Updated: 9 August 2018
The benefits of being a transparent startup
Why I decided to adopt a transparent model
And, share insight from other successful transparent startups and their founders
What Is A Transparent Startup?
Why I Am Building A Transparent Startup?
Hi, my name’s Paul and I’m the founder of Task Pigeon. Before I get to why I’m building a transparent startup and what I have learnt from the likes of Buffer, Groove HQ and Baremetrics it’s important to start with a story. People don’t often like talking about their past. And it’s easy to re-write history to create a compelling narrative that makes it sound like things weren’t quite as bad as they really were. But if I’m making a commitment to transparency, I also need to be transparent about the past.
My first two startup ideas failed. And I have wasted time, money and effort on each of them. The first startup idea was a social news app that would split your feed into separate interests. It gained a few hundred pre-launch subscribers but failed before it was built. Why? There wasn’t enough demand for the idea, my technical co-founder bailed due to study commitments and Facebook started doing something similar with their tabbed news feed.
it’s easy to re-write history to create a compelling narrative that makes it sound like things weren’t quite as bad as they really were. But if I’m making a commitment to transparency, I also need to be transparent about the past.
My second startup was a subscription commerce idea. In particular it aimed to deliver a monthly supply of vitamins and supplements around a particular health goal or outcome. It appeared to get off to a much better start. It acquired a couple of hundred pre-launch subscribers. It launched. But it only got a single paying customer. Why did it fail? Our product got diluted. Regulation is different in Australia compared to the US and we went from a monthly offering to a quarterly one. We couldn’t offer great value to the customer and put simply we didn’t convert pre-launch subscribers to customers.
Did I lose money? Yes. Did I lose time? Yes. Would I do it all again? You bet. Each and every business and idea I have had has taught me an immense amount along the way. And not everything I have done has been a failure. I bought my first business as a sixteen year old high school student, employed three staff and owned and managed it for almost 3 years. My second business I built from the ground up and sold it three years later.
But here I am two attempts down and moving forward. I’m more focused than ever. I validate ideas quicker and move at a faster cadence. And now it’s time to build a startup, and a transparent startup at that. I’m literally starting at ZERO dollars in revenue, and don’t even have a completed product yet. So unlike some startups that decide to become transparent later in their life, this is a first hand account of how it happens, when it happens.
I’m literally starting at ZERO dollars in revenue, and don’t even have a completed product yet. So unlike some startups that decide to become transparent later in their life, this is a first hand account of how it happens, when it happens.
So why did I decide to do all this? First of all I have been a strong proponent of giving back to the startup community before you ask for anything in return. I started a newsletter to promote great startup content within the Australian ecosystem. Then I started running ads for free to help other startups out. Eventually this leveraged itself into advising early stage startups and helping out where I could for free. Creating and developing an open and transparent startup is just a further extension of this. While there are some great open startups around the world, there aren’t many (if any?) from Australia and by writing about my startup from day one I hope to tell an interesting and informative story.
I was also influenced immensely by other open and transparent startups. My first exposure to a completely open and transparent startup came via buffer. In fact I found their blog first before I ever knew what their product was or did. I enjoyed their content and the value it provided and when it came time to get a social media tool myself I instantly went to buffer. I didn’t compare prices or features. I believed in Buffer and their story and was happy to be a paying customer. I have also particularly enjoyed what Groove HQ and Baremetrics have done for the movement. So when I sat down to start my own story I felt it only naturally to highlight the lessons I have learn from these companies.
Building a Transparent Startup – What I Learnt From Buffer
It all starts with one customer: There is no such thing as an overnight success. With hindsight it is easy to look back on companies such as Buffer (and even larger companies like Uber and AirBnB) and forget that they all started with a simple idea and just one customer.
In the case of Buffer Joel Gascoigne wrote on this blog back in 2011 that he got his first customer after 4 days. Not one thousand, not one hundred, not even ten. Just one! And I wish I could find the link, but I believe in the first month they only had something like 5 to 10 paying customers at $5 a pop! Hardly a life changing amount. But it all starts somewhere. And it starts with that very first customer.
- Have a point of view and test your hypothesis: Google was the 15th search engine in the world. And Buffer certainly wasn’t the first social media scheduling tool for Twitter. The point is they had a different point of view on how things should work. Joel talks about this in a post on his blog and also references the need to test your hypothesis rigorously. At Task Pigeon we know there are other task management apps in existence. But we haven’t found a tool that suits our particular needs and believe other managers, teams and people are in a similar boat. Task management tools are rarely a one size fits all approach. And we are testing that hypothesis with the launch of our product.
- Content marketing is an amazingly effective form of marketing: After launching Buffer Joel bought on a co-founder Leo Widrich to run marketing amongst other things. He led Buffer’s guest posting strategy and acquired 100,000 users for the product by guest posting alone. The lesson, content marketing works, but you have to be consistent and diligent. One or two posts won’t cut it!
Building a Transparent Startup – What I Learnt From Baremetrics
Baremetrics is an interesting company. They literally make the tool that lets you share all of your revenue details. Now most companies who use the platform keep these numbers private, but they heavily feature and promote their Open Startup wall where anyone can dig into the numbers of startups that have committed to being open. As soon as we launch and having paying customers you can be sure that we will use Baremetrics and be sharing our own dashboard. So what can you take away from Baremetrics and what they have achieved to date:
- There is only one type of validation, money – As I mentioned above I have written about validating startup ideas before, and believe that paying customers trump all else. This obviously isn’t a new idea and back in 2014 Josh Pigford, the Founder of Baremetrics, wrote about this very topic. In particular he says “1,000 people on your mailing list is not validation. 1,000 people on your free plan is not validation. 100,000 Twitter followers is not validation.” As a result Josh highlights how it is important to charge from day one. At Task Pigeon we believe in that philosophy too. While we will have a free version of the tool, we will certainly be making our premium/paid version available on day one. Plus, we only view pre-launch sign ups as 1% of our overall validation strategy. The other 99% comes from getting people to pay.
- Solving a major pain for any business means direct access to their pocket book: That’s another line direct from the Baremetrics blog. It is so powerful that I just had to include it. Josh went on to write that “Pain, on some level, plays a part in nearly every business decision you make. Seriously. Look at any B2B product that’s been built…ever. It’s almost always been birthed out of the need to get rid of a painful process. The reason is, pain is inefficient. We avoid it at all costs. But in reality, that painful process is also usually pretty necessary to the health of the business.” I think that says it all really, so I will leave it at that. When building a startup solve someone’s pain.
- It’s easy to be transparent: This point isn’t written in a blog post or quoted from a speech, but what Baremetric really highlights through their tool and ability to create an amazingly insightful dashboard is that being transparent is easy. Five, ten years ago, maybe not so much. But today it can be done with a few clicks and no code. So if you believe in the idea of an open and transparent culture for your startup there is literally no excuses, and nothing holding you back.
Building a Transparent Startup – What I Learnt From Groove HQ
The final company that I have read a lot about and followed extensively is Groove HQ. The company was founded by Alex Turnbull and provides customer support software. I have found Groove HQ’s story inspiring for a number of reasons. First of all Alex, is very open and honest in his blog posts. He writes as much about what went right, as he does about what went wrong. He also has a different approach when it comes to taking on VC funding and highlights through his own success that not every tech startup needs to take on huge amounts of external capital.
- It’s okay to launch in a competitive space. Groove HQ provide help desk software. By the time Alex had the idea for the company there were already global and dominant players in the market like ZenDesk and Desk.com. One investor was even so blunt to ask:
“Why on earth would you want to enter this space? You’ll be fighting an uphill battle against huge players. Zendesk, Desk.com, plus an overcrowded market of smaller companies.”
But Alex believed differently. He saw a competitive marketplace as validation that there was a need for the software and also pointed out that in his past company that he couldn’t find a solution on the market that did customer support exactly how he wanted. If he couldn’t find a solution that fit his needs, he believed other companies would have the same opinion. That is to say there is no one sized fits all approach to this issue.
In a later post Alex also went on to highlight that there are: 125 million SMBs (small or medium businesses) in the word. Assuming only 5% could benefit from SaaS customer service software that leaves 6 million potential customers. If 80% just choose one of the top three providers that still leaves 20% or 1.2 million customers for Groove and other players. With a price point per customer of $15p/m and the goal of hitting $100,000 in MRR Groove would only need to acquire 7,000 or 0.58% of these as customers. Or put another way the 20% of this market could support 171 companies just like Groove.
- Building a tech startup isn’t necessarily about raising VC funding: Back in 2013 Alex wrote a fairly detailed blog post about turning down $5 million in VC funding. He was opened with the fact that he struggled with the decision for weeks, but in the end decided not to take the money. I think its refreshing to hear from founders who are still committed to building a hugely successful company but opt not to raise funding. I don’t believe there is a right or wrong approach, but in today’s world where we hear about company A, B and C closing huge new rounds of funding it’s important to remember the numerous other companies that have become very successful by bootstrapping or taking on more limited amounts of capital.
- You don’t need to be a technical founder to launch a startup: Now this is a contentious point and I am sure many will disagree, but Alex built Groove HQ without a technical co-founder and highlights through his blog post that it is possible for others to do the same. Admittedly he was in a position where he could pay for an agency after previously exiting his past business. However, if you are an deep seated entrepreneur I believe you can and will find a way to get your product built and out there, regardless of your own technical ability or lack there of. It wasn’t all smooth sailing though and Alex does highlight some of the negative aspects of going it alone, without a tech co-founder. The point of this post was though to show that it can be done, and again I find this refreshing to hear.
As we start our own transparent startup journey at Task Pigeon there will be much more to learn. We are truly committed to being 100% open and transparent and are happy to answer any comment or email in the most open of fashions. So please feel free to start the conversation and learn more about what we aim to do with Task Pigeon in the coming days, weeks and months and years.
Also published on Medium.