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DSO News

You don’t have to let your startup gallop away from the off

March 12th, 2015

It’s a common adage that nine out of ten technology startups fail. In the five years since I co-founded a startup, RaceCaller, I’ve had plenty of near-death startup experiences.

The issues we’ve had are probably the same ones that face lots of startups: money and momentum.

There have been times when we have had neither.

RaceCaller provides tips, chat and games around horse racing. I set up the company with my brother-in-law, Eugene Cosgrove.

For the first two years, the business was self-funded as I continued to work on the side as a digital marketing consultant. When that wasn’t enough, we took out a €50,000 bank loan.

Now I’ve read all about ‘lean startups’. Let me tell you: we were lean. We were lean to the point of being mean. Nevertheless, money was needed for servers and race data. It was needed for flights to London to meet potential clients, or lunch with someone whose advice we wanted. It was needed for work by accountants and legal professionals to keep us out of trouble.

Because money was needed by all these necessary sources, we had limited means and real progress was therefore slow. In hindsight, though, slow progress was good for us. Because we probably needed this time to learn from our mistakes.

One of the mistakes we made at the start was in not understanding what we were selling.

We began with an advertising model. But we soon realised that we would need several hundred thousand users to make this support the business.

So we revised our revenue model to take advantage of the value we were building around our ‘social data’ (meaning fan tips and comments) and our tipping games. And we created an API for each which allowed us to license these out to third party sites and apps.

Despite being based in Dublin, we always found it easier to get meetings and win business in England so we spent a few days each month there, mainly through cheap flights and staying with friends and family.

Racing UK was our first client and things became easier after that. Over the next 18 months we began working with Trinity Mirror, News International, Mail Online, At The Races, Sporting Life and Sky.

Once we had grown revenues to a level where it could support the business and pay us a (very) modest salary, I went full time on it.

It was nice to get to a stage where we had a respectable level of invoices being sent out each month. But we still felt that we were becoming frustrated with slow progress. We felt like we needed to hurry up and show more ambition.

There was an opportunity to work more closely with a few key clients. In particular, these included Sky, At The Races and News International as well as a partnership with Sportech in the US. Given the time and effort we had put into winning these clients it seemed a mistake not to be making more of them.

But given the service level agreements that we now had to commit to we needed to move the business to the next level and make sure we could deliver to the standards required.

It meant hiring a couple of the right people on design and development and investing further in our security and servers so that we could deal with busy periods where over 30,000 fan tips and comments are shared per hour. So we raised funding for the first time: €500,000 from three private investors and Enterprise Ireland in the middle of 2014.

It is a strange feeling to have money in the bank at the end of month.

But we are still pretty mean. Adding costs is easy, but adding revenue is hard. You have to stay focused.

We know what we want to achieve over the next two years to make sure we create a sustainable business and show a positive return on the investment.

Plenty will go wrong but we just need to make sure that enough goes right.

Another benefit of taking this slow approach has made us conscious of the need to manage risks. If it is going to take five to ten years (and it has already taken five) then we must make sure we are creating something of value.

We have to stay focused on building a technology business that scales from a low cost base. And, obviously, to deliver a product that race fans like.

On paper, these aspirations sounds obvious. But each of them has been much harder to achieve than we ever expected. We are still trying to find the right answers to many of them.

Public Enemy’s Chuck D, when reflecting on 20 years in the hip-hop business once said: “harder than you think. It’s a beautiful thing.”

Startups are hard, but they’re beautiful. There may be pressure to go fast, but as we have found, you can also go slow.

Are you are looking for a serviced or virtual office in Dublin City Center or Dun Laoghaire, call us at Dublin Serviced Offices on 01 2020212

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