Lose your fear of financial failure when starting a business

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Lose your fear of financial failure

Matt Kuppers CEO Startup Manufactory

19/11/15Wayra UK

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• Founder & CEO Startup Manufactory • Co-Organiser / London Ambassador Startup Week Europe• Startup Mentor to Microsoft Ventures Accelerator, London

Business School ESS, Saïd Business School, Startupbootcamp FinTech, Pitch@Palace, an initiative by HRH Duke of York

• Co-founder of MenuSpring, featured in the best British Startup 100 ranking in 2013, currently valued at £3m

• Formerly associate VC firm Notting Hill• PhD student at LSE + nine-week course in entrepreneurship at

Saïd Business School, University of Oxford.

Speaker Matt Kuppers

© STARTUP MANUFACTORY 2015 | @StartupMfactory

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Startup Manufactory services


Strategy

Marketing

Product

Human resources

Innovation Competitive advantage

Competitor analysis

Marketing mix execution

Route to market

strategyProduct viabilityanalysis

MVPdevelopment

Product roadmap

Financial modelling

Fund Raising

Strategy

Team building

Resource allocation

Personal developmentMentoring

Top

Leve

lO

pera

tion

al L

evel

Early to mid-stage startup development cycle

Finance

Strategy Company structure

1:1 Mentoring

IdeationBusiness

model development

Price elasticity validation

Knowledge capture

Product launch

Product viabilityanalysis

Fundraising

Leadership

Strategic management

Market insights

capitalisation

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Startup Manufactory eco system


On failure

5© STARTUP MANUFACTORY 2015 | @StartupMfactory

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On failure


What constitutes failure?

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On failure


The FACE project, in collaboration with Prof Jan Brinckmann from ESADE Business School, conducted a study named Delphi Study on the Fear of Failure.Findings:Causes of the Fear of Failure• Financial related fears• Career related fears• Competence related fears• Self-perception related fears• Individual liberty related fears• Social perception related fears

FACE Project, (2015). Failure Aversion Change in Europe The Delphi Study. [online] ESADE Business School. Available at: http://www.face-entrepreneurship.eu/index.php/en/blog/articulos/the-fear-of-failure-is-a-natural-part-of-the-ict-entrepreneurship-process [Accessed 15 Nov. 2015].

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On failure


The FACE project, in collaboration with Prof Jan Brinckmann from ESADE Business School, conducted a study named Delphi Study on the Fear of Failure.Findings:Negative Consequences of Fear of Failure:• Delay in starting out• Some may never start• Part-time, most likely to close down• Not taking necessary decisions• Psychological issues• Casino behaviour (all eggs in one basket)


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On failure


The FACE project, in collaboration with Prof Jan Brinckmann from ESADE Business School, conducted a study named Delphi Study on the Fear of Failure.Findings:Positive Consequences of Fear of Failure:• Sense of urgency• Driver to do everything to gain success• Entrepreneurs better plan their efforts• Minimise potential risks• Casino behaviour (no plan B)


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On failure


Failure is a formative experience!

Find your own definition of failure!

Knock-backs are part of the progress!

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Real life case studies


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Real life cases


Psychological scientist Anuj Shah et al of the University of Chicago Booth School of Business conducted three studies on rational behaviour in the context of scarcity. Findings: Scarcity makes insensitive for proportional discount sizes• High-income participants were more willing to travel to get a

$50 discount on a $300 tablet than they were for the same discount on a $500 tablet

• High-income participants were more willing to travel for the discount on a $500 tablet than a $1000 tablet

• Lower-income participants, however, were less sensitive to the proportional size of the discount

Association for Psychological Science. "People value resources more consistently when they are scarce." ScienceDaily. www.sciencedaily.com/releases/2015/02/150212131828.htm (accessed November 15, 2015).S

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Real life cases


My personal experience

PhD student (2009) VC Firm (2011) MenuSpring (2013) Startup Manufactory (2015)0

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Income Fear Happieness

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Real life case study AAfter• Happy• CEO of his own

startup• Launched product• Raised €500k• £50k salary• Moved to Chelsea• 50h-week• Spends weekends

with family• Married, father of

one

Before• Former Investment

banking/Hedge Fund Analyst

• £100k salary• Two-bedroom flat in

St James• 80h-week• Weekend flights to

the US• Party in Dubai• Expensive girlfriend• Unhappy


Survival techniques• Airbnb’d flat in St

James• Crashed at his co-

founders’• £0 salary• Startup loans• 80h-week• Fed on Tesco only• Got himself a bike• Working tax credits• Free interns for

startup

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Real life case study BAfter• CEO of his own

startup• £30k salary• Launched product• Raised £380k

angel investment• Two-bedroom flat

South London• Back to being a

foodie• Got top job with

Airbnb

Before• Software Engineer

India• £80k salary• MBA at London

Business School• Two-bedroom flat

near Regent’s Park• Car owner• Foodie• Spend money on

expensive gyms and exercise


Survival techniques• Moved into bedsit• £0 salary• Worked with interns

only• Product development

India• Used business school

gym for free• Fed on business

school canteen + sold car

• No flights • Housing allowance

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How to mitigate financial failure


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What is your personal runway?

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• Assess cost structure• Each liability individually• How much cash in the bank?• Which revenue streams? • Change flat, sell car, sell assets, cancel contracts, scale cost

structure down• Find cost-efficient alternatives for liabilities

Before starting out

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• Prioritize expenses and think back to student days• Have a contingency fund• Loans pay-off• Get proper insurance• Prepare to go without salary for at least 9 months to a year• Don't pool your money• Utilise shared spaces and services: Being a part of the shared

economy culture is not just hip but helps in cutting costs• Do not take on additional financial commitments: You do not

have a regular income and your business needs liquidity at this stage



Build a safety net

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Mortgage Transport Newspapers

Food Drinks

Pause retirement saving

Fashion

Presents

Family

Internet Sky

Mobile phones


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20% Savings (Debts, loans, retirement, etc.)

40% Needs

(Rent, mortgage, medical bills, utility, etc.)

30% Wants(Gym, Fashion, Holiday, Tech

gadgets, presents, etc.)

10% Essentials(Food, communication,

transport, etc.)


Before you take the plunge

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Workshop


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Presentation time


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Freebies for Startups

WordPress Joomla

The Amazon AWS Free Tier


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http://growth.supply/free/

http://www.producthunt.com/@hnshah/collections/free-stuff-for-startups

https://blog.growth.supply/300-awesome-free-things-e07b3cd5fd5b

http://startups.timeetc.com/ensemble

http://www.greatbusiness.gov.uk/

https://startupdirect.org/

Freebies for Startups














https://startupdirect.org/

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Matt Kuppers | Founder & CEO+44 7958 274 [email protected]

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Small Business & Entrepreneurship

Lose your fear of financial failure when starting a business