Accelerating a startup, doughnut marketing™ and how to launch a business on a train

Simon joins Tom to talk about his experience of starting a company out of university, going through an accelerator and taking an idea from conception to revenue inside a week. In it we learn:

  • Why you might choose to go through an accelerator (and what they are)
  • The highs and lows of running a fast-moving startup
  • How to use tasty treats to get the user feedback you need

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Transcript

Tom

Hey, everyone. Welcome back to the Lighthouse podcast. I’m Tom. I’m joined again by Simon.

Simon

Hi.

Tom

Hello, hello. So, we’re going to be following up on our event that we had a little while back. It’s been some months now, actually.

Simon

Yep.

Tom

We had Anthony on before talking about his Porter’s five forces talk. At the same event Simon did talk about accelerators. He’s got a fair bit of experience going through one in the past. So we thought it’d be good to kind of get him on, rerun some of the stuff in there, give a bit of an intro … But also talk about his experience specifically and stories based around that.
Why don’t we start with a really brief introduction to what an accelerator is?

Simon

Good idea. I’m going to be very quick on this because we’ve actually done a podcast before with a programme manager of one of the best accelerators in Europe, Tristan Watson.

Tom

One of the best, yeah.

Simon

One of the best, yeah, definitely. In fact, if you dig out their stats they probably claim to be the best seed stage in Europe.

Tom

There’s no bias there.

Simon

No bias there whatsoever. It’s not like I’ve been through anything-

Tom

Just hang on, isn’t that the one that you went through? Coincidence, it’s funny you should say that.

Simon

We have that, actually, we’ll link that in the post. If you want a bit more detail about what it is, what they can offer, that kind of thing, you should definitely check that out.

Tom

Yeah, we had a good chat with Tristan about that before. It was a really, really good podcast.

Simon

Definitely, yeah. Just for the purposes of sort of clarity right now, I’ll do a really quick explanation. A business accelerator varies massively. But the one thing that they would all claim to be is a programme, which entrepreneurs use to improve their business. That’s it, simply. They could be completely free, they could take equity, cash, they could take anything else. They could also offer a combination of office space, mentorship, money, all sorts of things like that. Whether they suit your business is entirely dependent upon what you’re looking for.

Tom

Uh huh. We have a couple of clients who’ve been through other accelerators, textiles, things like that. We’ve had actually a few more people on the podcast who’ve come from Ignite as well that we’ve talked to. People have probably heard about Y Combinator. That’s a big one. You know, Airbnb, people like that went through theirs. Huge-

Simon

Dropbox.

Tom

Dropbox, yeah. Loads of massively successful startups gone through there. We emailed with the guys from Bethnal Green Ventures the other day who were interesting. I think they’re mainly based around product, physical product stuff, or tech things, but also kind of like companies that would do good for humanity all over the world.

Simon

Yeah, they have a big social enterprise sort of slant.

Tom

Some are all about just making as much money as possible, investing in companies that are going to get that 10x growth or whatever you call it. Some are there to help people enable good through tech. So there’s a big mix of companies out there, what they’ll invest in. Equally, there’s other stuff at the moment where a lot of big global brands and big companies will kind of have in-house accelerators or innovation labs, whatever you call them.

Simon

John Lewis have JLab.

Tom

We just found John Lewis the other day. … Unilever’s got one. I mean, loads of companies have them nowadays. They’re trying to-

Simon

-JustEat have launched one as well.

Tom

Really? It doesn’t surprise me. It makes sense because it’s a big risk I suppose to invest in stocks because of …and.

Simon

Definitely.

Tom

Yeah. But I think it’s interesting these brands are trying to find savvy people, young people, often, to come in and build things that they can latch onto and maybe use to grow profit in their businesses.
So that aside, let’s move onto your experience. Like you come through Ignite?

Simon

I did. I actually been to a mini one before that as well, but Ignite was a lot more interesting. I started a business at university with a friend. It was completely different to the one I ended up with. It was basically a simple natural-language processing algorithm to do with taking recipes and basically turning them into a form that a computer understands so that you can combine them, do clever things with them, send them to be ordered …

Tom

Sounds complicated.

Simon

It was needlessly complicated.

Tom

Has a little bit that startup time.

Simon

But unfortunately at pretty much the same time we started, there was a guy on The Apprentice … I’m not going to mention his name, because if you know about the business, you know who he was … And he had a similar idea. He left The Apprentice, raised a load of money, hired some developers … All due credit to him. He hit the market really quickly, started testing his assumptions, which is exactly what we said I’m going to do, and realised he couldn’t quite make it work in a certain way. He changed his format a little bit, such that when we hit the market, we were noticeably behind. This goes against some of the things that ANSI tells us we need to do … But when we hit the market we were behind, so we basically couldn’t monetize in the same way.
So we were floundering around a bit. We got contracts here and there; it was never nothing massive. We basically realised than an accelerator would help us solve this problem, help us find out what we should be doing instead. So we applied to loads, and Ignite actually got back in touch with us, they were interested. So we spent a lot more time looking details, what they offer, who their mentors are … Found out that it was actually a really good fit. They had some mentors who were in the industry that we were in, mentors who dealt with similar businesses to us.

Tom

Yeah, it’s really important, isn’t it … If you’re going to succeed, to get the right mentorship is vital.

Simon

Absolutely. It’s about knowing the industry, knowing how the customers respond to things like them you being able to connect them to people; which is ultimately the most valuable thing that we at least got out of accelerator.
We basically took the application a lot more seriously. There were multiple stages we had to submit, I think an application form … We had to submit a video, and then we got a phone call back. I actually got a phone call at eight o’clock in the morning the day after we submitted it, which woke me up. And it was one of the guys who was on the board for Ignite who was deciding upon applications, and he called me and said, ‘I was one of the prime investors in your direct competitor. Why should we let you in?’

Tom

Oh, wow. That’s a tough competition for you.

Simon

It is. I’m still not really sure what I said-

Tom

You must have said something right.

Simon

I obviously said something right, because they did eventually let us in … But that was a bit scary.
We had that. We had another phone interview, we had a Skype interview, and then we had a final face-to-face interview in London which went quite well; it was all quite hard. It was really interesting, just that process in itself, because the way they question you and your business … They question your metrics, which will tell you very quickly if you’re measuring the wrong thing. Because if they ask you a question about your business and you don’t know it, then you’ve not analysed what you should be measuring.

Tom

Yeah. Do you think it was as much working out whether your business is any good or kind of sounding you out as people?

Simon

Different accelerators would have different answers to that. The one that Ignite claimed would be the latter; they say that they take people based on the quality of the team, which includes their ability to measure an industry and everything. They take on some teams even without an idea they liked. They’ve had some teams where they really really dislike the idea, but they thought the team was good enough. And they’ve had some where they would just bring them on by the idea. But they claim it’s that.
Other accelerators justifiably would say their interest is solely in the business: those who deal with a slightly later-stage company, perhaps. But us it was just … They said it was about the team. I don’t think they actually really liked our business much, let’s be honest … Particularly because we were competing with one of their board members.

Tom

Yeah, definitely a conflict of interest there.

Simon

Yeah. They let us in, they gave us a place. So at the time we were still in South Hampton, which is where we went to university. We just dropped everything we had and moved to Newcastle [Pontine 00:08:17], which is pretty much one end of the country to the other.
We moved in there, got a place, got an office space … which begun the experience … I think this could be another entire podcast by itself, but I’ll try and summarise it. It was basically a very, very intense three months. I would go as far as to say I learned as much in that three months as I did in an entire year of university … The difference being that you have all these mentors who come in and question you and try and look out for you and make sure you’re making the right decisions. But you’ve also simultaneously got to be running your business on the side.

Tom

Yeah, I mean everyone we’ve had talking about in and commentaries I’ve had with people who’ve been through them say that it’s a super intense thing to do. But like you said, you’ve learned so much in that time that it’s always worthwhile; if not a little hard to stay on top of it all.

Simon

Absolutely. It was very stressful. There was a lot of socialising in the evenings, which I thought was brilliant at first. But I realised towards the end that it was genuinely necessary to get you to just relax and let your hair down a bit, because otherwise you couldn’t. Otherwise you’re thinking about your business every waking hour.

Tom

Well yep, I have you there.

Simon

I’m sure you do, exactly.

Tom

How did the rest of the team take it? There were three of you, is that right?

Simon

It was just two of us.There were some teams where it was just one person who would hire to cover people to help him, whatever … Right through to I think we had teams of four or five co-founders … And then they obviously had some people as well.
Ignite typically don’t like teams of one. I think quite a few accelerators are like that, which seems a little discriminatory … And there are one or two which specialise in single founders … But having also at a later stage in the business, being a single founder, I can really see why it’s ten times worse. You can’t even get anyone to bounce ideas off; you’ve got all the stress on yourself. You’ve gotta pay employees, and it’s entirely your responsibility.

Tom

I mean certainly as someone who’s started a company with someone else, I wouldn’t ever want to do it on my own.

Simon

No.

Tom

You just have to have that person to sanity-test your decisions and ideas, and I think it’s a much better way to approach something like that.

Simon

It’s also … This is touching on another podcast that someone else mentioned … But you’ve really got to be aware of the stress. Having that mental load is much bigger than people think, and much bigger than you realise at the time. I think it only really hits you afterwards … In my case, anyway. So having someone else there to share that load with massively helps. To having a co-founder, a good co-founder was always really helpful. But likewise, you shouldn’t just grab someone; because that can destroy your business as well.

Tom

So why don’t we talk about the story of what happened and what eventually became Shuttlecook … Is that right?

Simon

Yeah, Shuttlecook. So we’re in this accelerator, we weren’t really happy with what we were doing … And we also had pressure from above, as it were, to change … Which was entirely the right thing to do anyways, at this point. We tried out loads of ideas, we read a book which we mention pretty much every podcast called the [inaudible 00:11:15], which is extremely helpful.

Tom

Ding ding!

Simon

(laughs)

Tom

-for the 1,378th time.

Simon

Exactly. And it’s genuinely … I’m not going to say life-changing, but it’ll change your-

Tom

If you’re a startup-

Simon

If you’re an entrepreneur it’ll definitely change your way of thinking about business.
We read that book, we tried out loads of different ideas. We did something which … I want to go ahead and trademark this doughnut marketing-

Tom

I like doughnut marketing; it’s good.

Simon

It’s brilliant, where you get a big box of doughnuts and you sit in a busy place and you tell people that you’ll give them a doughnut if they talk to you for five minutes. It’s the best way of getting non-biased feedback, because-

Tom

I mean you’ve spoken about it before. We all kind of had a chuckle about it … But actually it’s a really important thing to think about, because you do want people to tell you the right stuff. And you have to incentivize people, because most people … You stop anyone in the street, they’re like, ‘No, no.’

Simon

Or only a certain type of person will.

Tom

Yeah, exactly.

Simon

And therefore you’ve-

Tom

But it’s a neat way of approaching that problem, actually. So it’s really effective. And there are probably other things you could give out as well, but it is really interesting to think … A really interesting thing to think about from a founder’s perspective as a way to trick people into giving you information you need.

Simon

Absolutely. And once they start talking, they’ll often give you a lot more than five minutes.

Tom

You’ve just got to get them interested.

Simon

Exactly, yeah.

Tom

I mean if they’re not interested they’ll walk away, but you’re not-

Simon

We used it as well a lot later on, when we wanted to sort of start to sell as well. We used this as a way to open the conversation, and we would generally learn a lot from it before we then start talking about what we want to sell them. And if we did that-

Tom

I can feel a blog post about doughnut-marketing company. … get writing.

Simon

We did that and basically just thought about the problem, and we came up with the concept of Shuttlecook.
Shuttlecook was a same-day, sort of on-demand, as you were, meal-kit delivery service. And it worked in the same vein to companies like Gousto, which was the original, and HelloFresh, which is the rocket internet version … Where you get everything you need to cook a meal, including all the vegetables, the proteins, the carbohydrates, et cetera, and a recipe card, ready to go in the correct amount. So you don’t have to measure out spices and things like that.

Tom

Yeah, that’s cool.

Simon

The difference with Shuttlecook was that instead of ordering it a week in advance to get a box that would last you for a week or so … Which is fine if you know what you’re doing a week on Thursday … Ours was more around somebody like myself: sort of young professional, very spontaneous … Could get a call at lunchtime from an old friend, and that’s it; any evening plans have now changed. The idea of Shuttlecook was you order it at lunchtime, up to three PM, and then a bag gets delivered end of the day, on your desk, ready to go … Just for that meal, just for that evening. So you don’t have to subscribe or anything.
I came up with the idea … We had a train journey down to London a week or so later where everyone that was trapped in the carriage with us became our panel. So we bounced ideas off everyone, it was brilliant. Most of them were also entrepreneurs, to be fair, it was fine. But we did all the … We came up with the name because we hadn’t called the service anything at this point-

Tom

It’s a good name.

Simon

Thanks. We designed the logo, we bought the domain, we got all the Twitter handles. We came up with all the branding in one go, in one incredibly intense three-hour train [inaudible 00:14:29]. We arrived in London and met all these investors and said, ‘Right, we’ve got a new business.’ But they liked the idea of it. It went well.
So we went back at the end of the day, and over the next couple of days sort of refined it. Basically we just went out around Newcastle … Again, probably with doughnuts, but I can’t remember … Talking to everyone, talking to loads of businesses about what we’re trying to do, get them signed up to the idea if they wanted to. We got 150-odd people, phone-numbers, something like that signed up. It wasn’t massive. And then the next day we texted them and said, ‘This is the meal. Do you want to buy it?’

Tom

Cool.

Simon

I think for ten pounds for two people. So five pounds a head. And we sold 20-30, I don’t know.

Tom

That’s not too bad.

Simon

Within a week of the idea, we’d sold meals. We had revenue. That was incredibly exciting … From trying to run a software business which takes months and months to push out things, to just sending a product.

Tom

The quickness of that is astounding really, isn’t it? And using old-school methods of just getting people’s phone numbers or whatever.

Simon

That was where we liked everything. We did that, we did it, we stepped back again and tried to make the whole process more efficient. And we then ran a proper five-six week trial in Newcastle … Got the hockey-stick-growth graph where it just goes exponentially up to [write 00:15:47], and then the story goes on from there. The story is a different story that again would be another blog post, but-

Tom

Yeah, I think we’ll come back to that one another time.

Simon

-raised a load of money, moved to London, et cetera, et cetera. But that was how it started, and it was a very exciting initial first phase. I think that’s what got me hooked on startups.

Tom

Definitely. And that kind of Ignite experience, the accelerator experience was kind of a big part of that, right?

Simon

Absolutely. You’ve got people to bounce ideas off, you got people through the highs and lows that have their own highs and lows around you. So you support them, they support you. They have a word, actually, for when you finish, called the ‘post-accelerator blues’, which I didn’t take seriously until I left. I was in an unfamiliar cold city, and I didn’t have anyone to bounce ideas off and talk about things and sort of see their struggle as well. So it is really helpful being surrounded by people, like-minded, trying to do something similar.

Tom

Yeah, definitely. It feels like a good environment for that kind of thing, but there’s obviously dark times as well, and then [crosstalk 00:16:43]-

Simon

It’s mostly dark times. It’s not light. There’s a few incredible highs and then an awful lot of downs.

Tom

Yeah, that’s really interesting stuff. I think we’ll link through to some of the other podcasts where we’ve had startup founders … And they all seem to be doing really well now as well; so no ‘post-accelerator blues’, there. I think we’ll definitely get some more chats to hear about Shuttlecook’s rise and fall … Could you put it like that, I suppose? … In the future, and then more kind of [take-homes 00:17:10] about how you went through your startup experience and got to where you are now. But thanks for giving us a bit of about accelerators and your experience.

Simon

No problem.

Tom

Cheers all for listening. There’s more content on our blog, wearelighthouse.com/blog … You can look through there. Follow us through all the social places, @wearelighthouse amongst those things. Drop us a line if you want as well to give us feedback on this podcast or anything else, hello@wearelighthouse.com. Check back soon and we will speak to you later.

Simon

Cheers.