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Nine Commandments for Tech Startups in Australia


I’ve recently been involved in the launch of a new tech start-up addressing a very small but noticeable hole in the Australian IT recruitment offering. Cramped up on a plane while EasyJetting from Geneva to Edinburgh, I wanted to share how we identified and then addressed what I consider the nine biggest ‘opportunities for improvement’ for tech start-ups.

We are not sure yet what level of success Re.cruit.Me might achieve, or whether it will be a success at all, as we only have just released the service to a private trial group. Be we can feel happy in the knowledge that we’ve been diligent in avoiding many of common mistakes made by Australian entrepreneurial ventures.

Here are the very commandments we used to guide our new venture.

What is Re.cruit.me?

Re.cruit.me is a web-based B2B application offering employers the ability to easily screen candidates for technical roles before their existing recruitment process kicks in. It also offers recruiters a cost effective way to screen and then categorise the clientele they advocate for and to best serve the employers they assist.

If you believe some pretty smart dudes in entrepreneurship, interviews are not places for technical and skill assessment during the recruitment process. They are better for assessing attitude and cultural fit.

Branson says to hire for attitude and the rest will follow. Job specific knowledge and aptitude will come much quicker to a candidate who is both well versed in the fundamentals and has the ‘right’ attitude for your company. The rest will – according to the space man – follow.

Re.cruit.Me’s aim is to enable recruiters to cost effectively categorise candidates based on their technical expertise and to enable smaller companies who handle their own recruitment to only interview candidates that have the fundamental skills.

After the candidate’s technical skills have been established, they can then ensure that the candidate fits the culture.

KD’s Nine Commandments

1. Marketing starts at conception, not at birth

Common in advertising circles, businesses arrive at the agency with a final product and say, “sell loads of this, please”.

At this late stage, the agency is not able to research and advise the most appropriate pricing, markets, product design, functionality, packaging, positioning and brand. Hence the creative process is stunted with too many non-negotiables.

Entrepreneurs have been known to focus overly on the inventive step – the product or service itself – rather than on the markets and the actors therein. Risk averse entrepreneurship is customer led.

Think about your customers from the start, not once you want to start generating sales.

2. Do not change the world, improve it

The incentives for the various actors in your marketplace must be considered.

If your product or service is likely to adversely affect an established industry, you will have a tougher time ahead of you.

Alternatively, if you can shape and then demonstrate that your innovation will help all key actors in the industry, you may find you have a much smoother ride.

At Kingston Development (KD), our approach to systems optimisation and automation is not to enable employers to fire staff but to create opportunities for the staff to make the company a lot more money.

For Re.cruit.Me, initially we were unsure how the product would be received by recruiters. We absolutely did not want to interfere with those companies that can afford to utilise a recruitment professional or company.

So, we worked hard to ensure that the product would not cause employers to reduce their spend on recruiters, but to make the recruiters a little more effective and lives a little easier.

3. Understand your business

We went into Re.cruit.Me to assist the industry, not to make money. The industry will judge us and if we get the thumbs-up, we’ll probably do OK out of it.

The business model is strong – with low marginal cost. We understand the market well as we built it originally to save time at KD. As the product is powered by KD – a software company – we are both a customer of and a supplier to Re.cruit.Me.

Our prima facie concern with the business model is the time-disconnect between when our costs are incurred and when our revenues are collected. We are at once a publishing company and a testing platform – and most of our competitors are either one or the other.

We plan to get hit with key cost centres each quarter as we develop new questions and improve our testing platform, yet our revenues are both seasonal and tied to variables outside our control, such as economic outlook, government decision making and technology trends.

4. Evolutions are mainstream, revolutions are radical

It is important to always consider human behaviour change when embarking on a new venture.

People should ask themselves how much change they are expecting their constituency to undergo in order to consume their product. What are the educational, political, social, environmental, technological and legal issues that my consumers have to consider?

Each actor may have to adjust their behaviour differently to the other. A good innovation is often one that requires the least amount of behaviour change per unit of economic return.

The test I use in measuring the extent to which an innovation is a revolution or an evolution is thus:

If my consumer group was a company, would they need to create a new budget line item in order to buy my product? If it fits within an existing category of expenditure, then it is an evolution. If they need to change their MYOB cash flow statement, then it’s a revolution.

Re.cruit.Me could be a new line item for some organisations that we are targeting, hence we needed to ensure that our price was very small and our value proposition sufficient to justify this change.

5. Versioning misunderstood

It is very important that you get to market as early as possible, regardless of your views on the competitiveness and speed of innovation in your market.

VCs often suggest that if you are not embarrassed by your product two weeks after launch, you are too late.

There is always more functionality, design, usability and value that you can add to your product. Always. You will never be ready, so get on with it and get your product out there.

We have a list a mile long of features we want to add to Re.cruit.Me and, as a web development company, we are in no better position to implement these features. However, we know the cascading and catastrophic problems that emerge when companies keep adding more and more functionality to their initial product offering.

Launch as soon as you believe that you can add some value to your market. Particularly in web-based tech start-ups, you can be very open with your customers that more is coming. You can even publish a schedule of when features will be rolled in. This is a great internal document at the least.

We’ve launched to a private group of recruitment companies and private tech companies to get their input which will feed into the next version’s functionality priorities.

6. Leave no stone unturned

Challenge all of your assumptions. Businesses regularly fail because of only one untested assumption. Not having data is no excuse to not challenge everything.

Apply broad based thinking to your product:

  • What might people of different socio-economic groups think?
  • What might large businesses do in response?
  • Which part of our product is the best?
  • Why is it the best? How does our product stack up against competitors?
  • Who are we competing against?
  • Are we competing within a category of spending, such as HR, or for a specific line item such as screening tests?
  • Perhaps we are in competition with a completely different business in a completely different market?

These kinds of questions will not only allow you to address any immediate weakness in your entrepreneurial logic stream, but should allow you to narrow down on your core value proposition and help you refine your differentiation strategy to maximise your chances of success.

7. Think big, act small

Many entrepreneurs are so caught up in distracting operational detail or product development that they do not give themselves time to sit back and think:

  • What will this company look like in 10 years if we do everything right and everything goes well?
  • Will we have offices around the world?
  • Will we have one big centre? Will we not even have an office?
  • Will we be a transnational or a small giant?
  • Will we be a services company or a product company?

You should try and articulate a picture of what you see the future looking like, so that decision making today is consistent with that vision. In this way, time, strategic thinking and resources today are not wasted on sending the company in the ‘wrong’ direction.

8. Misplaced paranoia

Don’t worry about idea theft. Speak to as many potential buyers, channel partners and suppliers as possible. Rarely, will they ‘steal’ your idea. Most of the time, they will give you valuable advice, and give you an honest idea as to whether or not your innovation will work.

At Re.cruit.Me, we spoke to recruitment companies large and small, technology companies (our primary customers) and the general market. A healthy level of paranoia is good for entrepreneurs, but it can be better placed than in idea theft.

9. Fair pricing

The two dominant approaches to pricing theory are known as value-based and cost-based. That is, do you start from the position of “how much can I charge for this?” or do you start from “what does this cost me to provision?” respectively.

For small innovation injections into an established system like Re.cruit.Me, we wanted to keep pricing very low – just a small margin higher than our costs of content development, promotion, hosting and software development.

We went into this business not to make money but to sustainably help the industry. This serves as a great offensive and defensive strategy.

Phillip Kingston is the author of the War for Eyeballs, the Managing Director of Kingston Development, Vice Chairman of the Centre for Sustainability Leadership and a fund manager for VC firm Voyance Capital.

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