Communicating, hiring great people and persisting are just some of the secrets to the success of construction management platform Aconex, according to co-founder Rob Phillpot.
Speaking at LauchVic’s Yeah Nah 2018 conference in Melbourne last week, Phillpot laid out some of the “anti-mistakes” he and co-founder Leigh Jasper made in growing the former Smart50 finalist, to a point where the company listed on the Australian Stock Exchange in a $140 million float in 2014.
The pair sold the business to Oracle last year in a $1.6 billion deal.
First, Phillpot outlined some things he would have done differently if he had his time again, including raising more funding.
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“Raise more than you need, think about what you think you need and add 30% or 40%,” he advised. Raising more than you expect to get means you will have more runway and capacity to do the things you want before having the raise again, he added.
“Raising money is expensive, it takes you out of the business for at least six months.”
Phillpot said he also made a mistake by taking on debt and warned others “just don’t do it, it’s awful”. Debt was the cause of “one of our near-death experiences”, he added.
“It sets you up for an epic fail”, he said, because if you can’t pay the loan back, “the moment that becomes due, you are insolvent”.
However, the entrepreneur also noted that in the Australian startup community, “we don’t celebrate the successes enough”. To that end, he laid out nine “anti-mistakes”, or things he thinks Aconex managed well in order to become the success story it is today.
“We did lot of bad things along the way, we did lots of good things along the way, but we ultimately got to a point where this thing we built … somebody wrote a cheque for $1.6 billion to buy it,” he said.
“That’s certainly a validation of a lot of things”.
1. Having a go
“Having a go is the first step, you won’t be anywhere if you don’t have a go,” Phillpot said.
2. Not being afraid to ask
“Asking bold things of people. What’s the worst thing that can happen? They can say no.”
At the conference, Phillpot produced a letter he and Jasper had written in the early days of Aconex, asking a high-profile wealthy Australian for investment.
At the time, Aconex had no product and no money, and that person said no.
“Don’t not ask the question … but also don’t let a no get in the way of asking the next person,” he said.
3. Choosing the right co-founder
Choosing a great co-founder is important as you can “help each other through the peaks and troughs”, Phillpot said, calling the core initial team for any business “so critical”.
“If you don’t have that person there that’s your rock, and the person you can bounce everything off, you will go crazy,” he said.
4. Empathising with the customer
Understanding the customer is a point that gets thrown around a lot, Phillpot said, but “unless you actually do empathise with the customer, unless you are in the head of the customer, unless everything you do is about the customer, I don’t think you have a chance of making it anywhere with the business”.
5. Having “big-ass goals”
This is also about “pushing through when things get tough”, Phillpot said. It’s another piece of advice that “sounds obvious”, but resilience is “one of the most important traits you will have as a founder”.
An prospective investor once pulled out from backing Aconex after he spoke to a construction company that was building a similar product, recalled Phillpot.
“They did build something,” he said. “Twelve years later, we bought them.”
6. Sticking to your principles
It’s important for a startup to have “some anchors that you believe in”, Phillpot said.
If there are principles in place, it allows you to have difficult conversations more easily.
Aconex has a principle of neutrality, which means it won’t share data on any party involved in a project. Although they have come under pressure from clients wanting to see all data involved in a project, having that principle in place, and being able to explain why, “allowed us to navigate that”.
“Now, that’s one of the most cherished parts of our ethos,” said Phillpot.
7. Hiring, and keeping, great people
Phillpot calls this point “braindead obvious”, but he also says it’s not all about getting great people on board, it’s also about giving them a vision they can get behind.
“If you give them the purpose and the vision and you show them how passionate you are, then people will follow you anywhere,” he said.
Hiring great staff is one thing, but then you have to keep them inspired to keep them “totally in your camp”, he added.
When it comes to shareholders, communicate early, openly and often, Phillpot said.
If you keep early supporters in the loop and make them “feel part of the journey”, they’re more likely to have trust in the venture. And when you are ready for the next capital raise, this means they can be “more willing to put money in themselves again”, but also to “bring someone else in”.
“If you don’t communicate with them or if you’re not quite open with them, they’re much less likely to do that,” he said.
9. Letting go
This is something Phillpot says he did “by accident”, but that was a “really positive thing for me and the business”. It involved stepping down from being a co-chief executive to focus on his “area of real strong competence” on the product side of the business.
This made him more engaged and happier, he said, “and when you’re happier you do better work”.
It also meant he was adding higher value to the company.
“You don’t have to be CEO of a company to be influencing, to be the leader of the business or to be respected,” he added.
“You get respect through actions.”