Everyone wants to be a unicorn, the next billion-dollar success story. This ambition is good and must never be watered down. Running a very successful tech business can be very highly rewarding, both financially and emotionally, even if the business is not yet a unicorn success story.
The world is awash with listicles and twitter threads that promise: “Do these things and enjoy success”. The truth is that the journey of a tech entrepreneur is not something that can be copy and pasted into different scenarios. However, there are some themes that tech entrepreneurs, or those aspiring to launch a startup, should know.
Parket, which is a world-leading off-street parking management platform, is significantly scaling. What are some of the lessons we learned that you, the aspiring tech entrepreneur, can benefit from?
Don’t fear the desperation
In order to launch and run a successful tech startup you need 10% inspiration, 80% perspiration and 10% desperation. A desperate startup will do what it needs to survive. A startup that embraces the desperation inherent in a new business will find that individuals within the business will go the extra mile and work together towards creative and innovative solutions. Remember that your desperation and inspiration only make up 20% of the whole picture. Long, hard work and perseverance is non-negotiable.
Solve a problem
Avoid ideas that are solutions for solutions’ sake. Parket’s idea was formed when I noticed people idling up and down busy city streets looking for parking while empty parkades owned by businesses were within stone-throwing distance. Solve a problem for people.
A different way of looking at the myriad problems facing our country is that it is ripe for problem-solving. Parking, congestion, energy, water, employment, education, food security – the list is long and the country needs people who understand that technology, at its core, enables efficiency and makes life easier.
Never stop learning
I learnt to code while studying towards an engineering degree. The internet has democratised education and skills. For about R250, one can study coding online for six months, becoming proficient at computer programming. Do you have an idea but don’t know how to code? Why not use free resources on the internet or look for cost-effective courses that can teach you important skills? It’s not just the obvious, such as programming, entrepreneurs should learn about business, accounting, sales and marketing and everything else that will make them successful business leaders.
You’re actually a salesperson
A book called Founding Sales – The Startup Sales Handbook changed the trajectory of my startup life and has had an important influence on how I see business. Without a strong sales strategy, plans and skills, your business – no matter the product – will go nowhere. If that makes you feel uncomfortable, rather now than after you invest everything you have into your idea. You must show people that they need your product. You must convince businesses that they can’t continue without your product.
It is very seldom that someone builds a great shiny app or platform and people come flocking. Your product must solve a problem, and you must go out and sell your solution to the world – whether that’s customers or investors. A good strategy is to have two founders, one that is the tech expert and the other who is gifted at sales and business development. If you can’t do this, then do what I did and learn how to sell.
The truth about funding
Funding is not always essential to a startup, but it sure does make things easier when you need to hire the best talent, develop and scale. This is why venture capital firms and angel investors scour the world for technology companies to invest in – they know that if the product solves an important problem, and the business is run by a team that is primed for success, they can make handsome returns.
However, South Africa is in an unfortunate position. Our Reserve Bank demands that IP that is developed in this country must stay in this country. This makes it terribly difficult for South African startups to raise US or European-style funding because if an investor shows up and puts a million dollars into your seed, as regulations currently stand they can’t get their money out. In essence, this means that once you have grown into a successful business and it’s time for the investor to cash out, the money must stay on these shores.
Perhaps the idealistic would see this as good reinvestment in the country, but in practice, the opposite is true. It chases international investors away. Activists pushing the Startup Act in South Africa are seeking change to this legislation, and supporting them would support a vibrant tech startup industry in this country. By comparison, it is not unusual to see Nigerian startups raise a million dollars or Euros. It happens regularly because investors who go to Nigeria aren’t hamstrung by the central bank in that country.
Now, some South Africans have found loopholes and register entities in foreign territories, then start to buy IP over to make sure that the majority of the IP is not in South Africa. This is a tragedy. Our country is shooting itself in the foot because if it didn’t have this restriction there would be a lot more funding in this country and funding is a massive boost to a startup and its ability to grow, develop and scale.
Don’t be afraid of a tight belt
Bootstrapping, or less funding, pushes an entrepreneur harder and further. I have travelled to Europe and seen attractive pitch decks that have attracted millions. Same number of zeros as South Africa, but in Euros not Rands. However, in many cases these products are not great and the businesses aren’t showstoppers either.
On the other hand, bootstrapping, to which we have become accustomed in South Africa, forces the entrepreneur to build a profitable business (or at least to a point of good unit economics) before scaling. This builds a resilient, albeit young, business.
A “no” never hurt anyone
There’s nothing more demoralising than having your great idea, or your business proposal that you know is rock solid, shot down by a potential investor or customer. Not everything is for everyone. Keep knocking on the doors and keep pitching the business. This talks to the first tip – desperation and perspiration make up 90% of the journey. This strategy, of never stopping, is the polar opposite of building a great product and then sitting and waiting for success. In the real world you need to drive your own success.
By Joshua Raphael, Founder and CEO of tech startup Parket