The most important decision when starting your own business
The most important decision when starting your own business
It's not to do with your team or the product...
I rap for listeners, blunt heads, fly ladies and prisoners
Hennessy-holders and old-school n*****Nas, Memory Lane
This week I had one of the more enlightening Zoom calls of my life, during a mastermind group I’m part of. Three other co-founders of small(ish) startups and I were talking about issues we were facing. I got onto the topic of the direction I wanted to take Medley, my startup. I had a choice of taking the business in two different ways, and really wasn’t sure which.
During the call, I had one of those rare moments of complete clarity. This clarity came, as most moments of clarity do, from retrospectively tying together a string of past experiences. I think the realisation I had will be helpful to anyone considering bringing something of their own into the world, so in this newsletter, I’ll lay it out for you.
To get to the epiphany, we’ll have to take a few steps back. The first step we’ll explore is my foray into entrepreneurship, which took place about 6 years ago. I’d made a good friend at my 9-5, a Portuguese developer with the surname ‘Sardinia’ which literally means sardine. He failed to see why the CEO and I found this funny. Apparently ripping into someone’s surname is a pastime more reserved for British schoolboys. I knew I wanted to start my own company, and I took on the long-held advice of ‘just solve a problem you are facing’. Till recently, if anyone asked me how to get started with their own business, I’d just tell them this.
Sardine and I started developing an app we called Friction. I was a fairly talentless recovering office drone at that point and contributed the ‘vision’ while Sardine did the coding (the actual work). The point of Friction was to help relieve smartphone addiction, I was going through a chapter of my life where I had more of a bent on spirituality and mindfulness than I do now.
The concept was simple, you’d select apps you’d want to use less and when you opened them a little modal would appear for 7 seconds, asking if you really wanted to use the app. The hypothesis was that this short delay would be enough to take someone out of their monkey mind and make a conscious choice. Friction never really released, we couldn’t get it to work properly, but a few years later there are a number of apps that do this and make good money, I’d like to think I was ahead of the curve on that one. I never felt like I needed motivation to work on Friction, I believed in the concept and wanted to help people solve what I thought was a necessary problem in the world.
My next startup got far past the MVP stage. Simpl.rent is now a proper business doing decent MRR with VC funding and a strong and growing team- a team I’m not part of anymore.
Simpl started out as a UK business serving UK tenants, it was borne out of a horrendous experience I had with a cleaner. My girlfriend at the time and I were moving flats and had to undertake the mandatory end-of-tenancy clean. Our flatmate found some bookie bloke on an online forum He came to the house and called my girlfriend ‘sultry’, he then explained how we had a £10m/year cleaning business (yet was somehow cleaning our flat for 200 quid for a few hours of his time), before proceeding to do an absolute shit job. When we complained he aggressively demanded the money or ‘we’d see a side of him we didn’t want to see’. I resisted the urge to blend his face into the carpet and instead gave him the money and showed him the door. Simpl.rent started to make sure this never happened to tenants again, addressing the problems of grubby estate agents trying to nickel and dime you at every corner and reduce the chances of psychotic wastemen entering your house.
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My current company, Medley was pulled into the market, rather than found with any specific vision. Our product and roadmap was decided by our customers from the off, there was just such as strong need for it. There was never any strategy, we just delivered what people wanted. This proved to be short-lived and over the last few months, we’ve had to do the real work of finding a new customer profile and building a product around their needs. Currently medley is at a bit of crossroads, with two potential directions, serve our existing customer base (mainly crypto projects) or serve a new one (which I don’t really want to reveal ‘cos spies 🕵️♀️)
While going through this decision I looked over my last startups and realised something. The most important thing when building a startup, at least for me, is not the market opportunity, the product, or perhaps even the team, it’s the customer you are building for.
Why choosing your customer is so important
With Friction, I was building for people who had a smartphone addiction, I believed deeply in the problem and genuinely wanted to help these people, working on this project never really felt like work.
At the start of Simpl, we were building for English tenants, again a customer I could resonate with and wanted to help. Over time the company pivoted to helping landlords, and also from the UK to the Polish market. I struggled to deeply care about this customer. Firstly, I couldn’t speak their language and also I had no understanding of the landlord’s issues. It started to feel like a slog. These factors culminated in me amicably leaving Simpl a few years ago.
Now we have a choice at medley between these two customer types, crypto companies or a new segment. In many ways crypto companies are the obvious choice, they’ve generated cash for us so far, there is an obvious market need, and our product is aligned with their needs. But there is a problem. In many ways, I hate working with crypto companies. Don’t get me wrong, our clients at Medley that are crypto companies are for the most part, great, but that’s because we’ve been selective in who we’ve worked with, the product so far has been very high-touch and we’ve been fortunate enough to say no to many companies we don’t think would do well for our brand. But that means every week I have to take calls with obvious grifters, Ponzi-scheme-runners, and generally people who don’t care about anything other than getting rich quick. The space is filled with opportunistic, short-term thinkers. These aren’t the kind of people I want to serve.
It may seem like a luxury, to be able to only serve customers you deeply care about. I’m sure anyone that joins an accountancy or consultancy firm doesn’t wake up every morning thinking ‘I can’t wait to help this massive supply chain company pass less tax or fire 1/3rd of their workforce’. No, they do their job and get on with it. I’ve certainly worked for companies before where I’ve actively disliked the end users of our product (Range Rover drivers anyone?) While in a company it may be possible to do a great job while feeling indifferent about your clients, I don’t think this is possible in a startup.
Firstly, to build a great startup, you need empathy. You need to deeply understand your customer’s problems, you need to at every opportunity seek out ways to get to the root cause of your customer’s issues, and you need to be constantly communicating with them and hashing out novel ideas that might solve their problems. This is 10x harder to do if you don’t care that much about the customer
Secondly, startups have so many problems. If you work for a big company then likely the product you are working on is proven, there is some kind of money-making machine in place, and your job is to just execute at a high level and optimise the machine. This is not true with startups. You are always reevaluating the problem you are trying to solve, you are constantly dealing with stresses from finance to funding to technical issues to marketing issues, as the saying goes you are trying to build a plane while falling through the sky. In order to get through something like this I do think you need a strong why, and often that why comes from trying to solve something for your customers, because you care about them, and you think the world would be a better place if these people could succeed.
Finally, startups are a slog. If you are an employee you can just leave. You aren’t tied to any company, you have no legal or contractual obligation to stay with your employer. You are a gun for hire and you have huge flexibility. I heard recently the average tenure at a company for millennials is around 2.5 years. The average timeline from startup to exit though is much longer, around 8 years. The decision you make at the start, about the customer you serve, will be one that stays with you for close to a decade. Do you really want to spend every waking second of your life thinking how to make the life of estate agents easier, if you have only had negative experiences working with estate agents? Probably not.
I think you do have to be quite intentional when starting a company (especially if it’s not your first) about where it’s going to take you. That’s why I’m not sure that ‘just solve a problem you have’ is necessarily always the best advice. I have a lot of friends right now who have built up some great domain expertise in various industries. Maybe they deeply understand the problems of sales managers, account executives or digital marketers.
The typical advice these people would get if they wanted to start a company would be to just take a problem set they face and build something around that. This is good advice if you genuinely enjoy working with the people you do. But many looking to start their own business aren’t content with their career and a big part of that may be that they don’t enjoy the people they are working with. So why start a company where these people become your bosses?
So yeah, my advice has changed. If people ask me now about taking the first steps into startups, I’m not telling them to just solve a problem they have, I’m telling them to pick a customer persona they actively want to serve and go from there. I don’t think this is a luxury, it’s a necessity. If you don’t care about the customer, it’s going to show in all aspects of your company, the lack of care, attention to detail, and the misunderstanding that comes from a lack of empathy and knowledge, all these elements will make your business shitty. Build for customers you love. Nas knew exactly who he was rapping for, his community who he loved. Be like Nas.
WAGMI
Tom