Personal Insights from the Trenches: Principles for Success

Place: eOffice, 1 Portland Street, Manchester

Date: 12th November 2009; Time: 6:00 – 9:00 pm

Event: Northern Start-up 2.0’s Managing Growth - Tech Entrepreneur Series

A typical Autumnal evening in Manchester; I’ve taken a cab from the Corner House to avoid being soaked by the copious rain. Traffic in Portland Street at the Piccadilly end is still heavy. I pay the driver and leave two blocks earlier to carry on on foot. I arrive at the venue at twenty minutes past the hour. As I am not the only one arriving late, I squeeze through the crowd and luckily find an empty seat in the third row. I see out of the corner of my eye Manoj Ranaweera, who is in the front row, listening attentively to one of the speakers. His monthly events have become almost a kind of cult for the cadre of young Mancunian entrepreneurs.

The three guest speakers do not disappoint the audience. In his usual informal, amusing and no-nonsense style, Steve Purdham shares personal insights from his recent ventures. We7.com and SurfControl.com are two of his success stories. In the same way, Chris Allen tells us about his ten-year journey with Laterooms.com. Wearing the hat of an investor, Peter Jones, Eden Ventures, succinctly outlines his thinking process and key criteria for securing venture capital.

In a nutshell, for technology-based start-ups to attract the attention of corporate VCs, the personal qualities, vision and market orientation of the entrepreneurial team is one of the two most important factors. The second factor is the potential for a global market; the technology solution ought to have the potential to generate a billion - what Hollywood people would call a ‘blockbuster’.

A clear vision geared towards constant growth is vital. As an adopted Northerner, I'm still amazed when a shrewd executive such as Chris Allen recounts his history of perils and ruthless decisions to inject an additional five or ten million pounds of capital – while he casually takes another sip from his glass of water. Growth is for them a necessary thing to stay ahead of the competition. Plain survival is a mediocre option; death is not in their vocabulary.

However, nowadays, according to our speakers, venture capital is not always necessary to succeed. Entrepreneurs have a range of options to acquire additional capabilities and still generate attractive profits focusing on very concrete market niches. Very, very few solutions have the potential to become as global and as profitable as Google, YouTube, Facebook or Twitter. By right-sizing operations and strategic market segmentation, young start-ups increase the chances to demonstrate that their solutions are workable and can generate revenue and profits.

Our speakers also remind us of the importance of business models and economic logic. Most sound technological solutions become unviable because of the choice of an inappropriate business model. A good business model needs to exploit and capitalize on the disruptive nature of technologies.

‘Disruptive’ here is the mantra.

We7 is now in a position to become a multi-million business because it has disrupted the very structure of the music industry by providing free music to end-users - legally. The traditional ‘pay-per-track’ logic has been trashed by a combination of advertising revenue and (forthcoming) premium services. This brings to my mind Chris Anderson’s ‘FREE: The Future of a Radical Price’. Two-sided markets and network effects are increasingly shaping the next generation of business models.

After the event, the discussion continues in KroBar across the road. Here, I have the opportunity to engage with Barry James. During the event, Barry willingly agreed to have his new cloud-enabled security solution ‘TakeWare’® slaughtered by the audience. It is clear from our conversation and the previous presentations that timing and opportunity sensing, besides disruption, is another key ingredient for our recipe for success. This sense of ‘timing and opportunity’ has become ingrained within the mind of these entrepreneurs partly through a painful but enriching ‘experiential’ process, and partly by developing an indifferent attitude towards uncertainty and risk.

However, how many people can honestly say that they do not fear the future, given the current uncertain economic environment? At least four people above can answer ‘Yes’.

Copyright: Angel J Salazar, Foresight North, 2009