lose your fear of financial failure when starting a business
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Lose your fear of financial failure
Matt Kuppers CEO Startup Manufactory
19/11/15Wayra UK
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• Founder & CEO Startup Manufactory • Co-Organiser / London Ambassador Startup Week Europe• Startup Mentor to Microsoft Ventures Accelerator, London
Business School ESS, Saïd Business School, Startupbootcamp FinTech, Pitch@Palace, an initiative by HRH Duke of York
• Co-founder of MenuSpring, featured in the best British Startup 100 ranking in 2013, currently valued at £3m
• Formerly associate VC firm Notting Hill• PhD student at LSE + nine-week course in entrepreneurship at
Saïd Business School, University of Oxford.
Speaker Matt Kuppers
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Startup Manufactory services
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Strategy
Marketing
Product
Human resources
Innovation Competitive advantage
Competitor analysis
Marketing mix execution
Route to market
strategyProduct viabilityanalysis
MVPdevelopment
Product roadmap
Financial modelling
Fund Raising
Strategy
Team building
Resource allocation
Personal developmentMentoring
Top
Leve
lO
pera
tion
al L
evel
Early to mid-stage startup development cycle
Finance
Strategy Company structure
1:1 Mentoring
IdeationBusiness
model development
Price elasticity validation
Knowledge capture
Product launch
Product viabilityanalysis
Fundraising
Leadership
Strategic management
Market insights
capitalisation
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Startup Manufactory eco system
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On failure
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On failure
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What constitutes failure?
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On failure
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The FACE project, in collaboration with Prof Jan Brinckmann from ESADE Business School, conducted a study named Delphi Study on the Fear of Failure.Findings:Causes of the Fear of Failure• Financial related fears• Career related fears• Competence related fears• Self-perception related fears• Individual liberty related fears• Social perception related fears
FACE Project, (2015). Failure Aversion Change in Europe The Delphi Study. [online] ESADE Business School. Available at: http://www.face-entrepreneurship.eu/index.php/en/blog/articulos/the-fear-of-failure-is-a-natural-part-of-the-ict-entrepreneurship-process [Accessed 15 Nov. 2015].
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On failure
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The FACE project, in collaboration with Prof Jan Brinckmann from ESADE Business School, conducted a study named Delphi Study on the Fear of Failure.Findings:Negative Consequences of Fear of Failure:• Delay in starting out• Some may never start• Part-time, most likely to close down• Not taking necessary decisions• Psychological issues• Casino behaviour (all eggs in one basket)
FACE Project, (2015). Failure Aversion Change in Europe The Delphi Study. [online] ESADE Business School. Available at: http://www.face-entrepreneurship.eu/index.php/en/blog/articulos/the-fear-of-failure-is-a-natural-part-of-the-ict-entrepreneurship-process [Accessed 15 Nov. 2015].
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On failure
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The FACE project, in collaboration with Prof Jan Brinckmann from ESADE Business School, conducted a study named Delphi Study on the Fear of Failure.Findings:Positive Consequences of Fear of Failure:• Sense of urgency• Driver to do everything to gain success• Entrepreneurs better plan their efforts• Minimise potential risks• Casino behaviour (no plan B)
FACE Project, (2015). Failure Aversion Change in Europe The Delphi Study. [online] ESADE Business School. Available at: http://www.face-entrepreneurship.eu/index.php/en/blog/articulos/the-fear-of-failure-is-a-natural-part-of-the-ict-entrepreneurship-process [Accessed 15 Nov. 2015].
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On failure
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Failure is a formative experience!
Find your own definition of failure!
Knock-backs are part of the progress!
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Real life case studies
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Real life cases
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Psychological scientist Anuj Shah et al of the University of Chicago Booth School of Business conducted three studies on rational behaviour in the context of scarcity. Findings: Scarcity makes insensitive for proportional discount sizes• High-income participants were more willing to travel to get a
$50 discount on a $300 tablet than they were for the same discount on a $500 tablet
• High-income participants were more willing to travel for the discount on a $500 tablet than a $1000 tablet
• Lower-income participants, however, were less sensitive to the proportional size of the discount
Association for Psychological Science. "People value resources more consistently when they are scarce." ScienceDaily. www.sciencedaily.com/releases/2015/02/150212131828.htm (accessed November 15, 2015).S
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Real life cases
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My personal experience
PhD student (2009) VC Firm (2011) MenuSpring (2013) Startup Manufactory (2015)0
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Income Fear Happieness
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Real life case study AAfter• Happy• CEO of his own
startup• Launched product• Raised €500k• £50k salary• Moved to Chelsea• 50h-week• Spends weekends
with family• Married, father of
one
Before• Former Investment
banking/Hedge Fund Analyst
• £100k salary• Two-bedroom flat in
St James• 80h-week• Weekend flights to
the US• Party in Dubai• Expensive girlfriend• Unhappy
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Survival techniques• Airbnb’d flat in St
James• Crashed at his co-
founders’• £0 salary• Startup loans• 80h-week• Fed on Tesco only• Got himself a bike• Working tax credits• Free interns for
startup
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Real life case study BAfter• CEO of his own
startup• £30k salary• Launched product• Raised £380k
angel investment• Two-bedroom flat
South London• Back to being a
foodie• Got top job with
Airbnb
Before• Software Engineer
India• £80k salary• MBA at London
Business School• Two-bedroom flat
near Regent’s Park• Car owner• Foodie• Spend money on
expensive gyms and exercise
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Survival techniques• Moved into bedsit• £0 salary• Worked with interns
only• Product development
India• Used business school
gym for free• Fed on business
school canteen + sold car
• No flights • Housing allowance
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How to mitigate financial failure
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How to mitigate financial failure
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What is your personal runway?
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How to mitigate financial failure
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• Assess cost structure• Each liability individually• How much cash in the bank?• Which revenue streams? • Change flat, sell car, sell assets, cancel contracts, scale cost
structure down• Find cost-efficient alternatives for liabilities
Before starting out
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• Prioritize expenses and think back to student days• Have a contingency fund• Loans pay-off• Get proper insurance• Prepare to go without salary for at least 9 months to a year• Don't pool your money• Utilise shared spaces and services: Being a part of the shared
economy culture is not just hip but helps in cutting costs• Do not take on additional financial commitments: You do not
have a regular income and your business needs liquidity at this stage
How to mitigate financial failure
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Build a safety net
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How to mitigate financial failure
Mortgage Transport Newspapers
Food Drinks
Pause retirement saving
Fashion
Presents
Family
Internet Sky
Mobile phones
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How to mitigate financial failure
20% Savings (Debts, loans, retirement, etc.)
40% Needs
(Rent, mortgage, medical bills, utility, etc.)
30% Wants(Gym, Fashion, Holiday, Tech
gadgets, presents, etc.)
10% Essentials(Food, communication,
transport, etc.)
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Before you take the plunge
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Workshop
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Presentation time
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Freebies for Startups
WordPress Joomla
The Amazon AWS Free Tier
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http://growth.supply/free/
http://www.producthunt.com/@hnshah/collections/free-stuff-for-startups
https://blog.growth.supply/300-awesome-free-things-e07b3cd5fd5b
http://startups.timeetc.com/ensemble
http://www.greatbusiness.gov.uk/
https://startupdirect.org/
Freebies for Startups
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Matt Kuppers | Founder & CEO+44 7958 274 [email protected]
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Startup ManufactoryINSEEC London32 Aybrook StreetW1U 4AWLONDON
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