# IEPC - Entrepreneur's Journey | LBS

Data: 11-01-2025 21:36:31

## Lista de Vídeos

1. [What I wish I knew 12 months ago: Entrepreneur’s Journey | LBS](https://www.youtube.com/watch?v=_1xASUz_8AE)
2. [Understanding Blockchain: Entrepreneur’s Journey | LBS](https://www.youtube.com/watch?v=jQBwObSDV5A)
3. [Growth hacking for start-ups: Entrepreneur’s Journey | LBS](https://www.youtube.com/watch?v=xXqUdfTS1Pw)
4. [10 legal mistakes for entrepreneurs to avoid: Entrepreneur’s Journey | LBS](https://www.youtube.com/watch?v=eZMdk_xs_DU)
5. [Exploring GenAI's Impact on Industry Transformation and Private Equity | LBS Experts Discuss](https://www.youtube.com/watch?v=pXbPVDg759Y)

## Transcrições

### What I wish I knew 12 months ago: Entrepreneur’s Journey | LBS
URL: https://www.youtube.com/watch?v=_1xASUz_8AE

Idioma: en

good evening everybody well welcome to
the entrepreneur's journey series my
name is jane cadaire i'm a director of
the institute of entrepreneurship and
private kappa at london business school
uh today's topic is all about learnings
with the benefit of hindsight and in
fact is called what i wish i knew 12
months ago
a fantastic thing hindsight if only we
were privy to it to be able to
anticipate what was about to happen
we've got a great lineup of speakers we
have rosie bailey the founder of nibble
nasty rigawama from umwaga
and pedro cabrero from yaezy and i'm
delighted to say i had the privilege of
working with all three of those guys
last year when they're in the london
business school incubator
and the progress that they've made over
the last 12 months is really testimony
to their resilience and their ability
now to speak of their learnings is
fascinating and i'm sure be invaluable
to you all
so today we're going to run with each of
them in turn uh they're each can speak
for 10 minutes or so and then we'll be
having questions by way of a panel so
there'll be plenty of opportunity for
you to interact with them all
and to be able to uh essentially pick
their brains
if you like this series then please do
follow us to stay updated with what we
do and when next event's happening you
can connect with us on linkedin and
twitter at lbs entrepreneur
please do check out our website for
upcoming events and resources and also
follow our blog the lbs start hub which
you can see on the screen
you'll be able to find links in the chat
box or for those who are watching the
recording we'll post these in the
description too
so without further ado i'm going to
welcome nasi
nasi if you would
like to take the spotlight
thank you so much jane good evening to
you and to everyone on the call today
it's wonderful to be back at an lbs
event and
lovely to be sharing some of my
experiences of this past year with you
and when jane asked me to be a part of
this i was thinking
one year ago
very little's happened i mean shouldn't
you be asking me about the past two or
three years and then i remembered that
it really was just one year ago when
we were getting started
um so i hope that means there's been a
lot of learning i know there's been a
lot of
experimentation and
embarrassment but um
a few things that
that i did pick up along the way that
if i were to do this again i would make
sure i don't repeat
um
so my name is nasi and my business is
called umuga
it's a social network for
trades people and service industry
workers
so we like to describe it as linkedin
for cleaners gardeners and hair stylists
and so with that we're building a
two-sided network we've got the classic
chicken and egg do we get the workers in
before the employers want to come find
them or should it be the other way
around
and these things are always just really
hard to spin up and i think that's been
our challenge
and at the end of the day you are
dealing with people this is
business to to consumer and we're trying
to get as many of these c's on the
platform as possible and
you know you learn with this kind of
business that getting people to do
things is really really difficult
one of the things for for me i think at
this stage last year is is we were still
bootstrapped and the money was running
out very quickly i finished my mba at
lbs in july of last year and so it was
just kind of whatever was left in the
bank account post mba which wasn't much
um i was a solo founder and just kind of
doing everything
with a very small team and very limited
resources so my approach to the first
fundraise was
completely wrong and i you know james
had me crying on the phone over this
story but
i took the easy route out um i was
practicing my pitch on an angel investor
slash friend
and at the end of that practice session
he said i'm in
and i hadn't figured out evaluation and
i just sort of said well great i mean
fundraising done let's just wrap this
thing up and then we'll as well
um
i didn't have a plan b
and i over overly relied on the fact
that we had a
friendship before we were trying to get
into business together
and things went sour and when they did i
didn't have a backup plan
and we had really kind of gone into this
process it was quite difficult to unwind
at that point
and so that was a crucial learning for
me i think
definitely in terms of a fundraise but
in all aspects of your business is
always have a plan b
um you know we got to times where we
sort of ran out of experiments on how to
get customers and we
lost a key sort of
outsourced team of ours that was
handling all our marketing and
like you know you ask yourself what are
we going to do next week for all our
channels etc
and so i'm slowly learning that in every
aspect of the business and in every way
possible always have a plan b because
things will go wrong
um and you don't want to then have to
start scrambling from scratch and in
some cases you really just can't it was
my biggest mistake which was on a
fundraise and running out of money is
the easiest way to
kill your startup dreams
sort of scrape my way through it and
trying to be better this next time
around we're starting our next fundraise
the second one i i've sort of
just scribbled down here have a tribe of
mentors
now the one thing i wasn't ready for was
the emotional journey
you're going into this new venture
you're gonna try something you're going
to at some point
you know lift your head up and say hello
world this is me and this is what i'm
making
um and you can feel extremely
self-conscious about that you're putting
yourself out there i imagine some people
back from my past life in private equity
looking at say a linkedin person saying
oh my gosh nessie what are you doing
with this tech stuff like what happened
to you man
and no one's thinking that
but people
might be keeping tabs on whether you win
or lose and it becomes one of those um
immediate topics whenever you catch up
with someone how have you been how's the
business and then maybe after that house
of family
and so you're talking about it you're
living it all the time
you're figuring out how to build this
thing as you go you're learning how to
be a founder you're learning how to
excel in your industry you're learning
how to be a manager how to be a ceo
you're learning
and
it's helpful to have people that can
help you along the way i had one great
mentor in the beginning and i thought he
could help me with everything um but
that's not really the case and he you
know we sort of got to a point where his
experience sort of kept out
and i was still asking for help with
things that he hadn't done before and he
was doing his best
and so i got to the point where i said
well i just i could do with the team of
people like him and not just business
related things but to also be great to
just have someone that i could call and
say
is it okay for me to be feeling so
self-conscious so anxious so
um just
you know
almost immature about what i'm doing
about whether i'm doing it right about
how people are seeing me and just how
i'm feeling feel kind of really
um
you don't you don't feel great you don't
feel like a powerful ceo and it's
you know if you can have someone that
has been through that knows what you're
feeling um and can help you and then
someone else that can help you with a
financial model and someone else that
can help you with the marketing strategy
it will really take you uh some ways
down the road as an early stage founder
especially if you're a solo founder
the third point i want to leave you with
this one i mean it's it is as obvious as
it sounds um i was told a billion times
um and i probably still need to be told
a billion more it's listen to your
customers and you know we did all the
good stuff all of the customer discovery
which was you know really diligent in
the beginning speaking to people finding
out that you know the problem we're
trying to solve is real and these
customers experience it and testing our
solutions with them
but i think we stopped listening at some
point when you know we thought
we have it we have something this is
interesting we're going to build a
business on this
and you end up trying to shove your
solution down people's throats being
arrogant and saying
they just need to understand when they
see the magic then they will start doing
it my way because it's obviously
brilliant
and it took us probably
somewhere between four and six months to
just kind of go back to emails and
messages where
they had been telling us exactly what
they wanted from the beginning and we
were saying to ourselves we're a social
network we're not just another jobs
website so we're not going to have jobs
jobs listings but
i think 60
of the people who signed up would send
us a message and say something like
where are the jobs i want a job how do i
find the jobs how can i get a job and we
literally just had to stop and say
hey when they sign up they want to see
jobs they don't want to connect with
someone or post an idea or an article
they found they want to see jobs
and it's really just stuff that that is
that basic um and then the question is
how can i
build this jobs experience into my
social network experience without losing
the community aspect that is really
important to what we're trying
to build
um
and as i say you know someone's going to
have to keep hitting me on the head to
say just listen to what they're saying
to you or go out and speak to them and
get some real information
so please be better than i was and
really listen to your customers
fall in love with the problem that
you're trying to solve do not fall in
love with your solution even if that
means turning into an entirely different
business than the really cool sexy one
you have in mind right now
the problem your customer has is what
you're doing this for and the solution
that you come up with them might be a
fluid and moving thing but get it from
them and make sure it's the one that
they want to use
thank you nasty yeah absolutely
fantastic words of wisdom and uh ones
which i'm sure resonate both with pedro
and rosie rosie shall we hear from you
and uh and then pedro and then we'll
open up the floor for questions and uh
you'll essentially get plenty of
feedback
super well thanks maxie and and it is
lovely to see both nancy and pedro again
i can't emphasize how important it is to
have a network of people going through
what you're going through and we were
all part of that network i'm sadly doing
to covert i think we only got to the pub
once but yeah exactly it's very
important
um so i'm rosie uh we were in the london
business school incubated last year
myself and jamie were both london
business school alum
and um we met actually and discussed the
idea and that's how i was born here on
campus as well
nibble is a negotiation chatbot with a
strong sense of humor um
and if you fancy pitting yourself
against the smartest wittiest ai you can
find on the street go to nibble.shop and
have a go on our demo and see if you can
negotiate yourself a special deal
we launched our app halfway through the
incubator in
march 2021 and eeked out on one customer
maybe two customers
um
and then
i don't know
it all started unlocking over the summer
we're now negotiating on about a million
pounds worth of transactions every month
doing about 150 negotiations a day and
growing at 50 per month so we're getting
quite excited about what we can achieve
um in terms of my lessons
my first one is quite similar to
something nasty said it that the first
and possibly the most important thing is
it's all about the people
um
i strongly believe that you shouldn't go
it on your own and if you're a founder
you should try and find a co-founder and
to be honest jamie found me much more
than i found him
and we are complimentary and different
we are capable of having a
hot debate about topics and not losing a
friendship and a working partnership
and we're good at different things and
that is just brilliant and it gives you
a huge amount of confidence in your own
decisions to have someone to bounce
ideas off and have someone to share the
ups and downs with so that's the first
point it's all about the people and the
most important people at the founders
but then there's also key hires and
i didn't realize
how hard it was to find the right people
but also sometimes how easy it was to
find the right people and how important
it was to focus on the quality of people
that you worked with and we've been very
lucky i mean i can tell you we haven't
worked with someone that i wouldn't call
on again we've had a stream of fantastic
interns really amazing interns that
we've learned stuff from and our
permanent hires are are just the best
and we continue to focus on making sure
that the only people that we work with
are people who are really smart really
diligent really
switched on but but also have the right
kind of
ability to be light-hearted
see the funny side we've got a
copywriter who writes all the copy for
nibble and um lives the dream of
pretending to be a smart ai chatbot
every day so you know there's all sorts
of roles you can find
and within that um
nasi said a tribe of mentors um i
couldn't agree more nasty you need
within that it's all about the people
you need cheerleaders
and you need people who will pick you up
and go
now this is a bit of a setback but i'm
sure it'll be fine and the fundamental
idea is brilliant and keep going and
that's not always the people in your
operational team that sometimes people
um at home it's sometimes people in your
formal mentor or senior advisor group
but it's often people
on the periphery of your network and
we've networked like crazy for the last
year and we will continue to network
like crazy for the last year one of our
most important senior advisors was
a chance encounter a a part of my
periphery network i got someone to
introduce us and then it sort of went
really well and that person has been
instrumental in introducing us to our
first clients
so
the only thing if there's only one thing
you take away from what i've said it's
all about the people it's all about the
people and that's what makes it fun i
mean there's no point working with
people you don't enjoy working with
um and then two smaller points um that
are easier to explain the second point
is um it's always going to happen a bit
slower
um jane's going to laugh at me i was
constantly giving her targets that we
were going to miss horribly
and
[Music]
that's fine
that's fine it's always good to have
ambition but
if you want to keep motivated and keep
the team motivated
set small targets small steps small
goals celebrate the little wins
celebrate
completing a sprint on development
celebrate getting somebody phoning you
back when you're cold calling
it's small things and you've got to
celebrate those wins because it is an
exponential thing and um a mathematician
was interviewed recently i don't know if
anyone's heard of hannah fry i'm a big
fan of her she's a celebrity
mathematician if such a thing exists and
she says if there's only one way to
explain exponential it's that you don't
see the truck coming in the 15 minutes
before it hits you
which is i thought it was quite the way
um
and then my last point is equity splits
everybody tells you this is important
and difficult it is important and
difficult
don't underestimate the importance of
getting that right and having an honest
conversation as early as as is sensible
on what the right equity split between
the founding teamers
i
people say it's you and you say yes yes
that's fine but it is an emotional thing
and i think you have to recognize that
so um
mainly
it's all about the people jane mainly
that's my key takeaway
thank you so much rosie that's great
great points to add on to uh nasa's
pedro pressure's on you now to come up
with three completely different ones of
course so uh
yeah i couldn't agree more with uh
nasi and and rosie today
definitely very insightful
lessons learned
so it's gonna be challenging to to say
something more relevant than them but um
anyways i'll give it a go
a quick intro uh i'm pedro cabrero
i'm lbs masters in finance 2019
i'm also a teacher assistant at lbs i do
the workshops of python r and machine
learning so you might see me around
in campus
perhaps
i'm also co-founder at jc i started jc
right after lbs
but also
right before covert so it has been a fun
and volatile ride
um
jc is an app that helps you track your
personal carbon footprint
it links to your bank account and gives
you a real-time reading of the carbon
footprint of of your spending of your
purchases
and
jc helps you reduce and compensate your
your impact on on the planet
so it's a legit technology we're using
open banking to link to your bank
account we're using machine learning to
classify your transactions and more than
20 years of data science of currency
print accounting to come up with
the most
exact carbon footprint estimation
and
so it's pretty cool
i
i would encourage you to to get it
uh we've received 1.5 million pounds in
funding
from bcs
and crowdfunding
we're
15 employees
so far and growing by the week and as
jane said i had the fortune to be part
of the lbs incubator
last um
20 20 20 20 21 which was an amazing
cohort but uh
as rosie said we just get to to met once
in the fall everything was virtual but
anyways
i got a a lot of lessons learned however
i i was told to focus on just three so i
will tell you the three that resonates
the most for me
and that will help you reduce um
the risk of entrepreneurship
so the first lesson
perhaps uh very
in line with rosie is
to hire senior people in early stages
and senior is very relevant for for this
um most entrepreneurs fall in the trap
of
hiring an army of interns
and
in my experience is not the way to go
it's super important for most businesses
but particularly for tech businesses
and we started developing the jc app
with junior talent it well it was just
uh my other co-founder which is senior
but then
junior developers
and junior designers and i myself i've
got background in finance not in product
management so we did all possible
mistakes literally and we had to redo it
all again so it took us
about a year or so eight months to to
hire the right team fortunately we feel
that right now we've got the right team
and six months or more to to rebuild the
app
so
all these rookie mistakes um drain a lot
of resources valuable time money and
focus
and today in tech businesses
the the end customer quality
expectations are super high
so people are expecting
apps that are super sneak that solve
customer problems very fast pros of very
high quality
so if you do something that it's very
like um
an mvp that
it's not
ready for for the end market
you're gonna hit a lot of walls
so in in our case we recently hired a
g-pro officer from revolut
designers senior designers from one of
our competitors
senior marketing and community people
and and so on
and and that's this will help you
mitigate the execution risk so uh if
you're thinking of hiring interns
uh for the most important business
functions
i think that it's a bad strategy the
interns are are great but not uh for
key business functions
so
the
the learning for me the lesson is um
whenever you're doing something that
requires a lot of skill and a product
that is expected to be of high quality
if you're dealing with
personal banking data or you're doing um
job to be done that it has to be perfect
all the time like sending
money like transactions and so on
it's better to to do it with people that
are experienced
and get getting
talented people people early on your
journey is super super important that's
something that i would like to
to
share with you and the second lesson
would be to to focus on proving one
metric
with a small
group of customers
and once you nail that business metric
then you focus on traction and growth
so the key here is not to fail and not
to fall in the trap of uh trying to
achieve growth if you have not
taken
or nailed one business metric
uh so for me it's been two years since
we've incorporated the company and most
of the time we've been focused on on the
wrong thing
too much time spent on fundraising
more than eight months
er also like six months of trying to
generate traction and growth we without
having
pro market fit
so basically we've been swimming against
the tide
so you have to figure out one simple
business model equation and optimize it
and that business model equation is
linked to the problem that you're
looking to solve and that's um different
for for every business
for yayc
which is an app that helps you reduce
your carbon footprint is the percentage
of customers that are carbon neutral
and to give you a few examples for
whatsapp is message sense
for youtube is
videos watched
for ebay is gross
merchandise volume
for for airbnb is knights booked
but however there's a caveat in this
north star metric for early stage
companies for instance you you focus on
what's up on on message sent you can
achieve growth by growing your number of
users
or
uh trying to increase them then the
number of messages that one user sends
so it's key that you focused on the
second
the percentage of customers that are
performing your action or your job to be
done
and once you will optimize that you look
for growth
and that's something that we failed to
do since the beginning and now on our
second year we're obviously working on
it
but basically this takes a lot of time
and if you focus on this simple business
model equation and optimize it then
funds and traction will follow naturally
not all the way around
this way you will reduce approach market
fit
a risk
and the last lesson that i want to share
with you is that uh fundraising is a
numbers game so it it's linked to nasa's
point
of um
not putting all your eggs in in one
basket
so we've been very lucky with
fundraising fortunately because we've
done a lot of pitching
um
after my master's in finance um
mass
program at lbs i pitched to four early
stage pcs
i got three nos and one yes so basically
that was like a 25 hit rate which was
pretty good
pretty okay so raised 120 k from antler
bc that
invest in tech companies early stage
developed the product
and after six months we pitched two
to business in london
we've got that was basically beginning
of um
2020
[Music]
and we've got
19 notes and one maybe
and then february march march
2020 covet hit and that maybe turned
into a note so this is at that time
we're looking to portfolio companies
and we had to
keep going somehow so we spent six
months pitching to
two angels and and this is in europe and
i don't remember how many
peaches we had but we were averaging
around one pitch per day
and basically within these six months
the time
frame all bc set null
and three angels said perhaps
so then we decided to shift our funding
strategy and we went for a crowdfunding
campaign with cedars
so we the crowdfunding campaign takes a
lot of time to run and to plan so we
started like three months before we did
a video
and we aligned the the angels
and we started the the campaign with
four angel commitments for a hundred
thousand pounds it was a successful
campaign since the beginning
because we did all our job of reaching
out and a very cool video and landing
page
and we raised our target of 250 000
pounds in the first day of launching and
over a month we total over 700 000
pounds
from more than a thousand investors
and then after that
we were very lucky
that a few angel syndicates followed
we did a follow-on round of half a
million pounds from from a few angel
syndicates from europe and and us
so
so basically we we were eight months
pitching getting
nose nose nose and then
three in one month and a half
are locked changed drastically
so the advice is to open as many doors
as possible
and to be flexible
you end up getting money from sources
that you never anticipated
so there's a lot of capital in the
market for strong entrepreneurs and it's
just a matter of increasing your odds
so that's uh all from me and hope you
check out the jc app
and add me on linkedin
thank you pedro so you've heard from all
three and um well i'm going to actually
uh load everybody up for the spotlight
um i'd like to turn a couple of things
round um so nasi uh well actually nasi
and um
and rosie were both talking about uh
hiring people and getting the right
mentors in place
nasty you were talking particularly
about mentors i mean what did you look
for in a mentor when you were talking
about getting that tribe in you said
that you wanted mentors on both personal
and business level um but did they have
different attributes or are you looking
for particular backgrounds people who
knew your business what were you what
was it that really would enable you to
put trust and faith into a mentor
yeah that's a good question jane
i think what i'm recommending this
evening is to be intentional about the
kinds of mentors that you'd like so to
think about the areas where you're weak
or need help
and and then
you know go out and find those kinds of
people
i didn't necessarily do that but i did
meet a lot of interesting people along
the way the best mentors
would almost
open the door to you asking for their
help that they would never push
themselves on you and that was great for
me because it told me that they don't
have any motive other than
you know they're speaking to me what i'm
doing sounds interesting and you know
they've perhaps been through this before
and they just really want to help it was
important for me that they had had
similar experiences before otherwise it
just becomes sort of
advice from someone who is who's trying
to be nice to you um
you want to go into the weeds for some
of these things and and tell them what
you're struggling with and hope that
they can really help you through so
experience would be good
but then a general attitude of
i want to help you because your mission
sounds super interesting um and beyond
that you know nothing else really
excellent thank you thank you
rosie you spoke very much all about the
people i mean did you enlist mentors as
well as just having a good team with a
sort of payroll basis it's uh it's
everything it's everything i think on
the mental side um
in fact we've just taken on two senior
advisors
uh which are if you like mentors who are
now a permanent part of the team if that
makes sense
and for me
that progression it was really important
it's quite interesting to see who's
going to give you a second meeting
there's a lot of people who will say
something nice
and be encouraging
but there aren't so many people who will
give you a second meeting so i look for
people who
immediately give you a thumbs up on
social media here i mean this doesn't
cost you anything and it matters a lot
to me
i mean like and actually if you could be
bothered to do that uh or follow me on
social media or do you see what i mean
like
it's it's not much but it shows that
you're reaching out and so the people
that we've really got involved in are
the people who offered those second
meetings and followed up
um and the people who replied to my
email when i said thanks for meeting and
the people who said i mentioned i might
be able to introduce you to so and so
here's their email address or
bets is still
they email so and so and say
you've never seen anything as cool as
this they don't just go oh would you
like to meet rosie they they give you a
proper plug
and and it doesn't cost much so they're
really gunning for you absolutely
absolutely
pedro would you suggest there's a huge
difference between having a mentor and
having an advisor i mean how many of you
guys have got a board of advisors
distinct from mentors
pedro let you go first
um
so a board of advisor is um
something that you have to set up
definitely
they
serve as a sense check whether the
strategy the and whether
what you're thinking in the startup is
going the right direction
um
setting up a board of advisor takes a
lot of time and and it's a lot of admin
to do so
obviously there's there's a stage
whether you need one but obviously early
stages you you cannot set up
you cannot commit to set up a world of
advisors
but we've been very fortunate to get um
mentors all along your our journeys
before incorporating the company and and
uh
through through all this two-year
journey from multiple sources
from antler the the bc that i started
with
from the uk global entrepreneurship
program
from lbs
itself from the obvious incubator
from like personal contact so it's
always to it's always good to open as
many doors as possible and then as as uh
nasi
mentioned picking the ones that um
resonate the most with
um
the
the job functions that you don't have or
you you're aiming to to feel in your
company
cassie did you use mentors distinct from
advisors or i mean
you know what's been the structure that
you took on board
you know
functionally what they did um
probably straddles both but i always saw
them as mentors i never
approached someone to say would you be
an advisor to this business it was
always
you've got tremendous experience in this
regard and
we're going through that now or we will
in the future
can i call you when i have a question or
when i need help
so i definitely see those as mentors but
you know if we look back and we think of
the kind of time and that some of them
have spent and how regular we would
speak and you know it almost became
formal they really did become advisors
in some regard
the one thing jane that i'll mention is
um
you do want to leave some behind at some
point you know they stop being useful
yeah the stage of your business
moves on and the experience is no longer
super relevant so i
whether you have them on a board or just
someone that you reach out to have a way
of of moving on when they're no longer
helping you
that's good
having looked at so many pitch decks um
the the one thing which has always stood
out is that typically when there's
advisors in place then they're typically
big names with very very relevant
experience as opposed and that's why
they're essentially brought in to
actually um
uh you know sort of highlight the the
support from somebody
for with relevant industry experience
um okay
rosa you were speaking about uh again
we're talking about the people here um
talking about how you selected a team
etc so there's a question that's come in
which uh i think is relevant to this
we're talking about
what not what what non-founder
experience do you believe is more
relevant to a potential founder uh
either being a vc or being part of
someone else's startup
yeah i mean i would have thought someone
else's startup is probably more relevant
um because what you want is someone who
says oh i've seen this before or a
friend of mine did this growth hack or i
did this or i know a good accountant or
ip lawyer that would give us some quick
advice on this you know just problem
solving getting rid of some of those
kind of simple things
somebody's also asked about insights on
doing a startup not directly related to
your previous career background sort of
linked question and i was i was a banker
before this so i i wasn't doing anything
related to this and actually i'm trading
quite heavily on a maths degree i did
more than 20 years ago to try and
persuade people that we know what we're
doing or some of the ai we're building
which we do but it helps so you don't
dig around on your cv for credibility
from other places
i've seen yeah
african experience
uh no i was
also coming from the finance industry i
was an equity sales and trader
and investment banking five years before
doing tech so
definitely doing something completely
different now
fintech
and climatetech
and what about you nasty
oh so i was in renewables we were
developing the power plants
um
so not at all related to social
networking or recruitment but the idea
came from the experience where we were
trying to hire low-skilled people in
remote regions to build these solar
power plants hydropower plants
and just struggling and wondering why
there wasn't a better way to do it so
the idea came from there but the
experience was completely different so
there's a question for you i mean with
the benefit of hindsight do you wish
that you would have
started the business where you did have
direct industry and sector experience do
you feel like it actually did impact
your ability to succeed i mean obviously
you've all done tremendously well over
the last
year since launch but uh would it have
been easier had you have had first-hand
experience in that sector previously
i'll continue janet yeah i want to say
yes and no
the no is that
having experience in an industry having
worked for a company where someone
trained you and told you how things work
in this industry can be a crutch when
you're trying to innovate
it's quite nice to approach a problem
with completely clean eyes and just try
and come up with a solution that makes
sense because it makes sense not because
you've seen it before trying to do some
pad to match
the yes part is
i just think
you know if i could start again now
i would do things so much better so any
kind of experience even just general
founder experience would have been
helpful but i worry that the the domain
expertise um may may have sort of
hampered the
production process
yeah very honest
for for for me definitely having domain
expertise is something that will reduce
the risk of entrepreneurship and and
will
increase the the odds of creating a
product that will be successful in the
long run
but obviously
so many founders start companies without
the domain expertise so i would
recommend
going through the entrepreneur journey
either way but if you happen to
have domain expertise then that's
that's a
great
check mark
for for you and for for bcs for
fundraising as well
so here's a good question that's come in
how important is it to have a technical
founder from the outset i mean that's
technical expertise which can be brought
in at any point would you make that
person a founder would you give them
some vested equity or would you just
contract out
rosie what did you do having built this
bot
uh so it's a bit of a hybrid to be
honest and some of the under underlying
algorithm
um it was a hybrid like we contracted
out but i took a lot of responsibility
for design i can't code python but i can
i can design how i want it to work if
that makes sense and so i would say in
that sense
was very very close
and then the build we outsourced some of
the stuff that was quite standard about
kind of basically building a website and
effectively a bit like building an app
um but we kept in house the the business
of tying quite small algorithm
to the quite smart chatbots to the quite
standard
app if you like
and that we contracted to somebody we
knew really well and actually as it
happened after he contracted with us for
six months he said it was the most
innovative and exciting project he'd had
to work on a long time and asked to join
us as a founder and we
moved into a hecticon
how about you nessie
i know the answer but i'm playing
devil's advocate here yeah sure i mean
we contracted out um
and i think
the question is
is the building of the thing
the hard part or is it the
defining of the thing
we're building a social network these
things exist
anyone that knows how to code should
know how to build the thing so we
weren't solving a hard technical problem
we were trying to come up with a user
experience and perhaps a business model
that would be interesting to someone who
used it
so
it's it's worked we we're still with the
same team that built our
first real mvp um and they feel like
they're my guys you know a few of them
are dedicated to us uh so it's the same
as as having them in-house or having
enormous as founders but um it works for
us yeah you're right actually so we see
ourselves as a technical company
first and foremost so to that kind of
guts of it it's quite important to have
insects yeah you're right it's what's
your business model what's your usp
yeah for for yay we had a
chief technology officer a full stack
developer quite a technical
person and very experienced
and i would definitely try to recommend
if you can find a technical person to
join as co-founder and if it
if it has a cultural fit and
and basically um
it has uh interest in what you're
building it it's it's always
great to have somebody on board on on
the co-founding team
nasty and rosie i mean did you give your
your techies uh any any equity or just
paying them
our cto is an equity off
years yes
okay okay
rosie let's talk about equity um what
what tool did you use and this resonates
with uh with a question here that got in
chat as well did you use a particular
tool to carve up the pie or
how would you like it to be honest it
was mostly an honest discussion
but i have heard of some quite good
tools there's something called
sharing the pie
slicing the pie if you do a google
search for it yeah and it talks about
and what i quite liked about that
because i'm quite sort of methodical
thinker it helped me
rationalize my arguments for where we
should be and what was fair because
there's different contributions like who
came up with the idea
who helped build the mvp so that we
could actually test it
who brings the connections and the
connectivity that can actually make it
grow you know and there's different
people bring different things to the
table and um
unfortunately i think it's human nature
to perhaps over recognize your own
contribution in this argument but maybe
i'm
i'm being unfair
and so it's quite useful to have some of
those things those arguments set out
quite rationally so that everybody can
get on board on the same basis
[Music]
you use slicing pile or there's another
one which is vested as well invested i
brought into the incubator if you
remember but
there's there's a couple of tools i
think seed legals as well they have that
they have yeah seed legals offer a tool
and invested offer a tool we're looking
at best of now but a bit later to put in
place an option
package because we don't have
we have the founders but we need to put
in place an option package for future
hires and stuff and we need to do that
next
what about you pedro have you used
uh we're using seed beagles but at the
beginning we split the
shares evenly across the three
co-founders
uh i'm
more of the opinion of you know like
having something small
uh of uh
having a small
pie of something really big rather than
having a big buy of something really
small so literally i and all the
employees at jc have shares so
basically that's the way that we align
incentives
and
every everyone shares the the upside
and
and in real question of um
the rule of thumb for startup equity
dilution
and i remember in the
very interesting course we had at lbs of
financing the entrepreneurial journey
normally you would like to
that the initial funding team keeps
around 50 percent of the company after
series a
so basically you have to give around or
you can give
around 50
of your shares
on pre-seed
seed and perhaps another follow like a
bridge round to to to get to to series a
so if you give 25 percent of equity to
the vc precede then you you you have
like 25 left
so
basically it's um
a rule of thumb would be anywhere
between 15 to 25 percent
every stage and that's um
up to
the the the person who negotiates the
the term sheet
uh
valuations comparable valuations in the
market and also the
the execution the
the milestones that that you've reached
so it's it's a bit of a combination of
that but obviously try to negotiate 15
so that whenever you are on series a
you've got 55
of the company
thank you patreon
inc interesting question from our part
um what strategy do you put in place to
retain highly skilled hiring that you
you have for your startup apart from
obviously increasing their salaries i
mean does this go back to equity where
you drip feed more equity out of the
equity pool
you don't have to always pay them high
price you can negotiate a deal whether
it's attractive and and you know like
your best tool is
to
to use your capital structure and issue
employee stock
options
to incentivize talented people to to
join your mission
are you all of the same
opinion i've done the same thing
i think for us jane and you know i can't
really speak as
as formally as pedro
they do a phenomenal job
we
have strategically hired people from
regions that we can afford
um and we just really look for for gems
so we have
a bunch of people who
were tricky to justify
when we made the hire and we had to
spend some time really polishing them
but
they're phenomenal now
so
i think just out of necessity um picking
people ghana india south africa
with you know salaries we can manage um
you know
not super incredible cvs before we got
them but probably really valuable moving
on from us if they ever do
um and then just giving them work that
they're really interested in keep them
excited
yeah i think keep them excited certainly
and engaged of course
right yeah i'd agree i mean our team
seemed to be motivated by wanting to do
something new and do something different
you know certainly um
the dev team side they feel like they're
inventing something new and that's
really really motivating
um jane i just say we missed lawrence
evans's low code
question
um i think lawrence is is still on the
call right um absolutely
um so lawrence i'm i'm by no means a
techie but i do understand that
our business is built on the technology
and that's our usp and that's for
competitive mode so we can't scrimp on
it so we didn't low code but that didn't
stop us using off-the-shelf pieces
as we built it um so for example we're
building a chat bot um amazon web
services have something called lex which
is a chatbot technology we built it on
the back of that but we did outgrow it
much faster than i expected and we
ended up substituting it with real stuff
so i guess
where there are low code loco solutions
yes but i i would imagine if you're a
tech focused business you're gonna swap
them back out again quite quickly but it
does get you to market and if your aim
is mvp and customer testing makes a lot
of sense yeah so by disclosure uh we're
a global thought leadership firm i'm
also a founder of my own company but
we've just published for mendix a
siemens company
a report called the state of low code
looking at global trends and low code
and one of the advantages of low code is
you head on at rosie's ability to scale
very quickly from designed execution
so maybe not in the initial stage but
when you once you have your key idea the
ability to be able to bolt on lots of
modules very quickly
and uh you know we're all looking for
ways to scale more quickly um
that's just one of them there are other
ways of scaling but
but it's something to to think about for
the next stage
and certainly i think people are
pointing to platforms like shopify that
let you do that and we've got yeah and
that right i mean we can install all of
our products on a shopify website um i
think our record is four minutes um but
the average is eight
it's been pretty impressive
uh james has just asked a general
question one one for me i guess about
how do we participate in the incubator
um if you're an alum of london business
school and you've graduated in the last
three years then do feel free to drop me
a line um i'll just put my email in the
chat
and i can certainly discuss the uh the
parameters for application with you
directly if i may i'm going to have the
last question i like having the last
words to all of you three guys um if you
knew
then what you know now would you have
done it
pedro
yes it's a painful yes uh because
obviously there's been a lot of
uncertainty and a lot of learnings
but uh definitely it's on the
correct side of capitalism
excellent great great nasty
yeah absolutely
i heard somewhere that the three things
a founder has to do at this stage
one don't fight with the co-founder i
don't have one so that's okay
to get to product market fit that's what
i do every day and it's fun so i love
that and three don't die
um and we're still alive so if i knew
that a year ago then it would be worth
continuing so absolutely excellent
excellent keep up the great work and
rosie
yes with bells on with bells on loving
it
wonderful great well three fantastic
examples of entrepreneurship at london
business school it was a pleasure
working with you last year it's been
fantastic hosting you this evening thank
you for your honesty it's it's so easy
for entrepreneurs to get up and speak
about uh all the things that went right
and sometimes it just takes that real
sort of a special person to be so honest
and open and to share those learnings
with our wonderful audience today so
thank you really so much all three of
you and thank you to all the
participants i hope that you've enjoyed
this session thank you for joining
please do join for the rest of the
series and have you enjoy the rest of
your evening many thanks guys
thank you jane see you guys
you

---

### Understanding Blockchain: Entrepreneur’s Journey | LBS
URL: https://www.youtube.com/watch?v=jQBwObSDV5A

Idioma: en

good evening everybody delighted to have
such a fantastic audience with us this
evening and uh also delighted to welcome
our speaker for the uh for the evening
uh dr theodosius maurices who is
actually our expert in residence on
blockchain at london business school and
uh certainly knows
a thing or two about the subject as well
as um as well as artificial intelligence
as well which i've just been chatting to
him about actually to try and get a
little bit of a heads up in terms of
really the the distinction and
differentiation between the two areas
um
so when we put this event together we
thought it would it would be an ideal
part of the entrepreneur's journey for
aspiring entrepreneurs looking to
upskill and not necessarily those who
are coders but actually those who
especially coming from london business
school are
more uh
proficient in terms of the the
commercial acumen of running a business
uh but that said it's always great to be
able to understand of course the various
components and especially the technology
which enables commercialization to
happen and to drive the business forward
and hence the need to understand and put
in perspective the importance of
blockchain in today's modern day
businesses
so as i say delighted to be able to
welcome theodosis here
with us this evening uh theo as uh he
otherwise likes to be known and he'll be
taking questions throughout the session
so
before we hand over uh just also to uh
make it apparent that those of you who
wish to get involved in blockchain uh
distinct from actually understanding it
from the perspective of uh how it would
uh
impact on your business or whether
you're in a startup or starting up on
your own then you can actually get
involved with the school's
blockchain club and i'll put some
credentials here on the screen for you
to welcome you to reach out to
one of our mims who's leading that and
his details are on the screen as well so
please do uh join in with the
with the uh initiatives that they're
running specifically on blockchain
finally just to uh understand to help
you keep in the loop of everything
that's going on at london business
school with regard to entrepreneurship
uh i worked within the institute of
entrepreneurship and private capital at
the school uh we embraced not only
entrepreneurship but also private
capital as the name would suggest in
terms of
working with vcs pe firms and obviously
all aspects of the entrepreneurship
ecosystem so do reach out to us if you
feel that there's anything you'd like to
be able to get involved with if you're
not ready at the school do follow us on
twitter and our startup blog as well
you're welcome to sign up there details
of various initiatives which are running
throughout the year as well as this
ongoing series of the entrepreneur's
journey programme
is with our next event in fact being
next week specifically for those at
london business school who are able to
come and meet the businesses in our
incubator program that's november the
10th so do sign up for that if you are
at the school
um other than that feel free to reach
out to us as i say our contact details
are on the screen uh and we look forward
to chatting to each of you um you know
to be able to get to know you better so
handing over now to uh theo
okay thanks jane for inviting me today
on this webinar thanks all of you who
attend uh the webinar today uh it's my
pleasure being with you today and honor
to be invited by
jane and the institute of
entrepreneurship private canada a lot of
business school to discuss
uh about the
new technology of blockchain technology
and how this can be applied to pretty
much any sector and in particular into
the financial services
so uh as jane has already mentioned uh
us so as i present i i will accept
patients so just
like interrupt me ask the question
because the time is limited and also
i'll provide my email at the end of the
session so that if you have some further
questions we can take them offline in
case there is no time okay so let me try
to share my screen now
okay so
tonight what we are going to try to do
we are going to make a fair introduction
into the world of the blockchain and uh
i promise i'll try to skip most of the
technical stuff but you know because
blockchain is a very complicated
technology
that is like
the celebration especially of
cryptography and many other like uh
mathematical sciences we will just
refer to the technical stuff whenever
it's needed in order to understand what
is the
main reasoning behind this technology so
my name is theo uh theomoroses you can
just call me theo my interest is in
cryptography and blockchain in
particular i have a page in cryptography
from ucl and i was a mathematics
graduate at the university of cambridge
and also now a blockchain mentor to
london business school and in particular
to the institute of entrepreneurship and
private capital
i have a lot of experience working with
blockchain technology not just from the
advising level or consulting level but
building real products and i have worked
with many big organizations and
companies which some of them i i list
here and i have worked also with
governments in order to help the device
dr blockchain strategy and best
practices in regards to applications of
blockchain across several sectors
i'm the
managing director of
electric consulting a small body
consulting firm specializing on emerging
technologies in particular blockchain uh
disciplinary technologies as well as
artificial intelligence data science and
we have a lot of experience end-to-end
in the blockchain chain space uh through
different like application blockchain
technology like decentralized finance
tokenization smart contracts development
body crypto exchange setup and
cryptography research and development in
general that are being used in the
blockchain environment
so what i will try to do in the next
like
40 minutes i i will try to take you
through a journey from the like
birth of blockchain technology how this
appeared and actually what is the state
of the art
nowadays in regards to application of
blockchain as well as challenges and
limitations so blockchain as you see in
the diagram here it's like the evolution
of money as we all know money it's a
very complex notion initially when
people realize that they would like to
start doing some
part some sort of trading they came up
with ideas of partnering this type of
bartering led to some standardization
issues it was very hard to pretty much
understand what values exchange for for
what other value so that people came
across of different methods of
standardizing the trades and that's why
we have like the
asset-backed currencies like gold being
used initially then metal coins then
paper goings
then
with this birth of the internet we have
like plastic cards the electronic money
and we have finally cryptocurrencies or
blockchain-based currencies that seem to
be like the future for governments to
build their own digital currencies
uh to be used for like eliminating the
paper-based uh payment methods
as i've already said we started for
partnering then there was a need for
standardization with which led into that
the development of
payment systems and uh
today 2020 we are very close in having
something called the internet of value
which will be a layer on top of the
internet that will allow users not just
to
exchange information freely through
network but also be positioned to
transact
in a completely paperless and digital
way
uh jpmorgan says that blockchain is
laying the foundation of digital money
and it's pretty much accepted that
blockchain is the technology that is
going to be used in order to pretty much
disrupt the whole financial services
sector but also will be the technology
on which the new monetary systems will
be based on
we know that certain countries already
started
studying how to devise their own central
bank digital currencies we have the
example of china
uk also they started experimenting with
their own digital currency based on rs
point research and in general it's a
matter of time when all the countries
will have fully digital currencies based
on the blockchain technology being used
as the accounting ledger behind it
according to the same article 2019 will
be remembered for the rise of digital
money which happened and the bank also
said in the report that the groundwork
is now in place for more mainstream
adoption of blockchain technology at the
same time that the foundation is being
established for the development of
digital currency and fast payments
especially cross-border payments
and we have this new evolution of
private money that is very popular
nowadays and we have a cryptocurrencies
as they call our digital assets becoming
mainstream and pretty much used across
different sectors for solving different
issues
however as you might already know this
comes with many challenges for example
auditability anonymity kycml procedures
that they have to be applied also
volatility which all these things will
somehow
be controlled at some point when the
governments come up with like a proper
regulation in order to regulate but
don't do not kill the technology at the
same time so at the moment we are
uh before the era of this like
technology going full mainstream and the
government start hopefully realizing the
how to regulate and make sure that this
technology can be used
and be secure for the investors
the adoption on the other side
grows exponentially according to several
like sources that you can go check out
there it seems that more and more people
are using digital currencies for example
21 of americans are already familiar
with this new technology
you you already know the el salvador
case
where they just made the bitcoin as a
legal tender and more and more countries
will follow i'm not saying bitcoin is
the way to go definitely
might not be the
the way to go but blockchain based
digital currency is the way to go for
the future for completely digital uh
payment systems
this example shows here how the bitcoin
network increased and we
experienced here something called the
exponential growth so what we experience
with other technologies in the past like
smartphones internal and whatever other
technologies that disrupted our society
is that we in all cases we have pretty
much observed this exponential phase of
adoption
the same applies with blockchain and it
seems that it's very likely that this
technology is going to become very very
like mainstream at the end being adopted
in
many applications in different sectors
so let's try first to see how this
technology appeared blockchain
technology appeared like uh when a bunch
of anarcho capitalists embraced the idea
to have a currency not issued by state
that could be exchanged freely without
the need of any financial institution so
this was the
manifesto of the kryptonite his
manifesto as you see here by timothy may
around 88 and the whole idea was to be
in position to design a system
that is controlled
by its peers without having a central
authority being responsible to oversee
transactions and at the same time
everything happens in a very transparent
way
and it seems that bitcoin
that firstly appeared in 2008 by
anonymous person or group of person
under the name satoshi nakatomo
solved this issue of a decentralized and
fair governance of a monetary value in a
very fair way
and this actually does not have it did
not happen by miracle it was actually
the long-term research for of more than
40 years of cryptography and the
engineering work that they were trying
to solve such a problem the problem was
to devise the first complete
peer-to-peer e-cash system and after 40
years of research bitcoin protocol
pretty much
uh combined all these very nice
technologies together as you see here
i'm not going to go i'm into these
technologies separately because they are
very very advanced but what you need to
understand is
in this bitcoin protocol that
gave us the blockchain idea it was a
very nice elegant combination of several
other pre-existing technologies there
was actually no new technology but just
a very elegant combination of
already existing technologies
three persons played fundamental role in
the inception of blockchain and the
potential for digital payments that i
just list these persons here in case
that you would like to emphasize more
and understand more about this
historical evolution of cryptographic
research that led to the birth of the
blockchain technology david chum was the
actually the first cryptographer who
tried to
build the first digital cryptocurrency
system digital currency system then adam
bach who designed
the proof of work consensus algorithm
being used in the bitcoin protocol which
is a set of algorithms and rules that
need to be obeyed for the transactions
to be valid as we're going to see and
scorch stornetta could devise the idea
of the blockchain which is the
accounting ledger behind this
decentralized ecosystem uh of uh
transacting nodes of transacting peers
okay these three are the main
technologies that actually have been
combined in alexandria and they gave us
bitcoin which was the first peer-to-peer
e-car system
and
the whole idea
with the blockchain is that we have a
ledger
we have like a database that is
distributed which means that it's not in
one place and you can attack it it's
pretty much everywhere every participant
into the network has this ledger which
is called the blockchain and whenever we
write on this blockchain it needs to be
approved by the whole system in a very
democratic control
or consensus algorithm formally and this
democratic control of consensus
algorithm is something that it is
written into the programming language
into the software and it's open source
so we know exactly what procedures have
been followed for ensuring that the
transactions are okay so in a nutshell
everything is transparent regarding
transactions on the ledger
okay
and when bitcoin appears it was pretty
much like
against the banks initially that's why
the first message that we
have written on the first block of
transaction was this one that you see
here which was about
against the existing financial sectors
but what i want you to keep from the
bitcoin protocol is not the bitcoin
but the blockchain
behind
this bitcoin protocol which is like its
accounting ledger okay if you are
interested to learn more about uh how
this blockchain system has been
used firstly as a ledger behind the
completely pr2pr electronic system this
is the paper to go and have a look at it
definitely
uh maybe after the webinar or when you
have free time which is called bitcoin a
peer-to-peer electronic cash system
which pretty much describes how this
blockchain works and the whole idea is
that
everyone
can be of this an ecosystem which means
that everyone can't download the
software and can be nodes
of this network what does this mean it
means that
whenever you are going to do a
transaction you are going to transmit
through the software this transaction to
the whole
network everything is going to be
transparent because every transaction
that happens among the peers of this
network is being validated in a secure
and in a very transparent way and as
soon as the history of the transaction
is there nobody can dispute it that's it
it happened which means that there is no
a place for fortunes there is no place
for disputes or whatever whatever the
system says
this is the real case because everything
is encoded and dictated by
the
algorithms that are programmed into the
system okay
and all these nice properties that
blockchain has are pretty much
guaranteed through advanced cryptography
i'm not gonna go into details because of
limited time but what i want you to
understand is that
blockchain is is like a distributed
database it's a ledger which is
maintained by a full group of nodes by a
set of peers and the rules into this
ecosystem consisting of this set of
peers is retained to the software which
is open source and you can see okay so
this is pretty much how a blockchain
works so how a blockchain works someone
requested transactions we'll say hi it's
theo i would like to send to jane
this amount of let's say ethereum or
whatever okay then i click i put as
inputs into
my software the address of jane the
amount i would like to send and then i
transmit three this
through the network then the network
validates that i have enough balance i
have not spent this money before i can
make a transaction and i really have the
authority through something called the
secret key to sign a transaction and
then this transaction is calculated
under a set of other transactions and
then the whole system together as you
see here this red cube start working
together in order to validate the
transaction say all these transactions
are okay and they apply secure
cryptographic protocols in order to
approve the block of transactions and
append this block of transaction to the
previous historic data and i'm not going
to go into this detail but the magic
that happens here is when you glue this
red cube with the previous gray cubes
using advanced cryptography and this
bluey is happening in a way such that
nobody
can go and change data at any time of
history
because everything is glued together
very very securely which means that if
someone going is going to change
the history of the transactions at any
point of time they have to go and change
all the data before this and it turns
out because of the algorithms that are
being used these turns to be impossible
to happen
i know this might be a bit technical but
this is like the backbone behind this
technology the idea is that
you can only do something into this
ecosystem
if you are authorized to do and whatever
you do
transacting or any other type of
application everything is recorded in
something called the blockchain which is
the ledger and this cannot be disputed
which means that
there is like a
full transparency into the ecosystem
what are the properties of of this uh
whole system of this blockchain
decentralization
we've said so far that there is no
single party
or the central authority overseeing the
transaction everything is encoded into
the system and all of them collectively
need to approve the transactions and
give the final approval for these
transactions to be executed
auditability
as we've said before
every person can join the system and can
keep a record of this ledger which has
all the transactions
participants of the network can verify
the velocity of the records directly so
in terms of variability it has very nice
properties
accountability
as soon as something has been recorded
if the transaction which says theo sent
one token to jail is approved then i
cannot later deny that i did this
neither jane can deny that she has not
received this amount
as soon as something is recorded and
validated then it cannot be changed
construction of direct trust is another
product of blockchain
are known in the trusted parties can
operate without the need of third-party
intermediation all this very nice
orchestration of transaction happens
without me knowing anyone in the
ecosystem everything is in the code
there and we trust the code that run the
system because it's open source and
there is a critical mass that actually
make sure that this
set of rules is being followed as
expected elimination of single point of
failure because there is no central
authority
so everything is agreed in a
collaborative and distributed way
extra security
because of the distributed nature of the
transactional database that we have and
also because of state-of-the-art
cryptographic techniques being used in
order to secure the network and
especially the blockchain which is the
ledger the recording database ledger
behind the network
resistance foundation and manipulation
because it's like a big system of people
interacting
finality all members of the network know
which the true state is
and how is this everybody has access to
this set of cubes as you see here the
gray and the blue ones this is the truth
these are the transactions that happen
and these are the transactions that are
happening now so we have a truth state
that is known by anyone and this true
state is encoded into the blockchain
into the distributed database
and
except of just having a blockchain we
can have additional feature called smart
contracts ethereum was the first
actually
framework to introduce smart contracts
into the blockchain environment and
smart contract might be a topic for
another discussion but what is a smart
contract blockchain is this distributed
database that
encore records the transaction smart
contracts can be
scripts that can encode conditions among
the peers of the system for example they
say if this and this happen then this
reward code to go to this address so you
can device and do some like a smart
execution into the system if you want
through something called smart contracts
other properties transparency because
the ledger is public you can go online
and see and check that everything is
fine immutability as we've said before
we are using state-of-the-art
cryptographic techniques so that nobody
can dispute and nobody can alter the
transactions
ownership is linked via something called
the private key or digital signal charge
so this very elegant cryptographic
design called digital signature make
sure that when a transaction
is conducted by you it's unlikely that
has been conducted by someone else
because you are supposed to protect
something called the secret key and this
secret key is so secure that it's
unlikely for someone else to predict
that random okay which means that
ownership is fully guaranteed as soon as
you apply some very simple security
best practices
and operations are streamlined and
unnecessary middlemen being removed
which is what we call computational
logic imagine the example of supply
chain
something is being posted let's say from
china to uk and it goes from like
several countries
in the middle or any other example there
are many cases where things are being
lost because of the complex supply
chains and why this happened because
each
let's say
person participant entity being involved
in the supply chain they might be using
their own centralized database if you on
board all these
entities into a blockchain based system
which means that all of them know
what is actually happening now
you can also orchestrate and streamline
all the operation which means that
blockchain can be used in order to
linearize the complexity of
communication because all of them will
be onboarded on the same software and
all the rules will be there and being
know how when these rules have been
triggered and what is the action and uh
actions taking place in this ecosystem
against the scenario of having each
entity having their own legacy systems
or centralized databases where confusion
is something that it's saying inevitable
at the end when there are many
communications
so the whole idea with the blockchain is
that you have a ledger that records
everything everything is being appended
when
like the full
set of nodes agree that that all are
okay
and everything can be nicely queried
the problems that have been solved uh
and bitcoin was the first actually to
initiate such a revolution in the
financial sector it's these three
problems here no counterfeiting no
double spending and transaction
irreversibility immutability i'm not
gonna go into more details on this but
the technologies that allowed us to make
sure that this is not issue anymore in
case of digital currency we are firstly
introduced in the bitcoin protocol and
especially the double spending was a
very very important uh problem to
resolve and very challenging one
okay
so 2008 we have the bitcoin a a proposed
blockchain as an account the ledger in
the monetary system being introduced and
one year later 2009 we have bitcoin
becoming open source and still there is
lots of controversy around bitcoin
definitely nobody knows maybe it's
international currency bubble or store
value here you see how the volatility of
prices i mean it's a very volatile asset
if it's considered also or an asset but
the bitcoin is the
uh like the
the reason behind this evolution of
private money i don't know if you know
this webpage coinmarketcap.com
if you go on coin coinmarketcap.com you
will see many many different projects
being represented by their own token and
having their own blockchain recording
the transactions that happen with this
ecosystem okay you can have as many as
you want not all of them will survive
pretty much but the revolution of
private money the revolution of
blockchain based
monetary systems has already
initiated
and
what we will observe actually it's what
we see in this curve here that happens
with all the nsn technologies
the whole idea is that when a new
technology appears you have the stealth
phase where some people
believe first and they make some smart
money then we have institutional
investors realizing that this is like a
true technology this is this is where we
are with blockchain now lots of
institutions
big banks got interest in the blockchain
technology then you will have the money
a phase
and then the blow up phase and then
something called regression to the mean
at the moment in the blockchain space
even if it's like 11 years old
technology we are seeing the
institutional investors level
and we started uh understanding what are
the real application of this technology
and started re moving
closer to the
mean case where we expect the hype to go
down
and more and more real and pragmatic
situations use cases surviving as we are
gonna see
okay so if you would like to experiment
with blockchain there is still a lot of
opportunity out there there are a lot of
like vc funds there are a lot of like
hedge funds interested in this quite new
technology even if it's like 11 years
old it's still very complicated to
consider as a mature one
the economies characterize blockchain as
the trust machine for the obvious
reasons that we've discussed before
and it is claimed that the internet
allows for free flow of information but
blockchain allows for money and trust
to be exchanged on top of the internet
layer
okay
some very interesting statistics
deloitte predicted that 10 of global gdp
will be built on top of the blockchain
by
2025
approximately twelve trillion dollars
now we have like two almost two trillion
dollar asset class valuation more
castella suggests that blockchain
transportation is a 500 million dollar
opportunity in the us alone because
blockchain has the potential to
bring stakeholders into the same like
environment so that
transportation and supply chain are
very very
good candidates for applying search
technology because we have multiple
parties involved in complex like
operations
this is a very very interesting like
diagram here do you really need
blockchain as we've said blockchain is a
distributed database
which is used to record transactions
about a network of peers
it turns out that in most cases you
don't really need blockchain
okay so in case that you have a use case
that you would like to study you can go
through this flow chart here we will
share the
slides with you and understand if this
is something that blockchain will add
value in it
okay and there are different types of
blockchain there is a public blockchain
like bitcoin ethereum there is a private
blockchain which is a blockchain where
the nodes the peers of the network are
approved entities for example in the
supply chain
i'm not gonna allow anyone to enter the
supply chain blockchain i know which
parties are involved so i will create a
blockchain that i will just on board on
this blockchain only the involved
parties
we are talking about the private
blockchain now okay or a combination
really depends on the situation
um as a rule of thumb
if you would like to apply blockchain it
means that you have either a trusted
nodes that you need to bring into the
same ecosystem and let the software
dictate how
the
state of the system will be or you have
complex relations among multiple parties
using their own centralized databases
then you would like to build let's say
private or a hybrid blockchain in order
to streamline the operations and
linearize the complexity of
communication among these peers
we said before that uh everything is
transparent that everything is solid
double
practically let's get the example of
bitcoin if you go to this website blog
explorer.com
what we've said before about
transactions everything is online you
can go and see what are the transactions
now what were the transactions before
five minutes how much bitcoin have been
transferred from one address to another
address
as you see here everything is pretty
much obfuscated it's like
you have random looking strings
transacting among them these are codings
of the users of the system because the
system is a pseudo anonymous but this
like webpage blog explorer.com it's a
visualization of the blockchain each
token that we've seen before or if you
are gonna deploy a blockchain as here
then you need to have an explorer that
will allow you to pretty much
trace all the transactions and you see
you can create some graphs
for example and you can trace the funds
so this is a very nice property
auditability it will be a very nice tool
for governments to have blockchain based
monetary system because everything is
transparent
as soon as you enforce it in the right
way then
it's a very good tool
and you can do forensics you can
understand what might go wrong if you
have further intelligence uh with your
blockchain based ecosystem you can
pretty much
see an imminent fraud or or a problem
that might arise in the near future
okay however
there are cases that you can't do
anything and
this is a problem for the regulators
where you have the so-called privacy
preserving technologies being used like
i don't know there are tokens like
monero dash or whatever but you cannot
really trace and do these nice graphs to
avoid money laundering
fraud etc
okay but each technology it's usually of
dual usage right it comes with a good
things it comes also with bad things so
it's up to regulation to decide about
what they can do with these privacy
preventing tokens that provide full
anonymization
into
the ecosystem of the blockchain okay and
examples of randomization you can have
like privacy at origin level sender
levels or transactional level you can
have like mixer technologies that are
being used in order to hide the tracks
of the transactions
several privacy preserving technologies
and if you are interested to understand
more about the privacy preservation we
can go and check these tokens here that
offer full anonymization
the reason i i refer to this privacy
preserving technologies is because in
financial services and in securitization
in general there are big studies around
that say how blockchain can be used in
order to
help
the securitization sector by making some
illiquid assets more liquid for example
real estate
you can have fractional ownership you
can have a building i don't know in
london and sell it across the world and
you can just
split in chunks and sell it uh to as
many investors as you want
these privacy preserving technologies
are good to be applied with blockchain
in the securitization space because uh
in secretization you need to have
privacy okay and this is this is
guarantees via certain cryptographic
primitives that it's out of discover of
today's
like seminar and there are examples in
the sector financial sector like
polymath that is a blockchain for
launching securities
let's say you have a project which it's
the idea is to buy a hotel
create tokens that represent this hotel
and then sell these tokens
to investors then you can use blockchain
to do that because blockchain will allow
you to link
the physical asset with the digital
world and sell it
by following certain procedures and
regulatory requirements
other applications that we observe we
are moving from web 2.0 applications to
web 3.0 application
there is a very common like quote saying
that the data is the oil of the 21st
century
okay data is very very important you see
all these big companies on the top row
google facebook
dropbox skype they all make money out of
data there are multi-billion giants
sitting on the leverage of data
now with web 3.0 taps the whole idea is
for this data
and for these companies to be completely
decentralized
which means that if there is a
youtube now there was it's gonna be a
version of youtube which is fully
decentralized and if you are creating
very nice content
you will be rewarded more because you
can sell your data so
blockchain will allow
the data monetization of the personal
data that you have that's why you see
this evolution now we are moving from
web 2.0 to web 3.0 where there is no
ownership there is just governance by
some company but everything is very
transparent and reported on the
blockchain what is actually happening
tokenization
i'm sure that you have heard of the
word organization a very nice
application of blockchain which you can
use in order to tokenize fine arts
antiques land technology
i'm sure that you've heard about nfts
artistic creations that you can use
on uh
and use blockchain in order to
sell them online
and as a tokenization it's a process
that you can follow if you are
interested in making a startup in as a
tokenization for example startup for
tokenizing i don't know real estate
paintings or whatever you can think of
that will add value
okay
so
if you plan to tokenize something or if
you plan to finance a new venture using
blockchain technologies you have to
understand first of all what is your use
case and what is the token that will be
associated with this blockchain in case
there is a token being involved and we
have in general three plus one type of
tokens the first one is the payment
token if you are creating a blockchain
ecosystem that can be used for payments
utility token if you are creating a
blockchain ecosystem and the token is
being used to unlock let's say some
special features
security tokens if you are planning to
go through securities and tokenize an
asset for example and sell it to
investors or hybrid tokens that are like
combination of these three three
different
types of tokens
in the past there were many crowdfunding
campaigns based on blockchain that
startups actually raise capital by first
having the idea then let's say in quotes
tokenizing the idea and carrying out
something called initial coin offerings
in the past now which it was like the
reverse of the
of the ipos okay and now we have the
security token offerings the whole idea
is that
you can go and um and
try to get some
uh retail funds by tokenizing your
project you if you have a blockchain
based project
there is a token associated to it then
you can use this token to raise funds so
blockchain can be used also for
financing new ventures
and
there are also other applications of
blockchain for example in the financial
sectors mastercard released a blockchain
based api
for
sending money over a blockchain and also
using the blockchain for the provenance
of luxury goods if you buy something for
a high brand for it from a high brand
then there is a special code that if it
goes through mastercard you can trace
this and make sure that this is
authentic if you are gonna buy a second
hand or if you are gonna sell it and we
have many other initiatives in the
financial sector space
swift is gonna be replaced by other
protocols which is the main payment uh
system used for transactions jp morgan
is using their own blockchain for
internal payments and you know about
facebook
except of the metaverse that they
announced like a few days ago
they will have their own
blockchain based
currency which can be used for paying
through the messenger
okay and they are going to use
blockchain for
providing fast peer-to-peer transfer of
money across the facebook users
and many many applications of blockchain
in general i'm not gonna go through all
of them i will provide the slides
internet of things imagine a future
everything is interconnected
then
your fridge for example will be
positioned to alter some meat and pay
automatically through digital currencies
this might
look to be science fiction but it's
actually something that we are very
close to it payments very important
intellectual property and copyright
blockchain and stroke cryptography
behind the blockchain make sure that you
can actually
claim that you are the original authors
of let's say
creation of art
nobody can dispute you unless you are
the first to record this thing on the
blockchain voting taxation in general
finance is being
pretty much redefined now we have the
core the term decentralized finance
where
startups are trying to use blockchain in
order to decentralize how finance world
operates you can have decentralized
banks based on the blockchain
decentralized payment systems
decentralized hedge funds lots of
different applications that you can
think of
nfts very very popular nowadays
non-fungible tokens that are unique and
non-interchangeable unit of data stored
in digital ledger if you go online for
check for openc.org
you will see paintings there being sold
for different tokens okay these
paintings are like creation of of mine
creation of art it's the first time in
history that we have a technology that
solves the so-called digital rights
management issue before it was very hard
to make sure that the digital unit was
not being copied or cloned now with
blockchain we have this ability to
make sure that we secure
who created what okay and if this looks
something like this maybe you find some
of them not worthing their money i'm not
here to judge
but i'm here to say about the evolution
of this technology that allows to pretty
much register vip of a creation of mine
okay see here you see something like
expensive nfks the first one was sold
for around like 70 million dollars
and we have several examples here
now what i've said before about the
blockchain let's say that you have your
startup you need to understand what type
of blockchain you are gonna use
are you gonna use a public blockchain
which means anyone can be part of the
ecosystem or are you gonna use a private
one are you solving a particular problem
for a particular industry where on the
blockchain you need only particular prs
entities to be on board
based on this you are gonna decide if
you are gonna use a public a federated
or a private blockchain ecosystem okay
security when you are going to design
your blockchain system is the number one
priority blockchain has a lot of moving
parts and many moving parts means
higher surfaces for the attackers more
complex interactions here you see
examples of lots of millions of losses
because of security vulnerabilities
found either in software or in the
algorithmic design or the implementation
or in any type of like a
possibility that we can think of and we
have many many cases of exchanges being
hacked of software being held
and many other like financial related
products being had
the other thing that you need to take
seriously into account when you design
your blockchain system is where these
private keys
that are being used in order to claim
tokens that they really belong to you or
to unlock specific features into your
blockchain ecosystem you have to make
sure
you know how to protect them through
proper secure wallet infrastructure as
it's been called okay
so the whole idea as i've said before is
that
whenever you interact into the
blockchain system and make a transaction
you have
a secret key secret key is something
that you need to keep secret in and you
keep it secret by keeping it safeguarded
into something called wallet
okay and the best practice is to make
sure that this secret key which is like
a piece of information let's say 256 bit
you keep it away from the network
okay
and this is called like a call storage
type of security wallets
and this is the best practice if you are
planning to launch a token-based
blockchain product in in the future okay
here is a guide about different type of
wallets that you might have in order to
protect your secret kits
you can encode even more advanced
features into these wallets for example
if you plan to build the new
decentralized bank of the future and you
have funds represented by digital units
then definitely you don't want to have
all of them under your secret key so you
encode something called multisignature
where you can bring more people in and
encode proper security
procedures and policies for example you
need five out of six persons to unlock
the funds and and so on this is the
space now is very mature and you can
pretty much apply relations like this
in case of uh custody solutions uh very
big space if you are interested to get
involved we have exchange custody like
binance consolidator party constructed
like bitco and self custody different
type of custodial solutions that you can
think of
and if you are interested to understand
how crypto exchanges work then
there is like a whole crypto trading
ecosystem that you can understand first
we have opinion leaders that give
financial advice we have exchanges that
allow you to sell your tokens or the
companies talking that you are going to
create for other tokens you have
applications and tools and you have also
blockchain agencies about news
and the
cryptochanges is a very very big topic
nowadays
and except of the centralized crypto
exchanges that you might know now they
are very popular the decentralized
exchanges we are instead to go into a
company
and say i want to sell my bitcoin for
the market
price now you can go on a decentralized
exchange where the smart contract will
actually let you sell your tokens that
you bother the tokens of the company
that you plan to create
okay and the general the blockchain
startup landscape becomes very very big
we have blockchain application in
several sectors like consulting payments
identity governance mining exchange nfps
content management
data provenance and notary prediction
markets pretty much the whole sector
is
and set of sectors are being transformed
through this new technology
and we have lots of startups in
any uh like space of interest
i'm gonna conclude with a very nice
example here you know about ethereum
right ethereum is like the second
biggest blockchain based uh
i don't know if it's like a crypto or
what it can be called it's like a
blockchain it's the first decentralized
computer pretty much in 2017
they
they've done their first talking
offering they sold the ethereum for 30
cents and the project became so
successful because the blockchain can
offer you this exponential speed up
where the ethereum now pretty much is
considered as the virtual machine for
building the central application
so i would like to encourage you to
start
looking into the blockchain space and
get
involved
if you are working on a startup now it's
good to also check out the blockchain
element
okay so thanks for your attention i gave
you a lot of information
a really extensive uh look into
blockchain actually without you know the
sort of the technicalities for pure
coders which is exactly what we were
looking for and
absolutely fascinating insight i'm
conscious of the fact there's quite a
lot of questions in the chat we do have
a few minutes um i'm just wondering if
you wanted to cherry pick a few of those
and uh and go through them at all ones
that you weren't able yeah before i go i
will write my email here okay so in case
that you would like to
send me some of these questions and we
can take them offline because we have
five minutes as far as i understand
right
yeah okay so this is my email
okay the first it's uh how much the rise
of quantum computing
impact the security of the blockchain
okay very good question i mean quantum
computing it's like a set of new
algorithms that will
break we'll be positioned to break the
traditional pki as we know it now it
will not affect the hashing techniques
okay but also now cryptographic
community is working on devising new
standards that will replace the existing
pki
i know it's a technical answer but it's
a technical question right i i cannot
avoid the technical lingo so
the whole idea is that we have new
algorithms that we will switch them
the existing infrastructure too
okay can records be erased without
traces no records can be erased in the
blockchain space it's fully immutable as
soon as it's there it's there
how anonymity matches accountability and
ability to trace resurrection okay very
good questions very technical again so i
have to give a technical answer there
are cryptographic primitives like zero
knowledge proofs that allow you to make
transactions in a way such that they
look to be random for someone who does
not have authorization but at the same
time they can prove to be valid okay
they are called zero knowledge proofs in
case
there is interest to learn more about
how this stuff is being corrupted
okay as the leisure gets bigger more
transaction does the nodes need to get
bigger in terms of storage or there is
not a really limitation it really
depends on the blockchain space if we
are talking about small hashes i mean
this is not an issue if we are talking
about the private blockchain and we
store more information except of the
fingerprints of the transaction then
this uh is becomes problematic but still
in the private space this is not a
problem
okay
since the ownership is not clear and not
transferable will it not negatively
impact regulations and government law
across the world regulations in
government it's a gray area
there is no government that really
tried to regulate 100 this technology
so uh ownership is very clear by the way
because there is something called secret
key that can be used in order to prove
that you have done something
but uh i don't have the answer
because
the government also do not have the
answers yet how they can impose this
right
what are the use cases where
decentralization is really of prime
importance without the need for
regulatory
we are not talking about
decentralization always
we need to remove someone maybe there
are cases where there are inefficiencies
multiple
middle parties being involved that's the
case why we would like to
have uh the blockchain ecosystem
the validation of a block is done
simultaneously by many nodes studies on
how much energy is needed for this is
horrifying how does this fit together
with climate change okay i mean
there are certain consensus algorithms
like the ones being used by bitcoin
proof of work that consume significantly
higher urges than the others okay they
have let's say high carbon dioxide
footprint
but now we have new generation of
consensus algorithms like proof of stake
that are not
heavy in terms of computation and thus
they do not have heavy carbon dioxide
footprint okay
so we are transitioning transitioning
into more environment friendly
algorithms and blockchains in general
i think if we just go to the last
question that's just been posted about
the suggestions of learning about
digital currency investing
okay regarding regarding investment
investing it's like a tough question i
mean
from my point of view the best thing is
to go and read the projects understand
the projects and
do not go into like gambling understand
if there is a real use case of something
if there are strong fundamentals behind
it okay that's the main uh
like thing regarding learning
suggestions and that stuff you have to
follow the
certain i don't know news agencies to
get informed about about the new trends
and what is coming out and follow
the milestones and the like timetable
horizons of each of the projects that we
are following and see if they deliver
what they promise
okay
i think we don't have time for
to wrap it up well i i just want to
bring your attention to the fact that
we've had a wonderful comment on there
which i'm sure reflects a lot of
sentiment from
uh the extensive audience we've had on
today to say that was the greatest
blockchain intro that they've ever seen
so really a huge thank you and uh just
you know for you guys online if you
haven't read the comments in the in the
chat do follow the at lbs crypto on
twitter to stay in touch with what's
happening with blockchain at london
business school and of course do reach
out to theo with any questions or just
for your words of thanks that was
absolutely superb it really was thank
you so much
thank you thank you enjoyed it thank you
so much
you

---

### Growth hacking for start-ups: Entrepreneur’s Journey | LBS
URL: https://www.youtube.com/watch?v=xXqUdfTS1Pw

Idioma: en

good evening to you all my name's jane
cadaire and i represent the institute
for in entrepreneurship and private
capital at london business school
delighted to be with you this evening
and even more delighted to welcome uh
both joseph fitzgibbon and frankie at
hill for as our speakers this evening on
the subject of growth hacking for
startups
a subject area which uh i think is a
long overdue to be covered
as part of this series the
entrepreneur's journey program um
historically we have taken funding
entrepreneurs through uh through a
series of events
from ideation through to growing their
business and then scaling it and growth
hacking is always a subject area where
you think actually there's really space
for that um and well joseph as one of
our entrepreneur mentors in residence at
the school is an expert on growth
hacking and suggested to me that he'd be
only too pleased to cover off this as a
subject area and uh clearly with uh such
an extensive audience coming online this
evening it's of enormous interest and
i'm absolutely delighted and very
privileged to be welcomed to such great
speakers uh to be able to deliver this
particular subject this evening
um so
as i've alluded to this is part of a
series and many of the events are open
to non-lbs students so welcome to those
of you who have come from outside of the
school
we record the sessions and we do quite
often make the content available beyond
the school's four walls so do look out
for recorded footage
which will typically appear either on a
youtube channel for the institute for
innovation for entrepreneurship and
private capital
and or at london.edu
so we are building up a library of the
online content and it's a famous
fantastic series for you to be tapping
into and
essentially enabling you to grow your
business
at the same time
in fact the next event on the 1st of
november
is
more than the subject of blockchain
for non-techie entrepreneurs so again a
very current and relevant subject area
and again delivered by one of the
internal resources that we have
available to us at london business
school so i do hope you'll be able to
sign up for that and look forward to
seeing many of you for that event which
i think runs actually very well as a
sort of natural uh follow-on to
tonight's
subject era of growth hacking so as i
say both incredibly relevant subject
areas
so without further ado i'm going to pass
the mic the metaphorical mic over to uh
joseph and he in turn will pass over to
uh frankie i'm not going to introduce
the guys other than to say that they are
our speakers this evening they are going
to be introducing themselves as part of
their talk um so if i hand over to you
guys um and joseph i think you are going
to be speaking next is that right yeah
so yeah it's great great to be here
today um talk about growth hacking um
it's a kind of new form of marketing
it's
changing the world i'm obviously very
very biased because that's that's the
career i have
um be keen to give you some kind of high
level overview but also some quite
practical tips
um in terms of questions we've got
pretty big audience today so if you want
to put them in the chat
then we can address those as we go along
and if there's specific questions you
have around your startup
then please just just stalk us on
linkedin
uh
cool we
here's some fancy billboards i made
cool so in terms of gender we did some
intros we'll talk about growth marketing
what it means
um we'll talk about uni economics and
the kind of measure of how we
think about value in a startup rather
than the kind of traditional p l world
um and then we'll give you some growth
advice which should be relevant if you
want to join a startup
or you're looking to create your own
startup
in terms of reducing your marketing
costs and increasing the value of
customers
right so just a quick intro for myself
i've worked in growth marketing for 14
years um i'm an alumni of outlander
business school as as jane mentioned i'm
an entrepreneur
mentor in residence
i
had a career in consulting before
business school and then post business
school i joined a startup called grace
who were sort of big d2c
scale up in london in the u.s
and we sold the business unilever i now
work with
i now work with vcs and the founders to
scale their business through hiring so i
work with businesses in terms of
defining who they need and firing and
finding the right talent for them
and i'll pass over to frankie to do the
same
hello good to meet everyone my name is
frankie uh and i worked for the last
four and a half years building a company
called patch plants it was a dtc plant
company
and we grew the company from about zero
to 20 million through that um through
that phase uh before that i did a year
at a b2b btc uh marketplace for jobs for
lawyers and i worked for emeritus you
know growing his social media account as
a digital marketer
um and i'm currently working part-time
as chief growth officer for mindful chef
food box startup and while i prepare to
launch my own
my own venture
right sweet
so in terms of learning objectives today
um
understand what growth marketing is
understand what uni economics are
uh we'll give you some key bits of
advice in terms of uh cache and ltv
and i suppose a more general objective
is to look smart in front of investors
and also to be able to look at different
business models and say
is this
is this business model better than this
other one and have a lens to look
through that
so we'll kind of do a bit of a double
act between frankie and i'll do a first
bit and then one will pass over
uh so what the hell is growth marketing
or growth hacking
uh
i spend my life asking people who have
growth in their title list and most of
them don't know so
it's perfectly fine not to know the
answer um
this is the simplest definition i can
find um
it is a combination of marketing and
product
and in this sense product means any
any aspect of a business where a
consumer interacts so it could be the
physical product that's sent through the
post
it could be the packaging it could be
the website it could be the email
journey
and growth marketing is when you're
you're combining both of those
functionalities together and you're
evolving the product simultaneously as
you're evolving the marketing strategy
so this is the strategy that the vast
majority of sort of modern businesses
use so you're kind of
googles and amazons and facebooks of
this world are all doing growth
marketing it's a basically a new form of
marketing that is a more holistic view
of running a business
so
very quick example
so from a sort of marketing perspective
you you marketing would be running
facebook ads
a product manager might say okay let's
launch a premium tier of a product
when you think about growth you think
about those two simultaneously
so you'd be looking at facebook and you
say facebook is not working how do we
get it to work better
and then you might launch a premium tier
to appeal to a different audience
and have better product market fit
so you're looking at those two things
holistically
and if you think about in terms of
levers
your traditional
um sort of digital marketing would be
looking digital marketing and landing
pages those sorts of things
whereas growth marketing is more
holistic so you'd look at
you know pricing sales strategy product
brand
supply chain issues ops
everything that can grow a business is
fair game so it's much more holistic
um it's much more complex and
the route to success is much less
obvious than it would be in the past
so a lot of businesses have moved
towards growth marketing model
where their growth managers or their
heads of growth
have a very very large remit in terms of
what they're able to do for the business
sweet
if there are any questions feel free to
ping them in the chat
and i will pass over to my steam comic
thank you so would you invest in this
company this company is a company that
uh lost uh more year over year between
2015 and 2019
um getting up to some pretty big
losses at 300 million loss in 2019
um by you know
most accounting measures for big
companies for public companies uh this
would be uh not an attractive investment
um
most mature businesses are um you know
their value is measured as a multiple on
their profits the multiple of these
profits would be incredibly negative
as you can see this is data from
deliveroo and so the reason for sharing
this is
to introduce the concept that at an
early stage in a business
in a business development
that could be a good case for investing
heavily in product development or
customer acquisition
if there's a belief and a good case
behind the fact that that will pay back
later on
um
and that's the the cac ltv the ltv to
cac ratio that we're going to talk about
this section
so startups measure value on a per
customer basis uh it's what we call unit
economics the customer is the unit
and it's all about the ratio of the
lifetime value of that customer the
amount of profit that customer brings in
in its lifetime with the business
versus the cost of acquiring those
customers
cac which is also called cpa by some
companies it's custom acquisition cost
it's the variable cost of acquiring a
customer so some costs are included in
it typically and some costs are not
the variable costs that we tend to
include
so
um also worth highlighting that it's the
point at which the customer actually
pays you money and some customer
journeys start with just capturing an
email address
or trying a product we usually don't
count that as the key moment so it's all
the cost up to getting them to actually
pay you for the product
and the lifetime value is a measure of
the gross profit generated by the
customer over a customer's lifetime
uh typically we measure this over a
cohort basis so all of the value of the
customers acquired in september 2021
september 21 would be a cohort cohort is
this a grouping of customers with some
similar properties
and usually when we talk about lifetime
value we group them by the date at which
they they were acquired
we calculated by looking at the total
revenue of the cohort we minus from that
revenue the total
amount of cost
included in delivering that revenue
which i'll break down in a second and
then divide that by the the size of the
cohort
and typically people look at a
three-year lifetime value so they
discount they don't include any of the
value delivered by the customer
after three years and that makes sense
for early stage companies because
there's such a high chance the company
won't even exist after three years
so it's
not often that people count four five
and six
there was uh it was a few questions in
the chat um
what is the cache of whatsapp
uh
pretty low i'd imagine i don't know
um
they did a lot of viral marketing which
we'll go into
um
a question from jake which i suspect i
know who jake is he knows a lot
um
how would you manage expectations on
conversion rate
um
probably too complex let's let's go into
a bit of a bit of the meat and then we
can answer that question a bit later
but yeah let's get to the next slide
okay nice so this is going to introduce
a couple of terms they might be new to
you uh or they might they might not be
but they're gonna be you know we'll
share these notes afterwards a bit of a
cheat sheet
um
average order value is the average order
uh the revenue after tax
of your average order so in the day you
might get orders of variable values you
take the average of them cm1 is the
margin left after taking out the cost of
goods cm2 is the margin of cost of goods
and the cost of fulfilling the service
or product cm3 is the margin after goods
fulfillment and also the acquisition
cost
and the cpro is cost per repeat order so
it's how much you invest per repeat
order in getting them to repeat on
average and repeat rate is how many
additional is per customer so
introducing the concept that once you've
invested in some marketing there'll be a
cost associated variable cost associated
with that
most of that is advertising spend on
media channels
um
once the customer comes in the door
they'll spend something on their first
order
and then they'll go on
to make additional orders of their
lifetime with you usually at a lower
cost which we group into cpro and on
each of those orders you're keeping a
slice of profit and you add up the
slices of profit you get the lifetime
value
do you want to take away the quiz
uh yeah
um so yeah in terms of like a few um
four categories see their ltv see the
cac it's both or it's neither um if you
guys want to shop some comments in the
chat we can have a look um so if you are
paying 400 pounds a month for a retainer
on facebook
where would you put that in those in
those categories
if my chat works
a couple a couple of votes for
ltv you would typically put it in
neither actually
um
there's some debate whether it be in cac
or not because it is directly related to
your facebook activity
but in most cases it would be neither
because you're either hiring a facebook
agency or hiring someone internally
and if you're hiring someone internally
with commerce overheads
well a little bit of debate among
marketers but it should come under
probably neither in this case
a thousand pounds on a new website
vote for neither
either
a couple of votes for ltv
uh
this would be neither because your
website is fixed it's a fixed cost at
this moment in time
so you would you would push it as an
overhead
um whether you get a million orders or
you get one order it's going to be the
same therefore you put it up
marketing manager salary
yeah i gave the answer before
so yeah it's neither um
uh i mean that we frankie and i were
debating this afternoon and the short
answer is there's a big difference
between what you would necessarily tell
investors
and what you would necessarily run it
yourself so
um
you want to get your cac as low as
possible because that is the best thing
to do so therefore you want an excuse to
remove all of those expenditures so in
this case you would normally exclude
wages from that and anything that was
similar to ages so like a facebook
agency would come under that
the final one seven pounds to pack the
product and ship it
a bit of a feels like a mixture between
cac and ltv um in this case it would be
ltv because it's the
these are the costs that you're removing
from your revenue so this is the direct
variable cost
um
but it would be included
uh does it mean the cac is
underestimated um
i'm assuming this is referring to the
previous ones the answer is yes it
probably is
um
but it's also just common not to include
it
um so if everyone is not including it
you don't want to be the only person
going to vc where you're including all
of your
all of your wage costs because your
numbers will look artificially low
so the reality is that people don't
include them even though they
arguably could but it's common not to
uh yes glenn you're correct
i'll pass back to frankie
nice yeah there's a question up a bit up
um up top that i'll address as well
which is the three three year point so
why is ltv measure three a period again
it's just a it's just
a um
a typical
um
it's just what's typically picked in the
in the vc investing world um so it's
used if we all use three years then it's
easier for investors uh to compare
companies like you know on a more
like-by-like basis but when managing
your business internally it's a good
it's a good idea to
measure on one two three four five and
six year um
and understand what your ltv to cap
ratio is over time because payback
period is important
uh the longer your payback period the
more
uh money you're going to need to cover
your overheads until you're turning a
profit
um so generally a shorter payback period
is better
um if you can get a high ratio of ltv to
cac
quicker then that's going to deliver the
profit in earlier and reduce the cost
it's going to take you to get to that
point in the business maturity
yeah
i think also with the with the
the three year period is you typically
will have very little data
so the accuracy of your forecast is
going to get lower and low and lower
so
um you know with patch plants for
example you don't know what's going to
happen in five years time people are
gonna you know when you're six months
into patch plants you don't know whether
people are going to be
ordering a plant once a week or once a
year or never
so it becomes very very academic at that
point but once you have
six months worth of data you can start
to have a rough indication of three
years but you wouldn't be able to
predict 10 years out
yeah
okay sweet um so on this on this slide
we're showing the range in this ratio
this golden number the ltv to calc ratio
so anything below one means that you're
making a loss on your variable costs
this is unsustainable it means you're
acquiring customers for more
than it costs to ever pay back so you're
definitely going to make a loss
and this is justified at the early
stages very early stage of the business
because
you can extract
learnings that you can turn
around your product or your marketing
and become profitable later obviously
the length of time that you can afford
to be running your business in this way
determines on the
fundraising that you've raised and
therefore the runway that you have
between one and two it means your profit
at making on variable costs but as we
just learned from those examples there's
a lot of costs involved in delivering
your product
running your business
um
all your salaries probably being the
biggest cost that aren't included in
this calculation so generally people
think about is
you raise some funding that's going to
give you enough runway by covering all
of your fixed costs
and then your character ltv ratio
is just about your variable costs and if
you can get that above one to two it
means that when you're at enough scale
you will have a profitable business
model
and
one to two is unlikely in your first
couple of years of business
um to be big enough
um to cover the fixed costs of hiring
enough people therefore people aim for
three
and again this is an investor typical
investor benchmark for a healthy uh
investable proposition so three
generally means your profit making on
fixed as well as your variable costs
so you're making enough profit
from this ratio to cover your overheads
um also there's probably some a buffer
in there to account for uncertainty on
repeat rates
all the calculations we'll look at in
the examples i'm going to share
when you're on your first year or two of
business you haven't even had long
enough to measure the lifetime value of
customers because you haven't had any
customers for more than one or two years
and therefore you're going to have to
use some assumptions over their repeat
rates
uh in your model and therefore aiming
for three give some buffer if actually
repeat rates uh or your margins turn out
to be lower than
than you than you hoped
three plus is highly profitable and at
that point businesses typically think
should we be investing harder in
marketing and trade off some of that
profitability on a on a unit basis
for
um
for scale for more customers
and so you'll see most healthy startups
running at three intentionally and when
they're
if they creep above three then invest
harder in marketing
next slide
get to that question at the end maybe um
so here's some examples i've got two
examples here completely different
business models and what i wanted to do
is just give a breakdown with some with
some realistic numbers for two very
different business models that both have
an ltv to ratio of three and therefore
would be uh you know would take take an
important box in most investors um
assessments so this first one is a b to
c d to c non-subscription business so
it's my funky hat company
um
[Music]
you can see that i've you know at this
stage i would have to run the business
for
probably you know a year to collect
accurate repeat rate data for 12 months
and then i've extrapolated that out for
uh you know what i expect in year two
and year three
um
if you look down the stack on the right
and this is a good template to to build
i think for any business you can see
that the average order is 65 pounds so
on average when people come to business
they spend 65 pounds on their on their
orders
my suppliers charge me 22 pounds so the
22 pounds is my cogs that's cost of
goods sold so much i have to give back
to my suppliers
then i had to deliver the product that
cost me 15 pounds
and that leaves me with a cm2 28 pounds
so cm2 is the profit i'm keeping
uh for each from each order that i
deliver
and then cm3 it takes out the
acquisition cost and i'm in this example
saying it's cost me 14 pounds on average
to acquire one customer the way you
calculate that is you take all of your
new orders that you've taken in this
period let's say this month
and then
divide by all of the advertising spent
so all of the all of the variable
marketing costs as we discussed
that leaves me with cm3 of seven 13
pounds seven so that means on my first
order i'm taking 13 pounds and 70p from
each hat sold each customer acquired and
then you can see some of those customers
go on and buy hats but it's not very
often
so if you look below you can see that
the repeat rate here is shown in
additional orders per customer acquired
so i acquired one customer on average i
get another 0.5 orders within year one
not quite eight five orders within year
two and not and then one point one extra
orders within year three
so that repeat rate
uh that gives lifetime value of 42
pounds
so that's the cm3 the first order profit
plus
1.1 extra cm2s so that's the profit from
their second orders cpro in there is
subtracted from each repeat order
and that leaves me with that ltv ratio
uh ltv's cap ratio of three
so
you can see for you know product based
direct to consumer businesses this is
quite a kind of typical stack
a lot of their unique economics is given
away to
their suppliers because they have to buy
the products that they sell or have to
produce the products they sell and then
quite a decent chunk as often also in
fulfillment
because you have to get a physical
product from one place to another
and while some customers come back
for non-subscription businesses
often it's not that often and that they
come back they have to remember what you
they have to have the need again they
have to come to you not your competitors
a second time
and so uh
in this case and this is quite typical
they only come back on average once
every three years in reality when you
break down the data you'll see that some
people are buying hats three times a
year and a huge number of the customers
acquired never come back that's very
typical of non-subscription businesses
i mean a simple way of looking at it for
the non-subscription businesses is
basically calculate your first
your first order profit
and then you you bear in mind that
you're going to get a bit of a halo
depending on what it is
i mean some products have a
a naturally high or naturally low repeat
rate so hats is pretty low
but
groceries are super high
so if you're making money on your first
order you're in a really good position
nice
and we'll also share the slides at the
end so don't worry too much if you've
missed a bit we'll go we'll share them
with you
okay cool onto a completely different
business model so this is my funky email
limited this is
a b2b sas subscription email automation
tool
so if you imagine this business
and imagine it's got a one year minimum
contract at 250 pounds a month
then you can model out that the average
order value it's obviously 250 pounds
and we get that every month while the
customer is subscribed
um the a
apis and the other hosting that i pay
for probably cost about 36 pounds so you
know much lower percentage of my aov is
going on my cogs because it's a digital
product not having to pay for physical
products or shipped around the country
um fulfillment cost also very low as a
percentage of the average order value at
10 pounds um just the card processing
fees which are typically included in
fulfillment
but my tax are much higher than my hap
business so my cacs are 800 pounds
and that is you know typically they are
much higher for this type of product
because there's a bigger sales cycle
it's a bigger decision there's way less
people in the world who need this you
have to reach those very you know niche
digital marketers in companies that have
this problem uh when they have this
problem and
often these type of products will have a
sales team behind it uh and all that
variable cost would be included in the
acquisition cost
and that means on the first order um
[Music]
if it was just a one-month product it
would be a loss of about 600 pounds
um but i've i've been aware of that risk
and i put a one-year minimum on the
contract
and you can see the the
repeat order i also invest some money
about 130 pounds on average per repeat
order in um in maintaining my
subscribers you know sending them great
gifts at christmas
and um when they lapse getting them back
by
by firing the sales team back up
um you can see how the profit breaks
down over the years and we're left with
the lifetime value of these customers of
2 300 pounds
which is the same ratio of ltv's gap of
three as the hats business with a
completely different makeup
that's it
cool
so a couple of of truths about
rules of thumb of uni economics bear in
mind so your cm2 so that's your
contribution margin before marketing
costs so that's your profit after your
average order value subtracted your cogs
and your fulfillment cost that should
increase with time as you scale
and optimize
a lot of your company should be working
on those two numbers very very hard
common examples is as you scale you're
going to be buying your products at
bigger scale and so you should be able
to negotiate lower costs with your
suppliers that reduces your cogs and
therefore increases the the margin that
you're keeping after cogs
um
however cats do generally increase with
time some companies manage to avoid this
but generally you see them going up and
that is because
early adopters
people who find your product or react to
your marketing most readily at the early
stages they tend to be the people who
want it most and so then there they'll
be cheaper to acquire later customers uh
as you reach further and further into
the addressable market they tend to be
harder to persuade and therefore more
expensive to acquire
channels get saturated so you'll start
with the most effective channels
those channels only reach a certain
number of people in the world
and if you usually you find that once
you're spending at a certain level on
those channels they get more and more
expensive you have to take tests and
risks on new channels those tests and
risks come with a cost associated which
pushes up your cack over time
competition generally increases if your
business is doing well other businesses
will copy you
um and the cost of inflation digital
marketing just media costs generally
over the last 10 years online have gone
up as more businesses invest in online
marketing and a lot of them based on uh
you know supply demand uh bidding
structures
so what's the takeaway from that and
we'll talk about it a lot more in the
second section of the of the talk but
build your own channels so paid
marketing is
essential at the beginning
as soon as you can capture the contact
details of
potential customers and uh and market
them directly
cool right i'll hand over to the next
section um
just to kind of clear the chat uh is it
more effective to use feet on the street
direct sales lead generation or for
early startups
don't know
depends what it is really
um the the only advice i could say is to
try it um
it depends on the nature of it um
it's difficult to say i know some people
have got
doing a lot of in-person sales and
having good success
but it depends on the nature of the
business
if you're selling warships then it's
probably good to have people on the
ground who are building relationships if
you're selling
cheap things um
probably not
can't focus marketing reduce cac that's
a good segue to the next section i think
uh cool so um basically we want to give
you some advice um in terms of like how
to think about marketing at a high level
this is not how to hack facebook and how
to hack google
this is more around the growth marketing
we talked about in terms of how you
think about them holistically as
a
how you think about how you evolve your
product rather than just saying okay how
do i hack facebook
it's to say well how do i build a better
product
which it partly markets itself and
partly allows me to access key channels
that i wouldn't be able to access
typically
so i'll keep the chat open so if you
have any comments along the way then
i'll try and address them as they come
along
right so to give you an example of an on
old client of mine client called bleach
uh so bleach cell
it's a bleach unsurprisingly um they
sell
vibrant hair color um
sort of you know if you want pink hair
then those are the people to go to uh so
this is the story of how they launched
in the u.s so a uk brand had a launch in
the u.s so
first thing they did is they built a
salon in l.a
um they got some celebrity backers so
they had a small salon in
a sort of posh bit of la
and they got loads of celebs to get a
salon and it created a lot of pr a lot
of content
and when you get a bit of buzz and a bit
of pr
it gives you more celebs he goes to a
salon and more celebs create more
content you get more pr
and you start to get very well known for
your hair color and your your dyes
and what that does is that also
sort of goes away from la and it goes
away from hollywood and you start to
kind of get people
um
knowing about the brand through social
media and then they start buying it
through your site and through
place like walmart
and
then these customers start creating
their own content so instead of
celebrities showing their new hair
you've got normal people showing their
hair
then you suddenly have two loops so you
have two content loops
one for celebrities and one for long
people
[Music]
and this is a real business and they've
done unbelievably well and they don't
spend a penny on facebook marketing this
is all organic
um and it's because of their system and
how they set the system up
so how they
they run a small salon
produces content
they distribute that content
they're kind of clever with their pr and
their branding
and they've built very very large
business off the back of
using facebook we're doing organically
so this is kind of what we talk about we
talk about growth marketing it's around
fiddling with your business model
in order to
[Music]
make it grow faster and make it more
profitable
uh let's just have a look at the chat
how would you value new customers
follows they don't necessarily convert
immediately
uh
interesting ahmed because bleach
actually i went through that question
with them
uh followers do not necessarily
translate into sales
so you can look at you basically have to
look at the correlation between sales
and followers but they're not
necessarily correlated
you can follow things and not buy them
so you have to just predict it on your
own basis
can these be predicted or do you need
initial attraction
um i'm assuming you mean the economics
i mean the lesson for all this is is to
try and to experiment okay cool
um
you you won't you won't necessarily know
what your initial metrics will be and
obviously if you've got similar
companies you can get a good benchmark
but your normal metrics when you first
launch a normally fairly bad because it
takes time to get your product market
fit to describe how you're selling the
product
to get the right price point to get the
right
you know color shape flavor etc so it
does take a little bit of time but you
can look at other businesses that are
successful
and
if you've got a good relationship with
them they'll tell you what the numbers
are and therefore give you a range
to go by
yeah i'd add to that that
i'd encourage you
to model it even if you have very little
even though if you're making quite big
assumptions around the novels you're
using
because as soon as you've modeled it
then you can start measuring against it
and you can quickly identify
where in your uni economic stack your
assumptions are off
um and adjust so it's good practice to
make your best punt and you can you know
make estimates informed by your customer
uh interviews when you're when you're
ideating for your your business uh other
companies that are similar if you only
sell one product at the beginning then
you'll know what your aov is because
it'll be the price point of your product
you'll also probably know your initial
margin because you would have found your
your suppliers and you can make some
assumptions over how those um
cost of goods will come down over time
as you scale
um and your fulfillment cost again you
can get pretty pretty pretty good at
estimates from before you ship anything
from from various shipping suppliers so
there's some ways you could you can get
some a pretty good feel but definitely a
good idea to make predictions
have a clear model like this and as
you're going through your testing in
your first couple of months
measure against those estimates so this
is front and center in your weekly or
monthly um learning process
yeah i think one thing i would say is
just for sort of lbs context is i do a
lot of mentoring sessions with startups
and they
they sort of learned that
the process of doing an mvp
but it's worth being as as frankie
mentioned quite disciplined around what
metrics you're trying to
answer
because yeah things like conversion
you're not going to measure at a very
low level
for your aov and your
you know which products people choose
you will be able to gain that that
information pretty early on
so if you ask you know 20 people what
they would do
that's probably fairly representative
when you have twenty thousand
but your conversion rate won't be um so
just be clear when you're testing stuff
what you're trying to look for
um and try and build out your full model
and obviously be cautious of what you do
and don't know
because that will help you
shaping your mvp
right lowering cac
the virality loop
so for those of you
who
live in in the world
you'll know uber very well um
so
uber in london is a good example they
were incredibly successful um they
used referral codes and they had a very
very good product so what they did is
for every product you would get a
referral code and you send it to three
of your friends
they would send it through friends and
they would send it through reference
obviously everyone has lived through
covert so people understand morality
a bit too well
but when we think about virality we
normally think about these sorts of
things but actually there's a there's a
wider view of morality
uh so we're gonna break down what uber
did so first of all you set up an
account
and then you take a ride and the key
metrics you would look at would be your
activation rate
and the time it takes you to take that
right
then you would your other key metric is
how many invites you send out per
person and the time it takes you to send
out that invite
and then the final one should move this
out you should sign up right of those
people
so you'll see uber is quite an extreme
example
but you can think about it you know if
you've got a sort of quite a complex b2b
product
if you can think about well
can i
pull forward the time it takes to see
value in product
so if it's a complex product that has a
lot of installation a lot of complex
integration
are there ways where i can get customers
to see that value earlier
and therefore the virality of it will
increase because they're willing to talk
about it with their friends and their
colleagues
um and how can i create these sorts of
loops the name which we'll go into next
uh
so when we think about virality as i
mentioned
we think about kind of
coronavirus and we think about squid
games um but what we're really talking
about is
and you know variety can be that it can
be
you know youtube videos that go crazy
um they're often a bit of a flash in the
pan
and you know are people going to be
talking about squid game in a month's
time probably not
um
but what we're really talking about
is
you know some products are not naturally
viral
right so
um you know selling plants is not
naturally viral you might talk about it
with your friends a little bit but
you're not suddenly going to have like
huge videos of patch plants
um
whereas what we're talking about is
making your product remarkable and a
remarkable product has a high nps it's
fundamentally very good
so you know uber was very smart with its
referral campaign but also had a product
which was far superior to anything else
their app was much better than anything
else
and the product was much cheaper than
anything else
so when we think about virality we're
really thinking about kind of
remarkability and how do we make the
product better fundamentally and they're
also talking about kind of how we grease
the wheels
so how do we make the product easier to
share more shareable
need
uh so we've got a few hacks for you here
so
um making your brand more visible so
some interesting examples here so
um
you may not be aware is when apple first
launched they
on the email sorry when the iphone first
launched they put sent from my iphone
and it was by far the biggest success
apple has ever had because this thing
went viral and it soon became a sort of
badge of honor where you'd have sent
from my iphone
to your inbox so all of a sudden you
were using your product
and you know the hundreds of people you
email every day they would see it
um you know classic example is luxury
luxury clothes they have the brand front
and center
and therefore you know exactly what
they're wearing
and people are effectively paying money
to be a billboard
and they're walking around and sharing
it and that is a huge part of their
success
i mean even things like cats so you know
kind of heavy engineering
there's absolutely no reason to put the
cat logo on it um
but you might as well and it's free so
like adding your brand to the product
can make a big difference
and then also in terms of deliveries so
you know
delivery is a good example
you want your delivery drivers to be
safe and have reflective clothing
you might as well make it a positive
brand experience so a big part of their
brand is around their driver experience
and the same thing with patch as well i
mean they could have just had a black
van
didn't need to look didn't need to label
it but actually it's a huge part of
their brand when you see
plants being delivered across your
neighborhood it suddenly makes you kind
of curious and they can have a look at
it so it's a big part of that virality
so
when you're thinking about your startup
thinking about how can you make it
how can you put the brand front and
center
even if it's
pretty technical pretty complex b2b
stuff
like a digger
uh and then how do you create a kind of
wow moment
so
pressed for champagne there's a there's
a restaurant in london that has these on
every table
and all it is is a little button with a
light
and the light is like slightly discreet
and the waitress will come along
if you press the button they'll give you
some champagne
and
this restaurant makes an absolute
fortune
and all they've done is installed some
really cheap buttons and some little
lights
and they've suddenly made a really fun
interesting and very shareable moment
um and that restaurant has done
unbelievably well
off the back of a simple button
so it doesn't have to be very complex it
doesn't necessarily need to be very very
sophisticated it can be as simple as a
button with a light
um and making sure your your brand is
front and center so i was discussing
frankie this morning
when i was at gray's so both grays and
patch are about previous companies both
of them were on um
the apprentice
now when graze was on what we did is we
got a room and we put the graze logo
absolutely everywhere in the room
because the bbc aren't really allowed to
show brand logos but if we put it
everywhere there's no way they could
have missed it
so it's a very very simple thing we were
lucky to get on it
and we milked it for all of his worth
so just making sure your brand is front
and center
whether it's at a pr event or
these sorts of things
that can make a big difference
i'll talk to the two examples i put in
there so apache was trying to think
about how we can make
the moment your plants are delivered a
really wow moment so for us that meant
you're going beyond your expectations
so that it's remarkable enough that you
tell your friends
um
whether you're seeing them that day or
your whatsapping them or you post it on
instagram
you feel so overwhelmed and excited by
your plant delivery
that you share it with your friends and
there your friends would hear about
plants you hear about patch and that
would be a very cost effective
acquisition channel for us to get new
traffic and new customers
so some of the things we thought of that
it was to make a plant club magazine
put that in the deliveries for free
we also got free gifts delivered you
know a lot of food brands rely on
sampling and they're willing to give
free samples away um by the thousands so
we partnered with dozens of different um
food and drinks brands over the years to
give away free edible gifts
people weren't expecting to open their
box and get a free drink or a free pack
of sweets and that uh
that added to that wow experience and
then we also texted them
the hour their delivery was made with
all of the care information that they
need to look after that specific plant
and that's so different from their
experience buying plants from a garden
center where they get it home and they
and they have no idea how to look after
it that that
that triggered
a decent number of people to want to
come back to us but also tell their
friends about about um
how wow our experience is
cool awesome
so i'll uh just to clear the chat so
what are your thoughts on invitation
only products
um
[Music]
can be very successful for a
launch
it's very difficult to make that
strategy sustainable over a long period
of time
but it can be useful to kind of building
a bit of hype
it can also be useful in terms of
releasing to gaining customer
information
so understandings are getting some early
users
who are sort of part of a club and they
have early access in exchange for
information so it can be really useful
to refine your product
um it's not really a long-term
sustainable solution there's a few
brands that have done that
soho house is quite a good example where
they've sustained that over a long
period of time but
it's normally useful as a as an initial
um
marketing strategy and it's often quite
hard to pull off
but it's definitely worth a try it'll be
my vote
uh
then penary said
the
rise of platforms such as instagram are
they in hindrance
well they're definitely good for
startups um it's the bane of their life
because they pay
a huge amount of money to facebook to
advertise their products on instagram
um
it is useful for them it's built a lot
of brands off the back of it
um
the challenge is how do you wean
yourself off because paid marketing is
expensive
so how do you do the stuff in this bit
of the deck
so that you can build a bit of virality
right so
you know the patch examples are really
nice like really kind of simple sms's
around
plant instructions like really simple to
do fairly easy setup
very cheap
and has a massive impact
um because as frankie said it is very
different from the competition
um so it's those sorts of things that we
should be focusing on so yes you
probably should be spending a lot of
money on facebook and instagram
but it is uh i'd see it as a necessary
evil and something you should be weaning
yourself off
not something you should be building a
business on the back of
sweet
uh
so another thing is incentivized
referrals so it's kind of two examples
one from my old company
and one from dropbox so dropbox had a
very interesting campaign
where it was called the space race and
you would sign up
and if you recommended a friend you
would get more space
and it was just a perfect perfect model
because your
experience of the product got better you
gave a good experience to your friend
and it cost dropbox virtually nothing
they had a room full of servers they
gave you a slight a little bit more
space
it really didn't cost them anything but
it made your experience much much better
um and gray's my old company we did lots
and lots of things around referrals
you would push to get the boxes
delivered into people's offices and it
would create a sort of wow moment
because they were very innovative and
you'd land a couple in an office and
then within a few weeks
the whole office had them because they
would have these vouchers and you would
get a free box and your friend would get
a free box
so they can be very successful
they're a bit overplayed as a strategy
now they still work but they don't work
as well as they used to
which i suppose is a general rule of
marketing things just don't work as well
as they used to
so you have to be keep innovating and
doing something new if you're copying
what everyone else is doing
you're catching the tail end of what was
very innovative five years before
yeah
um cool okay so here's some examples of
you know
from patch um
on
uh on this kind of uh viral loop
although just the role that the full
customer experience besides advertising
has in in had in our growth
so
one tactic we started with was by making
a free houseplant parroting video course
so a free 10-part video course that you
could sign up to with your email and you
get 10 emails in 10 days each of the
different video of the top 10 things you
need to go from zero to one
looking after plants
we use that on the website and in ads to
capture people's emails
emails and then after the course they
would be nurtured
towards a purchase by inspired with new
products inspired new content
through email and sms which are both
cheap ways to do that
some customers would then purchase
something so taking example of someone
who buy a gift for someone else
which is about 20
of our purchases
um
we made a gift note in those gifts and
we also made a care stick which is the
black thing you can see sticking out of
that plant and that care stick has a qr
code on the back to all the information
you need to look after that particular
species
so there's a branded care stick in there
and there's a gift note for free where
they can write a message to their friend
both of those things brand the product
which means that when they
share it with their friends
our brand rather than just the fact that
it's a plant is is in that content
that gift would be delivered by a
branded van and because
people who our target market would tend
to live close to other people who bought
from us so certain postcodes would
convert better than others so by
delivering with our own bands it's a
great way of targeting people who are
like the people who've already proven
they're willing to pay for our
proposition the gift receiver will then
talk to friends
about their plants and because it's got
a branded care stick in it they're more
likely to also mention the fact that it
came from patch rather than some other
provider when they're having that
conversation i think to an earlier point
that joseph made like
if you're selling printers it's going to
be really really really hard for you to
encourage
uh your customers to talk about your
brand because it's just not a
conversation worthy topic
um
i think plants is probably somewhere in
the middle where people do like talking
about their plants it's a hobby people
often like to talk to their friends from
care tips on plants and
because they're kind of big visual
things in people's homes people often
comment on people's plans when they go
over to their homes
and then you have things that are
incredibly remarkable like squid game
which is
you know everybody can talk about it
because they know everyone else has
probably seen at the top of netflix
sneezy conversation starter it's very
different from other shows they've seen
so you have the scale of like
the category you're in will make this
virality
process easier or harder by nature of
how conversation worthy your product is
um and then to the last to the episode
the last step there shows on instagram
we have huge number of people taking
photos and sharing their plants because
that unboxing experience was remarkable
and crucially very well branded
yeah that's a great one there is that
you
you didn't have to put the brand on on
the stick but actually it's a big part
of it
it does give you an incremental lift
because you get all those mentions on it
um on the printer example you could uh
you could have like black and more black
and white you could have like leopard
print printers that were quite cool
um but there's definitely things you can
do in kind of boring categories and
making boring credit cards fun it's
often quite successful
um just to clear the chat uh
[Music]
how to viral hack a product we don't
want to share
um
it doesn't necessarily mean like sharing
one-to-one so
you know a pr strategy for kind of
mental health could be quite successful
um
your your strategy itself could be to
get people to share it because
fundamentally that you write they don't
share about they don't talk about it but
you're it could be to get people to
share it
and therefore have conversations about
mental health
um i think you know as frankie said some
some things are more viral than others
um printers is fairly dull category
and some things people just don't want
to discuss so like a lot of health
questions people don't want to discuss
um it's just kind of ways of making it
easier to discuss for the people who do
want to discuss it
yeah i think it's also
those examples i think are great because
you only you know you only need
if if one of your customers
refers one other customer successfully
then your business is going to fly it's
going to grow exponentially probably
well very very quickly
if it's a big success if you can get one
customer on average to refer just 0.1
customers that's enough to transform the
profitability of your business because
that will reduce your acquisition cost
by by 10
so
you don't need everyone to post in
instagram about your product
it could be just as transformative your
business if you can
get each customer to text one trusted
friend that they you know they're not
embarrassed to talk about their their
about condoms or mental health to
and because they're texting just one
person directly
the weight of that referral might be
much more impactful than an instagram
post
so if you're targeting people who are
nationally this is very applicable to
b2b sas products like no one is going to
post on instagram about their email
client
but they might
email it or whatsapp it to their mate
who does the same job in another company
and because it's a direct type of
referral it could be very impactful
cool
so just a few comments on the chat um
these are very b2b these are very bc are
they more b2b
um
a lot of this is the same right you
still you know b2b you're still dealing
with consumers
they just happen to work for companies
so
you know
cat is b2b but you're still making it
more viral
um you know i know lots of companies who
give away free t-shirts and free hoodies
and it's a really simple thing because
the consumers the
the employees of a company love it and
they wear on their zoom calls and
it makes it more viral right if you've
got some free hoodies from a supplier of
yours
you're you feel good about the brand
you're more likely to talk about it
you're more likely to wear it and people
will talk about it so a lot of these are
relevant to b2b but i think the same
principles is true
um in terms of like creating a wow
moment whether you're selling a plant
or you're selling
some sort of complex b2p thing
the principle of it i think is still
true
yeah again i give riff a really good
example so um ametria was the email
client i used at patch and
you know some examples very similar to
these that they use is starting a start
with a free course on email marketing
for any marketeers give a fantastic
video course away that helps
people skill up on email marketing
collect a load of emails for free for
that content nurture those emails
through
a great blog um on top tips
and then what they did was organize a
conference for digital marketers in
london
and at that conference they uh invited
me to talk and before i was a customer
which was very smart because i was
flattered to be asked and
really it was a bit of a trick to get me
there
and then they filled that conference
with by giving free tickets to all of
their existing customers so that when i
was at that conference
obviously i talked to their real
customers
and they invited the very happy
customers so i heard a load of really
great reviews when at that conference i
asked them what the metro was like as a
email product
so it's a very great example of a b2b
sales cycle where they're using cheap
and free channels by capturing customer
data building their own channels
leading with content
targeting the right people through that
content
and then and then using referral
referral and virality as part of their
sales cycle
i was much more likely to listen to the
other real customers and um
and judge
the usefulness of the product based on
their referrals then i was to listen to
the sales people so that really got me
over the line
that's a small move i think the sort of
the b2b companies that are doing very
well are taking a leaf out of the b2c
businesses that are doing well
i think that this sort of
you know people don't want to deal with
sales people right that's the reality so
you know these sort of interesting and
fun ways to
advertise the products and demonstrate
the value of the product
are always useful so the lesson learned
for this is innovate
try lots of things this stuff is pretty
cheap you know these are all kind of
fairly cheap ways of improving your
product
um so kind of innovate but also don't
don't underestimate the power of these
small things don't think you need
grand
channels or ideas you know a stick with
some plant labels on
with some broad instructions on great
works really well
right
cool let's go on to ltv
so here's a few ideas on our tv um
so
pricing is critically important as i'm
sure you all know
and your discounting strategy is also
critically important
i think one of the things that people
underestimate is how much you can do
this before you launch the product
um you can do you know if you do it in a
smart way
you can do surveys and various bits of
information
to improve to understand your pricing
and you can do that pre-launch
so things like google granger van
westendorf those sorts of strategies can
work pretty well
and actually you know when you're when
you're pre-launched
it can be quite difficult to know your
metrics will be so you're not
necessarily sure what your conversion
will be
but you can test pricing um
and the vast majority of companies
haven't tested pricing they've just
guessed
or they've copied their competition
and the competition also haven't tested
pricing
so it's often a very very big lever and
something you can do very early on
people assume that you should be testing
pricing there's much later stage
business but actually you can test in
pre-launch
um also think about how you play around
with
how the product is consumed
so do you pay for it so changing kind of
who pays for it
when they pay for it
um and can you appeal to different types
of consumers as a result
so if people are kind of pushing back on
this description
can you offer them one off product
right and if people are quite happy with
one product can you offer them a
description right could you do a patch
subscription
where you pay you know 20 pounds a month
and you get a free plan you can go on
every month right
these sorts of ideas can make a big
difference and they can also appeal to
different types of
consumers and different types of
behaviors
in a b2b setting you know can you have a
you know enterprise version or a sort of
sme type version
and how do you differentiate that
so a lot of companies will charge based
on usage which is a good way of
discriminating against them so they'll
charge based on seats or
traffic numbers all those sorts of
metrics
and that's a good way of splitting out
your customers and ensuring they pay
different amounts
and then launching new products for
different niches so when i was on my old
companies
we had a we had a product where you
would a mechanic would go to your car
that you wanted to buy
and they'll inspect it for you
and they would tell you if you're buying
the right car or not
previously we had one product we had
just one service we split it into a
small medium and large
and first of all our conversion went up
because we appealed to different
consumers who wanted
different products that we didn't have
originally
um 50 of consumers went for the most
expensive option which we weren't
expecting
and our profitability increased
massively and we're able to push more
money into performance marketing
so relatively simple change
um
grew that part of the business 100
in
about a month and a half
so these things can make a huge
difference
um and you also need to be cautious of
like which customers do you want to
appeal to so it could be that
smes are too small and the product's not
right but think about how you can change
the product to fit those different
criteria
and that's something if you're if your
pre-revenue pre-launch
that's something you can do now to
experiment what consumers are willing to
pay
and what they expect to get for their
money
i'll pass the frank keepers and patch
examples yeah a couple exam examples on
those on those topics that we actually
did at patch so
one big one
that increased our lifetime value is
actually stopping doing discounting or
cutting it back massively the reason we
did that was we found um over the over
the last couple of years
the
tech behind discount websites has
improved a lot which meant that if we
gave away a discount let's say in one
advert to help grease conversion
uh they were very quickly picked up by
chrome scrapers and put on discount
sites and we're finding that a
large number of people every every day
were googling the words patch discount
code
finding these discount codes and i was
eating into our margin because most of
those people would have bought anyway
without the discount code so they were
using the codes via the code sites and
it wasn't driving any incremental sales
which was eating into our margin so by
cutting out the discounting codes we
found that we got slightly less
customers but at much higher margins and
therefore we took more profit per order
on average therefore our lifetime value
increased significantly
um
i would highly encourage people to avoid
discounts uh if they if they start
businesses
um based on the tests that we ran a
patch in every category and for every
business it will be different and
they're worth testing but by default i'd
start without them
and introduce them very sparingly we
also added bundles so this was um
instead of just buying a plant and
separately having to add the pot to your
basket or uh instead of adding three or
four plants we shortcutted people's um
uh shopping shopping flow by allowing
them to buy a couple of plants or plant
and a pot together in in one click and
then we found that this encouraged
people to spend more by making it easier
to make bigger orders that increase the
average order value which translates
directly into more profit per customer
in their lifetime in their full lifetime
value
we started
for the first couple years only
delivering in london because it was very
difficult to deliver plants in boxes
nationwide and they'd have to go into a
box if they're outside london
but when we started living outside
london we found a large number of our
london customers sending gifts people
across the uk and that added a whole
nother purchase opportunity for each
customer that we acquired so people
could buy something for themselves
or for someone else
um that meant that we tapped into new
purchase opportunities that we weren't
tapping into as much before because
before you couldn't send your granny a
plant in scotland and then suddenly you
could um and that increased the repeat
rate of customers on average in there
for their lifetime value
and finally we added other products to
our range so range extension is a very
good way of increasing both conversion
rate and lifetime value if you can find
products that the people visiting your
website also want
so we added plants for offices and plant
care to look after those plants we added
outdoor plants and we started with just
indoor plants we added plant stands more
pots more accessories and as we added
more products into the range we
generally found that people spent more
in their lifetime again they had more
reasons to come back to us and um and a
higher conversion rate when they did
so
[Music]
so a few final thoughts we've raced
through this we've got some time some
questions at the end um so a few final
thoughts so
uni economics are critical to determine
the viability of business both for
investors and entrepreneurs the
traditional metrics that you'd measure
with a business profitability these
sorts of things
they have use
but it's very complex
um so subscription you're paying for the
marketing cost up front but the value of
that consumer
will come in over time
so on your first year you'll be making a
loss but you'll be making profit later
on so those metrics are changed and
that's the fundamental
sort of currency i suppose you call it
of of growth marketing
um think about how you can evolve the
product
to benefit marketing
um
so how can you make the product more
viral
and yeah i wouldn't think about
marketing in a traditional sense of
do tv we do email we do facebook
think about it in the way that the
frankie articulated around the kind of
end-to-end consumer journey so how do
you make that journey better
um
and how do you um
how do you think about how you make it
more viral
and a lot of those ideas are fairly
simple and they can be done
very early on and also think about your
own channels like i spend my life
advising dc businesses to stop spending
money on facebook
um
how do you build channels that you own
and how do you build them which you have
control over
so there's a good there's a very very
successful business in the uk called
freddy's flowers
you have a flower subscription business
and pre-pre the pandemic they were
making six percent of their sales for
their own salesforce
so they would have a group of people who
would go to flower shows that go to
offices events fates etc
and they would sell flowers
and they had massive sales force and it
was hugely successful and they
had control over it they had control of
that end-to-end journey
they had much better ltv for those
customers because the sales people could
discuss how freddie's works
and he also had a lower cac than
facebook was
there's an amazing channel and they had
all that control
um so think about marketing beyond the
basics if you're seeing a company that's
successful at the moment
you can copy a little bit of what
they're doing but ultimately
you're basically seeing a history lesson
you're seeing what was successful a few
years ago
and you need to think about what's
what's working now
i think
that's it
oh and we've shoved in some useful links
in the back so when you have a look at
the slides there's some useful links of
some uh
growth hacking
and growth marketing kind of resources
that's great thanks guys absolutely
fascinating um
tremendous amount of content in
less than an hour and a half and
answering questions along the way and
i'm conscious the fact we have 10
minutes left so
whilst the questions have been coming in
i'm happy to
continue taking more for the duration of
the time we have left
did we cover up everything that was in
the chat i know you've been uh there's a
question about conversion that came
early on
i think quite early on we said we
covered around we did
if that person's still online and they
want to uh reiterate in the chat that's
absolutely fine uh just a couple of
logistical um issues here i've been
asked several times throughout the
presentation whether or not we're going
to be able to share the recording
and or share the slides um
the
for those of you who are students this
will all be on canvas so
in a couple of days time please do go
into canvas and you'll be able to pick
up both the slides and the recording um
and if you are not
part of the lbs community then we may be
able to share the recorded link um
depending on where we're going to be
publishing it but do drop me a line
and uh we can go from there
i'll be throwing up my credentials uh at
the end of this presentation anyway
any further questions
the conversion rate one and we actually
tested this quite a lot of patch we did
tests where so the question is is
conversion rate uh you know highly tied
to to price and it very much is um
the further out your prices are from the
optimum theoretical price for your
product
uh the more sensitive it will be
we did one test where we reduced all our
prices of all of our plants by 18
for a month and we actually did it on
two weeks off two weeks and then on two
weeks which is a good way of doing a
test like that
um
and
and we found that conversion rate
when we
dropped the price increased by about 18
as well so kind of very direct correlate
correlation there
pricing is the hardest thing for you to
get right because it's one of the few
things that you you won't learn much
about by talking to customers
um
and it can be hard to test because it
can be very difficult to split test
price
um but uh
but uh isn't but it's massively
important it's the number one thing that
customers will particularly btc
customers where it's their own money
it's the number one thing in most
businesses that people will um
that will drive conversion rate
well there was also question up front
from jake um
how would you manage expectational
conversion rate e brand is investing
much more in upper final activity
quite a complex question um
it depends on the holistics of it um
it's difficult to kind of isolate it i
mean a brand strategy versus a dr
strategy i'm not sure we could cover in
this session but
um
i think it's a subject in its own right
isn't it joseph and it's a book in its
own right um test it
test it and measure it it's probably the
only advice i can give you
okay
just really to put up some credentials
in case any of you did want to reach out
you're all very welcome to sign up to
the blog the startup blog at london
business school which is startup
start hub.london.edu and some
fascinating content on there um our
contact details iepc london.edu and
please do follow us on twitter instagram
there's just so much content for those
of you who are not part of the school
then it'd be great to be able to embrace
you and
and share some of this content with you
in this way
um unfortunately we can't open up the
mentoring of initiative beyond the lbs
network or else
poor joseph and uh frankie would be
absolutely inundated as they already are
but uh certainly that's all the more
reason for you to uh you know get closer
to the school to see which resources you
can actually leverage
um if you did indeed uh to decide to
join us um all that remains really is
for me to thank both frankie and joseph
for a most fantastic presentation i mean
the comments are coming in just to
pay testimony to that so absolutely
wonderful and thank you also for keeping
to time i'm sure people perhaps
want to now disappear off and give you
back your evening as i say a huge thanks
i'm going to be making these slides and
recorded footage available to
the students thank you so much guys and
uh well i will see you both in due
course and hope to see um as many of you
back online as possible for the first of
november blockchain event
uh which should be equally as
fascinating and enjoyable so
really wonderful session thank you so
much good guys have a good evening
i can say anyone who'd like to to reach
out feel free to add me on add me on
linkedin
um and shoot me a message
yeah likewise
be careful what you wish for guys
thanks so much

---

### 10 legal mistakes for entrepreneurs to avoid: Entrepreneur’s Journey | LBS
URL: https://www.youtube.com/watch?v=eZMdk_xs_DU

Idioma: en

good evening everybody delighted to be
here and for as i say so many of you to
join us this evening and uh well this is
the the first of our virtual event was
uh part of the entrepreneur's journey
um and the the
series as uh the title indicates really
just take you aspiring entrepreneurs
right the way through
ideation through to
having a toolkit to actually get your
business off the ground
and then growing it thereafter with all
the various resources including uh
investment readiness that will be very
much integral part of your growth over
the coming months as you launch your
business
um delighted to welcome uh david
farkerson with us this evening from
london law collective uh david and i've
known each other quite some time and
he's been an incredible supporter of
london business school uh during that
period always happy to help our aspiring
entrepreneurs with
their legal issues and it's great to be
able to welcome him here this evening
david thank you so much for joining us
pleasure brilliant well thanks so much
and um and welcome to everybody um
and welcome to yeah startups the 10 most
important legal mistakes
um a little bit of background on me
before before we all start um i'm a
commercial lawyer with
20 plus years
experience of advising predominantly
start-up companies and entrepreneurs um
and among other things i'm currently the
uh the legal expert in residence at lbs
so
i'm delighted that jane and her team
um have invited me to um to present as
part of the
lbs
journey series um i'm on a promise not
to make this dry and legal and dull
but instead
practical interactive and commercially
relevant so um so hopefully
we can keep the interest levels up in
that way
um
dividing it yes into the 10 most common
mistakes but essentially what's what's
the outcome that i want you to get from
this evening well
in essence it's
when you leave this evening hopefully
you'll have
an understanding of
really the whole journey of
uh a founder going going through a
startup
setting up the company
um organizing your legal arrangements
with your with your fellow shareholders
um taking on and incentivizing employees
how best to do that attracting
third-party investment
and eventually assuming this is the
ultimate goal
uh exiting your business
um for hopefully um on on good terms
that
are financially and commercially uh ones
that you want
um so the way we're going to do this
there will be um it's a bit whistle-stop
because there's a lot to cover um but we
will uh be taking questions in the chat
which i think jane's going to be
handling um and in any event
my email will be on the final slide and
i think our website's on there always
happy for a real or virtual cup of
coffee if any of you have any questions
afterwards
um delighted to deal with them in that
way so um hopefully that's helpful to
you don't worry about um
it all
everything having to be dealt with
tonight i'm happy to do so afterwards as
well so so to kick off
so
the premise of a startup um which is i'm
assuming why you're all here
um the cheery thought what is the cheery
thought well the cheery thought is well
london london's pretty good
london's second only to silicon valley
in the whole world
as the best place for startups to thrive
and that's according to a definitive
ranking of of international tech hubs no
other european cities in the top 10.
um so we're doing pretty well um ish now
the the problem really
is that over 90 of startups um sort of
fail
within the first few years which isn't
great i suppose
um
so
how do we make sure that yours is not
one of those
um
good question
well
the sort of smugly named autopsy which
is a london-based startup that looks
into these things
um they did an in-depth analysis of what
you would call post-mortem unfortunately
quite ghoulish but of but of many
hundreds of thousands of startups that
didn't work
and well over 75 of failures we're down
to two things
first
you've probably got a great idea i mean
undoubtedly you know every every smart
person is full of good ideas
but not a solution to a market problem
so
you could for example have developed
some really innovative tech
but it's not solving a problem that
other businesses or consumers can
identify with so it's not going to fly
you might have a great team highly
likely you know you've probably been to
to business school good universities
worked in some great places you've built
up a good group of intelligent
generally commercially smart people
but maybe not for a startup
when you're choosing your team
you've got to think about people that
have an early stage mentality
growth and success
is unlikely to be a binary exercise
and people who are versatile and by that
i mean innovators and problem solvers
so for example
ask yourself this
if things don't go initially to plan
is your team one that can scale back on
their immediate remuneration
if your solution in inverted commas is
not solving a problem that the market
cares about
could your product pivot perhaps and
solve another problem that you haven't
yet thought of
your team remember can help you with
this idea
so it seems simple
great idea
great people commercial success
when you've found that have the
confidence to grow quickly or the
competition will overtake you
so that was the first what you would say
mistake mistake is really not having the
right solution to the problem and not
having a great team at least in respect
of startups so what's the second
organizational structure
so interesting one this
i guess when you you wouldn't think this
but when people set up a startup they'll
often do it as a sole trader so just in
my case you know just david on his own
doing
doing a setting up a sort of an idea
trading see how it goes it's really
common now
it may seem obvious but registering a
company is a really good idea for a
whole host of things
now one of the reasons is because
if you're just yourself alone
and you're not within a limited entity
you potentially got unlimited liability
if things go wrong essentially you could
lose your house
so registering a company means that your
assets sorry your liability is limited
to
the assets in that company and you can
control that at all times
um much better than having the fear of
you know losing losing your your worldly
possessions
so a couple of um a couple of ways you
can register to come register a company
in that in this respect
first formations this is a normal uk one
takes about an hour
35 to 40 pounds set up a uk company
yourself
really really easy
if you're international and want to set
up a company in the uk
but you're not necessarily
based here
the one below that is quite good your
company formations dot co dot uk
what that can do is give you a
registered office in the uk
um it can even run a sort of nominee
bank account for you
which is often a problem
where the founders don't have a uk
residential address but this can help
cost of that is between 110 and 120
pounds um don't worry by the way about
taking all this stuff down i can share
the slides afterwards to um to make sure
you can access it in that way
now the holding company structure
while we're here you're like right well
how's the business within a limited
entity that's a good idea to to limit my
liability in this way
but think about if you have a trading
company which enters into all the
commercial contracts it's doing really
well
owns all the valuable intellectual
property owns all the valuable assets
and then there's a problem somebody sues
it
what happens
you're at risk of losing all the value
you've created
now a good way around that
is to perhaps create a holding company
structure
the holding company will own
the valuable assets be that the
intellectual property or let's say an
i.t system
and then it will license that to the
trading company so the holding company
does nothing except for own and house
those assets
and the trading company enters into
contracts with customers with suppliers
etc
what happens if the trading company gets
sued the likelihood is you do not lose
all the assets and the success that
you've built up
now although it's not bulletproof
most courts worldwide are unwilling to
do what's called peers through corporate
veil which would be to allow the assets
in the holding company
to
get attacked if the trading company gets
sued so good thing to bear in mind that
so that's sort of the first couple of
things
now
number three mistake number three no
founder shareholder agreements
so you've set up a business with your
friends your colleagues from business
school university people you've worked
with before what could possibly go wrong
well unfortunately quite a lot people do
fall out
so think about how best you deal with
this well
shareholder agreements founder
shareholder agreements a really good
idea for a number of reasons
first they can be really simple
take the example there's say
three founders
you're all doing different things that
are helpful to the business
ones in marketing one's in tech
one's in general management for example
stick that into an agreement
because it could be the case if you
think about it
using some real life examples
that after six months or so
one person gets married
they're married to somebody who's based
abroad they decide to move there it's in
a different time zone
they can't do what they used to do so
well
you therefore need let's say a new
marketing manager
but you can't get rid of the old one
because
they're the founder you've got no
shareholders agreement these people own
shares
now
if you set up the role description how
many hours a week generally speaking
what this person's expected to do and
the consequences if they don't it's much
easier to deal with that situation
even if for example you don't rely upon
let's say the strict terms of the
agreement itself
it enables it's a platform that enables
you to negotiate a solution that
everyone can live with
so thinking a bit further on that we've
talked about role description
what about how decisions are made on a
day-to-day basis
are there decisions that you need to be
by unanimous consent something big for
example
taking on a new director
um entering into a very large new
contract
um
buying a premises for example maybe
that's something that all three of you
should be doing
but for basic day-to-day decisions
there's got to be a bit of trust
maybe leave the marketing decisions
below a certain uh monetary threshold so
let's say the the marketing manager and
are the decisions they're a little bit
bigger maybe two out of three
if somebody leaves one of these founders
do you want them going off with the um
employees do you want them going off
with the clients taking the valuable
ideas
maybe not not a good idea
have some restrictive covenants
what about if you have an argument what
if turning on back to the the the number
of people it's relatively common for a
startup to have two founders
equal shareholdings both directors
what happens
if they fall out
well you're a bit stuffed is the bottom
line if you don't have a shareholders
agreement because nobody can do anything
they're in deadlock
if you have a deadlock resolution
provision in your shareholders agreement
this can ease things so for example
you could say that
if you can't resolve a deadlock
either it can go to mediation with that
said third party chairman
or perhaps one party has the right to
buy out the other using
a valuation mechanism such as for
example texas shootout under this
either par each party has the right to
um to put sealed bids in
and the party that wins
can buy the other party's shares or sell
their shares that party at that higher
value now
again
thinking back to what i just said
earlier
you might not get to that point if you
have a really slightly draconian
deadlock resolution process where it all
breaks down if you don't if you don't
resolve the deadlock
adults the founders tend to behave less
like children
um and they'll they'll tend to reach a
more practical scenario before it gets
to that stage
lever provisions are also useful
um you know if you've got one one one
founders come in
he or she owns 33 of the business
there's three of you
and then decides after six months they
don't like it they want to leave
what happens to their shares
what if you don't have a contractual
provision they keep them and that can be
really annoying because the remaining
two of you can end up working really
really hard for the next few years
essentially creating value for that
person that still owns a third of the
business
so maybe have some early leaver
provisions
decide among yourselves we're all in
this for at least three years somebody
leaves before that they're an early
leaver we can buy their shares back for
a much reduced value
um certainly worth bearing in mind
david can we just uh jump in with a
couple of questions of course yeah
one actually related to uh the second
point where we're talking about the
structure of the the company
uh one of the participants online has uh
has asked that they're trying to launch
an investment fund um
and they're registering it as an llp in
the same re well should they register it
as an llp in the same region as where
the fund is going to be domiciled um so
for example should they register both
the llp and domicile the funding the
caymans or could they reach the llp in
the uk and then domicile the fund in the
caymans so um yeah so fund is not funds
are not my absolute area of expertise i
mean i can i can look into it but i i
suppose considerations would be
um
views of third-party investors pretty
useful you know there's a investment
offshore these days many people
don't necessarily want to do that
although i appreciate that um the fund
itself being offshore is a is a is a
sort of good idea
um if a member of the llp is going to be
a sort of third-party investor they may
well want that to be in the uk there's
no issue with them being in separate
jurisdictions that that is for sure so
yeah i'd be i'd be tempted on balance
complete sort of instinct without
looking into it i'd be tempted on
balance to put the fund offshore
but to register the llp in the uk
um would be
mainly because the llp is going to be
the one that houses the
let's say members
shareholders uh type thing and
and uk law is can be really useful too
a resolving disputes but be also
you know i suppose attracting investment
be that as a member of the llp or
otherwise
fair enough okay that's great that seems
to have answered that question and now
one specifically about the shareholders
agreement another participant has asked
whether or not you think that as having
a cto having higher shares than the ceo
pre-vc investment is actually a problem
or could this be spelt out in the
shareholders agreement um yeah i mean
these things totally happen before a
shareholders agreement's reached it's
it's a good without being too too smug i
don't intend to be it's a good reason
why
um you'd want to get a founder
shareholders agreement in place before
as in quite a while way before the um
the the shareholders the
the vc comes in
um
be
you know one one reason being that
it can entrench really helpful
provisions for all of you
um is is not a bad idea that the vc then
needs to negotiate out
now
answering the specific question
um it's not a problem i think a vc might
think it's sort of slightly strange it's
like slightly weird
um
it would be helpful if the cto and the
ceo got on
um
that that's a that's a good thing it
might be a good idea if they could both
chat and perhaps equalize their
shareholding before the vc investment
may be why the value
while the value is still um pretty
pretty low so that a sort of transfer of
shares wouldn't incur
much tax
um but yeah bottom line is you can sort
out anything in a shareholders agreement
it's not an issue but one thing i would
say is before you go
and talk to the vc
have your stories straight with each
other what a vc will not want to see is
any kind of disquiet between the cto and
the ceo um because
it unnerves them and also it sort of
gives them an opportunity to
um you know divide and roll and offset
one against the others so
good thing to um to equalize
um so intellectual property
now
people probably know more or less what
that is um it is ip is like the special
source
of um
of what you of what you're trying to
develop it's the it's the expression of
your idea
it's
what does intellectual property actually
do
well it gives you the commercial it's a
set of legal rules that give you the
commercial advantage
um
by
registering usually this intellectual
property it gives you commercial
advantage for the development of your
idea against other companies that might
want to develop similar ideas so it can
really add value to your idea and it's
and it's commercial um expression of it
now
just to just a good way of seeing
intellectual property is really on a
spectrum one end to the other
now at one end
um you have protection of what you would
call innovations and the expression of
the idea itself now now what's that
that's patents
that's copyright and i'll explain a
little bit on that shortly
goes right through to the other end
towards
down there
towards the ex towards the protection of
brands surrounding the ideas now what
we're talking about there are things
like trademarks
um we're talking about domain names all
those kind of stuff
so what's the difference
well the difference really is if you
think about it
um
most successful entrepreneur may not be
the one
who thinks up a brand new idea and
exploits it
um
many many a successful entrepreneur more
than more than um more than those that
think of something brand new
um
they identify a strong business idea
that's already been running perhaps not
very well
and think ah i can pivot that i can
apply that to a different area of the
market
and on we go
now
what that means is
if you're developing something and you
say you can get a patent in it or it's a
it's a brand new idea
yes you've got first mover advantage so
that might be if you're if you're a
pharmaceutical company and you develop
something amazing that can really
um really sort of change people's lives
in that situation
you'd likely be to be able to get a
patent for
um the formula of your of your
pharmaceutical product and then
because so much money had gone into the
development
you get the patent that gives you 20
years free run
against um against other people uh
trying to uh exploit that idea so
essentially you can get all the money
that you put into research back and and
make more as well
um
now
generally that isn't the case
um although there is an obsession with
patents
what i talked about earlier just just
just before
is
that
if you can get this idea that somebody
else has developed you can exploit it
better pivot it slightly to a different
area of the market
then you get not first mover but fast
mover advantage you can register a
trademark around your idea be it a new
name a new logo
um so you're not the first in the area
but you can get brand strength in an
area that's already developed so what
i'm talking about here is things like
you know nike nike may not make the best
running shoes in the world for example
but a lot of people
when you when when you mention running
shoes it's the first name a lot of
people think of
um not because they've necessarily got a
patent over the running shoe per se but
their brand is extremely strong
so what they've got is fast mover
advantage rather than the first mover
advantage that goes with patents
just a little bit on that patent
obsession
now
a lot of founders will say to me well
can i patent my idea
probably not is the answer
um to patent something it needs to be
entirely novel
and it needs to be
capable of a
very novel idea capable of commercial
application
it's very rare to be able to get a
patent actually
um it can also take a long time to
register
it can take hundreds of thousands of
pounds and it's public from the moment
you make the applications so think big
companies can come in look at it and go
that looks interesting i might give
something a go that's really quite
similar to that
what this doesn't mean by the way is
that is that you shouldn't start off a
strategy
the original process of applying for a
patent
is
not that expensive and you can stop
sometimes
when you have early stage investors
you can start an application process and
maybe if you put pattern pending which
you'd then be entitled to do
on your investment ready uh documents
that might be something that might
attract investors or at least highlight
you above many other startups that they
might invest in
um just a quick summary on trademarks as
well
right at the other end of the spectrum
trademark is a registration of a name or
a logo it's not about the protection of
the idea so again nike the name or the
big swoosh
that that goes with the nike name um
summary of trademarks on that link there
which i'll provide afterwards
um so hopefully that gives you some idea
of of
ip one to watch out for
make sure you have the right to use all
your assets if you set up a new business
one of your co-founders comes in got an
amazing new it system
ask them where they got it did they
develop it alone did they develop in
combination did they develop it in
another business now
unfortunately
ip infringement actions against startups
are some of the most common reasons
among the ones along with the ones i've
given as to why startups fail do bear
that all in mind
um
ndas don't go blagging your idea around
the pub if it's a good one try and make
people sign non-disclosure agreements
before discussing
the special source element of it the
really confidential stuff with them in
any detail
anyone who works with you
make sure that they sign intellectual
property assignments really easy one
page document anything you develop
during the time that you are that you um
work for us whether they're employees or
contractors belongs to the company
gives that value investors will love it
um
also with commercial contracts with
venture partners i'll move on to that
actually on another slide when i discuss
another common mistake of startups
now
employment practices
let's have a think about those ones
first one is know the local law
just seeing if there's any more
questions no we're all good there um
quick one there delaware c-cop against
incorporating the uk
um
keegan my initial viewpoint would be
start off in the uk
um there's lots of really really good
tax incentives for people to uh invest
in uk startups seis the is those kind of
things which um
i can explain to you offline if you like
if you if you don't know about them you
can do i mean look this one up on google
you can easily relatively easily do
what's called a delaware flip
further down
your um further down your your company's
um
process which basically involves putting
a delaware holding company above the uk
one not a difficult one to do i'd
probably consider doing that around
series a level uh rather than straight
away um
so yeah that that's that's what i would
think particularly if your operations
are outside are generally outside the us
so just
keeping with the us idea there
know the local laws so many a u.s
company moving to london they're get a
little bit surprised
when that employment at will thing that
you get in the u.s
which is basically you can hire on fire
at will doesn't really exist in the uk
um it's really problematic to fire
people
um equally many uk company if they go to
france for example
they're a little bit shocked that the
employee taxes there
are hugely high
and the labor force is very unionized
it's even more difficult to fire people
in france so before you employ people in
a country know the local law
wherever you are
written contracts now let's think about
it
we all sort of live by the expression
okay higher slowly far quickly good idea
um we don't tend to do that in practice
as well
um
how do you protect yourself well
number one take a new person on
probation period
have a period say three months six
months where you can get rid of somebody
on one week's notice if it's not working
out
have a proper role description so that
any sort of performance
analysis performance meetings can be
undertaken against that that's in the
contract
much easier to do that than if you don't
have anything at all
as i discussed before
restrictive covenants intellectual
property clauses very important make
sure everything is owned by the company
make sure the employee is not going to
leave you and go off with all the
clients and the
and potential employees which without
those clauses they may well be able to
another thing with uh employment
practices bear in mind do understand the
distinction between employees and
consultants so
recent years have been a little bit
difficult poor tax authorities you know
bless them they've struggled to get as
much tax revenue in as they used to
um now what this means is they they
they're showing more of a sort of keen
eye
on
whether consultants might be employees
and it's easily done it's an easy
mistake to make now you start off a
business
you've got somebody in there part-time
they're not on your payroll they're
doing a couple of days a week
don't really care where they work they
do work for other people
you're a victim of your success it all
goes well
this person starts working more and more
full time for you
um they start needing to be let's say in
an office at least in pre-covered times
um and they're more under your direction
very quickly
that can lead to a situation where they
should be on your payroll
if they're not
what can happen is that further down the
line
when you put your annual accounts in
there can be an hmrc audit they look
into you and they go you know what quite
a few of your people they should be
employees so you should be paying um you
should be paying
employer national insurance on them
unfortunately you haven't done for a
while you owe us interest you owe us
penalties that's really disappointing to
be a victim of your own success if you
don't look at that
worth also considering that investors
are paranoid about this stuff
get it right you'll really impress
investors get it right your valuation
will be higher
definitely worth taking into account
share incentives so a bit of a connected
one here
now
i think a lot of a lot of founders will
say
um
i don't want to give shares to my
employees or advisors i'd be giving up
control of my my business well
not necessarily
you can award shares or options
that are non-voting
you can award growth shares or
or options that for example
they only trigger any kind of benefit at
all
upon a certain
uh success
uh defined moments of success happening
a big fundraising or an exit for example
down the line
and you know what it doesn't hit your
cash flow it's sometimes
you'll have say a really amazing coder
from let's say google true example this
um who will want to join you
but unfortunately they're earning a lot
of money daily there perhaps you can
give them some shares
it doesn't have to take away your
control they can be non-voting shares or
they can be options that trigger when
things go well
definitely a way of balancing
hitting your cash flow with long-term
incentives
the fact they are long-term incentives
also means you can tie
the award of those shares or the award
of those options to this person's
behavior
so
rather than have you know really big
hitting restrictive covenants that
you know are you going to enforce them
you know your senior person leaves they
want to take clients they want to take
employees with them
fight it out in court doesn't make you
look good doesn't make them look good
you're probably still going to lose the
clients and the employees anyway
now
if you have shares or share options
and in an agreement with them
it says well
if you leave and you don't go and join a
competitor and you don't take everything
with you
um
you might be able to keep some of those
or we might buy them back at proper
value
that will encourage people to behave
well
say they want to leave people do
they're more likely at that point to go
well i don't really want to lose all the
value i've created
so maybe an idea i go to my co-founder
or i go to my boss and go you know what
i do want to leave
but i don't want to lose all my values
so let's have a chat
co-founder says well tell you what
you can have this and this client
they're likely to go with you anyway but
please don't take these ones you can
maybe take this employee but don't touch
these ones
and you get to a compromised position
that everyone can live with what does
that do
it keeps your
the the name of your company strong
in the market as a good employer
and it also keeps some value in your
business now
all very easily done just by awarding
some share options or some growth shares
now any of you that want to discuss that
stuff i'm happy to do so in more detail
afterwards but i think hopefully you've
got the point
commercial contracts
now here's an interesting one
i can understand the position
i can understand that
you've been working hard and you get
this big big deal in it's looking really
good it's like you know what let's just
get on with it let's just sign
all this money's coming in it's
brilliant we're winning off we go
and
sadly that is often what happens
and then a year down the line somebody
reads the contract it's not great
should be like a chess game try and take
a deep breath
look at the end you want
and work backwards from that
in the terms that you're going to agree
with to agree to so
obvious things to think of
limit your liability
have a limitation of liability cause
don't go into it you know betting your
house or essentially betting the entire
company if things go wrong
protect your intellectual property
if you're the supplier for example just
license that intellectual property to
the client to use on a limited basis
not for example on the basis that they
can then take it
develop it further with a cheaper
supplier and cut you out which which is
a real life example of what often
happens
non-circumvention
if you introduce them to other members
of your network should they be able to
go around you and contract directly with
with that network no
what you've done is really valuable in
introducing them so you want to put a
stop to that as well
and finally just using another example
what about non-solicitation
you go in to a client you take your
development team
what's to stop that client just going
all this development seems good we'll
just employ or engage them directly
now well there's quite a lot you can put
a non-solicitation clause into your
commercial contracts
um
so hopefully that just gives a few
explanations of what you should be
looking out for
now
one practical point
to to give you here is
you might be saying to me well we've got
no leverage we just get given these
standard terms and conditions of these
big companies
uh that we're fortunate to um to
contract with
they don't they don't change they don't
contract on anything other than their
terms conditions
from experience
not necessarily true but do it by way of
side letter so you can say to them you
know what i appreciate you don't want to
change your terms and conditions but
there's a few things that are really
important to us
could we just sign this one pager
outside the terms and conditions that
says
for our contract
these provisions will take precedence
over the terms and conditions
particularly for example in areas that
that i've just discussed bigger
companies i can promise you are far more
willing to do that than to um to go for
wholesale changes to their actually
standard terms and conditions which tend
to require them going up the chain to
their big boss and taking ages so again
hopefully that's a bit of a good
practical um
suggestion for you
term sheets
now is an interesting one just looking
in there
um
chat box here uh yeah parent company in
the uk holds the ip r d company is also
invoicing uk or the any risk attached to
this model um delighted to take that one
offline if that's if that's okay
hopefully that would be um do feel free
to contact me afterwards on that one
um
is it better to incorporate a company in
the uk or an llp
um
definitely a company vernee i've got to
say i mean if you are a fund
it can be as in a sort of a regulated
fund it can be easier to incorporate as
an llp but if you're trying to get third
party investment
incorporating as a limited company is
far the better route um can you convert
an llp into a private company at a later
date
um
it's sort of doable it is i mean
essentially it's an asset transfer
agreement um but it but it is doable um
so
essentially take the view that in law
most things are doable some things are
easier than others but most things are
doable so
i'm happy to chat that one through
offline again if that's helpful
so just dealing with
with term sheets here
now
what's the point
what is the point so
think ahead you might already be there
exciting days of third-party investors
coming in and wanting to give you money
brilliant let's just go to the long-form
documents sign them get the cash in on
we go
i can sympathize with those thoughts
no doubt
but this is a bit like the story of the
tortoises and the hair
um so
a long form document which is what an
investor is going to want before they
give you the money
think about it
can take weeks to draft and negotiate by
the time you've done so
even if you don't like the final terms
you just spent a ton of money on
professional fees probably
um
you'll have used up a lot of your
sort of personal management time and
wasted you know money that could have
otherwise gone into developing your
business you'll be past the point of no
return the investor will know this they
know that you can't go for another
investor because you've spent so much
resource on this
it then gives them considerable
uh leverage to slightly go in for the
kill and get all the terms they want
so of course a good alternative
why not go for a term sheet so
yes it's a more
non-binding document
but
think about what it does it can contain
a summary of the main terms in short
form
and it's a lot more difficult for the
investor at that stage to bury things
that you don't like within the
complexities of a long-form document
if you're lucky enough to have a few
potential investors
term sheets are a great way
to administratively easily and
significantly less costly
keep the process open to leverage the
best terms and get the best investor a
lot more difficult to do that when
you've got a whole load of long-form
documents going on um
just looking at some questions here um
i think
a few going on
um
is it common to have an exclusive
contract with another company regarding
the provision of a service be careful on
that um again commercial contracts
if you give exclusivity um you know if
you're
then it's really about
depends if you're the provider or the
client now if you're the client you want
to give an exclusive contract
you want to have
you know minimum targets for example
that the supplier needs to reach
because if they don't you can have an
exclusive relationship with somebody
that isn't delivering and it can go on
for too long so
have an out for the exclusivity um if
you're in that situation
um so that you know if the targets are
not met
you can at least terminate you can
either terminate or you can make the
relationship non-exclusive of course if
you're the supplier maybe the opposite
situation if you've got somebody willing
to give you an exclusive relationship
and they don't have any targets in the
contract
sign it quickly um so it depends what
situation you're in and again if you've
got lots of leverage
at the term sheet stage
so you've got a few potential investors
maybe you can also insert a provision
that says
that and this provision will be binding
that says right
if you the investor
materially change any of the terms
um at the long-form stage
um you investor
and we withdraw you the investor pay our
costs or pay a contribution to our costs
what that can do
and again it only applies if you've got
significant leverage but what that can
do is mean that you know you can get
some of those costs back and you've got
more ability to perhaps start with a new
investor and again
frankly if somebody's put that binding
provision in the term sheet anyway
they're less likely to
want be silly and want to change their
mind later on you're more likely to hold
them to what they've said earlier on so
a few a few sort of quick examples of
the things to look out for
liquidation preferences bit of a debt
equity hybrid here best of both worlds
for an investor
one times liquidation preference
now this means that the investor gets
back their initial investment before
anybody else gets anything on an exit
and if things go well they share equally
in the upside
bottom line is these are relatively
common at series a stage
one times not two times so not like they
get back double their money before
anyone else does
only one times but at series a stage not
before then push back heavily if in an
early stage fundraiser asks for a
liquidation preference
ratchet this is more a sort of
non-dilution
early stage somebody goes i'll invest
200 grand in your business
but i always want to have 10 percent
seems good when you're getting 200 grand
early on
um
but what happens at the latest stage of
an investment
you the founder and any other investors
that have invested before this person
with the benefit of the non-dilution
ratchet
you get doubly diluted every time
there's a new investment
because the person with a ratchet isn't
getting diluted at all if you must agree
to this make it time limited so for
example say
okay you don't have a percentage
reduction
um
only until after the only until the
first main funding round after that
point you get diluted as well as
everybody reverse vesting of founders
you've worked blood sweat and tears for
a number of years before your first
major investment
big investor comes in and basically goes
your shares are reverse vested for
another four
years what does that mean
well it basically means if you leave at
any time in the in that four years
you have to give back some of your
shares that you've already worked hard
for
um
push that back to a maximum of two years
and make it also limited to your
voluntary departure so if you resign in
that first two years of your own
volition
yes perhaps it's reasonable that you
uh that you give back some of your
shares but not otherwise
bad lever
again
you know some investors try and put a
bad lever provision in that says if the
founder resigns at any time ever
they give back their shares for next to
nothing
sounds a bit like slavery to me
so definitely push back on that one
trigger have bad lever applying to sort
of gross misconduct only stuff that's
within your control
um so that you know if you literally hit
the investor in the office um
you know then understandably that's
probably gross misconduct but if they
think you're sort of not performing too
well which is a common um which is a
common sort of way that investors try to
get rid of founders and get the shares
back
don't allow that to be part of a bad
level condition um because
investors can easily do that
um just quickly moving on to number nine
data protection i only do this because
it's investors are paranoid about it if
you're processing any personal data
um
then you know which and personal data
being anything from which an individual
is identifiable
um you're gonna need to register with
the local
data protection authority as a data
controller uh the two ones there for
both the uk on the top and europe are
are stated in those links um
it's pretty easy data protection i mean
bluntly
how do you deal with somebody else's
property somebody's personal data it is
theirs it belongs to them um if you're
going to use it
uh
state how you're going to use it on your
site um you know on your on your website
get the invest get the um get the sort
of customer to sign up to this
um equally if you're going to share that
data with a third party save for
marketing purposes
definitely get the customer's consent
before you do that
and finally if you're sending out
marketing emails
for sure
get an unsubscribe button on the bottom
of the email that will save you
loads because bottom line is even if you
get uh somebody who sent an email in
there and they're really annoyed by it
if they can unsubscribe
the relevant data protection authority
is not going to give you much of a hard
time
and the final one and this is more one
rather than going through it it's just a
list there that you can all have
one of the worst things that can happen
for
is that it gets the point where you get
a big investor in
and at that point it's like oh my god i
haven't got any documents i haven't set
them up in an organized way
if you're an investor
impression is everything so
if you're an investor are you going to
invest in a good product who's you know
documents are all over the place not in
an online data room maybe if the
product's good enough
you can invest in a good product who
founders have set up an online data room
split into all those areas there
um in a really organized way it makes
you look great
gives you that it really does give you
the best prospect of raising at the best
valuation and on the best terms and it's
really simple
start that data room right at the
beginning and just add to it as you go
along
and the final one
um know when to call a lawyer so
you know
i think
platforms that offer
um legal documents you know
no bad thing about them but it's a bit
of a pharmacy analogy you go into a
pharmacy and you know what you're
looking for easy right
get some aspirin all very simple you
don't really need advice for that
go into a pharmacy and just grab the
first thing you've got when you don't
really know what you're looking for
could be a bit risky
and it's sort of the same with lawyers
um
do bear in mind that it's not all one or
the other
yes there are impractical lawyers out
there there are lawyers that charge by
the hour but there are also lawyers
plenty of them who are specialists at
working with startups they will provide
free precedence they will give you a cup
of coffee to sit down and chat for free
and they really really know what they're
doing
um
so
do bear that in mind
and that's probably frankly about it um
as far as i've been allowed to do um as
far as i can do within an hour um i can
see there's a few questions in the chat
absolutely delighted to um
deal with any questions you've got
afterwards probably probably after this
session because i imagine jane and her
team want to go home
could we just perhaps very quickly uh
answer martin's question about about
at what point would you register a
company is it before you develop a
two-week pilot uh without charging i
think i think i would say martin i'd say
yes just purely because it's so quick
and simple to do it you can literally
set up a company
in
an hour or so for
under 50 pounds so i think i really do
think that's a good idea because
um you can then have the intellectual
property that you're putting in the
pilot owned by that you'll then you know
have a have a short form one page uh
pilot document that says the
intellectual property is owned by that
company
um
it just looks it looks more professional
i think and you know if it was a
situation it took a week and cost
thousands of pounds to register a
company i'd probably agree with you and
say okay take the risk but because it's
so simple
um
i think i would i would definitely uh
register the um
the company
thanks david i'm conscious of us eating
into your evening uh if you want to
perhaps put your slide on just to throw
up some contact details for anybody who
wants to drop you out independently then
i know that you're always happy to hear
from him and that's fantastic and you
know we're absolutely delighted to have
had you here with us this evening
and to really cover off the fundamentals
of
setting up a business before you uh
really go too much further into
obviously yeah
operational details and then ultimately
fundraising etcetera and of course
there's the legal formalities you know
from right away from the start through
to uh through to even selling your
business of course so yeah great to have
you touching on those uh
10 most common mistakes and i must take
the blame for asking you to cover off
ten and i'm sorry for that and those are
only those are only my my experience so
there could be others and i'm happy to
happy to discuss those with anyone who
wants to thanks so much david
look perfect so i'd just like to uh
thank everybody for joining us this
evening and uh well some credentials
there for the institute for you to be
able to keep in touch with us and follow
the rest of the series uh we have weekly
events they uh on different evenings
right away through until easter so
please do keep
abreast of the whole program for those
at lbs we will be sharing the slides on
our internal portal canvas and for those
um who are outside we will be streaming
some of this on our london.edu website
so do keep put your eye on that and
please do subscribe to our blog as well
once again david thank you very very
much and thanks to everybody for joining
us and uh well look forward to hearing
from everybody and seeing the rest of
the series thanks so much
take care everyone have a good evening
thank you

---

### Exploring GenAI's Impact on Industry Transformation and Private Equity | LBS Experts Discuss
URL: https://www.youtube.com/watch?v=pXbPVDg759Y

Idioma: en

[Music]
hello I'm Michael jacobas the sidonald
Gordon professor of Entrepreneurship and
Innovation and professor of strategy at
London Business School and Lead adviser
at Evolution limited and I'm joined here
by Yuri romanenkov who is the academic
director of our next Generation digital
strategies program at lbs and a senior
advisor at Evolution limited and we're
speaking about this impact of gen and
private Equity Michael everyone's
talking about gen what is different
about this work this work is trying to
go beyond the use cases which is what
everyone has looked at and to consider
whether the hype is Justified or not so
we're looking not only at how people are
employing geni but also what are the
expectations for industry transformation
and the most interesting findings come
from figuring out where we're going to
see impact then we not and it's not
going to be the same in Industries it
also varies by business models and we
get some cool data in terms of how
organizations differ in their ability of
responding to gen one of the main
observations there relates to corporate
inequalities widening potentially as a
result of this what explains that and
how do we think about it generally
Technologies digital Technologies
amplify the inequalities they give the
possibility to some firms to scale up
and uh get a bigger part of the market
share but here what we see is that they
also get new attributes that are
important in success so things like
proprietary data become very important
if you have proprietary data then you
can leverage uh the new technologies and
what geni does and helping you
understand what the patterns are and you
are able to find new ways of serving
your customers or even expand beyond the
offerings
uh that you get so we see that there's
going to be winners are those who will
get the information infrastructure as
well as be able to embed uh the results
of what gen tells you in their own
operations so let's go a little bit at
the firms that report that they have
seen transformative impact around 22% in
our sample uh say they've seen it what
explains that one of the things that we
find about these 22% of firms is that
they go beyond the obvious they don't
just focus on the the easier more
modular cost of productivity initiatives
that are easy for everyone to replicate
but they go beyond that they look to gen
for potential for new business models
they look to gen for a step change in
customer engagement and we find that the
proportion of firms experimenting with
these different value levers is
considerably higher amongst companies
that experience high impact than those
that experience low impact that said
though Michael what do you think what is
it that ultimately gives you the right
to win in there what does it take to be
able to deliver on gen at scale the
funny thing is that the answer is not
technological uh what you need to do is
to first of all embed gen we see that
companies that are successful are not
the ones that just try everything and
they are broad but they are deep that
they are consistent in the way that they
use gen and that they ensure that they
do that regularly and in particular
those that for the more sensitive parts
of their Organization for operations and
for um uh the way that they engage with
the customers uh employ gen it also is
important uh to see that those that win
are those that look at the
implementation of gen I and the
engagement not only of Technology but
also of the changes in strategy and the
changes organization that are going to
make a difference so once again it has
much more to do with you're having a
strategic take than thinking about
technology and hoping that technology
will lift all boats and will yield
dividends so let's look at private
Equity what does it mean for private
Equity investors it's interesting
because I think it means means a number
of different things for different
private Equity players if you're a large
cap buyout investor and you were
generally
historically concerned about changes in
business models then the disruption of
Industries and this this redistribution
of economic profit that you just
described is potentially very alarming
news so they need to build a profound
view of their own of what geni means for
the industries they're looking at for
growth investors who who look at
companies at slightly earlier stages in
their development that's actually
excellent news because they may place
bets on the winners and not the losers
and look at the capabilities and look at
the value levers in a way that can um
can capture value for them and their LPS
But ultimately when we think about it
practically they need a a new way of
doing due diligence on these companies
they need to make sure that they look
outside in they really understand how
technology links to these value levers
that we were talking about and for their
portfolio companies how they engage with
with the management teams there they
need to really work with them to help
them build the right capabilities that
these companies need to make the most
out of this this really exciting
technological Revolution so many ways

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