Moving your business forward

Alex Hoye reveals what he wished he'd known when starting up his business.

We kept our composure on the lift, through the foyer, and out of the lawyers' offices on a wet October night.

Then, coast clear, we three co-founders turned to each other with a whoop, a team high-five. The next objective - find a place to open the warm bottle of champagne we had lugged around for months, waiting for this day. We had just signed the last document to get £5,000,000 in the bank to fund our fledgling company and it seemed that the world was our oyster.

It was my first material start-up and we thought we'd done much of the hard work - months of bootstrapping on credit cards, office space with week-to-week terms the key attribute, cold-calling through the phone book to get that first customer, ridiculous pizza sessions to find a unique name, endless pitches with VCs, angels and targeted key employees... the whole lot. With money in the bank and big momentum, from here on it would be simple...or so we thought. Of course, the voyage had just begun.

We were naïve at the time about the challenges ahead, but in hindsight, celebrating achievement of key milestones is like a hit of the entrepreneurialism drug, and those high moments that make up for some tough slogging in the middle.

Below I have somewhat unscientifically identified what are hopefully some nuggets of hard-earned wisdom to help make the slogging part a little easier.

Co-founding is like a trust fall

Today, as an investor, I sometimes see teams who are not in synch, not seeking the same goals, and who are obvious about it. The importance of alignment among the core team is hard to overstate. It is ok to disagree at times, but for major matters, disagreement should be done in private and constructively - with an agreed clear consensus until the next closed door session revisiting the strategy.

It's like a play in sports - even if some believe a different play should be called, when you are on the field, you execute the agreed play. This serves multiple ends. First, it means that the team is comfortable dividing resources to get things done, knowing that their interests are served across the board.

Second, it ensures that the broader staff is not distracted by internal splits and is focused on execution. Finally, you become your own support group and in such an environment you can objectively seek the right answers. We had a mantra on our founding team, "Be more honest with one another than we were with ourselves", a telling comment which got us through some tough decisions, bold moves, and great times.

Keep your head up

The attitude and mood of the entrepreneur has a startlingly impressive impact on your organisation. That means staff are more likely to whistle while they work if you are beaming or, conversely, quietly browse job websites if you storm moodily out of a board meeting.

Communication and people, people and communication

I believe that if two parties come upon the same concept, one brilliant but unable to harness the energy, imagination and capital of others, and a second less brilliant, but an effective communicator and manager of people, the second will eventually win out through sheer scale.

It is in part for that reason you often hear investors say that they invest in a management team, not a project. I do not mean to imply that the concept itself is not important - in a competitive market, it is very important. But it is the beginning. Heck, sometimes it's even the middle.

Building a core team of people who work together well and communicate clearly is critical to get initial financing - the lift under a concept's wings. After a project gets off the ground, hiring capable people, which in the early stage inevitably means getting their buy-in to the vision, keeping clear communication of the objectives of the company - change as they might - is the jet power.

The bigger the company grows, the more important it is to structurally ensure that everyone from top to bottom is aware of and shares the core objectives of the company - and I don't mean Walmart size, I mean that the communication needs are more than 10x when you grow from 5 to 50!

You can't focus ahead constantly looking over your shoulder

We spent immense amounts of time worrying about the hundreds of millions of pounds in investment that our competitors were raising and what they were doing. Market intelligence is critical for any business to be effective. However, we learned over time that it is more important to have a cohesive strategy and execute it well than to debate every tactical move that our competitors did.

In a fast-moving business, you could easily spend all of your time being reactive, but it gets in the way of moving your business forward. Some of the key decisions we made bucked industry trends, and after over a billion dollars was poured into dozens of start-ups in our market space, three years later there were fewer than a handful left and we were the only ones to IPO - precisely because we did a few things differently than the others.

Humans have a herd mentality hard-wired into us, and one of the core tenets of successful businesses is realising in time when the herd is moving off a cliff. You can only do this if you keep to your own compass. Of course, it is also important to ensure that your own compass is not driving you off an even bigger cliff, but that's another matter.

Simplicity wins

Every brainstorming session comes up with a dozen services, features, widgets, options to add to a product or partnerships to chase. Inevitably only a few really matter to the customer and each detracts exponentially from the ability to deliver. Focus, focus, focus.

Caveat Emptor

Stakeholders will act according to their interests in a pinch, it's not mean or unfair, but it is reality. Everyone is friendly going into a deal, contract or financing, but think hard about the potential downside scenarios before you sign a contract and think about what an advisor's stake is before filtering what you do with the advice.

Fund-raising is massively disruptive

Finance is lifeblood, but it is helpful to realise for planning purposes that fundraising is a massively disruptive process. Nearly everyone in the business will be affected be it for facts and documentation, pulling together client and supplier details, HR records, and most obviously anything legal or financial.

We found two important facts - first, that we had a clear operating plan so that the business could chug ahead as usual when most of management was distracted pulling information together for the process.

Second, knowing what most of the core questions are - and they do not differ dramatically between Series B to IPO, they just have more and more expensive people signing them off - we kept as much of it as possible logged and tracked as we went along between financings.

Necessary evil

Good - and reasonably priced - legal counsel is a necessary evil. Strive to get counsel with sensible views on outstanding payments when cash flow is variable, and ones who don't try to win contract clause battles at the expense of losing deal wars.

Have fun!

Business is a serious thing, but people work harder and better together when it's fun - otherwise, we'd all just be bankers...

Those are a few thoughts, but there are more than one can recount and the best way to find more is to live the experience. Most of all, I wish I had known how gratifying it is to look at a team, a business, an industry change catalysed by my involvement. It is impossible to go back to a 'day job' after having done so.