Tag Archives: startup

GenieBelt’s great 2017

I realized a while ago, that on my blog I have done only sporadic updates on how things are evolving with my own startup, GenieBelt. Too bad, because things have been more than normally exciting especially the last one and a half year, and the journey so far is a good story of persistence and ambition, which I think startup interested people can learn from.

As I wrote back in 2013, the starting point for GenieBelt was that Construction is a huge industry hurt by quality & cost problems, and it seemed straight forward that modern day technology and product usability focus could help massively – and on the back of that we could “easily” build a great company. Things turned out – as you can expect – to be a bit more complicated. But hey, that’s what makes these journeys entertaining and educational.

First of all, it took us three long years to go from idea to a beta product that really worked well for customers. For three years we walked through the desert having endless product iterations and strategy discussions. Tenacity, ambition and a great internal partnership made us get through it all. And maybe also having a bit more luck than un-luck!

We have been fortunate, that a number of visionary customers understood, what we tried to do and wanted us to succeed because they felt the pain themselves from communication and coordination flows not working in Construction. They gave us one of the the most valuable things for an early stage startup: hands-on, detailed and credible product/use-case feedback. But even with valuable data on the intricacies of Construction workflows, then it took us three years to get there. Why?

Construction is not only a huge USD 10 Trn. industry, but it is also a complicated sector to understand, e.g. the many different roles (clients, main contractor, multiple subcontractors, adviser this, adviser that, etc.), all projects having different participants, the participants changing roles between projects, etc. etc. One of my partners, Gari, calculated that there are 70 Million different kinds of Construction projects that all have their unique set of characteristics. So of course there are challenges in figuring out how to make a platform, that can tie things together without getting too complicated.

Another of the big challenges in Construction, is that 80% of work/costs are used at the Construction site, but it is at the office most decisions are taken, and where the involved parties have digitized most of their processes. The link between site and office is broken, and that is one of the main sources of the industry’s trouble – and this goes for almost all of the 70 Million permutations. From the beginning, we focused exactly on the “site-to-office” link, since that is what no-one has fundamentally solved. The established solutions targeting Construction are PC-era products that does not cater for a good mobile experience. New “ConTech” startups are using the mobile revolution to close the gap in various ways, and we have followed our own, unique path.

What started to be clear for us end of 2015, and more and more so during 2016 were a number of learnings, that fine tuned our product and commercial strategy:

A: Use a visual expression that is familiar. My first idea for how we should structure and visualize the data flow on a project was influenced by the kanban model also used by Trello. However, when we got our product wizard, Bob, on board, he came up with an obvious idea that has worked incredibly well for us: in Construction you are used to Gantt charts, so use the same structure for all the communication, i.e. build a living, dynamic Gantt structure for how you communicate and share data. Totally logical when you are being presented for it the first time, but someone needs to get the idea and execute on it.

B: Clarification of our Why/Product Road Map. From the beginning, we talked about improving workflows on construction projects and over time build some kind of analytics around this. In the beginning, I personally positioned  our solutions end-result as “Construction Managers need to look good and sleep well”, and that is still an effect of our offering, but over time we came to a better way to describe what our platform brings: transparency, accountability and overview to Construction. So much of the problems in Construction is because the participants don’t know what’s going on. They know what the plan is (or at least what the outdated plan said), but they don’t know actual status/progress update. Designing a platform that creates transparency on progress and performance would be a tremendous achievement. This is not only about launching a new solution to the industry, but it is becoming a thought leader on how the culture in Construction regarding collaboration and communication needs to change. We need a behavioral change and our solution and go-to-market approach should facilitate this in the most user friendly way. This is a much bigger challenge, but building the platform that can achieve this inherently also brings bigger benefits to Construction than just adding digital tools to an existing, yet imperfect process. Good – our ultimate ambition is to build a great company that can change construction for the better, and the opportunity is right in front of us. We are not just digitizing an existing process, we are facilitating a real change on how to manage construction projects. This deeper insight pushed us forward.

C: Shifting customer segment focus. Originally, we believed our core market would be small & medium sized ( SME) main contractors. In our journey, we realized that even though there are clear benefits for all participants in the construction value chain, then the part of the value chain that most clearly has benefits from more transparency and accountability in construction are the Clients & Developers. The Main Contractors also benefit, but they are at the same time more nervous for the effects of transparency, therefore some of them are not ready to change. The most strategic thinking General Contractors get it, but some are still focused on preserving the old and broken habits of the industry. We can therefore see, that even though we sell to all participants, then the majority of our customers are either Clients/Developers or those Main Contractors really willing to modernize and improve. And our customers are mainly mid-sized and big, because they are the one’s that best understand the need for systemic change. The smaller players will join as the industry changes, but it will be the mid-sized and bigger ones that will push the hardest for this change.

D: Commercial strategy based on hybrid sales approach. As a starting point, we assumed that we would use online channels to generate leads, and that the majority of those leads could be closed via low-touch channels. As our product- and customer focus evolved, we can conclude that our commercial strategy de-facto is much more of a hybrid. For sure, we have shown a very good ability to create traffic and leads online (and we will further improve that), but most of our revenues are closed with a sales force working online or in the field, i.e no touch only has a marginal impact on our revenue growth. Our commercial strategy will be a hybrid model of no-touch, low touch and some high touch sales, which is absolutely fine, since our unit economics are very healthy (MRR pr customer multiple times higher than anticipated helps a great deal), and we have people on board that have experience in scaling commercial organisations.

There are obviously many more details in the story, but the above four adjustments to our original battle plan have been pivotal in getting product-market fit and a commercial strategy that accelerated GenieBelt.

There have been plenty of errors along the way. One of the classical errors we have made is to let the product stray off course when the main direction had problems getting traction. We did a bit of snagging features in the beginning which we should not have done – closed down again. We did a bit of documents & drawings, also shut down. Classic start-up stuff when you get impatient iterating on your core use case.

So plenty of problems, but ultimately we have come far even though we of course know there is still a long way to go. Some of our achievements really make us proud, and they are part of the foundation for the coming years.

1: Our Ambition. Both the original founder team as well as the partnership team we have build over time is very ambitious. For most people it must sound crazy to have a small group of people deciding to change a big industry – but building a Great Company that can do that, is exactly what we want. One of the effects of that has been to deliberately not build the obvious products, that other ConTech companies built. The ConTech software startups have in general focused on snagging, health & safety and other products where an existing workflow is digitized. That is smart, since it’s more straightforward to design the product, and get customers engaged. Quick pay-off, and it of course moves Construction forward. But the basic problem of transparency, accountability and wider collaboration is not attacked head-on to the same extent, and therefore the transformative nature of the solution is not as the platform GenieBelt is offering. Our ambition meant we had to do something that no-one had done before: creating a platform that “connected site to office, and data to decision makers”, and that took longer time. But now that it works, then it is a transformative solution, more uniquely positioned and more significant in it’s impact. And better chance for building a truly Great Company. Having this ambitious mindset caused trouble the first three years, but now it is paying off.

2: Our Partnership. Today GenieBelt is run by a partnership of five guys (and yes, sorry – we’re all men!). Three Danes, two British. Two with Construction background, three with none. Four with good sense of humour, one with non-classified and very troublesome sense of humour. Four with plenty of startup experience, one has GenieBelt as his first startup. Three in their 40’s, two in their 30’s. Three that are hunters, two that are not yet, but secretly wants to become hunters. One and a half who are a football fan, three that just doesn’t get it. And all five of us are fathers with daughters and sons. So, we are a mixed bag, with very different backgrounds and mindsets. But we are glued strongly together by our shared ambition & vision for GenieBelt as well as a strong respect for each others professional and social contribution. We have already seen plenty of difficult moments, and we have come through all of them getting tighter in the process. One of our achievements is, that we have been able frictionless to change CEO twice, first in the initial year from me to Gari, and then in 2016 when we started building scale and commercial activities from Gari to Ulrik. Every time we have come out stronger. Personally, the partnership is a big reason why I enjoy the GenieBelt journey, and it is essential for my belief that we have a chance of achieving our ambitious goals.

GenieBelt partnership September 2017 when we celebrated taking an important decision – no further comments!

3: Our Culture and Organisation. With solid roots in our partnership philosophy, we have build our organisation from 12-14 people one and a half year ago to now 40+, based mainly in Copenhagen, but also London and Lodz. As is the norm for startups in Copenhagen, our organisation is very international with nearly 20 different nationalities, so at HQ the Danes are outnumbered. When growing the team from a small group of people to platoon sized and beyond organisations typically experience “cultural shakes” (more about that in a blog post some other day), and often the culture changes for the worse. To counter this, we have been very value driven. Due to some of us experiencing growth journeys before, we have focused on steering through the shakes to come out on the other side, with an organisation that is well glued together. One of the things we have done is to define and be explicit on our values; CotB, BIW, BoB, Respect and NoBS – values we try to stick to when taking HR and strategy decisions (NB: humour is deliberately left out as something we value, since too many laughs at the office has a tendency to create inefficiency and lack of focus – and is in general boring). So far we have succeeded in maintaining a vibe good people thrive in, and we intend to work hard to secure this as we move towards a company sized organisation, because the soft assets are usually the hardest assets in the long run.
Random GenieBelt’ers 2016-17

Four and a half year in, but it’s still early days. We have hardly scratched the surface of what can be achieved, but the snowball is rolling now. Together with many good people among Main Contractors, Subbies, Construction Clients, Developers, Advisors, other ConTech startups and Construction Industry influencers we are certain that change is now finally coming. We can all look forward to better housing, infrastructure, office space and anything else that the fascinating Construction industry produces. On time, on budget, quality spot on, less waste/environmental impact/injuries – what’s not to like!

Construction of Strasbourg cathedral, Alsace, France, engraving after a pen and ink drawing by Theopile Schuler, 1821-78, French Romantic illustrator and painter. Strasbourg Cathedral or the Cathedral of Our Lady of Strasbourg was begun in the 11th century and completed in 1439. The drawing shows the flying buttresses outside the nave and many medieval construction processes. Picture by Manuel Cohen

 

Partnership vs. co-founder lead startups

I spend most of my time being an entrepreneur (GenieBelt) or supporting entrepreneurs (e.g. Treatwell, StarOfService, ChurchDesk). As part of that, there are some troublesome themes I encounter again and again, one of them is how the leadership team changes as the company starts scaling. It’s a complicated process to get right, and also a very sensitive process both at an institutional level as well as on a personal level. One of the topics I think many company builders tend to get wrong is the entitlement of co-founders. I will not get popular in some quarters writing this, but yes; I think in too many cases people with the co-founder badge feels entitled to decision making rights they should not have. Let me explain.

What is a co-founder? It’s a person that founded a company, quit their job (if they had any) and bet most or all their working time plus their reputation on a project being successful.

Everybody that took the decision to risk time and reputation on an idea should get credit for that. Without those brave people, new projects would never get off the ground. However, the profile of those that start something, is often not a good fit for the profiles needed to scale projects through the various phases – and especially not in a leading capacity. Few people have what it takes to be just right for both inception, getting to product-market-fit, initial traction, growth, internationalisation, scaling, building the corporation, etc. It’s almost the same as demanding from a football player, that he had to be able to play equally well on all positions of the field (Alexis Sanchez?). I have previously written on the entreprofessional profile that can scale from zero to big, but they are rare creatures.

One way of mitigating the experience and skill gap many co-founders have, so they can continue in a leading role, is to let people evolve into different roles as the company grows, and to build up the various teams in the company so they combined have what it takes. But even with role changes and support from new people with more relevant experience, then it is in many cases not the right thing for the company to let all co-founders maintain their position at the top of the company. The role change sometimes has to involve seeing a co-founder being lifted out of the exec team.

That process often leads to stigmatization, fights in-between founders that destroys friendships, tense relationships between investors and founders that hurts progress, etc. It’s really one of the top risks when growing successful companies, and unfortunately the origins of many broken friendships. And it is usually unnecessary.

Here’s my advice:

1: Agree as a founding team from the beginning, that you will do, what is the long term right thing for the company

2: Have open and frank discussions without too much ego on an on-going basis, about how each of you evolve in the company

3: Introduce the “Partnership” concept

Bonus info:

Ad 1: You can also decide that maintaining your positions is more important than maximizing succes of the company, but then at least be explicit about that!

Ad 2: It is much better to have small arguments along the way, than sitting on a volcano that suddenly erupts Tambora style. When everybody has climbed high up in the trees, is so difficult to get down again. The on-going alignment talks can be informal “wine & cheese” chats every quarter or in some other format – the key is to find your own personal way of setting up the process, so it facilitates an open, direct and transparent conversation full of respect without the participants being too stuck in their ego.

Ad 3: This one is very important, but it needs a bit more explanation.

My first full time job was with McKinsey. I joined McK back in the mid-90’s since I believed “company building” was about getting into a corporation, become head of a business unit and then do a management buy-out. Suddenly Mosaic and Netscape launched and Yahoo had their eye opening growth and stock listing, so I realized the digital world opened the opportunity to build significant companies from scratch, and have much more influence over your own destiny – and the tech solutions being build could have massive impact. So I left, and have now spend 20 years in the tech sector, but from McKinsey I learned a few thing that I have taken with me on my journey, and one of them is the partnership concept. I am not sure, that the way I interprets a partnerships is how McKinsey does it, but the basic introduction in a business context I had at the Firm.

For me, running companies as a partnership is the only right thing. I am sure you can do it successfully in other ways, but my personal experience professionally, personally and socially is that the partnership model works really well in a startup and scale-up situation.

A partner is a leading person in the company, who view the company as his or her own, no matter whether the person is a founder or not. The partner acts and thinks as if it is his or her company. The first priority of the partner is to the company, the second priority is to the other partners, and there is a high level of trust & transparency within the partnership. Since the partner is sitting at the high table, then a partner will always have input opportunity on major strategic decisions. The CEO is of course the ultimate decision maker, but in a partnership the CEO will try to create broad support for all key decisions in the partnership, and this happen through the partners being close on decisions, values, vision and ambition.

To sum up, the key elements for a partner are:

  1. you are a leading figure in the company
  2. you have a say in all major decisions
  3. you feel and take ownership of the companys health and prosperity
  4. you have a meaningful stake in the company
  5. there is deep trust and respect between you and the other partners

A partner lead company is where the executives act as partners, and work in a very tight, high-trust environment towards a shared goal of making a great company. High on good banter, low on bad politics.

I want to run companies with partners, and I am not worried about whether those people are founders or not. Yes, founders should be respected for their initial decision and risk willingness (and they typically have significant ownership stakes), but that does not mean they should monopolize decision making and the top positions of the company for ever. If you from the beginning agree, that you are leading a partnership and not a co-founder team, then you are much more open to supplementing your team later on with new talent. Very talented and experienced people have many opportunities, and they would often shy away from working in a company that defines it self as being “founder lead”, because you then risk being squeezed between founders that feels entitled to take the final decisions, even though they might not have the best skill set or experience to take decisions.

A “partner lead” company will not keep founders sacred just because they are founders. There will always be some level of veneration for founders, and when moving people around there will probably also often be more flexibility, but optimally a company focused on getting things right in the long run will prioritize having the right people in the right places. Not necessarily easy to evaluate who should rightfully sit where, but too often co-founders are obviously sitting in positions that are not helpful for them, the company or anyone else. Many founders also don’t want to be stuck in an exec position, but would rather be in different roles that suit their temper and personality better.

In my ConTech startup GenieBelt we are partner lead. We have a couple of co-founders that are in key positions in the company, they thrive and do important stuff in their roles, but are not executives. And of the five executives & partners, we are three that were also co-founders and two partners who joined six and 12 months after our formal company creation. But we very rarely talk about who are co-founders, we present our selve as partners, and we talk internally mainly about our partnership – not who were where April 2013. It is not relevant for execution today. The two partners joining post-founding, the product shark Bob and our dear leader Ulrik, would not have joined our Band of Brothers, if they had felt they would be subject to “co-founder’ism”. And without Bob & Ulrik, GenieBelt would not be in the great place we are today.

For those that want neither a partner lead or a co-founder lead company, then there is also the option of having a “board lead” company. But this I can not at all recommend for startups or even scale-ups. A small, smart board that understands it’s role with mutual respect and trust is a great thing for a scale-up, but you still want the strategy and culture to be firmly in the hands of the people actually running the company.