I recently got the chance to deliver a closing keynote at Cambridge Tech Week. Instead of my typical talk on how AI impacts business and society, I talked about my entrepreneurial journey, starting and investing in companies, as well as the social, political, and economic challenges facing UK startups.

But perhaps the most interesting part was sharing my tips for new entrepreneurs. I got up to sixteen before running out of time, but people seemed to find them useful, so I figured I’d share them with you, too:

1.It only gets harder

I often ask entrepreneurs ‘How’s it going?’. The newbies typically say ‘great’, ‘awesome’, ‘going really well’. The more seasoned entrepreneurs will allude that it’s tough, then perhaps highlight some specific problems. My response is always the same: ‘It only gets harder. ’ As you grow a company, you face new and interesting challenges coming from customers, employees and macro dynamics, such as regulation, competitors and economic headwinds. As the stakes get bigger, navigating these challenges only becomes more complex. Great entrepreneurs rise to the challenge; they learn, adapt and become more resilient. When investing in companies, the primary characteristic I look for is adaptability in the team and offering. Adaptation is synonymous with intelligence, and the key skills for adaptation are creative problem-solving, critical thinking, resilience, and persistence. Indicators for these are people who listen deeply and ask good questions.

2. Research is not technology, and technology is not a business

Forgive the sweeping statement, but academics (like me) often massively underestimate how hard it is to commercialise research. The first step is to develop the research into a hardened technology that is secure, safe, performant, scalable, and maintainable. Assume it takes 10X more effort to develop the technology than the research IP. Then, turning the technology into a successful business requires arguably 10X more effort than creating the technology. If you’re an academic who wants to commercialise IP via a startup, brace yourself for a LOT of learning and hard work.

There are also two types of innovation, push innovation and pull innovation. A ‘pull innovation’ is a solution to a problem that there’s a strong need and market for. A ‘push innovation’ is a solution looking for a problem. The advantage academic research has is that it has higher competitive barriers, but research-based companies are often solutions looking for the right problem, and often they get stuck in ‘local minima’, focusing their solution on an early problem type, but missing a bigger opportunity. 

3. Have difficult conversations early

Founders typically start out by distributing equity equally, which is the first mistake. Once established, founders then ‘crack-on’ without setting clear expectations about each other’s roles, commitments, and deliverables. This misalignment can lead to disagreement, resentment, toxicity, and eventually the self-destruction of the company. Have hard conversations early by setting clear expectations for how equity/remuneration will be allocated going forward, and what will happen if people deviate from those expectations with respect to reassessing their role, remuneration, commitment and expected deliverables.  In my experience, early-stage companies fail primarily because of founder misalignment. If you’ve been through this experience, then you’ll know how awful it is.

4. Deeply understand your customer

I see this mistake in pretty much EVERY business plan and pitch deck. Google is not your customer. Banks are not your customers. Retailers are not your customers. Female millennials in London with average incomes are not your customers. When selling to the enterprise your customers are probably seven people that are either buyers of your solution, users of your solution, want your solution to cover their back, want to choose a competitor’s solution, want to build your solution instead of buying it from you, want to maybe work for your startup one day, want to not buy your solution because of budget issues, want to not buy your solution because it gives them additional work they can’t handle, want to keep their existing solution because they backed it financially/emotionally and don’t want to admit that it’s not fit for purpose…I could go on.

The point is, you need to deeply understand who these people are, what motivates them, and how you will convince each of them to choose your solution. Show me the names of people you are selling to, not the names of the companies or sectors they work for, and show me that you understand what motivates them and how you are going to persuade them to buy from you.

5. Networking is the lubricant of innovation

I wrote a detailed blog post about this back in 2013¹, and it’s as relevant now as it was then. Networking is like dating, and in the UK, we have something to learn from the US in terms of cultural attitudes to both. The dating culture in the US is that you can date many people at once, but you’re only ‘going steady’ once you have the ‘exclusivity’ conversation. In the UK, historically, if you’re kissing someone, then it’s expected that you don’t kiss other people. In the US, it’s totally normal to build relationships that fail. In the UK, if your relationship fails, then one or both parties are seen as being dysfunctional in some way. This attitude percolates through to our respective networking culture. People in the US are liberal with their network and will happily make introductions ‘because it’s okay if those relationships don’t work out’. In the UK we are much more cautious about making introductions because if they fail, then the parties are seen as being broken in some way. Networking is the lubricant of innovation; it will allow you to test your ideas, find advisors, employees, customers and partners much more quickly. Next time you speak to someone about your business, ask them to make three introductions – force them to open their network. It’s okay to kiss and for it not to work out.

6. Your friends are your first customers

It is, of course, solution-dependent, but your first customers will almost certainly only come from your friendship network. I’d be very surprised if you won customer #1 through cold-calling and LinkedIn messages. It’s only a friend who will give your solution a punt if there are no other trust signals, such as existing customers, revenues, case studies, proven ROI, etc. If you don’t have friends – friends who are your likely customers – then hire someone who has friends. A good salesperson is worth their weight in gold, but you have to hire very carefully. Hire someone who has discipline, a rich rolodex, and a history of closing deals with the very same people you want as your customers. 

7. Your first customers are your friends

See what I did there :). Happy customers are your biggest and best trust signal. Pretty much everything else is noise – awards, press, investment, followers. For early-stage companies, these are just vanity signals. Make your first customer your friend; an advocate, champion, reference, and evangelist. They are your most vital sales asset to enable you to win new customers. I was deeply inspired by the ancient Greek school of rhetoric and sophistry. To persuade someone of something, you likely need three things: Ethos, Pathos and Logos. Go study it yourself, but simply put Ethos is your credibility, Pathos and Logos refer to whether it makes emotional and logical sense. Your first customer(s) can help you amplify these key elements.

8. Take the call

It’s a cliche that big companies – either as potential clients or partners – can mess you around. As a startup, you don’t have the resources that give large corporations the privilege to be slow and cumbersome. Like a bear, they are strong, but they can also crush you without even realising it. They can drain your time and energy with endless meetings, legals, and – if you’re ‘fortunate’ – showing you off to their peers as a new shiny thing. Being fast, agile and adaptive is the key advantage of a startup. One time, I had got so frustrated with the ‘bear dance’ that I had reached the point where I almost didn’t pick up the phone when they called. I’m glad I didn’t let my ego get the better of me, because that phone call led to them being one of my biggest and most successful clients. Take the call, give people your time, you never know what it could lead to, but monitor how much energy you’re burning dancing with bears. 

9. Have a Purpose

As well as being nimble, the other advantage you might have over your competition is Purpose. I get requests every week for startups looking for tech-talent. The honest truth is that you should assume that you are not going to attract talent. Amazing tech talent either have their own startups or are being paid mega-bucks by large firms. Perhaps your only shot at attracting talent is offering a huge (equity) upside and/or having an extremely exciting north-star, an amazing purpose. Smart people want to work on things that are going to change the world for the better. Once you’ve attracted talent, keep reinforcing the purpose and showing how the company is moving towards it. If you can’t attract talent, then find a third-party outsourcing vendor and make sure their purpose is strong enough to attract and retain their own talent.

10. X3 /3 X3

Entrepreneurs tend to be massively over-optimistic when it comes to revenue generation or user acquisition. It’s often said that VCs automatically halve the revenues and double the costs. My suggestion is to take your three-year financial plan, triple the costs, divide the revenues by three, and triple the amount of time you will take to acquire your customers. This will be much closer to the truth. If you still have a plan you can live with, then you have a chance to pull it off.

Be frugal and cautious with how you spend your resources. Having too much resource can make you sluggish and slow. Financial and resource constraints (even artificially imposed) can force you to be lean and innovative. It always makes me chuckle when you hear the origin story of ‘successful’ companies – that they were developed in their bedroom, mom’s basement or family garage. Of course they were. Where else are you going to start a company – in your multi-million dollar office high-rise? No. That said, the lesson from these romantic garage-based startup stories is that frugality is a virtue.

11. Obsess over risks 

Entrepreneurs are lauded as brave and bold risk-takers. I have a controversial viewpoint. I don’t think entrepreneurs take risks, at least not in the way that we are told. On the one extreme, you have entrepreneurs who are so deluded that they don’t know they are taking a risk, and on the other extreme, you have seasoned entrepreneurs who take extremely careful and calculated risks.

When starting or running a business, you have three piles to balance: 1. A pile of resources (usually time and/or money), 2. A pile of product (usually a slide deck when you’re starting out), and 3. A (MASSIVE) pile of risks (for example, is there a market, will customers pay for it, legislation, competition, etc. etc.). What entrepreneurs typically do is use as many resources to create as much product as possible. Once they start running out of resources, they are forced to parade what they’ve built to a market that will likely not even want that solution. Your job is to rapidly cycle using as few resources to create as little product to remove as many risks as possible. These cycles should be short and fast. Learn about agile and scrum development and apply it to every aspect of your business. Once you have resources (i.e. revenues) coming in, then balancing the three pillars is a very different set of skills.

12. Raising money is not success

We are bombarded by news stories of companies raising money. It’s celebrated as the pinnacle of entrepreneurial success. It makes the rest of us feel inadequate. Raising money from VCs is not the pinnacle of success; in fact, for me I often see it as a red flag. VCs typically have an extremely myopic and narrow set of investment criteria. If they’re not investing in you, it’s probably because you don’t fit a cookie-cutter shape. It’s not you, it’s them. Getting a ‘no’ from a VC is not your failure, in the same way that getting a ‘yes’ is not success. Listen to them, learn from them, but there are enough anecdotes out there to convince you that VCs are not great at choosing the winners. If you have to raise money, then do the ‘VC dance’, but if you don’t need money, then focus on getting customers – that’s the true measure of success.

13. Hire an incredible COO

Some CEOs can create, inspire, and execute on a vision, but most struggle with the latter: execution. You don’t need me to tell you that execution makes or breaks a company, which is why you likely need an epic COO. There are many books that romanticise the journeys, traits, and plights of a CEO, but very little on what it means to be a COO. We’ve all seen the lessons learnt from a dancing guy² (see below), every leader needs a first follower. Great COOs also ask the hard questions and cover off every detail. If you’re a CEO then hire and empower your COO to manage you. An epic COO will make the CEO look good. If you’re a COO with an unmanageable CEO, then you might want to consider other options.