By Lior Stein
I have seen one big similarity between startup founders and a certain behavioural tendency of university student – compartmentalisation.
If you were anything like me all I wanted to do in uni was pass the subject, never hear about it again and hit the town with my friends – to stick the subject in a compartment somewhere in my mind where if I ever needed it again I would need scuba diving gear to go and fish it out.
The journey of a startup founder can at times be like the view out of an F1 driver’s cockpit in the throes of a race: fast, exhilarating and almost impossible to see everything that’s going on.
The goal here is to have an “eyes on the prize” mentality and block out everything else.
There is certainly great merit in having one main goal and putting in the majority of one’s effort to achieve that goal, but the risk is that certain lessons are lost when other activities are done quickly in order to get them out the way.
So many learnings are lost in doing this. Learnings that aren’t a nice to have, but will need to be learnt in other ways that will take as much if not more time.
Consider these functions:
1. Scoping out the technology development
2. Arriving at specific specifications
3. Deciding on a development style
4. Creating a financial system
5. Preparing to capital raise
6. Pitching to investors
7. Raising government funding
8. Commercialisation and selling your product.
I’m going to explain what I mean using the example of an R&D Tax Incentive, which is a hot topic at the moment as the end of April deadline looms.
Often a founder’s goal with the incentive is to get it done and get the cash in the bank.
Allow me to open up your mind slightly to what learnings can be achieved through the process of an R&D tax incentive.
The first part of the incentive is having a technical write-up done. This is essentially a document that can take the complex understanding of your technology and sell it to the government.
If the founder is not the developer then this task is handed to the developer and they get it done.
What can be generated from a technical write-up is an understanding of the product from a completely new set of eyes, from a selling set of eyes.
If the founder were to spend some time reading the document he or she may open their mind to a whole new understanding of how to sell the technology. Selling then flows into marketing and marketing then flows into pitching investors (pitching is basically selling but in a party dress, what Lexus is to Toyota).
Another lesson that can be learned lies in the finances.
When going through the rigours of an R&D Tax Incentive there are many questions over figures and how much time was spent on what activities. This is a great way for a founder to understand where each staff member’s time was spent in that year.
This can be exceptionally useful when a startup is transitioning from a development phase into the commercialisation phase. At this crucial point staff priorities will need to be reallocated in order to accommodate for the shift in the mindset of the company.
We have touched on a number of crucial items in the life of a startup: Sales, marketing, pitching, financial controls and staff time allocation.
All founders need to have these functions well in their minds.
If the R&D work was not compartmentalised it would have given the founder deep insights into each of these functions and possibly given them an entire new perspective.
Of-course delegation is crucial but at times compartmentalisation and complete delegation can lead to the loss of crucial insights into a business
Lior Stein is a director of Rimon Advisory and Rimon Investments.