Young companies don’t fail on good or bad ideas. They fail on execution. Yet many young startups make the mistake of focusing on the big idea or the high concept rather than the art and science of turning business plans into thriving businesses.
In a candid conversation with Yossi Vardi, an icon of Israeli high-tech entrepreneurship, at the Forbes Under 30Summit in Tel Aviv, four founders from Europe, South America and Africa discussed this issue, along with why they became founders, raising capital and finding investors.
Joining Vardi on stage in front of an audience of over 150 millennials gathered under a white tent in the shadow of the downtown financial district were Kate Unsworth, founder of Vinaya, a London-based wearables house that focuses on mental health and wellness, Simcha Neumark, founder of WorkCapital, which provides small business loans in Latin America, Jon Reynolds, cofounder of auto complete program Swiftkey, and Bheki Kunene, founder of Mind Trix, a creative design and marketing agency based in South Africa.
The first issue at hand was to explain how each panelist got his or her idea and translated it into a thriving company. “I realized that my smart phone was having a negative impact on my life, ability to focus and to connect and be present with other people,” said Unsworth. “I was always on my email. I was a complete addict.” As a technologist, she realized that she was in a unique position to figure out a way to design products that “makes us more human and not less.”
Reynolds described himself, a former U.K. civil servant, more of an “accidental entrepreneur.” He recounted daydreaming in large meetings and observing how untenable shrunken keyboards built into mobile devices are. His solution was predictive technology that knows how individuals use language; an auto complete ‘aha’ moment.
It was the disconnect between what Neumark saw at home and what he knew was possible that lit his entrepreneurial fire. “I come [from] a simple family” in the Brazilian textile business, he says. “One of the biggest problems in Brazil is access to credit for small and medium businesses. I saw this with my own father.” After an almost fatal plane crash, he left behind an investment banking career at Credit Suisse to help both entrepreneurs and founders.
All three young founders agreed that execution is far more important than execution. “It’s 100% execution,” said Unsworth. “Ideas will continue to evolve the more you tweak them and the more you learn.” But Neumark pushed it a step further, noting that “perseverance is more important than either. It is the biggest factor in success of a startup.”
Recognizing the role, potential and pitfalls of raising capital was a key theme among the panelists. “We didn’t know anything,” admitted Reynolds. His first funder was the U.K. government for $150,000; to date they are at $20 million Series B. “It’s easy to use financing as excuse, but if you believe in what you’re doing and prove your product to the market,” you will get funding. “We didn’t want to be seen as a small U.K. startup.”
Unsworth chimed in: “We are in hardware so we needed quite a lot of cash. We bootstrapped the first 18 months, built it all in-house.” Revenue from their first 200 products sold was used to pay back suppliers. “Our proof was that we already went to market.” Vinaya has secured $5 million in funding. “I have good relationships with most of them. They are people I like as opposed to just taking their money.”
South African entrepreneur Bheki Kunene proclaimed the value of bookstrapping. “I grew up selling peanuts, graduated to fruit and vegetables and then graduated to own my own business. Where I come from poverty is real. Starvation is real. I want to build an international global brand that helps people change their lives for the better.”
Vardi’s best advice of the morning? Too much funding in the beginning is death. The trap is that founders will spend too much and not focus enough on income. “When designing the amount of money you want to raise, try to think 18 months or 2 years,” he said. “More, and it will explode your financial bladder and you will use the money too fast.”