This post is based on an interview with Richard Kramer, managing director Arete. Richard is speaking at the Power of One in London on 11.11.11. In case you
Success can’t easily be reverse engineered. Some people figure out the formula and repeat it, becoming serial entrepreneurs. Some never learn the trick. Some come close again and again. Some die trying.
But some, who have negotiated the tricky road themselves, turn their experience into valuable advice. For them, helping others to decode the formula for their own success is a vocation.
Richard Kramer is one of these.
“Over the past decade and a half, I’ve witnessed just about every approach to starting up a tech business you can imagine,” says Richard.
“Some start-ups have been huge successes. It’s still hard to believe Jimmy Wales has managed to capture the imagination of hundreds of thousands of people around the world to create something as plain as an encyclopaedia. But he communicated a simple vision and the people came in their droves.”
After four years as the number one rated technology analyst in Europe, Richard left his role as head of technology research at Goldman Sachs to form the first - and still only - independent technology research group in Europe.
His credo is a refreshingly candid rejection of the establishment.
Unlike other analysts, Arete has no conflicts of interest preventing their telling the truth about technology. After the scandals surrounding deceptive and poor quality analysis, Arete found an increasing demand for its independent views on telecoms, software, semis and services.
For Richard, the next big growth area is mobile. “Internet penetration used to be the stat of the day for economists and entrepreneurs”, he states. “Now it’s mobile penetration, particularly when you take into account those exciting high-growth emerging markets, where the populations are leapfrogging the desktop internet.”
So what can mobile developers do to give themselves the best chance of success? This is what Richard is looking forward to discussing with the start-ups at the Power of One on 11.11.11.
Even if success can’t easily be reverse engineered, when you work with hundreds of start-ups you pick up some essential rules of thumb that can help others find their own route. Here, then, are Richard Kramer’s five rules for start-up entrepreneurs.
We can’t guarantee these are all you need to know if you’re planning your own start-up. But you will ignore them at your peril!
1. Passion comes from people
Ask yourself this: what makes you passionate about a business? It’s a deceptively benign question and it has fundamental implications.
The answer to this question explains why small businesses are fundamentally more creative than big businesses. And it explains why the technology sector has become a hotbed of start-up activity in recent years, leaving the big businesses struggling to keep up.
“However you cut it, what makes people passionate about a business is, well, the people,” states Richard, bluntly.
“The businesses you care about are almost certainly the ones you can name the people who run it, or perhaps recognise their faces. Even if you don’t know those people personally, if you can empathise with them, it makes it far easier to care.
“Imagine someone asks you to recommend a good coffee shop in the neighbourhood you live in. You’re going to want to suggest a local independent way sooner than the local Starbucks. We all like Starbucks and it’s managed to offer customers a great place to hang out, drink coffee and hook up to wifi.
“But we wouldn’t be proud to recommend Starbucks in the way we would the small independent. Why? Because the local guy who’s running his own show, he’s the reason we get passionate about the business. It’s the people. And if you extend this to your staff, investors and customers, it’ll be easier for them all to get into your idea when you’re small and your business is still all about the people.”
2.Small is beautiful
Richard has a simple rule about size: “small things are simpler”.
“Whatever you want to do,” he says, “it will be easier if you’re doing it at a small scale.”
If you want to launch a new app, it’s better to focus on usability and design than filling in the forms to secure the release of internal development funding and completing weekly project status update reports. But that’s how life can turn out for a developer in a big organisation.
In a small place, the thinking can be more purely focused on getting the app right. And that leads to better, more successful apps.
3. Ignore commentators
Start-up entrepreneurs should focus on their business and not take too much notice of what’s going on in the wider economy.
“The economy is growing. The economy is shrinking. What does this mean for a mobile start-up? Nothing,” says Richard. “I’ve run a business through upturns and downturns and can say for certain that the economic climate isn’t something you should use as a factor in your planning. It will affect your business – the availability of funding, the services and apps people and companies want to buy, how much disposable income consumers have: these are all affected by the economy.”
The answer as a start-up is to be flexible, and alive to changes in demand, changes in availability of funding; not to pretend you can predict the economy.
“Who can honestly tell you what the economic cycle will be in a year? If you know the answers to this, become an economist, not a mobile developer. You’ll be a billionaire soon enough!”
4. Build your business around its core values
Sounds obvious, doesn’t it, to say that a developer should construct her business around making great apps? But it’s easily forgotten, especially as you grow.
Once you experience even moderate success, suggests Richard, the growth you experience demands your start-up take a new shape. “You’ll need finance people, HR people, marketing people: all those people that are the norm in big businesses. But that’s when you’ll lose your focus.”
He reveals a fundamental problem: turning great ideas into great apps just isn’t that scalable a businesses. If you manage to develop one great app with a small team, it doesn’t follow that if you scaled up, you could create a thousand great apps with a team a thousand times bigger.
When you find success, repeat the success you have had. Stay small and agile. “Big companies may build a division of 10,000 app developers,” muses Richard, “but they won’t stand a chance against the right small team with the right idea and the right focus.”
5. Pitch to your end users
Richard believes tech start-ups are closer than ever to the people who will use the product of their labour. He casts his mind back, “the success of small developers was once based on big tech companies. If you were the small guy, you’d pitch your ideas to a big company, hoping it would take them and help you market your product or service.”
“Today, all the app stores and the growth of social media mean that you can pitch yourself straight to your end customer. This is a seismic change and one that developers have been among the fastest to grasp.
This is probably the biggest single factor, he says, in the emergence of the small giants. These are “the companies who are taking over the world with teams numbering dozens or, at most, hundreds. A decade ago, even five years ago, it’s unlikely they would have been able to reach the mass market by themselves.”
“But the market itself has changed. People are no longer tasteless consumers. Teenagers don’t sit in their bedrooms absorbing TV anymore; they sit in their bedrooms connecting with each other”, says Richard. They are sharing ideas, cracking problems, whether it’s a computer game or protests against the economic system.
“Harnessing this potential has been another way for small teams of people to create huge products and services. Look back a few years at how services like Trip Advisor, LinkedIn, YouTube and Wikipedia were built and spread,” says Richard, getting passionate, “these are, for me, the real heroes of the past decade.”
Those developers who are able to spot similar opportunities for getting users hooked on creating content, becoming the editors of a service or providing trustworthy information; these are the ones closest to reverse engineering Richard’s favourite formula for success.
Richard Kramer will be sharing his experience at the Power of One on 11.11.11
