I’m very happy to be able to announce that GrantTree, my third business, just closed its 3rd financial year yesterday, and has been growing its turnover by a factor of just over 3 each year. In our first year, we grew from £0 to £85k. (Ok, that may have been more than 3x growth…) In our second year, we went from £85k to £334k. In our third year, we have grown to £1,061k – that’s right, we’ve gone over a million pounds of very profitable turnover, an important milestone.
Since our success fee is typically about 20% of the money we get our clients, that almost directly maps to £5m or so of money raised for tech companies in the UK, and in particular startups, who are our bread and butter clients.
In that time, we also grew from 3 employees (including founders) and 1 subcontractor last year, to 12 employees and 3 subcontractors. Our culture changed, evolved, stumbled, recovered, and is, for now, healthy, positive, a good place to work – importantly, a place that my cofounder and I want to to come to in the morning.
It’s really exciting, after two businesses that didn’t work out so well, to be doing so much better the third time around. It wouldn’t have been possible in my first two businesses: the lessons I learned in those ventures were a big factor in making GrantTree a success. Most of those lessons are summarised on many blog posts on swombat.com and danieltenner.com (and even my older blog, inter-sections.net).
Here are some lessons that I’ve drawn from the last year. Of course, these lessons should come with all the usual disclaimers about startup wisdom: they are likely specific to GrantTree’s context, including its people, its business challenges, its ambitions, its starting conditions, its stage, etc. They are also subject to the further caveat that most of our employees joined in the last year, so that wherever I draw a lesson about culture, it should be taken with a grain of salt: we’re still very young, and what I think is working will perhaps prove to not be working later. And of course, GrantTree is a bootstrapped, unfunded business that has to earn every penny it spends, and is not aiming to grow 100x in a year à la Facebook/Google/etc. It scales well because it is a productised service, but it is not able to cope with super-growth.
1. Hiring is f’in hard, and you won’t learn it until you screw it up
Everyone knows this startup truism. And yet, it seems like the kind of lesson that everyone needs to learn for themselves. So don’t beat yourself up too hard when you make hiring mistakes and hire people you shouldn’t have. Everyone does it. Just make sure you correct these mistakes before they cause damage to your culture.
2. One-to-ones are invaluable
Early on, I had a weekly, one-hour one-to-one meeting with everyone in the company, on Wednesdays. Now there are too many people, so that they need to be biweekly. Later, no doubt, I’ll have to switch to monthly meetings.
Someone once remarked that I was “sacrificing” 20% of my productivity to have these one-to-ones. With time, I have become more and more convinced that these one-to-ones have been absolutely essential in helping me detect and fix problems early, and in allowing me to steer the company in the right direction.
Because the one-to-one is already booked, people don’t need to make an explicit effort to tell me what’s bothering them. There’s already a slot booked. On the reverse side, when I have something I need to communicate or explore with everyone in private I already have a ready-made, regular channel for doing so.
One-to-ones are also unbeatable for picking up subtle problems that people haven’t expressed explicitly yet. If someone tells you something but looks uncomfortable about it, you can pick that up in a one-to-one. You never would by email or other written media.
3. Devising an explicit strategy is very helpful, at the right stage
In the very early stages, the “strategy” of the business is simple: sink or swim. There is no need nor point to make grand statements about the company strategy at that stage: just figure out how to keep your head out of the water, close that loop, and get the business to make enough money to actually survive.
Once you’ve closed the loop and started growing, however, there will come a time where you are growing, but it feels like your founders and early employees are all pulling in different directions. Coming up with a clear strategy for how the business should grow can be invaluable at that point. It allows you to focus your limited resources on specific activities at the expense of others, and liberates you to spend some of the hard-earned capital of the company on growing it faster (because you’re spending it for a specific, tangible, agreed purpose).
For example, one of our key strategic focuses last year was that there were many potential clients who didn’t know about R&D Tax Credits, so we decided to focus on reaching all these people as quickly as possible. This decision enabled us to grow our outbound salesforce with some confidence that we weren’t just throwing money out the window.
I highly recommend Good Strategy, Bad Strategy as informative reading while devising a new strategy for your company.
4. Explicit goals are uncannily helpful
Stating your (realistic) objectives (e.g. 3x growth) explicitly mysteriously seems to make those objectives more likely to happen. Don’t ask me how or why it happens, but so far I’ve seen it happen a few times. The magic of the subconscious mind, perhaps…
As an example, we explicitly set our objective to 3x growth this time last year, and the turnover we’ve achieved is just 5% off from that objective. Uncanny, I say!
We’ll see how well this works for the coming year…
5. Culture requires constant vigilance
This summer, we almost fell down the path of building a traditional company, with the usual management structures based around the “Theory X” assumptions. Luckily, we realised we were going down the wrong road before it was too late, and managed to change direction, back towards building the kind of company that we want to work in – a company with an open, transparent, no-bullshit culture, where people do good work not because they’re under constant threat of being fired or not earning their next bonus or pay raise, but because they’re good people who want to do good work.
It’s awfully easy to let the company culture evolve in the wrong direction, which is the default way that most businesses are built. Once you have employees, building the right kind of culture is the kind of thing that should always be at the top of your mind.
“Are we building the right kind of culture?” is as important and omnipresent a question as “Is our growth strategy right?”
Otherwise, you run the risk of one day waking up and realising that you’ve built a company that you hate, and when that happens, it may be too late to break that culture and rebuild it in the way that you would have wanted.
6. Profitable businesses are really motivating
Woobius was not profitable, and most funded startups (certainly those that reach the VC stage) leave profitability as a much later concern. First, let’s take over the world. Then let’s make money.
I was maxed out on my credit cards and overdraft by the time we finally earned our first success fee on GrantTree. It’s fair to say that we started out completely broke. It is incredibly positive and motivating to know that every penny that is earned is a penny that we have the right to spend as we see fit, without any accountability to “investors”.
Of course, there are constraints on that. Now that we have 12 employees (10 of which are not being paid dividends and so rely on monthly salaries), we have significant monthly staff costs. And of course, there’s taxes. But still, the money earned is earned now, not towards some future objective like an acquisition or IPO.
The more I compare the two, the more the funding/growth/acquisition-ipo path feels, for first-time founders at least, like the delayed life plan.
7. Mentorship is extremely useful
For much of the first half of this year, my cofounder badgered me to get some external advice from people who had built this kind of business before. Finally, I gave in, and contacted Joel Spolsky in hope that he would be willing to help.
Joel’s advice has been very useful. Running a company can be a lonely affair, and there are very few people out there who can genuinely relate to the problems you’re facing, and offer useful advice to boot, based on real experience. Reaching out to someone who’s been there before and is willing to help can make a big difference both in terms of the quality of your decisions, and the confidence with which you end up implementing those decisions.
Obviously, this is just a glimpse of all the learning that happens in a year like this, but I hope it can help someone else who’s about to go through the same kind of period. If you have any questions that I might be able to help with, feel free to reach out by email (or even better, suggest a meeting in person).
We are of course intending to grow further this year. We’re trying to do most of our hiring through our network. If you’d like to hear about possible opportunities for working with us as and when they arise, though, please do sign up to our jobs mailing list here.