Peaks & Troughs; what I learn running a #startup

2016 has been a fascinating year to run a mobile commerce app. It started off with the feeling you were in the hottest space on earth, and has ended with cautionary tales around companies like Y Plan’s firesale to Time Out, and questions over where the mobile ecosystem is evolving.

Nowadays, you don’t need to start a pitch deck explaining that mobile will be popular, but you do get to demonstrate just how quickly it’s being adopted against that of E Commerce on web, particularly from a traffic point of view, globally. As Ben Evans says in his end of year report, “Mobile is eating the world”.

At Grabble, we like to “learn fast and fail faster”. We aim to release updates to our app every 2 weeks, whether good or bad, the commitment to innovate is always there. We learned, for example, early on, that E commerce on mobile is especially hard if you are, like us, not taking a huge margin in order to make the sale, ultimately working as an affiliate. Making matters worse, the way marketing on mobile currently works in the ecosystem, makes it a huge barrier to entry — the cost of acquiring a user is extortionate, the ability to keep that user increasingly difficult and then converting them to become a repeat customer, well, that takes some real expertise.

Lesson 1: Move from commerce to content on mobile to sustain a regular ‘active’ audience.

One of our early lessons was to abandon the pure E Commerce on mobile approach — as we were losing people through the funnel too frequently. The only way to create a ‘sticky’ app as it’s known, was to pursue a content strategy, and our job became, more out of necessity than specific intention, to curate the internet every day and provide content with context, all made shoppable in our app.

Lessson 2: It’s not all about ‘growth’ at all. Retention is far more important to figuring out your business model

The biggest problem in building a mobile commerce company, or, actually, most consumer tech companies, is you get a taste for the VC promise of gold at the end of the rainbow, and they can set you off on a path to chasing the wrong metrics entirely. Yes growth is important, but focusing on building an engaged audience is far more important. Once the penny dropped for us that content was the secret to unlocking a daily, and weekly active audience, we started to actually build a real product, and consequently, a real business. VCs can easily make you focus on the wrong factors, so never assume they know better.

Lesson 3: The ‘affiliate’ model on mobile simply doesn’t work.

The affiliate industry was created in the boom of the E Commerce on web era, and one of it’s key drivers for success was the fact that it worked for both the publisher and the brand. The model is simply that the publisher (or referrer of the traffic) is paid a fee/commission for the sale made. Having tracked over £100m of ‘Grabs’ (that is, saved products) on Grabble over the last few months, looking at typical conversion rates compared to what that would be on web, and then, of course, reviewing the bottom line, it becomes really clear who the winner is. Always the brand, never the publisher.

Lesson 4: You can’t convert sales by clicking through to mobile sites. Native checkout is the only way to guarantee great user experience.

One reason affiliate worked so well on web, was because you could direct the traffic straight to the client in a desktop browser, designed for shopping experiences, and let them look after the customer from that point.

On mobile, the second you let that user leave your app, and enter the world of mobile web, with poorly designed, fiddly checkouts, you’ve lost them, so we had to build a fully ‘native’ checkout. Through repeated testing and iterations we got this to a market leading 18% conversion rate for 1st time customers. More on this another time. The point to make here is simply that, despite all that, your measly commission (around 10% at best) barely pays for itself when you are taking payment fees, and having to create a customer service department into account.

Then there are also the stubborn retailers who refuse to work with such checkout solutions, and instead force you to direct the click from ‘buy’ into their substandard mobile web checkouts which generally convert at a rate of 0.000001% (if we are rounding up). What’s interesting about this, that we learned, is not only does the brand not make the sale, but the user gets a bad experience, and was less likely to return to Grabble, so it’s a double loss. The reality is, the affiliate industry worked on web because everyone could get paid, be profitable, and grow. On mobile, the user experience journey is completely different, speed and simplicity are key, but to facilitate that, there are costs, and consequently, it becomes unsustainable.

Lesson 5: Understand user psychology and track metrics. They change often!

Your customer on mobile is ‘busy or bored’. Understand the customer psychology on mobile. It’s quite simply, nothing like what it is on web. Just because your 29 year old single female working in law in the city will spend ages researching her homeware choices for her apartment in Hoxton online, doesn’t mean she’s willing to invest that time on mobile. She wants the information to come thick and fast, delivered with beautiful transitions, simplicity at the heart of it, and she wants to consume all of it instantly, before impatiently moving onto the next article. We learned that if we kept female users on an article for longer than 1 minute 48 seconds, they would close the app. If it was under 1 minute 30, they would ‘tumble’ into the next article. Tracking these kinds of differences is crucial!

In Conclusion: Building mobile commerce products is intricate, difficult, requires repeated iterations, rapid tests, and takes an obsession and love for all things mobile. We built Mobula to turn the lessons we learned into valuable insights for clients.

Today I had the pleasure of interviewing 4 very different entrepreneurs for the podcast series I’m recording with my friend Rich Martell; Nick Jenkins from Moonpig.com, Michael Acton Smith from Calm.com, Steve Bartlett from Social Chain and Simon Cook, the CEO of Draper Esprit, a VC with an entrepreneur’s attitude.

Amongst the many lessons we learned from listening to them, that soon you will too, these were their top tips.

Nick Jenkins: 

1. “You need to be decisive. Because what I learned whilst doing my MBA was there were many people far brighter than me who could do a bunch of presentations much better than I could, and yet they couldn’t pick one thing to go with and they never got anything properly off the ground - so being decisive is a key skill. 

2. The other thing to advise is simply to never do any work yourself you can pay someone a simple wage to do. You should always focus on the big picture key drivers”.

3. “work smart not hard”

Michael Acton Smith: 

1. “It doesn’t cost anything to be nice, so even if you do get rich and famous, just don’t be a dick”.

2. What my grandmother always said to me - “You have two ears and one mouth. Use them in that ratio - listen to people. 

3. Hang out with people you like. It sounds obvious but it’s not. Many people are drains instead of radiators - they drag you down rather than help you glow. Actively choose who you spend your time with here.

4. Glass half full. Be positive - enjoy the journey, don’t just be in it for the outcome; the destination only comes if you enjoy the ride.

Simon Cook:

“We are entering a realm where a startup entrepreneur + risk capital can achieve - and using the example of SpaceX taking people into Space, says it all. So there’s never been a better time to be ambitious, be brave, find similarly minded investors - but there’s nothing to stop anyone achieving anything in today’s society”.

Steve Bartlett

“The best piece of advice, or things I really remember for people starting out - is the importance of not believing your own bullshit. Listen to what the numbers are telling you, what people are saying, look at the data, and feel free to be delusional - just never believe your own crap.”

If you’ve never done this before, you’re lucky, there’s times when it’s easy and times where its hard. Easy, is when someone is bad at their job. Your job as founder is to create a symphony by recruiting the best musicians who all play a different instrument and to make them play together beautifully through harmonious and meticulous instruction. 

Now, running a startup in a new or disruptive industry sometimes even the founder doesn’t know how the song should go at times, so it can sound out of sync, but you can spot those that have oversold their abilities a mile away and you know they will always make your orchestra sound worse. Letting those people go is a matter of quality control, and your job as conductor.

However - that doesn’t change the fact that sometimes, your orchestra is too large for the concert hall, and you could play almost the same exact song, if pushed, in a more efficient way if you just removed certain elements, despite them being at the top of the game. The reality is you know, in your heart of hearts, you could survive the tune you are trying to conduct without them, and it would save you money, time, and enable you to focus on the key instruments that make up the majority of the noise.

Following a board meeting at the start of the month, with a look at our finances and time of year, it was agreed that we would let 4 people go, immediately. It was, in the end, a spreadsheet job. Sometimes that’s the best way. When you’re the conductor, you’ve put together the song sheet and figured out what skills you need, and during this process, you come to love your musicians who are performing as you’ve asked. It become impossible to remove emotion when making the tough decisions. But if you’re the financier, it’s a lot easier. You can break things down into - “is she doing the intro”, “is he doing the crescendo” and ask the important questions where you know the audience’s attention lies. If you are unable to defend a role that musician is performing around those questions, they are in danger of appearing less crucial, and as such, being asked to find a new orchestra to play in. That’s what happened.

We got the news on a Monday night, but in a team of 24, letting go of 4 people at once is a big culture shock. We had Tuesday to plan it and had to execute by Wednesday. It’s like ripping off a band aid. Usually we would just let go of one poor performer with a job chat and tell them. This time, we were letting go of 4 top performers who never let us down, had a perfect work ethic and were a pleasure to work with. It was horrible.

I asked my friend Toby, who was the CTO at MindCandy before setting up Space Ape Games what we should do, I tend to go to him for advice, he’s older wiser and straight talking, which helps. He told me that in these situations, the earlier on in the week the better. Like a true technologist - he’s tested all the different ways of letting people go and noted down over the years the team’s reactions to the different styles. The worst, he said, was doing it on a Friday, despite you thinking it might be the best. Left with a weekend to fester without any real control of the situation, it can turn a fair decision into a sour one quickly. Beyond that, you, as the founder, aren’t in control of the team around you over a weekend, so you cant do simple things like talk to them about your reasoning and make them reassured that they are valued and safe in their roles.

On Tuesday, I emailed 3 big groups of company leaders, founders, and managing directors/CEOs that I’m an active part of, to explain what we had to do the next day, and see if there was interest for roles with those skill sets, explaining that we didn’t want to let any of them go, they were all excellent, and we couldn’t recommend them more highly. I was inundated with responses and immediate requests to meet. That made it a bit easier. Letting people go is really, really hard, but actually, hiring great people is a lot harder.

Joel and I arranged to meet them on Wednesday morning before work, he met one back to back with another in one location, I did the other. There were a lot of tears, and pure shock, of course - they’d never had a warning, they’d never not performed. One of them had never been let go of before, so it was an especially big shock, and it made me feel 10x as bad, but I had to keep a brave face in front of her tears, the decision was really beyond my control anyway. The coffee shop felt so bad for both of us, they brought over free coffee.

We asked them to get their essential stuff quickly, and come back for the rest another time so they didn’t have to explain themselves to other team members. Then, somewhat unconventionally, Joel took half the team into one room I took the other half. Joel took content and marketing, I took product and tech. We essentially took each other’s teams, but our rationale was that we could talk about it in a more open way like this, and by splitting into smaller teams we could invite debate and do it more conversational style than having it dictated. 

This seemed to work well - there were lots of questions around targets, requirements, roadmap planning, etc. It actually focused people into a sense of what needs to get done, and how fast, to make sure we weren’t slipping like that again, and therefore there weren’t any outcomes like this in the near future again. Of course, I know in business that quite often these things are out of your hands, but it was great to see how people reacted - though they were sad, they focused their energy on the task at hand. 

Once I was back at my desk, I began emailing their CVs to people, and within the same day, had over 30 interview requests. This really helped to soften the blow. I communicated with each of them during the period and explained that we would be paying them for the next 4 weeks regardless, and do everything we could to put them back into a job before there was any chance of them going a week without a pay-check, and of course explained they would all be getting great references.

I’m writing this post with their permission (having asked in advance if they mind), and now knowing, in the aftermath, with the dust settled, that they are all now employed in excellent companies, and have personally all written to us to say thank you for the opportunity and how much effort we put in to helping them afterwards. 

Whilst letting go of 4 people, by surprise, in one day, was a new and horrible experience I didn’t enjoy - it’s actually been one of the most rewarding professional experiences I’ve gone through. It was a necessity, something I had to do, and the repercussions could have been 10x as bad - the team could have been immensely demotivated and disappointed, yet they supported our decision and spent time explaining how they felt, or where/why they were confused - and we were able to have a dialogue over it rather than letting it fester, and causing serious internal issues with the team members left behind.

In another rare privilege, I had a ‘founders lunch’ with Kevin Systrom today, and had a prime seat, directly opposite him, accompanied by founders of Made.com, SAM labs and Lyst. This intimate lunch was an opportunity to question him on where the company was going, and to know the man and vision behind the $1bn exited app, worth around $30bn today based on general estimations.

He’s a lovely down to earth guy, very charismatic and chilled - it was a very boozey lunch but he notably didn’t have a sip. He talked passionately about cycling and his love of brands such as Rapha, and opened up an opportunity to discuss the future of mobile commerce and brands selling on mobile a lot more.

Instead of simply sharing the detailed vision he has for Instagram here, after all it was a private lunch and not really my right to share what’s not public information, what I can share is some of his founder tips.

The number 1 tip he had, or rather regret he had, is that around positions and titles. He says this is his biggest pain, the politics at Instagram over who has what title, who deserves what promotion, etc etc. He finds it incredibly frustrating when really he just wants to work with adults who are there to achieve the best for the company, and he wants to focus his time on their mission and vision,and whether they are achieving it, rather than detail on when people’s pay reviews are up and who has outperformed who by incremental margins. He also said an issue in the early days was people wanting grandiose titles before they were ready for it. We’ve suffered with this at Grabble, so I could definitely relate, and it was the second time it’s been said to me this week by founders.

He said the thing that made him successful with instagram is the ability to disrupt from within. He said they’ve never been happy being a photo sharing app, and they wanted a deeper but more abstract mission that aligned them better with connecting people. They were previously a ‘photo app’ but he wanted to move far away from that, and he said even they struggled a lot to align people in the company with a new vision/mission, and the new logo obviously caused a lot of frustration and arguments too, but he said it was all important to feel like it was a new mission, everything that existed before had to feel like it was the old Instagram. The new Instagram was about connecting people, and he even said that in the future that has nothing to do with images then that’s totally fine with him - whatever form of connecting people and communication works best at the time, is, from his perspective, the only thing Instagram should care about.

On managing stress - it was interesting though not so surprising, they never really had any moments where they weren’t flying high so their main stress concern was always about under-delivering on expectations and failing to meet their potential. He said this is where he became fascinated by the prospect of ‘disrupting from within’ and said from his perspective, founders that don’t question their own businesses every 12 months, in this fast paced ever changing environment, and don’t disrupt what they do, tend to be those that fail. He said he admired those that do it, and knows how much stress it can cause to change a company mission or focus but at the end of the day, it was essential to progress and was always rewarded.

It’s a well known fact that I like to share. For starters, just look at my twitter. In fact, just remember you are on my blog. My colleagues have complained in the past that I can share too much, Joel gets bored of how open I am about everything, and when it comes to writing this blog, there have been MANY posts that I’ve written that he’s told me to remove immediately. Some are so open and honest that even I know to remove it.

Something I’ve always found counter-intuitive though is WHY pretend everything is OK? It’s a startup. Of COURSE it’s not OK. Every severe low is usually met with a resounding high. Each high is followed by an extreme low. I’ve come to savour the lows cos I know what’s ahead, and I’m now only really concerned when we are flying high. So why is it not acceptable to admit that deep down inside your company, you, just like everyone else, are struggling?

I guess the answer really comes down to 2 things. Responsibility, and confidence. I am not a startup of 1. I have a responsibility to the people I employ, the investors who are shareholders of my business, and the partners that use our platform, to always present the best story, and the reason why I have that responsibility is because of that second thing. Confidence. The second people don’t have the confidence that you are doing the right thing, you can spiral out of control. Just look at any stock market share plummeting as evidence. Just look at Britain’s currency. In fact, just look at ‘Great Britain’.

However, I’ve learned that I really don’t function well keeping things to myself. Over the last month, we had to let 4 people go to reduce our burn rate (monthly cash spend). It was brutal. It affected me. I’m a people person and I had to make redundancies that were best for the business, and I had to make sure it was handled professionally and clearly, and that was very complicated. In the days leading up to the decision it ate away at me. I hope to share the lessons I learned from that day on a post (pending approval from those ex- colleagues).

Anyway - the point I’m trying to make is, I had Joel to share this with, but it was equally hard for him. Sometimes it’s great to share what’s troubling you with someone else, but if they are going through the same struggles, then it can be less effective. I did write a blog post about how I was feeling about the whole thing, but I’ve not published it (just shared it privately with friends). it still didn’t feel like a good release.

So I’ve been going to Sanctus, which is a group therapy session once a month. It’s been a good place to share (with the same group each week but no one I know well) what’s going on in my life. What I feel. What makes me sad. What makes me happy. It’s actually just been a really good place to be myself. 

2 years ago, I set up a dinner with a friend, Rob O’Donovan, as a place for other founders to just share what was REALLY going on, how they really felt, with no shame or judgement, under the assumption everyone wasn’t just ‘killing it’. It’s amazing how impactful that dinner was for all of us, and how much that honesty ties people together. 2 years later, these dinners are the foundation of a hugely active community of founders over 200 people strong and is operational and growing in LA and San Francisco now too.

Whilst that community grows, and is a fantastic outlet for me to share once a month, I think the nature of group therapy; what I’m learning about myself both by sharing as much as listening, is right for what I need now. It doesn’t hurt others by exposing truths that people who know me would rather not know, and so it’s ‘responsible’. It doesn’t shake any confidence to discover that, after all, I’m human, and my company has been as affected by Brexit and a devalued currency as everyone else’s has.

Most importantly, I get to share, receive feedback, and have some time to consider how I’m feeling in a safe environment free of judgement and that alone, is powerful and, ultimately, in everyone’s reach. For those that are curious, and based in London, do check out Sanctus like I did. You dont need to be part of a special dinner community, nor write a blog to have opportunities to share. In fact, despite having both, and telling everyone how I’m feeling most of the time, I still feel like I need more of a release, and these group therapy sessions have really helped me find better equilibrium.