It was an interesting arbitrage process in financial services, that we could bootstrap through to substantial growth, before expanding to include additional services, or sell to one of the dealer channels that would've been our customers. It (the idea) had all the hallmarks of a successful idea; a scalable business with a compelling need, accessible market, viable value proposition, a low investment trajectory, an immediate path to customer revenue, deep-domain knowledge and market expertise, with a market willing to pay. In short, a 'unicorn'.
The compelling need was caused by a change to Financial Services legislation by the-then (Labour) Federal government, with an original start date of July 2013. It centred on whether Financial planners were authorised to give advice to clients (which they are), on matters pertaining to tax advice related to the FP advice (which they are generally not).
My co-founder, who apart from being a Chartered Accountant, had a long & successful entrepreneurial track record. He had recently gotten married, and had started working together with his new wife in the Financial Services industry as Financial Planners & Tax Advisors, which was how we had identified the opportunity.
After 6 months of customer discussions, problem identification, and solution design, things looked good to start scoping out the platform & service.
And then something weird happened; the spouse of the business co-founder suddenly started making demands on my co-founder, around our involvement together, which seemed completely at odds with the process of 2 people starting a venture. Without having a clue why (and I'm not considered to be socially inept), we had gone from having dinner parties at each others homes, to my co-founder telling me that I couldn't call outside of business hours, lest his wife hear that we were talking together.
By this time, I had my own personal family challenges, so I made the critical decision to shelve the project, and put it down to a learning experience.Though to this day, i still have no understanding of the cause of the 'disappearing act' of my friend and co-founder. And perhaps I never will, but the process taught me some valuable lessons.
As it turns out, due to this week's announcement that the (now Liberal) Federal government has permanently shed the FOFA reforms, it would seem that I saved myself 3 years of hard work and effort in developing a startup through to being enterprise-ready. As I had previously developed a startup that turned out to be on the wrong side of government legislative changes before (which was around the National BroadBand Network), this meant I could apply an important valuable lesson, that I previously learnt.
So for a range of reasons, deciding to build that startup, was probably the smartest decisions that I never made.
However, as we get closer to our first seminar to support experienced professionals, - part of the first stage intake of our new venture accelerator program (StartUpFoundation.com.au) - my take-aways from it, and the value and that I can pass on to other prospective entrepreneurs far outweighed the price I paid for the learning.
I make the observation specifically around these key areas, because as entrepreneurs (me included), so often when we have 'the solution', we just want to get into motion, and 'get it done'. Doing so might cost you and your co-founders years and many hundreds of thousands of dollars in losses and opportunity costs, without getting some things clear first. I am proud to say that I have never lost a dollar of investors’ money, perhaps because ideas, resourcing, team-building and execution have never been a problem for me.
Before you get to your ‘Go/No-Go’ decision point, here are some things that you must address.
- Get your life in order - which includes making sure that the life partners of any participants in the venture understand where you are going, and how long & what it will take to get there.
- Have a plan for when the life of your co-founder (or you) goes 'pear-shaped'. It will likely happen, so having those open discussions early, will help set the tone for open and considerate conversations in more difficult times.
- Not doing so is probably the biggest unsung 'killer' of most early stage ventures.
- Know what your 'stop-loss' strategy is at every point. Just as you do with your share portfolio, know what your entry & exit points are, especially if you aren't hitting all your milestones.
- Getting the right types of mentoring & accountability guidance & is especially critical here, as is continuing the the conversation & involvement with life partners.
- Make sure that your exit or contingency strategies address the challenges of governmental or legislative risk. If you are building a model contingent on the economy, or governments doing "the logical thing", you could be in for a nasty surprise.
And finally, you might need to grow up (occasionally)- unicorns don't really exist, except perhaps in our dreams. ;-)
