 Hello, everybody. Welcome to the last talk of the day. And I have to open it with a really poor pun. Now, if you're here because you're trying to figure out how to party and drink till 4am for the third day in a row and not die, I will not be able to give you that answer. I'm born and raised in Poland. I've been grappling with this issue since I turned probably 15. I still haven't found the answer. However, what I will talk to you about is 10 reasons why startups die. And more specifically, what I'd love to do is tell you about how to perhaps avoid these 10 reasons. So hello, this is me. What do I know about startups failing? I'm going to slightly embarrass myself and show you a picture from 14 years ago. This is me back in Krakow, Poland, pitching my first ever startup. The world was very, very different back then, to say the least, in terms of availability of capital, availability of talent, access to mentors. And we had this great vision of building a social media platform that would help people travel around the world. But, well, you can already start imagining how this story went. We launched in 2010. We actually did extremely well, given the little resources that we've got. We got to 200,000 users. And then we died. We died for a number of reasons, one of them being that we couldn't figure out how to make money. I will talk to you a little bit more about that. But as you can imagine, it sort of broke me. We were young. We were ambitious. It was very, very hard to get ourselves up from it. But, you know, the funny thing is it's easy to talk about failures when they're followed by some successes. I definitely learned so much from that experience that the further ones were a little bit better. I moved to London in 2012, started a company called Asumo that has saved hundreds of millions of pounds to hardworking migrants who send money back home. After starting a yet another startup, I joined Google in 2018. My company exited in 2019. We were able to raise a fund that invests in black founders across Europe and in Africa. Rachel Palmer, my colleague, spoke yesterday with Christian Facy from all the mobs that we invested in. Since then, Asumo exited earlier this year, and I'm now going back to my roots, and I started a new company in the carbon removal space. So startups are everything that I know. So by the way, if this presentation turns out to be shit, please don't tell me because clearly my entire identity is linked to this stuff. So, 10 reasons why startups die. Is this an exhaustive list? I'm not entirely sure, but I can definitely tell you that if you're not watching out for these 10 things, shit can get really, really rough. If it weren't already rough because building startups is hard. And one of the things that I definitely found is I've really, really enjoyed Slush, but it's incredible just how big the startup industry has become, how much of a lifestyle it has become. So it's important to brace for these really, really big challenges. This is potentially the most important slide I will show you during the entire presentation. Who here is the founder? Raise your hand. There you go. Who here has co-founders? How many of you are afraid of falling out with your co-founders? Well, frankly, I think all of you should have your hands up. And I promise you you should. I've had eight co-founders in my day, and they have all been my best friends at a certain point. And it is very, very hard. It's like marriage, but harder because there is so much money involved. And if you haven't gotten it wrong, there is no sex to make up for it. So 60% of startups fail because of founders falling out. And if I were to give you one tip on how to avoid this, business plans change, recessions come, markets change, but values stay the same. If I were to give you a single tip, that would be when you decide to do a business with somebody else, spend a lot of time talking about values, and spend a lot of time talking about culture. Because a lot of difficult stuff is going to happen. You're going to have to lay people off. You're going to have to decide to move to different countries. Really good co-founders talk about really, really important life stuff. Often, you know, you might have to negotiate with your co-founder whether you move house, whether you should be able to give yourself that pay rise to take a mortgage, or what happens when you have a baby. This is the fundamental relationship. And so often it goes wrong. And a single practical tip that I would give to you, I really, really, really hope that all of you have reverse vesting in your shareholders' agreements, because one of the worst things that can happen to a company is when a co-founder decides to leave, and that's fine. Sometimes life happens. But what if they leave with a quarter of the business, or half of the business, because you haven't reverse vested their shares? So please look out for that. The second one is a bit of, you know, no shit Sherlock. I think everybody here is concerned about it, but there are a few ways in which I would think about it. One is Paul Graham has this really famous term, default dead. Is your startup default alive or default dead? And in principle, what this means is, if you were to continue increasing your revenue at the rate that you currently have, will you manage to get to profitability, or are you going to run out of money? Do you have to depend on external capital to survive? And this is how he defines being default dead. And especially in this economy, the goal will be to try and be default alive. So have enough cash in the bank, or a rate of revenue increase or revenue growth that would keep you alive. Now, I have a separate definition, or my own definition of default dead, that's sort of slightly contrarian. I think there is also a risk that you're so afraid to spend money that you don't do enough, that you don't innovate, that you don't hire the best talent that's available. And this is also a version of being default dead, because just surviving is probably fine if you're waiting for new information, if you're waiting for markets to turn, but if you're not really making it big, then chances are in startup land, that's not going to be good enough. So there's also an element of sort of knowing how to back off if things are really not picking up. Also, as we're on the subject of running out of money, I'm sure everybody here is aware of this, but also, you know, aside from the fact that, A, it's really good to have revenues. If you can figure out how to get revenues, please do. I think VCs have made many of us a little bit lazy, unfortunately, you know, sort of subsidizing growth and subsidizing products for a very, very long time. But also, VCs are not the only way. You could, you know, there are grants. Some people say it's boring and annoying to apply for them, but there's a lot of public money around. There are loans that are available to startups that is revenue-based financing. So if you cannot raise VCs, don't panic. Look at other options. This is another slide that I really, really love. Many people say culture eats strategy for breakfast or lunch. Actually, I'm not sure. Very important meal. And this could not be more important. One is related to the quality of your talent. Companies are just selections of individuals that are deciding to pull together and go in the same direction. If the quality of talent is not good enough, chances are you're not going to outrun your competition. And there is a general trend that A players hire A players and B players hire C players. It's really, really scary to hire people that are smarter than us. But it's possibly the best idea that you can have. When we started Asamo, I was 24. Everyone that worked for me was much more experienced than me. I've learned most of what I've ever learned from people that worked for me. It is true to this day. Quality of talent is incredibly important. The other thing I would say is a lot of startup founders, especially Techies, I don't know if any of you read the book surrounded by idiots. It's a really, really good book that talks about different personality types and how they work well together. A lot of founders are red and green or red and yellow. Basically, what that means is you're super focused on execution, not necessarily always the highest people skills. Somebody that works for me, who's actually in this room, asked me a few months ago if I really want to manage people or if I just want to build stuff. And she really made me think, because a lot of the talent that you've already got are going to have to nurture. It's, you know, what are your learning and development budgets? Are you throwing a party every Friday? It doesn't have to be fancy, but it's important that it's there. How do we make culture work in remote? If you are not the right person to find answers to these questions, then make sure that your co-founder or somebody in your company is. And actually, yesterday, we heard from Christian Facy, he was talking about regretting not hiring a head of people before. This is a really, really important function and it's people, not human resources. People are not a resource. All right, on to the next one, not testing and learning. Obviously, we all talk about data. Data is really important. But what does it mean in practice? There are two challenges that are sort of at, you know, there's tension between them. One is the risk of getting something too perfect. So when do you launch? What do you show to the world? Do you wait until it's exactly how you want it and doesn't have to be building a new company? It can be shipping a new feature or shipping a new product or showing a new idea to a client. If you wait too long, there's the whole tension between waterfall and agile. If you wait too long, chances are you won't get the benefit of getting their feedback. A lot of us are perfectionists. It's a really, really scary thing. But whether you are B2C, and I think B2C actually forces founders a little bit more to do the testing because you look at your finals, you look at your data and it's really, really critical. In B2B, it can be harder to define what that test and learn means. But I really think that for each product, you should have a definition and you should follow it really, really carefully. And there is also something about... This goes back to culture. A very sour experience from my own time. I, in one of my previous companies, a colleague made a pretty big mistake, lost a fair bit of money and my co-founder came out and humiliated him in front of the room of all of his colleagues. Now, as you can imagine, pretty much everyone else stopped trying new things because they were afraid that they would get publicly humiliated. Not a very good thing for people to be afraid of. So combined with that testing and learning, there has to be a culture of acceptance that sometimes when you try shit, it will go wrong. And one of the smartest people I've ever met, a very senior executive from PayPal, talked about how children learn to walk. If babies didn't fall, they would never learn to walk. So that whole sense of actually celebrating mistakes, if you have a weekly town hall, if there is a way of saying, oh, we did this thing and it didn't work, thank you for that test. And again, making that into the culture. All right, that one I feel very passionate about. Making stuff people don't want. I know it sounds really obvious, but again, a lot of founders are very passionate about the stuff that we build. And this can be because it's super innovative or because it solves our own problem or because we've talked to all of our friends and family and they think it's a really great idea. But the challenge is that often it goes back to the testing and learning, it's all interconnected, almost as if I thought about it before. Chances are that people might not consider this as big a problem as you think. It might be that what you're trying to build is more of a feature than a product in itself. Chances are that there are good signals from the market, that it's a fad, that somebody thinks it's a good idea. And then in practice, it might be tricky for that to become a core of what you're doing. And again, an example from my past life. At Asimov in the height of 2016, everybody's talking about mobile and how important mobile is. And we knew that sending money to bank accounts or actually even for cash pickup, it can be quite complicated because you need to know the types of bank account numbers in different countries or it's hard to figure out an address. So we were like, okay, we're going to have this great idea, we're going to figure out how to send money to a phone number. So all you need to know is the phone number of the person you're sending to and they can then pull up all of the details themselves that reduces the risk of getting it wrong. Brilliant idea, incredible idea. We directed two-thirds of all of our dev resource to build it. It took us a year, we shipped it, we discontinued it two years later. Largely, it turned out that we were solving for the wrong thing. That people, when they send money, what they really want is they want to understand what's going to happen down the line and as trust is so critical in financial services, when they were getting to a place where, okay, so I've only given that person's phone number and now I need to charge my debit card to the tune of a quarter of my monthly salary, that was terrifying for them. So we thought it was a very good idea, but it turned out people didn't want it because this didn't map to their mental model of what sending money looks like. Now, there is a variation of this slide, making stuff that people don't want to pay for. And that is, again, tricky because we are used to these big success stories of very often VC-fuelled companies where you don't have to worry about making money. We've all heard it many, many times, don't worry about revenue, just get the growth. Get the growth and get the data and be fastest to market and it's going to work. Now, ideally, you would still have a very good idea of... And you might not have to know exactly how to price it, but as far as I'm concerned, you should at least have a test that there is, what's the price elasticity of that product? What are the chances that you'll be able to make any significant amount of money from that product that's going to substantiate the effort that you're spending on building it? All right, moving on. Ignoring the competition, that's a tricky one because a lot of people panic when they see competition. I actually think competition is great if there is a lot of competition. Chances are that it's a very big market, that it's attractive, that there is money to be made there and that it's solving an actual problem for people and for companies. Now, how to find the balance between ignoring the competition and watching it without panicking? There is a really good story. One of the most successful productivity tools, the founder tells a story of how he was so convinced that he had the best product on the market, that it didn't matter that there were other entrants coming in because his product was superior. The challenge was that he was so focused on building a super sophisticated product that he was not doing enough sales. The inferior product went on to get a fair portion of revenues of the back of that raised a ton of money, with that money hired all of the great people with all those people built as superior products. Again, it's not necessarily rocket science, but there is, you know, VC is always asking about, you know, what's your moat and how defensible is it? Speed to market in my personal view is the best one, the strongest one. I much prefer it to patents or, you know, trade secrets. These things are helpful. Relationships are important. Another challenge that I think often people say, we have really good relationships so we can monetize. I would stress test that. It's not always true that you can just flick your fingers and turn that into money from one minute to the other. Watch the competition, speak to competition. In my new industry and climate tech, I really hope that we can actually talk to each other a little bit more and innovate in spaces together and create the new definitions of good together, rather than everybody in their own corner. I hope that there is going to be a bit of a trend of friendlies or fellow travelers in business. Another one, it's just not big enough. What does that mean? I mean, again, those of us that are raising VC will know that there's always this question of how big can this get? And a VC will always want to see a billion-dollar company to build a billion-dollar company. Ideally, it'd be in an industry that's at least 100 billion so that you can ambitiously aim for 1% of the market. There are many problems that are this big, but they aren't all in the same country or within the same vertical. There's a lot of ways in which to think about it. If you're passionate about a problem and about a solution, one of the ways, if you're worried that it's more of a feature than a product, one of the solutions might be looking at how quickly you can scale this internationally. I'd argue there's never been a better time to be a founder. The world is more and more interconnected. We all speak similar languages. COVID has given us ability to work remotely, but I would really ask yourself, if you're obsessing about a problem or you're really running a successful business, you want to build a new product, there's also a case there for focus. And not introducing too much complexity. But if you're really passionate about something, make sure that it's going to be big enough to again substantiate that effort that you're putting into it. Now that's also a good one, being too optimistic. And it's funny because founders are visionaries and I think all of us in this room probably passionately care about the things that we're doing. And we broadly believe that the world is changing for the better and that we have agency in the world, that we can make things better. The problem is when these optimistic assumptions become part of what our business model is built on. A very good example of that is cost per acquisition. Who here is running a B2C business? Yeah, okay, some. Do all of you worry about cost per acquisition? I suppose so. Do many of you assume that it's going to go down over time? At Google I've worked closely with more than 200 startups. I've seen tons and tons, probably thousands now, of decks and business pitches. And one of the biggest challenges is when you assume that things are going to get cheaper over time in practical terms, it often gets more expensive because of competition, because of saturation in the market. Because, broadly, it is not a very good idea to assume that today the business doesn't check out financially, but in two or four years' time it might. There are network effects. You're able to do a really good refer a friend scheme. These things all work, but I would generally conservatively assume that acquiring customers is going to cost the same over time. Now, the other piece about being optimistic is about cost and timeframe of building. It's a little bit like if any of you have renovated a flat or a house, you know that it always costs twice as much and it takes twice as long. It is exactly the same in software and in hardware, especially with the recent supply chain shortages. I would argue in hardware it's even worse. It probably takes three times longer and it costs three times more. And it's, again, one of these examples of how can you take your best estimate when you're working on a new product, sit down with your team, think what you think is going to cost and how long it's going to take, double both numbers, if you're in software, probably triple. If you are in hardware. Got two more. Getting distracted. Now, this is going to potentially be unpopular, but I could say with a certain degree of certainty, regardless of how much fun Slush has been, Slush organization are not going to like me for this, regardless of how much fun this has been, probably half of us shouldn't be here. If very likely is a distraction, if you didn't come here having meetings in all of your key business areas set up already, if you aren't coming out of this with really robust and tangible outcomes for your business, chances are this wasn't as good as it could have been for you. And founders get distracted by events, founders get distracted by PR. I'd say PR is very powerful, because especially if you're a first-time founder, if you can make a name for yourself, that gives you clout, that makes it easier to raise money. But I really would encourage everybody to think about the ratio of time that you're spending on building your business versus doing everything else. And by the way, I'm not saying that the everything else that you should just sit in the office for 12 hours a day actually really hope that we're going to change the definition of good and that it'll be able to be more sustainable to be a founder, that we won't be requiring 24-7 from every founder, especially if we want to have some women or parents to ever be in this business. But even maybe the time that you're spending doing some of the stuff that's non-core, if you look after yourself, look after your team, your family, I think that might be better. The other way of getting distracted is if you follow a fad. So, oh, there's this really cool thing or maybe competition did something, let me follow this, so let me try this. Focus is probably the best thing that you could do. Now I'm going to sound like a Googler, could not recommend OKRs enough. If you aren't using OKRs, you probably should, because it just makes you laser focused. And if everybody and the team has OKRs, then you can basically make sure that you stay on track. If something is not part of your OKRs, chances are that you shouldn't be working on it. And, OK, so that's the last one. Founders giving up. I mean, the reality isn't, it's not a coincidence. I started with founders falling out and I'm talking about founders giving up. Being a founder is hard. And many of us choose it because we're really passionate about the problem we're solving. Some of us choose it because we had the opportunity, the opportunity presented itself. We were asked to co-found something with somebody. But the reality is, the companies that I've seen succeed, they have almost inevitably all gone through a period of almost dying. One of the companies we backed at Google for startups, Black Founders Fund, he spent two years fundraising. It was six weeks from going bust and raised the six million dollar round and is now building a very successful business. There is a tension between when do I give up or do I carry on? And hopefully, if you carry on, it's for the right reasons. It's because you really care about the business you're trying to build. So let's think about it for a second. Many of us probably in this room have found themselves in this situation where you're six weeks away from not having any money in the bank. What do you do? Now, I mean, I would say hopefully, if your business is going down, you would know not six weeks before, you would know six months before. At the minute you run out of money, it's game over. It's too late to do anything else. If you know six months before, then you have options. One of these options are obviously to try and go for an early acquisition. I'd say this can be quite challenging because founders often think, oh, that's great. If I can just flog it for a million or two, basically not necessarily even worry about returning to my investors, but this is going to give me some cash and I can go and start my life again. The challenge with this is acquisition is not the end, it's a beginning, because most often if you're being acquired, they're acquiring you for you, you're going to probably be locked in. The buyout money is going to be connected to how long you stay in the company. So I would very much ask yourself if you want to be working in the company that's acquiring you. But that is definitely an option you could look at at selling your business for parts. One of the ways you could do it is speak to your suppliers and your partners. Chances are they'd be interested. What you've got to offer, you can obviously go to the competitors. There's generally very little chance that you'll be able to backtrack from that because you're going to give them all of your secret sauce. But if you know that you're going down, it's not a bad idea at all. When is it right to give up? I mean, I really feel because founders are so value and sort of values driven and intrinsically motivated. If you really don't want to do it anymore, if it's hurting yourself, if it's hurting your loved ones, I would probably think about leaving. If you found yourself building something you don't particularly care about, the other thing about giving up ideally, you wouldn't just walk, you could always replace yourself, bring in a different CEO, bring in a different co-founder. But this might sound obvious, but I would really encourage the people to think why they do the work that they do. Is it still giving them the opportunity to grow, to learn? Can they still be the leaders that their teams deserve? But often giving up is really not the right option, and I would like to leave you with a quick anecdote. Those of you that live in the UK might be familiar with this woman. This is the founder of Starling Bank. Now Ann tells her story, she actually wrote a book about it, so I would recommend that you check out her book. But she tells a story of a day when she woke up and her entire team walked out on her. She had absolutely no money in the bank, she had been building something for Starling for a while. Her entire team walked out on her, she was completely out of money in the bank, and the entire Fintech community in London was laughing at her. She tells more in the book. Now, obviously, as you can imagine, the story ends well because she then asks, okay, so what was I supposed to do? Was I supposed to just sit down in the corner of my room and never leave it, or should I just have a cry for two hours, put my clothes on and go out and pitch again and look for money and hire a team that's going to stick it out with me? And she currently has 2% of the retail banking market in the UK and almost 9% of the business banking market, and she's going global. So I think there's very much a decision that we all can take of what do we do when shit gets rough, and I hope that if that happens for you, that you're going to find the energy to put your clothes on, go out and do it again. Thank you.