What I’ve learnt from the trenches of startup eCommerce in London

by oneafrikan on September 18, 2014

I’ve spent almost two weeks writing this. At first it was too personal, then it became too anecdotal, so I’ve settled on a list of things which I think are concrete lessons I can impart, and which are easily digestible.  Hope you find it useful!

eCommerce is hard.

The startup world is largely populated by tech people. Or led by tech people. I think that eCommerce went through a phase where technology was a barrier to entry, but that phase is over and it’s now becoming a barrier to growth, markets and customer data.  In other words, most retailers are now doing something with eCommerce, so the first mover advantage is gone for all but the manufacturers. That means you have to be smarter to win than you did at the start of the recession.

So when you recognise that, winning becomes about margin, supply chain, steady growth and building a brand people love.  The nub here is that whilst the web, and essentially Google, has allowed everyone to access bigger markets, they’ve also made it easy to compare products and prices, so customer acquisition then becomes paramount.  Big brands rely heavily on brand traffic online, so you can compete there by acquiring traffic more efficiently than them and everyone else.

In the end as an entrepreneur I chose eCommerce over any other play because I think that doing the hard things is what creates the most value in the long term. It’s tougher, it requires more grit, it takes a special kind of person to get through the tough times. But ultimately I think that if you succeed it’s a safer bet than being one app of thousands in the app store which may or may not be “de rigueur”. In other words, I don’t like building something based on fickle consumer novelty.

The market is big. There is a lot of competition. Find your niche fast.

Because the market we’re in is so big, we made the mistake of trying to do everything and be everything, for everyone, and do it fast. Others are still doing it and hemorrhaging cash in the processs.

There are much bigger overseas companies than us (I’m talking $1Bn in size) who have entered our market and failed miserably because they didn’t adapt to the way the local market works, whilst also trying to do everything and be everything, to everybody.

So that’s a mistake I’ll never repeat no matter how much other people are telling me it’s the right thing to do.

Stay away from Amazon and others like them. Until you’re big enough.

The first and obvious point is that you don’t want to take on Amazon. They’ll beat you into a pulp quicker than you can say “I’m getting outta here”.  So you want to pick niches which Amazon doesn’t do, products which Amazon can’t sell, a proposition which Amazon can’t offer, or a market where they don’t operate.  Ideally all 4.

So in our case, the furniture market can’t support the commission that Amazon charges for anything other than a small marketplace seller; the big, difficult to ship products we sell don’t fit into a neat parcel conveyor belt; and we’re moving to a proposition Amazon can’t do.

That said, there will come a time when it makes sense for us to benefit from the additional volume Amazon can provide.  But we’ll do it on our terms and when it makes sense.

Pick value over novelty.

When was the last time you opened a Groupon email? Or tried a Groupon deal?

In the time I’ve started I’ve seen a lot of people try eCommerce approaches which I think are pretty binary. In other words, it’s either going to work or it’s not.

I think that the most successful brands, companies, people and things, give the customer or user value. The best ones do it every day, so that they essentially become a part of the day.

For the customer, the novelty of trying something new soon wears off. For the business, the practicality of having to come up with something new to offer every day / week / month is difficult to keep up, and the supply chain and people required to do this continually is incredibly hard to achieve, but for the largest players with other revenue steams who can subsidise this cost from the the rest of their business.

So in eCommerce I think that doing something which isn’t necessarily sexy, but which does something useful, is smarter and more pragmatic in the long run.

Avoid top line growth for growth’s sake at all costs. Grow consistently.

It’s easy to acquire customers if you are prepared to spend more than you make on them, and there are many companies doing this. They make the assumption, or take the bet, that they will figure out how to make acquisition profitable at some point. Some succeed, some fail.  I don’t think top line growth only is an accurate predictor of success.  I did at some point, but I don’t now.

It’s much harder to grow whilst staying profitable. But not impossible. And if you do this, you’re more likely to grow a bit slower than someone throwing money at every acquisition channel they can. I think in this case consistent growth is better.

So the problem is one of dual demands. As the entrepreneur you’re tasked with showing growth almost at all costs, whilst also showing a route to sustainability. No investor gets excited by a small company. So you have to think about this up front, and be honest about which approach you’re going to take. And then you need to get everyone on board.

So there isn’t an easy answer here. It’s hard. Pick your companions wisely.

I wouldn’t bet on Lifetime Value of the customer.

Ties into the point above.  I think what’s key here is that unless you are a destination for a huge number of shoppers (as Amazon is) or you have a huge brand, where you can offset acquisition costs and the margin loss from lower prices against the profit from multiple orders, it’s more important to build your business around making a profit on the customer’s first order.  If your Average Order Value is sub-£50 I think you’ve got your work cut out. If it’s above that, then once you start adding the second or third purchase you’re making a LOT more profit.

Each niche will have different ways to do this, but the take home here is that building a business model on the 10%-20% that will return to shop again, in my view, is riskier than figuring out how to be profitable on first order.

There’s a big difference between data, information, and wisdom.

We’ve got a poster on our wall.  It says “In (a) God we trust. All else must bring data.”  Without visibility of what’s happening you’re pretty much flying blind. So if you’re going to optimise your acquisition and conversion rates, you need enough data to turn it into information that can be acted upon, so that you will make wise decisions.

More than that, once you start growing, you need to take that same approach to your on-site data and do the same with your product and customer data.

The real point here is that too much data is a bad thing. It pollutes thinking and creates unnecessary friction where there doesn’t need to be. I think the smarter thing is to work backwards from the questions you want to answer, pick the top questions which will unlock value for you, and then go about getting the data to answer those questions.

Much easier said than done with something like Magento, or most other retail systems, but worth the work when you get it right.

Quick tip:

  1. Use spreadsheets for longer than you think you should. You can do a lot with pivots and vlookups.
  2. Build them yourself. Don’t trust someone new to do it until you trust they know what they are doing given the objectives you’re working to.

Observe the 80/10 rule as early as you can.

When we made the decision to move away from the catalog approach we started with, we analysed our data in a way we hadn’t done before (that’s a whole diatribe on it’s own), and the wisdom we gained from it was that we were generating about 85% of our monthly revenue from 10% of our product SKU’s, and that 20% of our suppliers were causing 80% of the problems we dealt with every day.

So we stopped advertising for products we didn’t sell, we removed problem products and suppliers, and we trimmed our range.

And a beautiful thing happened: our revenue stayed relatively consistent, our problems decreased, and our profits increased.

Now we do this every week, because the insight is so valuable.

It’s a marathon, not a sprint. But it’s a sprint at the start.

This is probably the thing I need to work on the most: I tend to put my head down, forgetting food, rest, exercise and most everything else. That’s OK when you’re in your mid-20’s, but after doing that for a long time it’s definitely not sustainable in the long term.

Now, everyone you ask will tell you to maintain a balance and look after yourself, but I think that when you’re starting and certainly in the early years, it’s super hard to create momentum and progress to tight deadlines and cashflow without huge amounts of work.  It’s a nice idea, and makes for good magazine reading with good looking lean models, but it’s harder to do in practice.  And I’ve found that most of the people that give this well meaning advice haven’t done it before.

So my thinking here is that it’s better to know yourself, know where your limits and boundaries are, and work accordingly. You only really understand where your limits are by pushing them, so in many ways it’s worth the sprint to figure out how fast you can go.

Are you a survivor?

IMG_2403 It’s easy to sing when you’re winning. It’s easy to be confident when everything is going right. It’s easy to sell when your numbers are “up and to the right”.

But if you look at the above, you’ve got to be pretty confident about your ability to move fast, adapt to the market, change tack and continually improve things, in order to feel you’ve got a reasonable chance of succeeding, when things aren’t going to plan.

On top of that you’ve got to be able to get through it all without losing your mind and becoming a douche in the process.

So I think this point is really about taking a long, hard look at yourself and then evaluating whether you think you can keep going regardless.  Mark Suster writes honestly about this, recommend you read his essays on the matter.

Pick your companions wisely.

I could write for days on this, so I’m just going to jot down some bullet points.

What to look for:

  1. good generalists who can adapt
  2. someone who sticks their hands up
  3. someone who wants to get stuck in
  4. someone who contributes on Day 1, and is still contributing at Day 180
  5. someone you can have lunch with
  6. someone you can debate with
  7. someone who you will go to bat for

If you can’t say yes to the 7 points above, it doesn’t matter what their background or skills are, it’s unlikely to work.  When you’re bigger you can replace point 1 with whatever role you need to fill.

What to avoid:

  1. big egos
  2. baggage
  3. a sense of entitlement
  4. not taking responsibility
  5. not learning new skills
  6. no sense of humour

If you spot any of the above, they should be a non-starter.

Some tips:

  1. Set probation periods to 6 months. 3 is not long enough.
  2. Create hiring processes which weed bad people out, without manual intervention.
  3. Delegate a decent (but non-critical) project to start with in the probation period. Set the deadline for 2 weeks before you think is reasonable. Then see what happens. The results should speak for themselves.

As a corollary to this, I have the most amazing wife in the world. Without her I don’t think I would have gotten this far.  I’ve also got an amazing group of friends who know me well enough to support me I prioritise work over other things, like fun.  So I think that support from family & friends is essential.

Find your motivation.

A little while ago, I was sent an online chat transcript by one of our customer support team. In this transcript, some investor I’ve never heard of and whom I won’t name here (maybe one day though) described how he was betting on our company failing with his other investor mates. ** Note, not one of our investors!

Who the F&$! does that? Seriously, who the F&$! does that?

Any good investor in this ecosystem knows that success and failure are both sides of the same coin. They know that the odds are stacked against anyone starting something new, growing fast, and trying to disrupt an industry. They know that the journey is pretty tough, unforgiving, and that the path to success is paved with obstacles at each step of the way.

Do we really need some dude jumping onto online chat and sharing his negative bets with the customer service team?

So when I read this transcript my blood boiled. I had to go for a walk. I wanted to call the guy and swear and curse at him. I wanted to reach out over the telephone and rip his eyes out. I wanted to find out where he lived and camp on his road with a big sign saying “Here lives an arsehole”.  But I can’t and I won’t.

So that, and many other things, are my motivation.  It’s not about the money.

I want to the prove the first supplier I met with who told me it couldn’t be done, that he was wrong. I want to show a big £11Bn industry that they have their eyes closed and a storm is coming. I want to prove to my friends that I’m capable. I want to prove to myself I’ve got what it takes.

But right now, today, I want to prove to that douchebag of an investor that he was dead wrong, and that he’s missed the whole point of what good investors invest in. And then I’m going to send him something laconic.

Discuss!

Creating Systems & Processes that provide the framework for rapid growth. Talk from Scaling Startups London.

by oneafrikan on March 27, 2014

Did a talk today on my experiences scaling a startup, at the London Fast Growth Forum.

Here it is:

Some validation

by oneafrikan on March 4, 2014

Tl;rd:
Work hard at your company culture, and keep working at it. Don’t give up, and don’t compromise on your values.

Now, the last 12 weeks have been incredibly trying.

I’ve reached moments of exultation, madness and mania, worked through stress & fatigue, generally kept my head without leaping off buildings or launching into tirades, all during some of the most trying aligning of circumstances that I could imagine.

No doubt, 5 years from now I’ll be like:
Meh....

But we’re talking about now, so let’s get back to that… Recently we got asked to do a short application for an EU startup competition, where one of the questions was around company culture.

So Isabelle posted a little SurveyMonkey survey, and this is what came back:
HOW FUN IS IT TO WORK AT WEDO? (1 BEING NO FUN & 10 BEING LOADS OF FUN)
5 6.90% – 2
6 20.69% – 6
7 20.69% – 6
8 20.69% – 6
9 6.90% – 2
10 24.14% – 7
Total 29

WEDO IS GREAT BECAUSE?
1. great people make a great company
2. We’re trusted to figure out most things on our own.
3. The atmosphere is a good compromise of hard-working and laid back.
4. Good atmosphere
5. Of the Culture and the people
6. it’s growing fast and I can learn a lot in that process
7. Everyone is happy and time flies.
8. it treats you like family
9. The people are great, we have social events and we now have a flexible time off system
10. It is made of great people
11. Great Colleagues and values
12. The company culture is brilliant! Awesome people to work with too :-)
13. Family ethic and transparency.
14. Of the people!
15. we have great people working on interesting problems and we have a laugh while working hard
16. Employees get fantastic career growth that are hard to come by at other companies
17. Ed tells me stories about his Twingo
18. of the amazing people that work for the company and because you know how to treat your employees
19. We’re the little guy.
20. Its fun and friendly and I have learnt so many extra skills
21. There are some fun people around.
22. Of the people
23. Interesting people, interesting work
24. some fun people work here
25. We’re doing things differently from other retail or furniture companies
26. of the fun friendly working environment
27. Everyone is of a similar age and likes to be social!
28. Company Culture, Opportunities
29. it’s young, it’s fresh, people are cool

After all that’s happened in the last 12 weeks, I can go home smiling ;-)

As for the rest: grit teeth, hustle and metronome.

Checks & Balances in a new and growing team

by oneafrikan on February 6, 2014

So, we’ve grown from 16 odd to around 45 in the space of 12 to 18 months. In that time we’ve grown with all sorts of people from all sorts of backgrounds. Key lesson as been that e-commerce requires lots of types of people, so you can’t hire like you would for a tech team, just doesn’t work.

Today I posted something on our team site which I’ve been stewing on for a while, thought I’d post it here for others to see and perhaps utilise in their companies.

Key issue is that when you don’t explicitly state things, then people make assumptions. When they make assumptions, then often the way you think things should / would / could be done, are not the same as the assumptions… Be prepared for fuckups to ensue.

So, you have to make things a bit more explicit to make sure that people know where the boundaries are.

And without further ado (some stuff removed to take out competitive intel):

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
All,

A quick update on what to do and what not to do in situations where decisions need to be made, and where (some) overall responsibility, accountability and decision making lies.

Product imports:
Problem:
Bulk importing often upsets indexing / caching on the servers; communication that it was happening could have solved the issue

Solution:
This is your responsibility if you are doing an update. Let tech & ecomm teams know you are doing an import / export to rest of the team.

Caveat emptor:
Flo is working on solution for this not to be an issue, which will go live with AWS. This may negate the above.


Conversion rates on site:
Problem:
Sometimes we do things which knowingly or unwittingly which affect conversion rates. Case in point is the red box on the product pages over Xmas, which resulted in 50% or more decrease in site conversion rate.

Solution:
Gareth has overall accountability for this. If the conversion rate is materially down ( more than 30% reduction for more than a day ), needs to be raised immediately with Gareth.
If there are material changes in the conversion rate ( more than 30% reduction for more than a day ), we should expect to drop everything to work on analysis and a fix.


On-site changes, features, user experience
Problem:
I want to bring some consistency to the features & UX we release from now on – and will only let new features go live when I am happy with the UX.

Solution:
All website changes to the frontend need to be run through Gareth for foreseeable future.
Posting onto the team site is great for feedback, but does not constitute approval / decision making.

Caveat emptor:
Excludes merchandising tactics like banners & product labels etc.


Site issues, site down, pages not loading
Problem:
We encounter pages which don’t load, sites which are not live, caches which are broken etc etc

Solution:
Flo has overall accountability for this. If this is a significant problem, we should expect to drop everything to work on analysis and a fix. If Flo is in a meeting, then that meeting should be interrupted. If Flo is not available, first port of call is Gareth then Martijn. If it is a weekend, then first person to contact is Gareth to triage severity of the problem. If it needs to be fixed immediately, Gareth will get in touch with Flo. Do not attempt to contact Gareth via anything other than a phone call or txt message. Skype and email are not reliable enough for this.


Bugs / issues / tech problems
Problem:
We encounter problems with BrightPearl, Magento, SagePay, PayPal, etc etc

Solution:
Do not send the problem directly to one of the developers in the tech team. Ever.
First port of call is Anish for triage. If Anish is not available, then Gareth. If Gareth is not available then Flo.
If the problem is threatening our ability to transact, fulfil orders or complete payments to suppliers, then this takes priority. If this is a significant problem, we should expect to drop everything to work on analysis and a fix. If Anish is in a meeting, then that meeting should be interrupted. Do not attempt to contact Anish via anything other than in person, a phone call or txt message. Skype and email are not reliable enough for this.


Traffic
Problem:
We encounter a drop in traffic to the websites, for whatever reason (ads down, ads paused, ad position poor) etc

Solution:
Jacob has overall accountability for this. If this is a significant problem, we should expect to drop everything to work on analysis and a fix. If Jacob is in a meeting, then that meeting should be interrupted. If Jacob is not available, first port of call is Ed then Gareth. If it is a weekend, then first person to contact is Jacob to triage severity of the problem. If it needs to be fixed immediately, Jacob will sort it out, or get in touch with Ed for help. Do not attempt to contact Jacob via anything other than a phone call or txt message. Skype and email are not reliable enough for this.


Deliveries
Problem:
We have a problem with stock deliveries to our warehouse or Colchester. Or we have a problem with stock in warehouses. This materially affects stock availability for our sites, or photography of the products for the sites.

Solution:
Alan has overall accountability for this. If this is a significant problem, we should expect to drop everything to work on analysis and a fix. If Alan is in a meeting, then that meeting should be interrupted. If Alan is not available, first port of call is Tom then Jacob. If it is a weekend, then first person to contact is Alan to triage severity of the problem. If it needs to be fixed immediately, Alan will sort it out, or get in touch with Tom for help. Do not attempt to contact Alan via anything other than a phone call or txt message. Skype and email are not reliable enough for this.


Meeting notes not comprehensive enough
Problem:
We make decisions, make commitments within teams, agree direction or allocation of people, or ask people to do things for us and then we don’t document this. This then runs the risk of things being forgotten, “he said, she said” arguments, running around like headless chickens doing things which are not important, or worst case people not aware of what is going on.

Solution:
All meetings should have: (1) agenda, (2) meeting notes, (3) actions.
All meetings must go into calendar.
Agenda goes into calendar description, or team site before the meeting.
Meeting notes go into the team site; comments go into replies.
Actions go into Asana; comments and collaboration goes into Asana tasks.
Any project changes must go into intranet spec / project page so they are documented as such.

With respect to external people:
All meeting notes via email and then onto the team site as a reference.
Actions into asana as usual.


Saying No! is as important and sometimes more important, as saying Yes!
Problem:
We see something shiny and new. We get excited. We ask people to look into it, we spend a day chasing it, we start getting into email threads about it, we do some work on it, try something new out.

We start going down rabbit holes. We chase too many rabbits. We chase lots of shiny things but we don’t get the important things done.

We end up with lots of rabbits, but nothing else.

Solution:
Do not do anything unless it is in a team project, and associated with a team deliverable. Do not go off piste. Do not add projects to Asana unless you are clear that they are a part of the larger company objectives. Do not assign tasks that send people down rabbit holes.

Gareth has overall accountability for direction, deliverables, deadlines and focus. If you want to change direction, go for a different deliverable, change the deadline, or change focus, it has to be run past Gareth first.

If you do not, you run the risk of losing your job, missing out on a bonus, missing out on a promotion, or worst of all letting your team and the company down. Stay focussed.

If you are not sure of what you should be doing, then the first thing to do is ask, and there is absolutely nothing wrong with that. In fact, asking for help, asking for direction, and getting help with focus is one of the first signs of greatness.

And to be clear (this will be fleshed out more in the coming week), these are the general objectives for 2014:
1. get XXX down to XX% or less
2. get revenue up to £XXm per month
2a. get XXX up and contributing
2b. get XXX contributing more
2c. get SEO and other performance marketing channels contributing XXX% of revenue
3. Add XXXXX as transactional site
3a. Get Wedo brand ready for XXXXXX
4. Add XXXXXX
5. Add XXXXXX channel

Any effort into anything else is superflous. Period.


Some general principles / points:
Learn to think if your time as rocks, pebbles, sand and water. Start with the rocks. If we do not get the rocks done, but we answer lots of emails / do lots of small things / focus on the unimportant work, the rocks will still not get done. Start with the rocks.

Email is asynchronous. Sending an email does not mean you have to get a reply. If you want to speak to someone, speak to them, do not rely on email.

Get into the habit of posting meeting notes during meetings; or directly after meetings

Get into the habit of allocating enough time to work on projects so that they are done to completion. I am guilty of this because I’m chasing 25 things at once, so I’m going to start being more ruthless with my time and focus – so should everyone else.

Get out of the habit of ad-hoc interruptions. This is a great little primer for anyone who thinks that ad-hoc interruptions are OK.

Posting something onto the team site and asking for feedback does not mean it will be done, not that it will be remembered – that is what Asana is for.

Adding someone as a follower to a task does not mean they will do it – you must assign to that person if you want them to do the task.

Get out of the habit of using Skype for conversations; Get into the habit of speaking to people. Use your legs and feet to walk over to people when you’ve agreed to discuss something. Accept that you will have to schedule time with people to have these conversations, because the best time to discuss things is when you’re both ready to discuss and can think clearly. Accept that a quick 5 min conversation is waaaaaaaaaaaay faster than a 30 min Skype conversation which interrupts work flow.
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You have to do the hard things…

by oneafrikan on January 23, 2014

I recently came across this:

You have to do the hard things:
* You have to make the call you’re afraid to make.
* You have to get up earlier than you want to get up.
* You have to give more than you get in return right away.
* You have to care more about others than they care about you.
* You have to fight when you are already injured, bloody, and sore.
* You have to feel unsure and insecure when playing it safe seems smarter.
* You have to lead when no one else is following you yet.
* You have to invest in yourself even though no one else is.
* You have to look like a fool while you’re looking for answers you don’t have.
* You have to grind out the details when it’s easier to shrug them off.
* You have to deliver results when making excuses is an option.
* You have to search for your own explanations even when you’re told to accept the “facts.”
* You have to make mistakes and look like an idiot.
* You have to try and fail and try again.
* You have to run faster even though you’re out of breath.
* You have to be kind to people who have been cruel to you.
* You have to meet deadlines that are unreasonable and deliver results that are unparalleled.
* You have to be accountable for your actions even when things go wrong.
* You have to keep moving towards where you want to be no matter what’s in front of you.

You have to do the hard things. The things that no one else is doing. The things that scare you. The things that make you wonder how much longer you can hold on.

Those are the things that define you. Those are the things that make the difference between living a life of mediocrity or outrageous success.

The hard things are the easiest things to avoid. To excuse away. To pretend like they don’t apply to you.

The simple truth about how ordinary people accomplish outrageous feats of success is that they do the hard things that smarter, wealthier, more qualified people don’t have the courage — or desperation — to do.

Do the hard things. You might be surprised at how amazing you really are.

So I’m not going to comment on this, other than to say I hope it’s made some sense to you, or helps you think about the things you’re doing in a different way. As for me, I have my own hard things to do and the day is still young… ;-)

Re-thinking Twitter, or better put, Signal vs Noise

by oneafrikan on September 18, 2013

5 min time allocation for this post….

Twitter has become too noisy for me. Because I live in startup and tech land, the insane number of meaningless tweets I was thumbing through whenever I used twitter was becoming more and more frustrating. Too much inane noise, not enough (connection or) signal.

So I’ve unfollowed everyone except those people I work closely with, are family, or are going to become family.

In an effort to find the signal that is right for me right now, I’m going to limit myself to following no more than 300 people. If that doesn’t work, I’ll take it down to that theoretical maintainable friends network number of 150 (anyone confirm?).

Lets’ see what happens.

You get 5 types of people

by oneafrikan on September 17, 2013

I was listening to a talk recently where the speaker talked about the 5 types of people. I’ve understood this intuitively, but for the first time I’d heard it explained in a bite sized, easy to understand way.

Basically, the speakers assertion was that in any business you get 5 types of people, and when you ask them to do something one of the following things will happen:

  1. They don’t do it
  2. They ask “how do I do it?”
  3. They ask “can I do it like this?”
  4. They just do it
  5. They do it without being asked

By and large, I’ve found this to be true and think it’s a pretty good way of thinking about how people in my business are contributing.  As a leader, I see my role as continually living in group 5, if only to lead by example.

His further assertion was that the proportion of people who belong to group 4 is about 1 in 25 and group 5, 1 in 50.  Youngsters or entry level people should always be in group 3 and up, and you should always look to hire people from group 4 and 5.   And then lastly, groups 1 and 2 should either be let go or managed out.

Of course, this is all easier said than done, but again a pretty good way to frame a hiring process which unearths these people.

Lastly, he brought up an interesting way of looking at talent and performance, which is explained below.

Employee 9 boxes

Employee 9 boxes

Basically, anyone who is red should be let go / managed out, yellow people need to be improving, and green people are the ones you build a business on.

Which one are you? ;-)