RAMPING UP: How to startup successfully, so you’ll never stop.
Published on 29 October 2020
Colin Kinner launched Startup Onramp four years ago, after working with hundreds of startups and seeing them make the same mistakes.
Through his involvement with numerous startups as an investor as well as running early-stage funds, accelerator programs, incubators, and mentoring countless startups, Colin knows too well a startup is not like a regular business.
He says when running a café, a retail business, or an accounting firm, the rules are predictable.
In a tech startup however, you are almost by definition engaging in business model innovation and trying a business model that nobody is tried before.
“I thought it would be really handy if we could create a program that helped people who are starting their first tech startup to learn from all the people who've gone before them.
“One side is looking at what things they get wrong, inadvertently, unwittingly, that are really unhelpful to the success of the company.
“Then on the other side, what are all the things that successful entrepreneurs have done that have been really useful that have helped them to speed up their journey to success?” Colin explains.
Startup Onramp runs a range of different programs in various formats to give people quick exposure to best practice, or "What are all the things that you probably should be doing? Plus, practical guidance on how to go about doing them.
Colin estimates 250 people have gone through the programs nationally.
“We've had some really good companies come out of them and we've also had a group of people that have been through the program and said, "All right, well, I've now realised my idea isn't going to work, but I've realised that really quickly and cheaply." So, we also count that as a success,” he says.
IF YOU START ME UP, I'LL NEVER STOP.
Colin says there is a lot of terminology around startups and onramps needing to be unpacked.
He views a startup as a business that starts small, but if it is successful could become massive very quickly.
“Usually they're going for a global market rather than a local market and generally they're using a combination of technology.
“Technology might be it's on the internet, or it could be technology that's come out of research, or that involves some science behind it.
“They almost always engage in business model innovation and are trying something that hasn't been done before,” he proposes.
Colin maintains if you're starting a business and can predictably say, "I know what this business is, how it's going to work, I know who our customers are, I know how we're going to make money, I can project for the next three to five years of kind of cashflow forecast… that is not a startup.
So, what makes a business?
Colin says it is solving a problem for a particular customer, getting paid, and the costs involved along the way.
“At a basic level, a business model is those things, who is our customer? What problem can we solve for that customer? How are we going to make money? And what are costs? And obviously you must make sure that your revenues exceed your cost at some point.
“So, a business model is really just setting out those core things,” Colin relates.
Likewise, Colin sees innovation as doing something that is new, different and believes there are different levels or degrees of innovation.
“The sort of innovation I really like to see in any startup is new to world innovation.
“This is something where you're going to do something and you're going to be the first company to do it. You don't have to be literally the first in the world, but you don't want to be the 1,000th,” Colin cautions.
Colin references file sharing backup platform Dropbox as an example, saying the popular tool was possibly the eleventh such platform to be created.
“When Dropbox started in 2007 the founder knew they were not the first to try because Microsoft and Google and others were doing similar things, but they had just done it really badly.
“The way Dropbox succeeded was to understand where their competitors had done a bad job and knew how they were going to do it better.
“That is the ideal sort of innovation where you are in the first handful of people to do something anywhere, because that means that you can capture the whole market potentially.
“The least valuable kind of innovation is incremental innovation, or technology adoption,” he maintains.
Colin says Startup Onramp intends to be valuable to people starting companies, from the early-on idea stage.
He says he has helped a lot of people who have ‘had an idea in the shower’ test whether the idea is viable, right through those two years into their startup.
“I've met a lot of founders who are five years into building their business and it's been a long, hard slog.
“They've done a lot of things that haven't worked, and then someone's explained to them why those things haven't worked and it's heartbreaking because they admit they have put their life savings and five years of my life into this venture.
“I personally feel really strongly that it is vital to help people really early on so that they don't have that kind of long gestation period of doing things that are not going to help and wasting their time and their money,” Colin admits.
Startup Onramp launched its Founders Course in March this year; a practical, video-based online course to show how to start a startup and maximise its chances of success.
Colin says it is for startup founders with global ambitions, and anyone with an idea for a startup.
When Startup Onramp launched, Colin and his team started running a program called a Pre-Accelerator; a 12-week program for people working on a startup idea. The program involved workshops, mentoring and a pitch event.
Colin says the program was impacted by COVID, making it difficult to get in-person groups together.
“I decided it would be a good idea to create an online version of the program that people could do in their own time without having to come and do a face-to-face workshop.
“We spent quite a bit of time building that and we interviewed about 20 startup founders, experienced founders, some investors, some venture capitalists, lawyers, people that have got really deep skills relevant to lots of different aspects of starting a company,” he says.
Colin explains the Founders Course explores all the things every startup founder should know a little bit about and gives the participant enough information to get off to a good start.
The program is broken into three sections.
The first ten modules are startup essentials, starting with a lot of terminology and all the ‘buzz words’ people need to understand.
Next, the program looks at what makes startups succeed and what makes startups fail.
"What are the big buckets of activity that you as a founder should engage in that will increase your chances of success and what are the things you should avoid?” Colins says.
The following part of the course is about launching your product; using a minimum viable product (MVP), to test your idea with customers, and how to interview customers before you spend money building an MVP.
“We talk about building a team, the legal structure and some of the governance agreements that you'll need to have in place.
“We talk about how to pitch, and the many opportunities to tell people about your company, tell them about what you're working on and why it's valuable.
“The final part is about growth and funding. Assuming you have validated your idea, how do you grow that using digital marketing as a tool? How do you raise money from investors?” Colin summarises.
Also in the mix is a module on the importance of diversity led by Sarah Moran from Girl Geek Academy; a topic Colin feels is often overlooked in the startup landscape.
WHAT COMES AFTER STARTUP?
So when is a startup, no longer a startup? Colin says several companies that have been through some of Startup Onramp’s earlier programs are now no longer startups; rather globally significant companies.
One of the businesses Colin is actively involved with still is a company called SurePact, an enterprise software product for project managers.
Their product gives people managing large complex projects a better view of all the moving parts of the project so they can better manage risk.
“That company was started by Megan Avard, who has a deep background in complex project management, so she was leveraging 20 years plus of domain expertise.
“Being able to say to yourself as a founder, am I going to leverage some really deep domain knowledge so that my startup has a really good chance of being successful?" is important, rather than moving from one industry into foreign territory,” Colin counsels.
Colin shares another alumni example of Replica Studios, whose founder Shreyas Nivas undertook the Pre-Accelerator, working on an entirely different idea.
During the program, Shreyas realised what he was working on just was not going to be successful because he learned from customers that no one was willing to pay for it.
Colin says Shreyas did what good founders always do, which is to say, "Well, okay, I'll start working on that, but I've got five other ideas, which one will I work on next?"
“His next idea was to use artificial intelligence to create synthetic voices, so he's built a company that is using AI, artificial intelligence, to take samples of a person's voice, and allows them to synthesise that to create voices for lots of different purposes, whether it's games or audio books or web apps.
“They got accepted into the Techstars Music Accelerator in Los Angeles about a year ago and then came back to Australia and raised $3.7 million in funding and they're continuing to grow.
“They're a great example of a company that's actually working on their second thing, but making a really good go of it,” Colin illustrates.
Colin also says he sees people building businesses that would not on first glance look like a tech startup; rather they might be building a physical product rather than just a software product but are equally interesting as an opportunity.
“One company was building a boat anchor product, a heavy engineering product, and a new design of an anchor for boats.
“The founder of this company basically was a recreational fisherman who liked to go fishing but did not like repeatedly getting his anchors snagged on rocks and on coral.
“He realised the current anchor design was not very good, so being an engineer, decided to design and build an improved version of a standard boat anchor."
“Then some of his mates asked him to make one for them, and he ended up making a handful of them,” Colin recalls.
Colin says this angling engineer is now building a business that is going to sell this new design of anchor globally, to a potential market of 300 million boaties.
“He's not going to be manufacturing 300 million anchors in Australia and putting them in an Australia Post box and sending them to people.
“What he will end up doing is being an intellectual property licensing business, so he will license the rights to manufacture country by country, and then have manufacturing relationships in lots of places where they can manufacture it locally and then ship at shorter distances.
“He will make money while he sleeps by having those manufacturing partners pay him a license fee,” Colin tributes.
Further afield, Colin is working with some companies in Germany, including a partnership with a German accelerator connected with the Founders Course.
He says it is interesting to see the different kinds of businesses that exist in other places around the world.
“I'm working with a Berlin company, who have launched an app called Wonder, which is helping people to remain accountable for goals they’ve set for themselves, be it a fitness goal, a learning goal, or something as simple as doing yoga three times a week.
“They found people spend something like $40 billion per year accessing the content that helps them to do those tasks.
“They have an app that helps people remain accountable for the tasks that they've signed up for by matching them with an accountability buddy and helping them to get through it that way.
“And they are growing like crazy, plus getting a lot of interest from lots of potential partners. They are a really interesting example of something that's solving a really specific problem, but it's actually a really big one,” Colin says.
STARTUP TIPS AND PITFALLS
- Do not spend a dollar building anything, or on any part of your business until you have talked to customers.
Colin says one of the biggest things causing startups to fail is the founders not getting validation for their idea, first.
“They’ve got a great idea, maybe they'll talk to a couple of people, the sister and the other one might be their mother, they get the pat on the head that says, "Oh, that's a great idea, dear." and they go for it… fast forward 12 months, and they've spent a $100,000 of their own money, they still haven't got any customers and it's not looking good,” Colin cautions.
Colin maintains the first thing people should do test their assumptions with their target customers. He warns against ‘pitching’ the idea to see whether it is ‘good’, saying this largely unhelpful.
“People are trying to be helpful and supportive of entrepreneurs, but in doing so they tell everyone that's a great idea, but that means absolutely nothing.
“Go and ask those customers what problems they have,” he suggests
Using SurePact as an example, Colin says founder Megan Avard interviewed many project managers and asked them what was hard about managing projects? What keeps you awake at night? What are the things that go wrong that you wish you could do something about?
By asking these types of questions, Colin says you come to understand at a deep level what problem you are going to solve with your company, and then you can go and solve it.
“It's actually a whole lot easier today than it used to be because of COVID. Despite all the challenges of a global pandemic, it is a whole lot easier to get people anywhere in the world to jump on a call or a Zoom call and have a chat,” he encourages.
- Set out your assumptions in falsifiable statements.
Many people have some assumptions their business is based on.
Colin says every startup is just a little more than a walking set of untested assumptions.
“Your job as a startup founder is to go test them, however what people often don't do is to actually write them down and articulate them as falsifiable statements.
“Let us say I'm building an app that helps dentists to better plan their day. My set of falsifiable statements would start off with something like, "I believe that dentists have a real problem in planning their day."
“I might then say, "I believe that that's because dentists have appointments that run longer than expected," or whatever other assumptions I have around why that's a problem that I should go try and solve.
“If you go on and test those extremely specific assumptions, you get you a much better answer than saying, "Here's roughly the idea that I've got and is anyone interested in it?" Colin reveals.
- Find out what you can release to your target customer early and cheaply.
The largest amount Colin has seen a person spend money on for a yet non launched product is about $250,000. He strongly advises against this.
“What people can do early on is to explore if there is a way they could deploy an MVP, minimum viable product, that isn't anything like the full product they have in my mind, but that will still allow them to launch something to see whether their target customer thinks it's interesting or not."
“Depending on the kind of thing you're building, it can be really, really cheap and quick to deploy,” he advises.
- Figure out with your team who is doing what.
Not everyone has a team. Some people start out as a sole founder. Some people start off with a team.
Colin encourages people to complete a founder alignment exercise; a one-page canvas that asks four questions:
- Why am I doing this?
- What am I willing to put into this company?" (time, money, reputation, etc.)
- What do I want to get out of this company? (millions of dollars, fame, wanting to be your own boss, etc.)
- How do I define success for this company? (having 100 offices around the world, retiring at 55, etc.)
“If you're a sole founder, do that exercise and then sit down with your family or your spouse, or a good friend, and just walk through it and give them the opportunity to kind of question you on it.
“Does it make sense and is it realistic? It gets really interesting when it's a team of people and you can sit down with your co-founders, each fill in that kind of one page Q&A thing separately, and then come together as a group.
“If you watch the conversations that come from that, it's usually pretty interesting because there's lots of different opinions for each,” Colin says.
Colin Kinner is one of Australia's most experienced startup coaches and mentors, having worked with several hundred emerging entrepreneurs. He is passionate about helping startup founders to be successful by learning from the experiences of others.
He is also the author of Crossroads 2016: An Action Plan to Develop a Vibrant Tech Startup Ecosystem in Australia.
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