The first five years of your business are the most crucial. They can make you or break you – and your business!
Ruby Lee established Tribe9 to help funded startups, scale-up. She says founders should get their hands dirty but know when to delegate as the business grows. Ruby outlines 3 key things that all startups should be aware of in the first 5 years.
Adam Stone is the founder and CEO of Speedlancer – the world’s fastest freelance marketplace. Adam blew his pitch to Coastal Ventures in Silicon Valley and lived to tell the tale. At 23 he’s got plenty of time to recover and he describes how adjusting the pricing model quadrupled Speedlancer’s revenue in 2 months.
Disclaimer: Transcripts may contain a few typos. Similar sounding words can lead to them being deciphered wrongly and hence transcribed likewise.
Interviewing Public: It’s an amazing journey which is up and down like every startup. And I made the silliest mistakes at the beginning. I still make a lot of mistakes, but I learned from them. I laugh at my mistakes afterward and move forward. So it’s like an ongoing growth.
Interviewing Public: I think it’s cashflow probably just this constant big thing happening nothing happening, big thing happening, nothing happening. Keeping that steady is really difficult.
Serpil Senelmis: For WeTeachMe, this is the Masters Series where industry professionals share their secrets to success. I’m Serpil Senelmis from Written and Recorded. The first five years of any business involves many challenges, rewards, highs, and lows. And once the business concept is tested, it’s important to respond to the market to meet and exceed expectations. That requires systems, processes that enable the business to function grow and succeed. It can take a lot of hard work, and we’ve got to experts in harnessing people’s power. Adam Stone is the founder and CEO of Speedlancer. It’s the world’s fastest freelance marketplace delivering work in just four hours. Adam says the key to successful navigation of the early years of business is to be a straw, not a sponge.
Adam Stone: It wasn’t my quote all but it was be a straw, not a sponge. So instead of trying to absorb all the knowledge that’s coming, just pick and choose the advice that you feel is relevant because you’ve got some understanding of your target market so you know where you’re headed in for the most part and where your vision is. So it’s important to be able to pick and choose the adversity or listen to.
Serpil Senelmis: We’ll hear from Adam soon, but first, a professional startup grow up. Ruby Lee co-founded Tribe9 to help fund startups to scale up and achieve their potential after a decade working in HR and recruitment, Ruby is passionate about helping fledgling businesses to hire well. Ruby says in the initial phases of your business, you should do a bit of everything before you start outsourcing.
Ruby Lee: So awesome to be here. That’s really exciting to see future of work staring right back at me. Those of you that are really wanting to either launch a startup, start a business, you might already have a business, been in it for a couple of years. So hopefully today I can impart some knowledge. A little bit of background about me, so I’m a bit of a corporate misfit. I’ve been definitely in corporate for almost 12 years, I was an accountant. Then I moved into HR and recruitment. And then from there, my startup journey began. I also funded my entire business, my first startup while still being employed. So I’m a big, big advocate for the side hustle. My startup journey actually started three years ago, and I call it hustling and love it love that word. I’m aware of the actual meaning of it, but I still embrace it. 2006-2014 was in the corporate world. And then in 2015, I had my first son and I got super bored during maternity leave. And I thought I would start a recruiting blog. And so I started writing to a community of people who wanted to hear about tips and tricks on how to find a job and I thought it was just a really fun way to stay active in the market. What happened was at the time, I called my business, That Recruitment Chick, which is terrible, so don’t judge me for that name. It just sounded really good at the time. But I started the business and my employer at the time, it was not too happy with it. So there’s a lot of employers who don’t love the side hustle, they feel very threatened by it. They are not very accustomed to having a side hustle actually happened within the business. So I decided it was a values misfit and I moved on. I was on the hunt to find an employer that would 100% support me and my side hustle and In effect, I was actually also trying to find someone to fund the business. So it’s a very different funding model. I wanted to go down the self-funding path my business is very much focused on consultancy and a lot of it was sold off my brand. So I didn’t really need huge amounts of funding. I didn’t have a big like tech stack to manage or anything like that. Didn’t need a warehouse. It was purely just me and my laptop, and just something to keep me funded whilst I grew income in what was my side hustle. So I found my employer, I started working with a business called Cogent, which is a ventures based incubator in Melbourne. It was in the software, tech startup space, and we got to work with some amazing founders all around Melbourne, purely Melbourne based. So because of that, I’ve been able to really help a lot of founders scale up with their people strategy with a hiring strategy with how they thought about their next or their first five years in business, and it became my world. And so I got to really interact with a lot of brand new startup founders who were anywhere from, you know, $100,000 worth of funding up to five mil. So it was really cool to kind of be up on that spectrum. And at the same time be building my side hustle, which cost me less than $1,000 to start up. So I kind of had that really nice perspective across the board. Long story short, I’ve got some tips for you, top four lessons that I’ve learned in my own startup journey, but also for lessons that I see over and over and over again, with startup founders who I partner with today. So let’s dive into it. funding through a side hustle, I definitely do talk a lot on panels where we focus on the future of work, we focus on the gig economy, where it’s going, and my entire stance is that the side hustle is the way to go. But you can do that very elegantly in partnership with your employer. The three pillars for me in terms of starting a side hustle was financial stability, so wanting to have an income source to actually help grow your business. Secondly, It’s that creative satisfaction that often we yearn for when we’re in a full-time role. And we can’t expect our employees to tick all the boxes. So for me personally, I wanted to launch my business, my startup, my side hustle, because I didn’t really have that creative avenue in my current role. So I was a recruiter, I loved it. But I was really missing that element. And I think it was that creativity. And thirdly, it’s being completely always intellectually stimulated, wanting to learn. And definitely that’s been one of the things. Since I started my business. I’ve learned so many things like every single day, I’m constantly learning my strengths. Being an accountant is in finance, business operations strategy, and putting together a business plan and the lean canvas. When it comes to creativity like design, UI, UX, building a website, I am so bad at that I’m so bad at that. So I’ve had to really learn and it’s been really fun because it’s ticked boxes for me around creativity and being able to actually excel there as well. So So the first five years are critical, as generally, your cash flow is going to be lumpy. And you’re testing pretty much all elements of your business. I’d say even today, I’m three and a half, almost four years in, I’m still testing every single day with new technology that’s coming in. So be just really mindful about how you’re going to fund that. And then starting your business as a side hustle, I feel ultimately does reduce risk. Employers out there are starting to actually approach me to coach them on how to help them engage with side hustlers and help them keep more engaged in their current role. So there is a shift happening out there. It is happening very, very quickly. And these are large employers before banks before audit firms, it starts from the top but I’m super excited to be sharing that with you. And I’m a massive mascot for the side hustle. So secondly, it’s all about your best customer. So attract only profitable clients that received the greatest benefit from your product or service. Obviously, you want to attract your best client. But can I just say, and this is a question for you, I modeled my business of the type of client that I would want to attract? And therefore I asked myself, am I my best client? So for me, especially with rubylee.co, I really wanted to build a business because I was a side hustler, and I couldn’t go anywhere for that support. I mean, there were business coaches, and there were career coaches, but there wasn’t anyone that I could find in that intermediate bit. So I identified a gap in the market, but I also built the entire business around the type of coach that I’d want to engage right. So what I do now is I’ve got a couple of thousand people in my client list. I use HubSpot to capture all of my customers, my clients. And so quite recently, I went through it and literally line by line how to look at who are my most profitable clients because we all know that as soon as customers and clients buy from you, they will continue to buy from you unless you significantly fuck up. Can I help you?
Ruby Lee: Okay, yeah, so seriously, I’m like podcast. But seriously, I do feel that it is such an important exercise to do no matter which part of the business cycle you’re in, to continuously check in on who are your mad, crazy fans who basically want to buy all of your shit, and you guys will be able to identify that very early on in your business journey. Think about the cheerleaders that you have on social media, those that stalk you that follow you on LinkedIn, that want to share all your content. They’re the people that will refer others in their social network to you. They’re the people that will be like screaming to send you a testimonial because they’ve loved your product or your service. So identify your best customer and basically summarize that into a concise statement. What makes your best customer awesome. And then that becomes your core messaging for everything you do. It goes into all of your social media posts, it goes into your brochures, it goes on to your website, think about it in reverse. What are your testimonial saying? And how do you repurpose that content? There’s no point sitting there scratching your head going, oh, you know, how do I talk about my business, your customers are already doing that for you just bring that to light a little bit more. This is me with my people head-on, and my HR head on and I have to talk about this because a bunch of you are hitting that four to five-year mark, in your business journey. And usually, at this point in time, you’d know your customer base, you’re ready to grow, you’re ready to scale. And then you think they’ve got to actually employ people if you haven’t already. And so the most common roles that I would say come to me would be sales, definitely on the developer side of things and design and UI. These people are so hard to find. So this is why I think it’s really important to start thinking about not just your consumer brand, but your employer brand as you scale and grow and as you want to visualize where your business is going to go in the next five to 10 years, think about how you want to talk about yourself as a boss because quite seriously, that’s the one differentiator in market to help you scale your business. You need people to scale. You don’t need tech, you don’t need money. You need good people in your team. And you’re only going to attract great people. If you can get your culture down path, you get your message down path. Employer value proposition is really about knowing what an employee would want for you. So for those of you that are in current jobs or in current roles, what keeps you at your employer? That’s what an EVP is, what attracted you to work with them? That’s what an EVP is. And so in reverse, as you’re thinking to hire, why would someone want to come and work for you? They want to know what kind of boss you’re going to be one of the founding members of your business actually saying about you and how is it going to help you grow? So I just had a little point in here about building communities and doing that early doing that through your social media, going to meetups. creating groups online. So I started a Facebook group. And it has transformed my business because I built a community around side hustlers. And it has really, really helped me understand my customer, obviously rented business from it, draw an income from it, but also be able to support a community and understand what they need from me. So think about how you’re going to build communities and branding.
Ruby Lee: And lastly, getting your hands dirty. In my very early days, and I just talked about that I’m really great at the financials of my business, I’m a numbers girl. But I immediately thought, okay, there’s no way I can build a website, I’m just going to outsource it. I’m just going to get someone else to do it. Might go to Fiverr or Feelancer, someone who can do it for me, junior developer, whoever it was, and then it dawned on me, it’s like no, actually, I kind of want to give it a go and I want to learn and I’ve got some time because I funded my business from a side hustle so I had income coming in. And so I thought, you know, bigger opportunity to learn and I ended up learning how build a very simple website, learning how to do like very basic CSS coding, HTML coding. And it was great, I loved it. But what that actually did for me was helped me put a value on how awesome it was to get outsource help, and be able to sort of say, hey, this is what I want out of my website, I know that it does take time, I’ve given it a go. So I understand what I’m asking from you is going to be quite tricky. And it just gives you that one step more savvy and a little bit closer as you’re building your business around how to negotiate where you place value, what services you actually need, and where your strengths are. But there comes a point where you do need to let go. And you know, I know a bunch of us with founders with startup founders, and you just kind of have this like control freak quality. I call it a quality because it is but you know, you kind of want to be able to go right like where is now my time best spent? So as you start to move through that first five years, like if you’re hitting the two to three-year mark, and you still doing your accounting and finance and you’re not using someone like an MYOB to help you automate your financials, then you really should be thinking about how you’re going to be doing that. So I say this with get your hands dirty in the early stages. If you are heading towards the three to five-year mark, start to think about how you’ll outsource. That’s it for me. Thanks, guys.
Serpil Senelmis: So it’s pretty simple. If you’re new to the startup game, start with a side hustle because cash flow is going to be a bit lumpy. Thanks, Ruby. In a moment, we’ll meet Adam Stone who founded the world’s fastest freelance marketplace.
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Serpil Senelmis: Adam Stone got started early as an entrepreneur at the age of just 12. Since then he’s one student Entrepreneur of the Year and founded Speedlancer, the world’s fastest freelance marketplace. Adam believes the key to startup success is having affordable people power available when you need it. That’s where Speedlancer comes in.
Adam Stone: Thank you a bit about me and why the obsession with freelances? Yeah, so I’m 23. So on the younger end of the solar spectrum, I started an eBay business selling BB guns on eBay and then progressed from there to the wonderful world of mobile phone unlocking super furnace with one network and you want to take it overseas, you could go through us. That one did decently well. So it became the number one retail and walking provider online and we had over 100,000 paying customers. I started Speedlancer in 2014 as a side hustle while I was studying in university, and the idea was I had a lot of experience hiring freelancers through my previous business. So we had a team in India and the Philippines. And that’s how we ran the whole business. So about 10 of us at some point, developers, customer support reps, and like enterprise customer relations as well. And that’s when I realized through, you know, using every platform out there, Elance and oDesk, which became Upwork. And then fiverr.com, I realized that there are all these problems using freelancing platforms. And that’s when I decided to sort of do something about it. And that’s where Speedlancer’s came from. There was a bit of serendipity involved because it was a side project. And we were doing like 100 bucks a month at the time. And in December 2014, I met Dave McClure, who was the founder of 500 Startups, and that’s where the company became a real company. I’ll share an interesting story. I got asked to pitch to Khosla Ventures, which is one of the most respected VC firms in Silicon Valley. They do all this med tech stuff, and it was a partner that asked to meet with me and everyone from the team of 500 Startups was so excited, like oh, you know, you’re going to Khosla ventures. I was like, I don’t even know who they are. I don’t know how to pitch in there. Like I’ll just do a demo day pitch and I said demo days in three months’ time now like, oh, you’ve got a draft pitch deck, don’t you? I said, yeah. And it was like, just some text with different fonts that I’d put it together. It was about five slides in two and a half minutes. So I went in two-hour train ride to Silicon Valley, Sand Hill Road, entrepreneurs dream, and I went to go pitch. And yeah, two and a half minutes later, I was out the door. And then I went back to 500. And I would like, so how it to go? So yeah, I think I went I think it went really well.
Adam Stone: And they said, they said, so tell us about it. I was like, Well, you know, I practice my demo day pitch. And they said, what the two and a half minute one? I said, Yeah. Like, and then what said, that’s it? Is it all right? It didn’t go very well. That’s okay, keep trying. So from there, where we’ve come, we’ve had 1600 clients to date, people during 500 Startups would say, Oh, I’m never going to use a platform like this because I need to be able to choose my freelancers. And I’m very proud that we’ve achieved 94% satisfaction on every single task. So it’s a four out of five rating or above. So what happen is Speedlancer instead of hiring a freelancer, the whole premise of what we do is that we’re an outcomes-based kind of platform. So instead of choosing someone, you sort of rely on us, we’ve got a network of 500 curated freelances routers from Inc, The Guardian, Huffington Post, Y Adventure, someone from Oprah Winfrey’s network designers who credit directors are from around the world. Data Entry, people hope we’d like lead generation sales stuff, and also some front end or back end developers for your common WordPress type things. So how are we different is we’ve got two products, one called tasks and one called bundles. And of course, there’s been a number of setbacks along the way. So I had a visa rejection for good two and a half years, which led to failed fundraisings right off to 500 Startups. I had an investor offering 500K, right after the program, and they said, can you fly to San Francisco to you know, sign the cheque? I was like, nope, not allowed there, sorry. And so that one fell through pretty quickly. So for two and a half years, I wasn’t even allowed back, which meant I had to raise some money from Australia. So raise the small amount of money from the Murdoch’s Venture Fund, which is really exciting and some other angel investors. You know, after pitching to 100 people, eventually, you get one finally got the visa sorted about six months ago. So it’s been really helpful. The other setback, well not really setback, but advice was listening to the well-intentioned advice of others who don’t really understand your vision. So sometimes when you’re trying to break things, you know, you’re trying to innovate in an area, people just don’t understand it and that’s fine. It’s not their job to understand it, it’s your job to have a product that actually makes sense to them if they’re a potential customer. So sometimes when you have mentors, you know, their job is to provide advice based on their background, but that’s not necessarily going to apply when your business actually comes in. Because you’re working on different things, you’re trying to break rules. And when that happens, you kind of have to choose so I heard a quote the other day, which actually MYOB quoted me on the other day as well. It wasn’t my quote at all. But it is be a straw, not a sponge. So instead of trying to absorb all the knowledge that’s coming, just pick and choose the advice that you feel is relevant because you’ve got some understanding of your target market. So you know where you’re headed in for the most part and where your vision is. So it’s important to be able to pick and choose the advice that you want to listen to. The other one is lack of distribution models. And then the extension of that is matching your pricing models with your distribution models. So distribution is how you get your product out there, be it marketing or sales, inbound, outbound, paid acquisition, free SEO, cold email, PR, all these things. And then the part that people don’t talk about very often and took me a good two years to actually figure this out, was that pricing has to actually fit into your distribution strategy. So walk through that in a minute things we’ve done well over time. So I come from a like a bootstrapping background, if you want to call it that says self-funding as opposed to fundraising. My habit is and I think it’s important to be able to at least stop through breakeven, if not profitability points whenever you can. So just the fact that you have, you know, a month in your profit and loss statement that shows what the numbers could look like. If you were to break even, it sort of proves to investors that you can prove to yourself that you can do that as well. So people will always ask you to how much runway do you expect this fundraising will have? And they always hate it when I say or, you know, okay, let’s say 12 months, but realistically, I’m not going to let the company die, sorry. Even though that’s sometimes what investors want, because they’re aiming for 10 to one odds, so that, you know, they like to see you break everything in the worst case. But I think it’s important to be able to stop through breakeven, also having a process-oriented company, because I have used freelances, to run my previous business. That’s something that I had to do innately. But it’s something that I found a lot of people don’t do so they run their businesses as people focus companies, which is fine. But as long as you as a founder are not relying on that one person, if they have to leave or if they quit, or if they’re underperforming. If someone wants to work for me, I make it clear from the very first engagements that they have to document everything they do. And that helps them because if we do really well or they do really well, then I can promote them in a second and then could hire someone really quickly under them and maintain a process. And that also means that we can effectively use that combination of in-house outsourced, and obviously speedline to type talent and fit that into the processes. Rather than not having a process and you don’t know where everyone fits together with freelancers probably work out.
Adam Stone: I’ve got here sales is actually all down to its pricing models. That’s something that people don’t often think about. So we started off with $50 tasks. That is where one person submits one task on Speedlancer and one freelancer delivers it normally within four hours. And that’s what we call like a $50 task. That’s like a token amount between 50 to 150 bucks typically, few typical four-hour task, some freelancers deliver their work in 10 to 20 minutes. So you know, they can do a bunch of these and actually earn some decent income as a gap filler as well. But what we realized was that weren’t really getting much traction because our sales model was cold email, and if you’re doing cold email, then surprise you have to follow up with the call. If you do a call and then some of them say one to 10 are actually converting onto a 50 dollar product doesn’t really make much sense, made sense to everyone else just not me, I was a bit late to that game. And that’s when we thought to develop the bundles product, which is what is so different about Speedlancer. So without bundles instead of hiring one freelancer, or instead of getting one task done, what we do is we string together a bunch of tasks. And we’ve got a paid and pending platform, a workflow-based platform. What does this approach so we got a pending platform called bundles. And it’s a workflow-based system, meaning that we can string together multiple tasks in a certain order. So let’s say you want a sales development campaign. We’ll do the lead generation, sales, copywriting, the lead enrichment, the email sending, and the follow-up. And then we actually have a sales development rep who sits on the inbox and monitors every day to check the inbox and nurture these people into warm leads. Or it could be a content marketing campaign where we do the planning 20 topic ideas, then the research then the writing then design. So it’s what we call bundles and funnily enough it’s 10 times the price so it’s actually an upsell from just a straight two bundles, but it actually adds more value to our customers. So I’d say that it’s more than 10 times the value, because instead of having to manage all these different types of talent, and somehow create a workflow, we just do that automatically. So that’s something that our customers have really enjoyed. And then we got to the concierge plan, which is $6,000. And we had to do that because it didn’t make sense to sell a $500 product with a cold email and then a phone call, only made sense to jump on the phone for like a $500 a month plan. And that actually helped us engage new customers and excite them because they were so used to dealing with freelancers, working with them long term and maintaining that relationship and that point person. So I said, okay, why don’t we give you that point person as a concierge, we add them onto Slack, which is the live chat platform. And they can actually, you know, stay engaged with us long term, surprised that actually helped us score new customers and increase the lifetime value and then some customers end up upgrading and referring other customers as well. So upselling cross-selling And now it makes a lot more sense to fit in with our distribution strategy, which we already knew about, which is called email, and retrofitted the products to fit that. So that happened to work well for us. And that correlated with our growth. So during 500 Startups, we’re doing a few thousand dollars monthly recurring revenue wasn’t actually recurring at all, that 18 months ago, we launched the bundles, and that doubled it. But within two months of launching the concierge plan last year, we grew four times just by having that pricing model fit the distribution model. And it also helped close new sales. So within two months, we’d only gotten two months of revenue out of them. But I think it doubled the sales rate as well. So that’s probably how we got to four times. Actually, I learned from one of our advisors a few years ago, and it just took me a while to actually learn this, the importance of having three tiers of pricing. And it’s we almost have three tiers, in a sense, you’ve got the task bundles and the concierge. And the idea is to add value that doesn’t actually cost you as a company anymore. So with the concierge plan, that’s just our support team that we add on Slack. So we found a way to engage our customers and provide additional support to them, and provide additional guarantees like double revisions and task replacements. We’re so sure that it will be right that task replacements aren’t really an issue, especially after the revision. So, freelancers, we encourage them to provide more revisions anyway to have a bit of rating. So those are pretty easy guarantees for us to provide. But that is still valuable for the customers. Yes, so that’s us.
Serpil Senelmis: Wow, what an impressive 23-year-old, when I grow up, I want to be just like him. Thanks, Adam. And thanks also to Ruby. I’m feeling a lot better about my first five years in business now. Although there’s plenty of work still to be done. Next week, building a powerhouse brand. Does your friends some of your business in a way that your preferred customers will understand? We’ve got two marketing heavyweights joining us that will help focus your brand’s message. Until then, I’m Serpil Senelmis from Written and Recorded, and for WeTeachMe, this is the Masters Series.
Adam Stone: And there’s also product-market fit which some of you probably more familiar with, which is how your product and your market have to fit. I deserve a Ph.D. for that one.
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