Grant Saxon, BDO ECP Technology, Media & Telecommunications Leader attended this year’s Sunrise Conference - a forum which unites leading Australian entrepreneurs to discuss the challenges of start-ups and share their strategies for mitigating risks and optimising opportunities.
Here’s what our team uncovered.
Whilst start-ups have room for error, there are three inherent metrics which are crucial to thriving in the market.
Matt Barrie – founder and CEO of the eBay equivalent for services, Freelancer.com - imparted various anecdotal insights, notably his involvement with Sensory Networks in its early years. He explained that whilst it had great technology, the business model was not attuned to consumer needs. He said ‘we sold it as something in a box, and that wasn’t right.’ Addressing Intel’s acquisition of Sensory in 2013, he remarked that the company had taken 13 years to prove product-market fit.
Barrie’s lesson for budding start-ups is ‘if you must compromise: product, market timing or people - always compromise product.’ He concluded that timing and an A-team are key to creating traction and attracting customers.
Phil Salter, co-founder of Salmat, elaborated on timing and agility. He recalled Tumbleweed, Salmat’s email security service, which was introduced at a time when consumers perceived no cyber security risks. As a result, the business lost $13M. The seasoned salesman advised entrepreneurs ‘don’t blame anyone and cut your losses quickly.’ He also used the recent sale of Salmat’s BPO unit, which handles outsourced direct marketing communications, to highlight the importance of a clarified vision. He explained that whilst the unit was profitable ($375M valuation), mail is diminishing at 6% p.a. and the unit is void of long-term direction.
Salter further revealed that Salmat’s forage into the digital space has yet to yield returns, but noted the investment to be necessary as the enterprise adapts to technological disruptions pervading Media.
Invest in profitable relationships
In the same vein, SpringSource is committed to its mission of enhancing user experience. SpringSource is a pioneer in commercial open source and was acquired by VMWare for $392M in 2009, only five years after its launch. Rod Johnson, co-founder, unveiled that the open source relies on its users: a million developers who contribute to its evolution as well as free riders who become product champions. He recounted the story of a small business client from which the software yielded no revenue. The client then worked with Morgan Stanley, recommended the platform and SpringSource became the IB’s software partner.
As Matt Barrie puts it ‘measure everything’.
These visionaries look beyond short-term commercialisation. Their success is underpinned by a unique value-add, that is, the capacity to disrupt and adopt disruptions.