practice is preparing us and our message for potential customers. After all The Pitch panel will not be buying our product, customers will. Keep pitching – practice makes perfect 😉

Elevator Pitch 2.0: Are you Listening & Learning?

I took part in another pitch competition this week and didn’t win, yet again.  However I learnt alot more than the previous pitch. The first pitch was to a camera in a booth. Unfortunately I received no feedback from the judges. How can I improve if I don’t get feedback! This weeks two minute Nott Tuesday pitch competition was to a live panel (Mike Butcher The Editor, Doug Ashby The Entrepreneur and Duncan James The Lawyer). They gave me some excellent feedback during a three minute Q&A to learn from.

Aware Monitoring looking more  like Rappers (photo by Nick Walker)

Here’s a link to all Nick Walkers’s event photographs. The pitchers at the event were (in presenting order):

1. Simon Oxley and I from Aware Monitoring with our Website monitoring and Web infrastructure monitoring service. Click here for our pitch slide deck on Slideshare.
2. Darren Ramowski from golfshake.com, who’s a really nice bloke,  gave a very relaxed pitch about his great golf website. The judges loved Golfshake and its international potential. Time for Darren to learn how to go Global now!
3. Next up was Kamran Hussein from Buyers4Cars with an innovative startup that allows car buyers rather than sellers to advertise their vehicles.
4. Tadhg Kelly from Simple Lifeforms have just released their first social game and I’m sure they will go very big with this game or one of the next games they’ve line-up.
5. Last, but no means least was Nik Le Page who pitched an idea on online profile management. Nik won an extra award because he was a last minute and enthusiastic entrant.

I’d like to have come first in both pitch contests, who wouldn’t. However there is probably more to gain from not winning. Sore looser you may think. But learning often means putting yourself in a difficult situation where you will be challenged and probably won’t succeed. We have to go out of our comfort zones to learn. It’s the hard lessons that often have the most impact.

Pitching is a vital skill for any startup. As founders we need the ability to effectively pitch to everyone: investors; journalists; customers; partners; co-workers; etc. Therefore we’ve got to work hard on our pitching skills. For more tips on pitching listen to Tim Berry (Angel/Entrepreneur) and his seasoned advice.

All situations in life can be learnt from whether we win or loose a business pitch, customer deal, sports competition or our new product is a failure. Only by listening and learning from the challenges we can improve. The business coach Brad Sugars said something that stuck in my mind – “work on yourself as much as you work on your business.”

Growing as an individual is about Lifelong Learning – “the pursuit of knowledge is not confined to childhood or the classroom, but takes place throughout life and in a range of situations”. So what have I learnt from my Pitch 2.0 feedback? I’ve understood the importance of being relaxed, spending more time on what the product is, our forward strategy and the investor greed inducement.  Until the next pitch! Which is going to be real soon with a National Pitch competition. I’m a sucker for punishment 😉