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Why it’s less “pivot” and more “handbrake turn”

3 Jul
Startup drifting...

Startup drifting…

I was having a chat yesterday with Andy Young of Stripe, telling him about Satago (my startup) and our recent strategy change to focus on accounts receivable automation, and told him that I didn’t think there was such as thing as a startup “pivot” because it’s more like a handbrake turn.

He tweeted my comment today and it got a bit of attention so I just wanted to expand on my thoughts…

I’ve never liked the term “pivot”. A pivot is when you change direction with one foot placed on the ground. It’s soft, it’s gentle, it’s quick and once you change direction with your pivot, you know which way you’re facing. Dancers pivot. Startup don’t.

For one thing, a pivot takes an instant. A handbrake turn takes a fair bit longer. Now, startups may be agile and nimble and all that, but that doesn’t mean that your tw0-developer team startup can just change its model overnight. It takes weeks and months of planning and re-factoring. It may require a complete re-write of your app’s engine. In our case implementing a new pricing model required some significant changes to Satago under the hood and we’ve still got lots to do…

Pivots are not scary. Handbrake turns are… but not necessarily for everyone in the car. The CEO may think he is a “Fast & Furious” style driver, but everyone else in the car is probably crapping themselves, eyes wide in terror and knuckles white, gripping whatever they can to try and stay seated!

Also, with a handbrake turn, you’re not really 100% certain what direction you’ll end up facing. Hopefully you’ll end up facing in the direction you planned, but if you hit a bump in the road you might end up somewhere you did not expect. Try not to flip the car.

So I propose we ditch the term “pivot” and start talking about “startup handbrake turns”.

eFax: How not to reduce churn

30 Apr

I needed to amend some company bank details and my bank, Santander, insisted that I had to either post in the changes or send a fax. I haven’t seen a fax machine in years, however a quick tweet did point me towards two online services. HelloFax,  a Y Combinator company, and eFax, a old-school looking service with the sort of design that makes you grimace.

Both companies offer a 30 day free trial. I’ll be honest, I was not intending using either service beyond this one fax.

I tried HelloFax first of all, but because I was faxing a 0800 number, HelloFax would not send the fax, which made them kinda useless. I then tried eFax and despite the fairly ugly user interface it did the job, and that’s what matters.

Whilst HelloFax have a free option, with multiple price tiers thereafter, eFax has one flat monthly subscription and requires you to enter your credit card at sign-up. *Warning bells*

Well yes I forgot to cancel the account before the 30 days free trial were up. Fair enough, I would pay their £7.50 monthly subscription for my one fax sent and cancel the account.

I could not find how to cancel the account from their fairly confusing UI, so I emailed their support to be told that I could only cancel the account by phoning customer support. *Warning bells again*

I haven’t phoned them yet. I don’t want to out of principle. If they can take my money online then they can cancel my account online. I don’t need them to “help me”. I think it was the credit score companies that used to be notorious for only allowing you to cancel your subscription to your personal credit reports by phoning them up, whereupon the customer service representative would try to persuade you that you really needed to pay £10/month to know your credit score at any time. Yeah right.

I then double-checked my bank account to see what they had charged me. Since starting my free trial on 26th March, I have been charged £7.38 on 28th March, refunded £7.38 on 3rd April, charged £7.38 on 17th April, and charged £16.61 on the 29th April. Quite how that equates to a 30-day free trial and a £7.50/month subscription I’m not sure.

Everybody wants to reduce customer churn as much as possible, but it should be achieved by having a great product and great incentives not to leave, not massive obstacles to prevent you leaving. I might very well have wanted to use eFax regularly in the future, since it does what it says it does – sends faxes – but after this experience I’d rather buy a fax machine (presuming they still exist).

As far as I can see, eFax’s Terms don’t even say that you have to phone them. Just that you have to contact a customer service representative. I’m pretty sure an email to customer service counts!

Customer Agreement   eFax

Give them their due, they’ve been quite responsive on Twitter and did apparently try to phone me today. Hopefully they’ll be able to sort this tomorrow without me having to ask my bank to start several chargebacks against them.

I’m not massively enamoured by the “Fax SaaS model”, so I wonder how eFax and HelloFax are doing. I guess they must be on to something if YC invested in them.

On the related topic of startup metrics, take a look at this beautiful metrics dashboard which works via integration with Stripe: https://buffer.baremetrics.io/dashboard Nice!

Update (2 May 2014): I spoke to eFax customer support (calling from Ireland) and I have to admit the guy was quite helpful. There was (I think) some kind of error on my account because the number I had faxed was 0800 it was more expensive than their normal free trial allows. Hopefully the extra charges will be refunded soon. As expected they offered me a deal to stay with them longer, but it was not a hard sell and I actually agreed to it. Why not have a fax number for £3.50/month?! So… I still think it’s pretty cr@ppy to force customers to cancel on the phone in this day-and-age – they probably could have got the same effect with automated emails to entice me to stay, but on the other hand it worked for them. So the lesson is – remove your online cancellation button kids!

 

Startup Referral Systems

7 Dec

I’ve always had a love for a well-designed friend referral system. Indeed,when I was working for Rocket Internet, one of my tasks was to re-design the invite-a-friend system for Westwing.de. More on that later…

If you’re really clever/lucky you create such a shareable system, that you end up with a viral coefficient of over 1.0 (meaning each user, on average, brings 1 additional user to the service) and… woo-hoo… hockey stick growth!* Hopefully this is something that I’ll be able to apply to Satago.

So here are a few friend-referral systems that I think are particularly good or notable. Upfront disclosure – links are my referral links, since, well, that’s kinda the point of them.

Dropbox

One of the most successful recent friend-referral systems was Dropbox’s. Like many of the best referral systems it was a mutual-benefit system, meaning both the inviter and invitee received benefit from using the referrer’s link. When I first signed up to Dropbox, you would get your first 5GB of storage for free, but if you used a referral link from a friend you would get an extra 250MB storage, and of course the person who gave you the links for get an extra 250MB. It meant people were posting their Dropbox referral link all over the place to try and get extra storage, and people who were signing up were actively seeking out referral links.

Dropbox's invite system has got more generous recently.

Dropbox’s invite system has got more generous recently.

One Kings Lane & Westwing

As the original “inspiration” for Westwing, One Kings Lane gives us the standard flash sales shopping club model whereby everyone you invite gets a $15 voucher and for every shopper that you invite and makes a purchase, you receive a $15 voucher. However, One Kings Lane’s invite page is hideously designed.

At Westwing we had exceptionally high design standards, which sometimes made it difficult to get new features implemented quickly. I don’t think my final designs for the Westwing invite page ever got used, but I just checked the website and they have now updated their invite page and it looks really, really nice – much better than One King Lane’s. However the basic model is the same – you get a voucher, I get a voucher.

Westwing's current invite page. Beautifully designed.

Westwing’s current invite page. Beautifully designed.

One Kings Lane invite page. Hideous.

One Kings Lane’s invite page. Hideous.

Fab.com

That brings us to Fab.com, whom we unsuccessfully tried to “emulate” with Bamarang. I especially liked Fab’s invite friend system, because they not only had the usual shopping club voucher system, but they also added a kind of “prestige” system, whereby users who successfully invited lots of users would receive extra credit and free shipping. I think with Fab’s voucher credits they were especially good since they are additive, whereas usually with other websites you can only spend one voucher per transaction.

Fab invites

Fab invites

What’s more with Fab.com is that the whole site is designed to be shared – and every time you share something from Fab, to Facebook or Twitter, it is automatically a referral link, turning a natural instinct to share in to a potential source of free credits.

Big money

What I consider one of the most generous, or at least potentially lucrative, friend-referral systems, is from the UK’s Seedrs – the crowd-equity funding platform that I used to raise investment for Satago. If I refer someone to Seedrs who goes on to make an investment in one of their listed startups, I receive equivalent to 5% of their investment to make my own investments. So if someone logs on and makes £10k investments I will get £500 to invest in startups that take my fancy. Of course the chances are the startup will not be the next Facebook… but there could be some big wins there (like Satago of course!). Wow!

I’ve already suggested to Seedrs that they should allow a registered user to decide whether they take the whole 5%, or if it can be split with the person referred so that there is an incentive to use the referral links it becomes a mutual referral system, which I think always works better.

AirBnB

I just logged in to my AirBnB account to book some accommodation in Dublin and found that I had three £16 vouchers because three different people had signed up to AirBnB via my referral link. I don’t even recognise one of the links, so maybe that came via Twitter. Currently, AirBnB is not a mutual referral system, meaning only I get any reward for using the link, although I think AirBnB have gone through periods (maybe when they were newer) of making their referral system mutual. AirBnB does encourage you to share the listing of the place you have stayed at to Facebook, and that link is (presumably) also a referral link.

TransferWise

Transferwise is an excellent service for currency transfers. Started by some of the guys behind Skype, it is both genius and super-simple – the money you transfer from A to B never actually moves – they just match it against people moving money in the other direction, thus totally removing the costs of transfer. Clearly Transferwise benefits from having as many people using the system as possible (i.e. to make the service actually work) and hence have quite a generous referral system. Currently, if you refer three people to the system who actually use it, they give you £50 in cash. In fact Transferwise was my inspiration for this post as I made my 3rd referral this week and got my £50. Woo-hoo! I have heard of some people referring dozens of people to Transferwise and making quite a bit of referral cash.

Honourable mentions

Not particularly inventive, but the host I use for the Satago WordPress blog is TSOHost, and partially the other reason I wrote this blogpost. I found them due to a recommendation on someone else’s blog and made sure I used their referral link so they would get some reward. When I set up my girlfriend’s NGO, Kids Have a Dream, on a new website, I used TSOHost again but used my own referral link, meaning I made £7.50. Huzzah!

Lastly, I hope that the referral system in Satago will work – for every person you invite to use the system, you get credits which you can use to get data reports out of the system.

Stick or Twist: The programming language dilemma

27 Sep
Stick or Twist?

Stick or Twist?

My blog post yesterday about the difficulties of finding a technical co-founder generated a lot of good discussion over at Hacker News.

Something that was frequently mentioned was an issue that I have also been wrestling with: whether or not to stick with the original language that Satago was built with.

Satago was built with Java, using the Tapestry framework. I knew that if/when it came to looking for a tech co-founder, and potential employees, it would be more difficult to find Java developers than, say, PhP or Ruby developers. Many Java developers are currently working in banking or big enterprise platforms, which pays very well, whereas PhP developers are much more common in web startups, and Ruby-on-Rails is currently much more trendy (as is Nodejs).

By only looking for Java guys as potential co-founders I am restricting my pool of potential founders. I’ve always said that for the right co-founder I would not mind to switch language, but at the same time if the site is already in Java, it would be a shame to start from scratch in other language.

This subject does seem to neatly polarise opinion amongst my developer friends, and the people that commented on the Hacker News thread:

The two camps are:

(Paraphrasing collective opinions) “You’d be mad to change programming language now. The site is well built, the code is good, and Java is a great language for you to scale with the sort of application you’re going to build. Wait for the right guy, they will come along. “

and

“Honestly, I think your biggest problem is Java, it’s just not going to hit a large enough cross section of 20/30 year olds, that want to take a risk, that are into tech.”

“That should be the least of your concerns. Finding a co-founder is hard enough without expecting him to know Java. Pick based on other criteria, then let him rebuild it as he sees fit. There’s a good chance that even a Java guy would end up refactoring it beyond recognition. It’s exactly what I would do.”

As a non-technical guy, I’m not really in a good position to judge the technical merits of Java vs. not Java.

What do you think – stick or twist?

Finding a tech co-founder is like trying to get married

26 Sep

Keep CalmBeing the “business guy” trying to find a tech co-founder is tough, that’s well known. However, I think I underestimated just how tough it really is in practice until I began to try and find someone myself.

Ever since I was a Seedcamp finalist, the main feedback I’ve had for my startup, Satago, when I’ve been talking to investors, has been “it looks very interesting, but we wouldn’t invest unless you have a technical co-founder”.

I don’t blame them. The argument of course is that you would be wary to invest in a technology-based company where nobody in the company knows the code. You need to have someone in the team that can fix a crashed server at 3am, or burn the midnight oil to hit a new feature deadline.

To date I have been using a contractor to build Satago, and whilst he is very good (one of the best developers I’ve worked with to be honest, but sadly based very far away from me in Russia) the fear is that without the large chunk of equity that a co-founder would be working towards, he could just down tools, and then Satago would grind to a halt.

To everyone that asks me how the cofounder search is going, I tell them it is like deciding you need to get married in the next few months, but you’re still single. One probably could find a mail-order bride quite quickly, but it would most likely be an unhappy marriage and end badly. Instead I need to try and do some high-throughput dating (slutty much?), and find someone that I can have a lasting relationship with (well, at least for the next 3-5 years).

So far I have been jilted at the altar a few times. I have very high standards, and so the potential co-founders that I am attracted to, and want to get on-board, are of course very high-calibre. When you’re a talented tech guy, you’re never short on offers and so far my almost-co-founders have decided each time the other iron in their fire is hotter for them. It’s starting to hurt my feelings.

I'm a guy, but you get my point...

I’m a guy, but you get my point…

Asides from reaching out to my own network, which includes some very talented technical guys, and networking my ass off, I have also listed my “co-founder wanted” plea on a couple of UK/European websites, including WorkinStartups. What’s been encouraging, is that the people that have got back to me have have usually said that I am about the most credible startup that they have seen on there.

So what are my and Satago’s credentials?

Raised £30k on Seedrs (60 investors!) to build my MVP.

Have a working MVP with beta-testers using it, and very good feedback from them.

Finalist at Seedcamp in Berlin (this has been the main filter for people that have contacted me – if it’s good enough for Seedcamp to look at it’s good enough for them to look at too).

Interest in Satago at Government-level (two meetings at Downing Street to-date).

Downing Street

Me at Downing Street to discuss Satago and late-payment to small businesses.

I just got very close to a term-sheet from a Tier 1 VC fund for a seed-investment, but after many meetings with them they decided I was too high-risk as a solo non-tech guy. That I got so far with these guys was great validation in my mind.

Lastly, some really cool top-secret things coming next month!

I worked for Rocket Internet for 2 years (that’s either, “nice, he’ll be good at business execution” or “herp, derp, evil German cloners! Fetch the pitchforks!”) and an MBA from Oxford University (that’s either “cool, useful degree from a good university”, or “begone foul-MBA, for ye are pure evil and do not know what a startup is”). I also have a PhD in Genetics, and while not especially useful for a internet startup, it does mean I too can hack code, just not computer code (ok, really I’m hoping it appeals at an intellectual nerd-to-nerd level). Also, I’m fairly certain I’m not an obnoxious guy, so hopefully it’s not my personality putting people off!

I’ve looked at a couple of these founder-matching websites, but they seem to be a bit US-focussed, and of course I seem not to have made the grade for the..uhhh…. “illustrious” FounderDating.com.

I do have a few good networking opportunities in the next couple of months so maybe something will come from that. I’m also thinking about organising a couple of founder speed-dating events in London and Berlin next month. I’d select 10 high-quality, credible “non-tech founders” with more than just an idea in their head and invite any tech guys that are looking for interesting co-founder opportunities.

In the meantime, if you’re reading this and you’re interested in helping me tackle the problem of late-payment to freelancers and small businesses, please get in touch (Berlin, London, Oxford or Scotland – all good to me). Satago is built with Java, with Tapestry framework and PostgreSQL database. Of course one thing I have found (and I expected anyway) is that most of the young, entrepreneurial developers are PhP or Ruby guys. Most Java experts (at least the ones I’ve spoken to) are from banking and already very well paid, so it’s quite a leap for them to consider a startup. I’m not committed to staying with Java – I’d prefer to stick with it since it’s already working well, but for the right co-founder of course we could move to any language.

FounderDating: Nice concept, dodgy viral mechanism

28 Apr

The other day I noticed that my girlfriend had posted to her Facebook wall about trying to “unlock Berlin” as a city on some dating website. Wondering why she was trying to access a dating website, when she’s meant to be dating me, I took a look at the website, FounderDating.

The concept sounds good – a matching website for entrepreneurs in the Internet startup space, with tight control on who gets to join and an emphasis on at least 50% engineers, presumably so it doesn’t get flooded with those annoying MBA-types with their ideas and “I just need a coder” attitude. Or as they put it:

Seems good. I’m looking for a technical co-founder, so I applied.

As part of the application process I had to link my account to LinkedIn and invite other people to recommend me as worthy for acceptance to this network. OK, that’s fine. Getting people to recommend me  makes sense, and obviously they want to spread their brand to good entrepreneurial people, so win-win.

At this stage I was told that the more people I invite the more chance I have of getting accepted to FounderDating. Hmmm, ok, that got my “slightly dodgy” radar twitching, but nothing too bad. I have over 500 contacts on LinkedIn, so how many should I invite to be sure I get in? I thought maybe 10 would be a good number, but in the end I could not be bothered scrolling through 500 contacts so I picked the first three of my entrepreneurial contacts, who I thought might be happy to endorse me.

A week later I get an email from FounderDating – my Application is incomplete. Oh. Really? I open the email to be told that 2 of my 3 contacts had not endorsed me yet, and that FounderDating  “can’t continue to review your application without their response

Hmmm. That seems to be a bit of a conflict. FounderDating tell me to invite as many people to vouch for me as possible, yet my application can’t proceed unless every single one of them replies. So If I had invited 10 people I would have more chance of getting in, but then logically less chance of all of them completing the application.

I tweeted them pointing out that this didn’t make much sense, but they thought I was just confused:

Well anyway, I decided to send a email to my two outstanding contacts. One of them replied saying they had tried but were unable to access the website. He’s a busy guy, so I didn’t want to push the matter any more seeing as he’d already tried twice. In fact my email to my second contact bounced. I had no way of knowing this as the original request was sent by pasting their email in to FounderDating directly – not by a message via LinkedIn, which might have made more sense. A message through LinkedIn later and she had managed to sign in and vouch for me.

Well, 2 out of 3 endorsed me (at least I hope they did!) – I guess that means I will never get in… shame.

Things got more interesting when I got an email from my girlfriend, saying she’d just got a strange email about FounderDating “from” a friend of hers:

Hey Anne,

I’m starting my next entrepreneurial project and looking for the right people to do it with. So, I’m applying to join FounderDating – a handpicked network of entrepreneurs. As part of the application process, I need people to vouch (aka act as a reference) for me. I’m hoping you can do this for me as they won’t look at applications without it. It’s quick, just click this link
http://members.founderdating.com/miniprofile/….

This is a really important part of the process, so thanks for your help,
[name redacted]

The problem being that she knew her friend would never have sent an email like that.

Oh, so FounderDating have been sending this email in my name to my contacts? That’s definitely not cool. As far as I can remember I was not told that my contacts would be sent reminders and I definitely never got a chance to review this text that they sent on my behalf. The worst thing is that they have written it to really sound personal – “Hey Anne”.

I’m protective of my network. I was probably a bit blasé about giving an unknown service access to my contacts in the first place, so I apologise to those people that I have now inadvertently hassled.

I love good viral mechanisms. They can really make a great company. One of my favourite’s is Fab.com‘s, which I have… *ahem* studied in great detail. I’ve been pushing TransferWise loads recently and have got a few people signed up (if I get 2 more I get £50!). I also managed to get £15 of free bets from my friends at TradeChase the other day just by sharing my bets to Facebook (but they’ve removed their normal referral link! Guys – bring it back!).

Most importantly the company with the viral mechanism needs to respect the trust that you have put in them by allowing them access to your network. I’m sure FounderDating haven’t been malicious in their viral intentions. It’s just bad implementation. In fact it’s probably working well – I see loads of tweets about them, although I’m not the only one who is unhappy with their endorsing system.

I would like to be able to log-in and change the settings or something, but I don’t seem to even be able to log-in and when I use their “forgot password” link, I don’t receive anything.

Hopefully FounderDating will take this criticism well and change their system ASAP. And hopefully I get in soon too and find a nice technical co-founder for Satago.net.