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Cake Invest – a recipe for technology start-up success

October 24, 2012

One of the companies I’m working with, Cake Solutions, has a passion for software development and working with start-ups. Start-ups are ideas rich, cash poor, so we’ve devised a business model that works for everyone – Cake Invest is the brand, the model we call ‘The Catalyst Process’. Check out the web site, and apologies, I’m not quite in the Daniel Craig class and no Oscars shortlist this year, but maybe next year… http://www.cakesolutions.net/cake-invest.html#.UIagoIVt0gM The goal at Cake Invest is simple: help great people with great ideas build great software.

Despite a promising idea, many technology start-ups are doomed from day one and it’s often because they don’t have the right processes needed to turn technology insights into a great product. Success isn’t just about a twist of fate, timing or a game-changing new idea, start-up success can be engineered by following the right processes from both a business model and software development perspective, and that’s what we nurture at Cake.

A start-up by definition, demands innovative cutting edge solutions that fulfils the vision of the founders, and provides a competitive and commercial edge (faster, cheaper, scalable). They cannot be limited to a narrow scope of technologies, they need the right tools for the job. Cake is experienced in developing new software that is scalable, enterprise level and innovative. Cake is not limited to a specific number of technologies, our expertise is broad enabling us to choose exactly the right technology for the project.

So what’s special about how we work with start-ups? Well, it’s Cake’s start-up process and technology product development model, ‘The Catalyst Process’. The three-stage Catalyst process puts passion building great technology applications at the heart of the product innovation, but also stresses the importance of business thinking and business functions inside the same box. The Catalyst model seeks to systematically reduce risk to technical start-ups for both entrepreneurs and investors, and thereby improves the success rate of innovative technology product start-up businesses.

This three-stage process is as follows:

  • Stage One: We evaluate the opportunity, impartially determine the best technical stack and architecture using the latest and most appropriate technologies and techniques, and offer an early indication of resource requirements.
  • Stage Two: Cake’s own development team build a proof of concept model, which confirms the technical solution and provides a very basic application to begin the customer feedback process.
  • Stage Three: This stage sees the completion of the application to v1.0 and its on-going development with frequent releases. The agile development process adopted requires daily integration with our clients and demos every two weeks.

But it’s not just about the technology behind a start-up, Cake Invest provides an intensive mentoring and business support experience to help super-charge software innovators with their start-up product ideas.

Throughout the period start-ups work with Cake Invest, we provide the following support:

  • Access to a team of experienced and highly regarded software developers
  • One-on-one mentoring from start-up mentors
  • Legal support services
  • Collaborative office space in our office to work alongside the Cake team
  • Exposure to seed investors

I’ve found that out that over the course of working with Cake, participating entrepreneurs hone their business thinking alongside the technology thinking – working on product-market fit, pacing development milestones in tandem with their customer acquisition strategies, understanding their financial model and those vital cashflow dynamics.

In addition, the entrepreneurs will discuss business strategy and share lessons with some of our other start-up client ventures, while really ramping their networks – and sharing a beer, – the core emphasis is building great software, learning and the expansion of a network of peers, advisors and financiers, but it doesn’t hurt to have some fun too. We designed Cake Invest to be the start-up accelerator program we wish existed when folks in the Cake team started on their own venture.

New start-ups today need only a little funding, but they need more help and support than ever before. They need a community of inspirational technologists and business mentors who have the badges and scars, having struggled on their way to a big success, legal and accounting services that don’t cost precious cash, and opportunities to meet and pitch investors.

Besides the business and technology conversations and insights into new ideas, we’ve also learned about the folks themselves, their experiences and how they think, how they’re finding life in start-up land, the psychology of entrepreneurship. It’s early days, but experience and success to date auger well. Of course we’ve had a failure too.

At Cake, I’ve learned about agile, Scala, spring frameworks and functional programming, but most of all I’ve seen what tech entrepreneurship looks like at the coalface. We keep moving forward, opening new doors, and doing new things because we’re curious and curiosity keeps leading us down new paths. Here are my 10 thoughts and reflections after living with the Cake Invest team and the start-up folks:

1. You can start a business without first having an idea. Just go into a market and observe the gaps and the points of customer pain. In that gap or pain, you will spot an opportunity, come up with an idea, and launch a product. Don’t jump onto a bandwagon thinking you can do something better than is currently being done, find open, uncontested market space.

2. The only thing that matters in the first phase of setting up a business is taking an idea into a proof of concept, getting customers, and then getting customers to pay. This means you don’t need a logo, a website, or a finished product. You need the capability to craft your proposition into a prototype with a story. Storytelling is your key weapon when starting out, build a following, and talk with them.

3. Entrepreneurs are confident folks, but often put off what they are most afraid of – failing. Some get their heads down, work hard and build a product for 6 months, come up for air, only to realise no one wants it. They ignore the reality that the purpose of a business is to create customers. Lose that fear of failure and put it at the beginning of your journey, think about it as an experiment. Lose fast, quick and cheaply.

This is a key point. At a business’s inception, resources are limited, and the best content for a business plan is real-world data based on testing aspects of the concept. These experiments need not be complex. You want simple, iterative tests that are easily measurable and let you know whether you are winning or not.

4. Entrepreneurs are often headstrong, yet lonely, work in isolation but thrive in a community with like-minded others. Find a place to share your setbacks, failures, and successes, and create connections. Be part of a community, get connectivity, and folks will help push and pull and reshape your idea, and make it better. Look at the impressionist painters in Montmartre. The Cafe Guerbois, near Manet’s studio became the gathering spot for Monet, Renoir, Sisley, Degas and Pissaro, and the movement was born and flourished.

5. Folks who make excuses about not getting results deflect and bury their head in the sand, but typically suffer from a lack of desire. They are kid themselves, but in reality, just don’t want it bad enough. Those that want it are endlessly resourceful in building their first business. Most hurdles are mental barriers, self-created, if you want it bad enough you’ll find a work-around and make it happen. Go back, reinvent, learn and adjust. As Edison once said, ‘I’ve not succeeded yet, because I’ve not failed enough’.

6. The most important skill for an entrepreneur is salesmanship. I’m not talking about the slick gift-of-the-gab salesman with false charm and perfect white teeth, I’m talking about people who can actually ask for money. The question ‘Would you pay for this?’ is a surprisingly difficult questions for entrepreneurs to ask, but you get feedback – you either get the deal and customers pay, or what you need to get customers’ wallets open in the future.

7. Your social and educational background, age, gender, race, and geographic location have nothing to do with being successful. I’ve worked with circus performers, French-speaking body paint artists, dog walkers, chemists, engineers, shy Serbian developers and students. All of them built their own business model and launched a company. The most successful to date was a student from Sheffield working from his parents’ garage.

8. Picking a business you are passionate about is not as important as being passionate about the process of building a business. Along with passion, it’s about graft. There’s no doubt technology entrepreneurship is becoming its own kind of celebrity – the story of Facebook was portrayed in The Social Network – but the reality is as Eric Reis said: ‘Entrepreneurship is not cool, it’s not sexy and it’s totally uncomfortable. It’s boring and gruelling, and that part is never part of the movie.’

9. Think big, and then double it, then you can go anywhere and do anything. The concept of the ‘Big Hairy, Audacious Goal’ is vital to unleash your thinking. Once you’ve made the decision to start, you’ll see dozens of new opportunities open up that never existed when you were standing still. The hardest decision is the decision to get started. Think and create your business model and how to monetize, don’t spend time working on detail that quickly becomes irrelevant as you find our what the market needs, not what you think it wants.

10. Quit talking, start doing – once your mind-set is reprogrammed to do stuff, you become unstoppable. You lose the uncertainty and reticence that ‘I don’t know how to do that’, this becomes irrelevant – I firmly believe that anyone who wants it bad enough can do this. They can work out what to do starting from scratch. Learn from others, borrow successful models and add some disruptive thinking – for example, look at iTunes and the Bit Vendor Model – how can you take this model into an existing market and create new value?

A start-up is an experiment, we need technology development practices geared to the start-up context of extreme uncertainty. The Cake approach maximises the chances of success, building a great product with enough features that increase the odds customers will want it. It avoids the handing over of a big cash sum day one and hoping a successful product will emerge.

Focusing on the user experience enables the investor to measure conversion. Everyone is aligned, collecting user metrics means investment decisions are based on measured user behaviour, and support the ‘pay as you go’ approach. Making incremental investment, proportionate to projected customer value based on releasing early, releasing often manages the technology and financial risk in tandem.

More technology start-ups fail from a lack of customers than from a failure of the technology or product. The agile investor model starts with lots of small experiences, filtering out failure and expanding investment upon success. It means stop selling start listening to your target customers – chase customers not sales revenue. It also enables the search for the right business model. At Cake I’ve found that serendipity happens, and that innovation is anything that isn’t business as usual.

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