Last week London’s newest start-up space, TechHub @ Campus in Bonhill Street, opened its doors for the first “Founders Secrets”. This was a great opportunity for new businesses, founders, CEOs and those involved in the early stage space to listen, discuss, learn and network.
It was a fantastic example of one of the positive aspects of the start-up world; the willingness of people to share their experiences, the positive and negative, what works and what does not, the highs and lows. The room was packed, with an expectant buzz and tangible energy and also a seemingly endless supply of pizza and beer. Nice!
Robin Landy, the founder and CEO of the innovative price-comparison browser extension, InvisibleHand was first on stage. Launched in 2009 it has grown to 3m downloads, is at break-even and currently used by hundreds of the largest retailers.
InvisibleHand auto-presents a drop-down menu of real-time best prices to users when they browse a product or service on Google, taking account of contextual information. Otherwise it remains unobtrusively out of sight. One of the USPs (unique selling points) that Robin stressed was the fact that InvisbleHand presents real-time prices. Price change strategies differ from sector to sector and retailer to retailer but many will change prices on a half-hour basis either to reflect a promotion or market conditions. The product range has extended to include flights, hotels and car rentals, where margins are better.
Robin described 6 of the things he learnt the hard way in this period, his very own school of hard knocks:
- PR is most effective at the start. Robin engaged a PR company who were able to get them onto Tech sites and generate user interest which led to downloads. There had clearly been some internal tension about when to scale that effort back from turning into brand building.
- It’s OK to be scrappy. InvisibleHand needed to establish relationships with lots of retailers. Initially they took advantage of their parent company’s retail relationships by hiding behind their affiliate accounts.
- Enter awards. They can be time consuming and expensive but are good for raising profile and credibility such that potential partners will start approaching you.
- Protect the business. Patents may not be relevant or the right approach but the business will be more attractive to potential acquirers with some form of IP protection.
- Founders don’t scale. There were some things with which Robin needed help. He was honest enough to admit to taking too long to realise this, which delayed bringing in the right resources.
- Learn some negotiating skills. Meetings are a large part of start-ups and initially Robin found he was not always securing the best deal. So he educated himself and took advice and this scorecard is getting better over time.
“Batman” to Robin was Paul Fisher of Forward Venture Partners, an active investor in the business, and next on stage. Paul is a Director of InvisibleHand and gave some helpful insights into the investor-company relationship. Paul stressed that as only 10% of VC investments succeed some “luck” is needed. When it comes to fund-raising a start-up CEO should remember that investors are interested in:
1. The capability & confidence of the team.
2. A good explanation of the proposition. Practice your pitch.
3. Understanding how the team has handled problems. Be honest.
4. Judging if they can work with the team. Listen to feedback, especially about possible team holes.
5. Good execution. The product may be a bit “scrappy” but was it executed properly, did the team deliver on promises?
As is often the case in these events some of the nuggets were left to the Q&A session, posed through the Twitter hashtag and selected by TechHub’s Elizabeth Varley.
1. How to get traction early on
a. Get to the super-early adopter crowd through the places they hang out.
b. Become a featured extension. Invisiblehand became popular enough with Google to become a featured extension which led to interest from Mozilla/Firefox and then demand from Google for Chrome.
c. Consider a white label strategy to open your product up to brands
d. Get a viral coefficient on early users – brand building is a waste of time for start ups.
2. The importance of LTV (Life Time Value)
How many users, how long they are retained and how much revenue they generate. Vanity metrics can be also be useful for PR, such as the one used on the InvisibleHand web site, total savings found.
3. That IE is an “awful browser” on which to develop
Some of their biggest internal arguments were about not supporting Internet Explorer earlier in the development cycle.
4. A coherent user approach is important
Starting with a desktop browser extension they are now developing i-phone and i-pad apps.
5. Bootstrap as long as you can
When you are convinced that you can really scale the business but cannot do it through funds generated by the business, that is the time to raise funds.
6. VC funds are the most expensive funds on the planet.
As quoted by Paul Fisher!
The data team at InvisibleHand is able to analyse hundreds of thousands of product enquiries and purchases, in aggregate form of course. In case you wondered, number one in the weirdest product category is currently “moustaches” – made from real hair 😮
Founders Secrets is a valuable addition to the London start-up eco-system and is likely to gain in popularity. If you didn’t get to this one, my suggestion for future events is simply this, book early!