What’s your background?
We founded GoCardless after leaving our jobs in the city. Hiroki and I had worked together at McKinsey, and I knew Tom from a previous startup when we were at both at Oxford. The three of us were all looking for a change, and decided to just go for it.
How do you make the most out of an accelerator?
Focus. Supreme focus. When we started at YCombinator, we left everything behind in the UK, flew to San Fran, moved into a house together, turned one of the rooms into an office, and worked all day every day. We only stopped to eat and go to the gym. Even at the gym, we all went together and talked about the business the whole time we were working out.
Just as important as what to focus on is the thousand things you don’t need to focus on right now.
There are only TWO things you need to worry about right now, nothing else:
- Building your product
- Talking to your users
If you haven’t got any users, talk to the people who you think might be your users.
Legal, accounts, all the other bullshit – chuck it out of the window. What really matters is asking yourself, “Will we be alive in 12 months time?” All I know is the more time I spend worrying about other stuff, the less time I’m spending building an awesome company. Just focus on building your product, and talking to your users.
What metrics do you need to show an investor?
You just need a graph that goes like that. (Ed: Matt mimes a classic hockey stick graph with his hands)
If you haven’t got that, the reality is you probably shouldn’t be worrying about investment anyway.
You’re on this planet for a really short space of time, and if you get the investment, you’re committed to this for at least 12-18 months. So I want and need to be MORE convinced than the investors that this is something I should be spending 12-18 months of my life on.
What metrics to focus on? Revenue is always ideal obviously. Otherwise, show significant user growth – or the equivalent in your industry.
When and how do you approach investors?
It’s always best to hold off as long as you can because you’ll spend 3 months at least full time raising investment and not working on your business. So you want the business to be in the best position possible before you neglect it like that for so long.
We were really harsh to ourselves and said “If we haven’t raised $1 million in 12 months, we’re out.”
The other thing about raising money is that there are loads of time wasters out there.
The first thing to think about is how much you want to raise and how much you’re likely to raise. You’ve got three types of investors: Angels, VCs, Seedfunds. If it’s less than half a million, don’t bother with a VC in the UK.
You only want to meet with people who are legit. The legit ones are the ones who have actually made investments and who are actually useful. Talk to startups who have raised before and ask them three things:
– Who is actually worth speaking to
– If they think you’re ready
– If they say yes, ask for an intro to speak to the investor – for advice.
Paul Graham had this thing where he said if you go in asking for money, you get advice. If you go in asking for advice, you get money.
No one really likes being pitched to.
Here’s the beautiful bit. If you sit with 3-5 legit investors, who actually make investments, who are smart connected people, and they don’t want to invest – you’re not ready to invest.
Is it a bad thing to go to investors if you’re not ready, will it ruin your chances to go back?
Don’t go and pitch them, and don’t waste their time. But it can never hurt to build a relationship. Be on time, ask intelligent questions, show them that you’re serious. At the end of the meeting, thank them for their time, and politely ask if you can come back to them after 3 months to talk to them again. If they’re a legit investor and you’ve really acted on their advice, they’re unlikely to say no.
Is it worth trying to raise if you don’t have revenue but you have a lot of users, in Europe?
We had very little revenue when we raised our first round. So it’s not impossible, but it certainly feels harder in Europe than the US.
I’m going to stop talking about raising investment at this point. Everyone at this stage spends way too much time thinking about investment. At this stage all you should be thinking about is building product, getting users. Nothing else.
What are your top tips for distribution and user acquisition?
Think logarithmically. Ask yourself: Where do I get my first user? How about my first ten users? Then hundred users, and then a thousand.
Read Steve Blank’s book ‘The Four Steps to the Epiphany‘ – which is essentially the entrepreneurs’ guide to Customer Development. In short, it basically says, work out who are the actual people who want to use this? The tighter you can get on that definition, the better you will do.
Don’t be the cool solution looking for the problem. We were definitely the former. Some of the best businesses start when people keep asking for something over and over again – and it solves a genuinely a problem.
What would your advice be on managing co-founder relationships?
Starting a company is a massive massive commitment. Hopefully it’s something you’ll still be doing in 5-10 years time. We didn’t realise the weight of that statement when we started. The likelihood of you flipping and selling in 1 years time is really slim, so please don’t start out with that goal. Building a true relationship is so much worth your time investing in. Day one – no one is the CEO. Don’t give someone 80% and take 20%. If you think you’re 4x better than the other person, you’re rubbish at hiring. You want to worry they’re slightly better than you. I took the smartest, most hard working guy I knew, and started a business with him. Hiroki and I, we’ve never had a proper argument, even though we lived together and spent 24 hours a day together. When times get hard – you can’t raise money, the tech is breaking, and everything’s going wrong – you want someone alongside you who is going to go through it all with you and still be there on the other side. You need each other to keep each other going.
Who was your first hire?
Technically Tom. We had 2 options: Outsource the tech, or teach ourselves. Outsourcing the tech is a dumb thing to do when you’re a startup. Finding a great tech cofounder is ideal, but hard to do. Teaching yourself – we started doing that, and then through our network we found Tom who was an absolute genius.
Our first employee was a guy called Harry, who is our CTO now. I’ve honestly no idea how we got him, he’s one of the best programmers in the UK. We hired him 2 weeks before going to YCombinator. Harry happened to be enough of a nutter to leave his flat, his girlfriend, to fly to SF, not even for a salary – we just got him a laptop and paid for his meals.
We know that we’ve done hiring best when they come from our network – it makes it so much easier. My biggest advice would be – don’t be in a rush, don’t do it too soon, strip back to the fundamentals. Ask yourself: Do I genuinely think this person would be great at this role? Do I genuinely like this person? Ask those questions, be harsh.
A big thanks to Matt for giving up his time. You can follow his latest happenings on Twitter @mattjackrob.
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