At the moment we seem to be invited to a lot of forums, groups, and meet ups, and I won’t lie to you it is nice to be made to feel important.
But as important as the invites make us feel it also seems that whenever there is a gathering in the world of tech and startups, most of us push the self-promotion button on our conversation settings and it gets stuck.
‘Everything is pumping’
‘Our associated companies are getting sniffed at by Google or Facebook or Amazon (or all of them) but we are going to hold for another couple of hundred million.’
‘We are hiring everyone but can’t find any good staff’
I find myself listening to these conversations often and if I’m honest, on the hard days (you probably know the ones I am talking about) I even let them batter me a bit.
After all, having Google sniff us with an ad words discount offer is probably not the self-promotion retort I should go for. When I recount stories to the team over coffee their general state is one of bemusement of the situations I find myself in and the people I end up in conversations with.
Maybe my self-promotion button is broken.
But we founded Adroit Creations to show things could be different in our sector of the tech world, so that should include the way we self-promote as well, shouldn’t it?
After all, some of the people who ask me for advice tell me they get the most out of our struggle stories and our bad decision paths – not the “we are so awesome“ facts.
So that is why I’m writing honestly about our start up without the gloss of multi-million dollar series A rounds and stay over incubator camps – actually, we don’t even have a foosball table.
But what we do have is a pretty strong set of values, open salaries, open financials and open coffee tab at the local cafe.
And yet when I am in these conversations I sometimes think this culture and these values can have its draw backs.
Back before we were even ready to release any products to market we were looking for more runway – bootstrapping was delaying our time-frames and we wanted to hit the market hard. I wasn’t taking a salary and my personal saving were feeling the pain.
Somehow I was invited through a contact of one of our employees to a coffee with someone who was very interested in investing in the company. We exchanged some information and all due diligence reporting palaver that investors seek and they must have liked it because we fixed a date for the coffee.
Quickly I realised a number of points:
1. Lost in translation
The first point turned out to be one of language – we didn’t speak the same language. Fortunately we had an interpreter but unfortunately, their English wasn’t fluent and nor did they have a background in business or investing.
2 . The wrong game
The second point turned out to be more than language – somehow I had dropped into a different game. We understood enough to start talking figures and I suggested around $300 000. At this point in our journey, as a bootstrapped lean, start up, this was huge money – we were only burning about $30k a month at that point so we figured we could ramp up and get to town quick smart. We figured that would be about 30% of the company pre-market given the challenges with the game space we wanted to play in – Government IT provision.
3. The money
Point three turned out to be the money (of course). Turns out the investor understood we were after $3 million and was fine with it. However, I wasn’t. It wasn’t an amount I had even thought of and at 30% would have valued our small pre-market company at $10 million.
4. The value
Point four showed the different value people can put on amounts of money. And this is where it went wrong – amid flashes of jumping from money for a dedicated mobile designer to hiring a whole mobile team and support staff, my integrity kicked in and when discussing percentages – I said that amount would give him about 60% of the company (even this I thought was madness – the company would still be valued at $5 million). However there was no way I could only offer 30% even though that was what he put on the table.
5. The expectations
Point five instantly followed from point 4. It was like the flip of a coin and gone was the eager investor and here was the cagey non-committal partner agreeing to maybe go to the party but wanting to keep the options open just in case something better came up.
It was only afterward that I did my homework – turned out the investor had a lot of hard cash (and houses in many cities) and was expecting to put between 3 and 5 million dollars into the business, hyper–scale and then flick it off. When I offered 60% ownership they took that to mean I had no concept of the company’s value and maybe they were missing something.
6. The reality
So here I was, part of a small company dreaming of doing great things, thinking $300k would be a massive win only to find myself talking to someone whose partner‘s annual shopping allowance was three times that amount.
Like many tech companies at that stage in the life cycle, we didn’t have huge reserves and we valued (and still do) every dollar so these amounts were a different world. Looking back now it seems like a huge opportunity – a once in a life time chance – that I dropped the ball on.
I was prepared for the meeting:
- I had cashflow and forecasts, market breakdowns and even draft share agreements,
- We had established viable interest,
But I didn’t have any concept of what to do if offered $3 million out of the starting gate. I also didn’t have the ability to put aside my integrity to overvalue the company that I had started.
I can’t tell you what you should do if this situation even comes up (seriously, would you listen if I even offered advice after that performance?). But the thing that stops me from losing sleep about it is before we formed the company we worked out our values and what we wanted to achieve. So giving up on our values before we were even out of the starting blocks, well that wouldn’t have provided a strong foundation for building on once we got in the race. Because one of the values we set is about not buying into the hype and trying to become another unicorn.
We are about proving the way IT is delivered to government can be different, and that means we probably won’t get easy wins nor get $3 million dollar investments over coffee.