Starting Up in a Time of Turmoil (Campus Party Europe 2012)

Starting upin a time of turmoilCharles ArmstrongCampus Party Europe 2012

This is not the advertised talk!(but I will be discussing workspaces)

Charles Armstrong @car0lusSociology at St John’s College CambridgeTrampoline SystemsThe TramperyOne Click OrgsUK Government Tech City initiative

Usual recipe for a startupRaise investment from a big name VCGrow as fast as you canAct like a grown-up corporationSet up your own officeRecruit a team covering all functions

My advice:Tear it up

We are living in anextraordinary period

We needdifferentapproaches

Where can we lookfor a precedent?

65.5 million years ago

Permian-Triassic mass extinctionSuccession of global cataclysms70% of species wiped outFood chains & ecosystems collapsed

Dominant species died out

Small niche playerssurvived

Why did mammals make it?Small size, fewer resources to surviveMain predators disappearedEvolved rapidly (hearing, smell, warmth)

LessonsThe rules can change completely from onegeneration to the nextBeing small & agile is the best bet in a crisisSurvivors evolve to become top species

1 Finance

“Total capital managed byVC funds* will contract by50% from $24 billion to$12 billion.”*Figures relate to USA onlySource: “Right-Sizing the Venture CapitalIndustry”, Kauffman Foundation, June 2009

VC investment$46.5 billion in 2008$11.8 billion in 201175% reductionSource: Dow Jones VentureSource

Changing patternsSupport existing portfolioFewer, larger dealsLower risk, closer to profitability

The way it was£50 million £2 million £1 million £500,000 £100,000 Friends Angels VC Private IPO & family equity

And now…£50 million ? ? £2 million £1 million £500,000 £100,000 Friends Angels VC Private IPO & family equity

Innovative financing routesDonation crowdfunding (eg Kickstarter)Club crowdfunding (eg Bandstocks)Equity crowdfunding (eg Crowdcube)Investment bonds secured on equity/assets

But do you need investment?Earn consulting revenue whilst building productWhite-label versions of your productCreate projects to raise sponsorship

My experience2007 raised £3 million from VC2008 VC disappeared after crash2009 raised £500,000 equity crowdfunding2012 currently raising £500,000 bond2013 planning £1.5m crowdfunded bond

LessonsBootstrap if you possibly canEquity crowdfunding or bonds if you need cashDon’t be scared to innovateA talented VC can still be a great ally

2 Growth

A startup shouldscale as rapidlyas possibly

Right?

Not necessarily. There’sa trade-off between rapidgrowth & resilience.

My experienceTrampoline broke even with 5 peopleGrew to 20 people before 2008 crisisHad to restructure to 5 peopleNow growing organically & profitable

LessonGrow more slowly to survive shocksBe ready to turn away some opportunitiesReach profitability at each growth stage

3 Business culture

A lot of people encourageus to play a conventional“business” role

But if you play a role, ratherthan being yourself, you cutyourself off from passion &authenticity

In an age when the worldis in flux it can also be anadvantage to be differentfrom the crowd

My experienceTried to be more conventional for investorsRealised it was making me miserableClients & senior execs like that I’m differentEncourage team members to be themselves

LessonsBe yourselfRespect conventions but don’t follow themBuild genuine relationships

4 Workspace

Conventional wisdom says asuccessful business needs ashiny office of its own

Now this logic is beingturned on its head

Co-working isn’t justabout cost &flexibility, it opens upcompletely new growthstrategies

Co-working growth strategiesCreate communities of trust & friendshipTreat other tenants almost like team membersShare freelancers, contractors & servicesOutsource functions to other tenantsIf one business succeeds, many succeed

My experienceOpened Trampoline’s office as The Trampery30% of tenants are partnering with 5+ othersGrowing pool of shared contributorsOpening another 4 buildings in LondonRe-structured Trampoline to maximise benefit

The Trampery Bevenden Street 60 people 2 meeting rooms

The Trampery Old Street 50 people Members club Conference centre

The Trampery St John’s Street 50 people Seminar room

The Trampery Mare Street 60 people Café Performance space

The Trampery Tabernacle Street 200 people 4 self-contained studios Winter garden Event venue

LessonsTreat workspace as a strategic choiceChoose a community that “fits” youDiversity is good, not just people in one fieldMake time for informal discussionBe open to serendipity & random chances

Conclusion

Starting up in a time of turmoilAvoid raising finance if you canIf you need investment try crowdfunding or bondsGrow at a sustainable rate even if it’s slowerBe yourself & encourage others to do the sameFind a co-working space the suits youOutsource, share & partner with other firms

Above all… be a smallmammal, there’s no pointcopying the dinosaurs

This is themost excitingtime to do astartup EVAH

Good luck!I’m @car0lus@tramp0 @thetrampery

Starting Up in a Time of Turmoil (Campus Party Europe 2012)

by Trampoline Systems on Aug 25, 2012

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