Erevena recently collaborated with GP Bullhound to host a Research Briefing & Breakfast, “Titans of Tech: All Change at the Top”. We were delighted to welcome two co-founders of companies identified as Europe’s Top 50 Titans of Tech 2019. Tim Sadler, CEO & Co-Founder of Tessian, and Alexis Prenn, Chairman & Co-Founder of Receipt Bank, joined Lilian Poilpot, Partner at Erevena, for a fireside chat to discuss the markers of success and overcoming challenges.
As founders, what was your first challenge?
For Tim, one of the biggest challenges for Tessian was the long loop of feedback that exists for enterprise software. With the first goal being to get just one customer to use Tessian’s email security software, Tim said that a lack of available feedback often meant that they were building blind. In addition, the enterprise software product market was far less developed in Europe in 2013 than it was in the USA.
For Alexis, the first great challenge was the fear of rejection, as is often the human condition. He found himself continually wanting to improve the product before seeking funding which in retrospect, he felt was a mistake. With a newfound driving ambition, Alexis now recognises that it’s vital to move forward without waiting for an unattainable level of perfection.
Furthermore, when creating a new product or sector, there is the challenge of trying to imagine what this will look like. You must consider who the customers are and what you are trying to do for them in a way that hasn’t been thought of before.
What was the dynamic between you and your co-Founders?
Tim found there to be a natural division of roles and responsibilities between the three co-founders, with the group easily splitting the responsibility of developing the company and product between them.
“You need a close co-founding team with the ability to divide and conquer. It’s important not to have too many split opinions and also be able to bring varied skills to the table.”
– Tim Sadler
Alexis underwent a slightly different trajectory in the development of Receipt Bank. He had previously worked with his co-founder, Michael Wood. However, after Receipt Bank’s Series B, Michael moved to a Non-Executive Director role after realising his specialist area had narrowed as they brought more people in. Recently, Alexis followed a similar suit in moving from CEO to Chairman, having learnt that there are a multitude of milestones that come with funding. The culture of the firm changes as the workforce grows and it’s necessary to continually reimagine and redesign. Upon realising his skill set had changed in relation to the company, he made the decision that he would be better suited as Chairman.
What happens when growth stagnates?
A cornerstone of culture for start-ups is that people focus solely on growth. However, this cannot be the only thing driving the development of the company.
“A culture based purely on growth is very fragile.”
– Tim Sadler
Although it can be hard, it is important to recognise the hard times as key milestones of growth. A company able to celebrate moments of difficulty will end up developing a more positive and resilient culture.
Additionally, in Europe, there is a deficit of talent in comparison to the number of companies being founded. That deep focus on craft is not quite there in the way that it currently is in the USA.
To avoid stagnation of growth, Alexis emphasised the importance of raising funds earlier than you might think you need to. He warned that it often takes 6 to 9 months to deploy the cash. For example, 2017 saw Receipt Bank raise their Series B. It then took several months to employ the people to deploy the money, leaving them in a sort of “Catch-22” situation and resulting in a difficult 2018 for the company.
How do you maintain the company’s DNA?
For Tim, this is all about defining the company’s core purpose. Having a fixed vision and set of values and continually questioning what you are doing is important. For example, in the USA, internal presentations are often started and concluded with the company’s mission. Belief in the core of the company is of crucial importance and is something that should be continually reiterated.
Furthermore, when creating a new category of product, it is necessary to find the delicate balance between the huge opportunity and the challenge of changing people’s opinions. For example, selling Tessian’s products involves fundamentally shifting the existing opinions of CIOs. This is hard to achieve but, once done, will be revolutionary for the company.
Alexis further emphasised having a business model that you can stick to. However, most important is the repetition and integration of this within the company. People need to have a fundamental understanding of the core of the company and this is what formulates the culture.
“If you can’t repeat the mission then it’s not embedded, and you don’t have a culture.”
– Alexis Prenn
A mantra that Alexis endorses is to say on Friday, “On Monday, we get to do it all over again, but a little bit better.” He emphasised that there is no magic fix, but rather lots of hard work, repetition, and small improvements.
Additionally, when moving between stages of development it is easy to become bogged down in the detail. However, it is vital to maintain a sense of confidence and determination.
“People don’t leave a winning team so lead with courage and determination and you’ll have no problem with retention.”
– Alexis Prenn
Where do you get your advice?
As a first-time entrepreneur, Tim identified 4 key areas:
- Recruit the best and hire people significantly more experienced in specific areas than you. This allows you to learn effectively from your team.
- Read a lot. Not only is literature an excellent source of information, but there is something cathartic in reading about things going wrong.
- Build a network of CEOs and founders. Often there is a great willingness from the generation above to pass on advice to those entering the business world.
- Keep the quality of your investors high. They are an excellent source of advice and can help you avoid mistakes others often make.
Agreeing with Tim, Alexis also added that there is value in repeatedly questioning “What do you actually think?” Often in the process of execution, as you become focused on the “doing”, it can be easy to lose sight of the original driving thought.
“Answers are easy. Questions are difficult.”
– Alexis Prenn
As the business progresses, the answers will evolve but the fundamental questions often remain the same.
How did you select investors?
For Alexis, the investors chosen were those who collaborated the longest and hardest and demonstrated an interest in understanding the company’s journey, thus demonstrating a commitment to an active ongoing relationship. Consequently, they were the most appealing to work with.
Tim also recognised a disparity between USA and UK investors. For UK investors, there is less judgement on the quality of the investor and the amount of capital being offered is prioritised. However, for the USA investors, the brand and reputation of the investor is very important. Often companies will accept less capital in exchange for an investor with a more reputable brand.
What do you wish you had known before?
Tim encouraged people not to overestimate or be afraid of the competition. Drawing on Alexis’ earlier comments on always “waiting for tomorrow”, Tim emphasised the importance of having confidence in your product and be willing to put yourself out there. For example, Tessian are opening a San Francisco office and Tim will be relocating there. This involves a tremendous cost however, it remains the case that the place with the deepest expertise in enterprise software is the Bay area. It is therefore a landing point for expansion and worth the potential risk of relocation.
Alexis also urged people to enjoy the journey of developing a business. Exposing yourself to the possibility of rejection is terrifying but necessary for success.
From a more practical side, Tim additionally warned against putting the talent function in the people team. Instead, he recommended to have them report directly to the CEO as the importance of recruiting must not be underestimated.
Both Tim and Alexis emphasised the importance in both self-belief and appreciating each milestone. If you can get 1 customer then you can get 10, then 100, then 1,000 and so on. At the beginning, you should celebrate the small wins and keep your levels of confidence and ambition high.