Lessons learned as a company founder - 03/09/14❰ Back
What are the biggest challenges a founder faces when building a successful technology venture? What are the softer skills that help to get the best out of their team? And what happens when things don’t go according to plan? We talked to three founders of technology companies at various stages of the growth cycle, about what motivated them to go it alone, how they share success and failure with their team, and what they would do differently next time round.
John Cronin is an innovative serial CEO & Chairman who has been instrumental in mergers & acquisitions worldwide, raising equity, debt facility and vendor financing funding between $50m and $900m. In 2003 John founded Azure Solutions as a spin out from BT Brightstar. From an initial investment of $20m he sold the company in just over 3 years to Subex for $140m. John has built four further companies to exit: Picochip, Netsource Europe, i2 & Antenova, and is currently Chairman of Antenova and Cyan Technology.
Dr Francesca Crawford is CEO of Altacor (www.altacor-pharma.com), a European specialty ophthalmology company developing and marketing a portfolio of products targeting chronic eye conditions. Fran co-founded Altacor in 2007 and has since raised £10m through funding rounds supported by a mix of VC and angel investors and high net worth individuals. Previously, Fran played in integral role in the growth of three other life science businesses; Sirus Pharmaceuticals, Spirogen and Ethical Holdings plc.
Emily Mackay is Founder & CEO of Crowdsurfer (www.crowdsurfer.com), a ‘Bloomberg’ type data service for the high-growth peer-finance world. Crowdsurfer is gathering millions of data points of crowdfunding and peer-to-peer transactions and opportunities globally, and making it searchable and analysable for the first time from a tailored web dashboard. The company is backed by 18 international investors including angels from Thomson Reuters, BlackRock, Mubadala Development Company and Cambridge Angels. Prior to founding Crowdsurfer, Emily founded Microgenius, the UK’s first platform for community share offers, which is now part of the Community Shares Unit.
What motivated you to go it alone?
John was motivated by “the quality of the people, and the fact that our product was right for the market, scalable and fit for Tier 1 customers worldwide. I looked at the competition and I could see that our product would beat the competition hands down. The issue was Telecom companies were losing c15% of EBITDA to technical and fraudulent practices. Azure had the software revenue tools to stop this leakage and help create more profits for these companies. That’s why we ended up at Number 1 Revenue Assurance.”
Founding Altacor with a partner, the major driver for Fran was “a good idea and a good business model, which was underexploited in Europe. We wanted to start the company from ground zero and build, distilling our collective experience in the pharma industry.” Fran made a very deliberate decision not to use the typical tech business model “of early stage technology/IP based spin outs. With Altacor we chose a specialty [Ophthalmology] in which some products could be brought rapidly to market through the CE mark regulatory system whilst also having the potential to develop longer gestation pharmaceutical products. We wanted to create market awareness and brands that would then be a channel for subsequent products developed in house or jointly with partners. The motivation was the challenge and excitement of starting something different, and using partnering and M&A to build the company.”
It was the intellectual challenge that appealed to Emily. “Crowdsurfer is the ‘Bloomberg’ for the crowdfunding/peer-to-peer finance industry, providing a way of searching and analysing a high-growth yet fragmented global industry. Being part of that growth with my first company, Microgenius [www.microgenius.org.uk], means I understood the problem from the inside as it arose. There’s so much demand for insight into crowdfunding and peer-to-peer finance that building Crowdsurfer was too good an intellectual challenge to pass up. I just love solving problems!”
What would you do differently next time?
For Fran it was a question of timing: “Not start a company in 2007. That really impacted on the original plans in terms of funding and particularly bank lending and market sentiment more generally. We have a sound business model, so although there are always things that could be done differently if you look at the details, there are no major headlines.”
John would encourage a founder to look closely at the incentives package for all. “Alignment is vital. Ensure that the right behaviour is rewarded with high returns. Motivation of employees is key to getting them to focus on customers, customers and customers.”
Emily says, “I wish I’d read ‘Lean In’ by Sheryl Sandberg earlier. It addresses the issues that women face in their careers from Sandberg’s perspective as a Yahoo/Facebook executive, and for both sexes is very insightful into the human side of business and our internal dialogues and barriers. At the end of the day, businesses are about people: both those you bring together as a company, and those for whom you solve problems.”
What have been your biggest challenges?
Fran’s overriding challenge has been funding. “Funding is the beginning, the middle and the end.”
Emily’s current challenge is “to hire outstanding UX developers and data engineers. We set high standards, and expanding the team is no exception.”
For John, cash flow was the biggest challenge, but also product and company culture. “We started in the UK then quickly went global, to EMEA, North America & SE Asia, so having enough cash to expand was a challenge.”
“Getting the product fit for market required the acquisition of a couple of smaller UK companies. And company culture was a challenge. The company was a spin out from BT and the people involved were part of the BT culture, so didn’t have the entrepreneurial background. I changed the leadership team 2 or 3 times.”
On reflection, what are the softer skills that you feel have contributed to company success?
All agree that communication and company culture are vitally important.
For John it was “constant communication with the team, through newsletters, team meetings, conversations and trips to the pub. We had a very open culture where we encouraged people to come out of their box. We had an open plan office, with sweet machines. One of the team had been an engineer for 20 years, had no business development experience, but he approached me and said, I can set up operations for you in the Middle East, I know these people. He presented a good business case, and I listened and took a calculated risk. Trust your instincts, have faith and create the culture where you encourage people to break through the glass ceiling.”
Emily says “Crowdsurfer’s culture is one of enjoying constant improvement. It is important both from a human perspective and a commercial one. I’m also a big advocate of working the hours that suit you. We’re more interested in what you can contribute.”
Fran and her team are always “looking for smart ways of doing things. Being pragmatic, and looking at creative ways that things can be done rather than the bureaucracy.”
For John the importance of communication extends to focus on your customers but also getting to know your competitors really well. “I did lots of networking with companies we could potentially acquire. Understand your competition, their cashflow and their pinch points so you can do a sweetheart deal. Our aim was to have the top products in our sector, position as Number 1 & 2. In one product area we were 5th, so I went out and found the competitor who was No 1, and we merged the companies.”
What has kept you going through the difficult times?
For Emily it is the knowledge that she is part of a team forging something new: “Crowdfunding and peer-to-peer finance is essentially technology connecting people financially. That is an unprecedented change in the way money moves around the world, and a shift in where financial power lies. When I have a difficult day, I have the fresh perspective of a brilliant team of engineers, investors and advisors, and I remind myself that if pioneering was easy, everyone would be doing it.”
Fran cites “sheer doggedness and the determination to make a success of it” but also the support of her team, “the encouragement of our Chairman (Andy Richards) and other close colleagues.”
For John it is belief above all else. “You must have belief in yourself, but also in your capabilities as a company and in your product. You need to know that what you have is right for the market.”
How do you share success and failure with your team?
For Fran ”sharing success is very much doing something to celebrate with the team. We have sales teams across the UK and we like to celebrate that we are a Cambridge company through locally based activities.”
John says that it is important first to “agree what success looks like, and articulate this to the team. How are you going to get there? Recognition is very important when someone has done something well, with bonuses. But don’t just tell the good stuff. I learned very quickly to have complete transparency from the board all the way through the whole team. Tell it as it is, warts and all, then work as a team to turn it around.”
Fran and Emily agree that complete openness and honesty is paramount.
As Fran says “When something doesn’t go according to plan, I prefer to see it as a learning experience addressing the situation head on and revising the plans accordingly, transparency is essential.”
Emily “focuses on communication so that everyone knows what is going well and what needs revising. I try to always make a point of telling the team when I made a mistake, or could have done better – it’s incredibly important to establishing a culture of constant improvement that the CEO leads this.”
If you could give a few words of wisdom to a founder, what would they be?
John “Have belief, passion and lots of energy. Communicate and focus on the customer. You need everyone in the team to be aligned, from the board to the cleaner.”
Emily “Ask lots and lots of questions and listen very hard to the replies.”
Fran “It may be trite but true: Know your customers, be appropriately optimistic whilst considering the downsides. You need to know the worst case. Don’t give up.”
Bailey Fisher Executive Search is an independent executive search firm specialising in the technology sector. Founded in 1988, the company operates internationally from offices in Cambridge and London. Bailey Fisher has been instrumental in building the boards and senior management teams for some of the most ambitious companies to have emerged from the UK technology sector. www.baileyfisher.com
This article was written for Cambridge Business Magazine and first appeared in the September issue, pages 66-69. Read the online edition of the magazine.