Top 10 secrets of successful digital entrepreneurs
Friday, June 20, 2008/
The champions of the digital technology stakes have common aces up their sleeves. BRAD HOWARTH reveals their top 10 tips for success
By Brad Howarth
The champions of the digital technology stakes have common aces up their sleeves. Here are their top 10 tips for success
Most entrepreneurs don’t remember the 1990s recession because their companies were not around.
But there were plenty of technology entrepreneurs that got walloped by the 2001 dot-com crash and learnt key lessons.
Now that money is drying up and the economy is slowing down, SmartCompany has asked some technology entrepreneurs how to make sure they don’t crash and burn this time around.
All entrepreneurs can learn from these 10 key lessons from digital entrepreneurs on how to build a successful technology business.
1 Make every dollar count
The promise of an investment is meaningless until the money is banked, so My247 founder Chris Kettle says don’t wait until the last minute to raise more. Cash conservation is critical at all stages of business growth. And he says only work with customers who pay their bills and value your time.
“The great thing about digital business is that the cost barriers are coming down every day, and you’d be surprised how many websites you visit are being run from people’s spare rooms,” he says.
Kettle’s company is growing by finding strong partners who can take it into markets he could not otherwise reach on this own, especially in the US.
Tech companies are also more likely to be on the leading edge of technology adoption, with Kettle investigating using the free Google Apps productivity software as a more cost-effective option than existing packaged software.
The founder of human resources software company Aruspex Stacy Chapman agrees that there is good cheap (or free) technology to help a business get by with minimal expenditure. Chapman says in some cases smart use of technology gives her a “virtual” presence in her clients’ markets that is almost as helpful as a physical one – but a lot cheaper.
“I know people who have insisted they need WebEx and a PABX and other expensive technology – we are more about freeconference.com, Skype and really anything that’s free,” she says.
2 Become a global economist
Turn-around specialist and chief executive of the mobile social media company Xumii, Jennifer Zanich, says it is wise to watch the macro environment your company plays in very closely.
Being tuned into global and regional economics will let you pick trends, such as the strengthening of the Australian dollar or the weakening of your target market’s economy, helping you make better long-term decisions. That means constantly scanning blogs for new competitors you may never even have heard of yet.
3 Don’t lose focus
The US-based founder of the Queensland-born software company Ephox, Andrew Roberts, says it is vital to know the difference between an opportunity and a distraction, and not to get lured.
He says initially he chased the broadest possible market, which generated great media coverage but few sales. Success came when Ephox narrowed its focus to partnering with large IT companies, and the company is now turning over revenue greater than $US10 million a year.
“We have been able to license our technology to larger software companies, which has helped fund our growth and enabled us to reach users we wouldn’t have otherwise been able to reach,” Roberts says.
4 Listen, adapt and change
No one knows the market you are selling in to – and the speed at which it is changing – like the people you are selling to. Zanich says this hasn’t been the case in two companies where she was engaged to turn things around.
“They were building the wrong product for the market – the customer was dissatisfied and talking to competitors, and they didn’t know,” Zanich says. “The customer was actually willing to pay a lot more for the product – they just didn’t ask.”
Customer loyalty software maker Emagine International’s founder David Peters says to keep in close contact and adapt as customer needs change.
“R&D is a never ending process, and you can’t wait till the product is perfect, because by that time the customers’ needs are different, the market has moved on, or you might have invested in functions and features that are no longer relevant,” Peters says.
5 Cultivate free advice
The world is full of successful entrepreneurs who are willing to give back a little of their success in terms of time and advice. Groups such as the ANZA Technology Network provide formal mentoring programs for US-bound companies, while the Australian Information Industry Association, the Australian Interactive Media Industry Association and Microsoft’s .NET clusters provide formal and informal networking opportunities.
Peters says mentors are vital, and he has been lucky enough to call on the advice of Integrated Research founder and chairman Steve Killelea, former Volante chief executive Allan Brackin (now his chairman) and former Netcom chief executive Chris Howells whenever he has needed advice.
6 Learn to sell
You may be “the technology guy”, but you’ll better understand why your salespeople have trouble selling your genius ideas once you’ve walked a mile in their shoes.
“We wasted a lot of business development and marketing activities on opportunities that were difficult or impossible to translate into sales,” says Ephox’s Roberts. “It is critical for a start-up to have a professional discipline around the sales process and the day-to-day execution of sales.”
At the same time, it is vital to remember what your staff do best – developers really love writing good code – and not to start mixing the roles around.
7 Become a name dropper
According to the co-founder of webMethods and VisualCV, Phillip Merrick, the claims you make as a start-up become so much more credible when people see a well-known company sign up with you. Americans in particular respond best to American brands only.
Similarly Emagine International’s Peters says it is important to begin selling early. “This way you get a beta version of the product in the market and get immediate client feedback, you get to create great client relationships by having a ‘marquee’ client who drives the R&D direction of the product, and you deliver early revenues,” he says.
8 Keep your team informed
Your people can only give their best performance when they are as informed as the top executives. They are often capable of earning more money elsewhere, so make them feel valued by keeping them “in the loop”. Equity can also be used to build staff loyalty, especially in the US where employees are more willing to forgo salary in favour of shares or options.
9 Be wary of consultants and advisers
Always check their track records and pay no one who doesn’t come with a reference from a source you trust. At the same time, build a good support network.
Peters says he will often call on his peers when making decisions, such as selecting new technology. “We’ll use our network of contacts – other CEOs of IT companies – to see what they use,” he says.
10 Be talked about
You are the best free publicity machine you have, so according to Kettle; put yourself out there at every opportunity. Start a blog, comment within forums, and keep your corporate website up-to-date – for potential customers, investors and media it is often the first place where they form an impression of your business.
The online software company Atlassian has been able to cultivate a strong community of interest around its blog, and became well known in its niche sector before ever becoming popular as a mainstream business.
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