Over the past five years I’ve been working independently initially at the Thalesians and now my full time focus is now on Cuemacro. I’ve written about some of my experiences during this time. In this article I take a broader view not only of what I’ve learnt, but what other startups have accomplished in the past few years to try to understand how a startup can be successful. I’ve been a part of Level39, a fintech accelerator in Canary Wharf over the past few years and have seen many business come and go, some have even become household names, such as Revolut. This has given me a (small) window into the whole startup space for fintechs.
This probably seems obvious, but if your income is less than your expenditure, your startup isn’t going to get anywhere. It takes years for a startup to get established. It is also about trying to keep a tight reign on spending. It is very easy for spending to cascade out of control, if you do not keep an eye on it. If you can’t stay afloat then no matter what your idea is, you won’t be open long enough to realise it. Of course, you can seek funding to grow quicker and grow your customer case (and increase the value of your business), in which case, your income is likely to fall short of your expenditure. The key of course is not to run out of funding before you start to breakeven! It can also be a psychological issue, are you prepared to essentially be long theta for an extended length of time?
A startup begins with ideas. When I quit my job in 2013, my premise had been to sell research subscriptions for quant strategies. In a world before MiFID II research was basically free being supplied by banks. My idea didn’t work out (perhaps post MiFID II timing would have been better?). I then changed my approach, focusing on doing my bespoke work for clients, which was a mixture of research papers and also software libraries, in particular Python. More recently, I’ve delved into the world of FX TCA, which I’ve very much enjoyed and now have a Python library (virtually) ready to do it. The whole point of startups is that they should find it easier to be nimble to change their approach, especially compared to larger companies. Many startups I’ve interacted with during my past 5 years have reinvented themselves totally compared to their original idea.
My experience of hiring has been mostly within banks, and to a much lesser extent as an independent. The big contrast between a large bank and a startup is specialisation. In large bank, the roles typically will be more specialised. Within a startup, it’s much more a case of all hands on deck! Hence, when a hire is made, even for those with a specialised skill, it is likely that they will end up juggling other roles outside of their typical comfort zone. It’s also the case that hiring isn’t easy, and frequently in my conversations with other startups, it’s one of the biggest issues. Finding a person with the right skills is never easy.
Marketing and sales
My background was not in sales or marketing. In a bank, my role was to write research and there was an extensive sales team to help market our desk. The problem is that if you have the most amazing technical product or skill set it isn’t much use if no one knows about it. It’s sometimes easier to overlook this, if you have a technical background. This wasn’t something I appreciated quite as much as I do now! I now spend a considerable amount of time marketing Cuemacro and it has borne fruit over time. It takes a lot of persistence and effort, but in the end, if you can communicate with clients and be able to understand what they are looking for you can engage with them. Trying to understand precisely what you can offer clients is also important. If you can’t describe what your business can do, then it’s surely going to be a challenge to explain that to clients. I certainly haven’t got a special formula for sales and marketing, but it is an area where I’m slowly building up more know how.
The view I initially had of startups is that the most successful startups have founders in their early 20s. I think this was partially a result of seeing companies like Facebook etc. In practice, most founders I’ve met have had time in industry under their belts. Most statistical evidence I’ve seen, suggests that the average age for founders is most likely in the 30s or 40s. Purely speaking from my own experiences, I think it was invaluable for me to have time in industry for what do (in particular because I’ve stuck to the same area, namely FX markets). Even for founders that switch to new products or areas, many skills are transferable.
Ok, I’ve left this one for last, mainly because each business will have a different product and different services which they can offer. Does it have to be unique? Probably not, but in practice, an idea is little use without effective execution!
A few last words..
If you’ve got any thoughts about what makes a startup successful, I’d love to hear your comments. I’ve barely scratched the surface in the above comments, and I have to admit I’m very much on a learning journey when it comes to startups. However, even in this limited time, I’ve manage to learn from my experiences. It’s also been massively beneficial to talk to other founders, even those doing something very different from me, to hear their thoughts about the subject.