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From consultant to entrepreneur – the McKinsey way
McKinsey consultants are known for giving and asking for constant feedback, working long hours to exceed client expectations, and going the extra mile to meet the extreme expectations set by their peers and managers. Working under these circumstances builds valuable commercial and personal traits and it’s therefore no surprise many ex-McKinsey consultants eventually turn out to become successful entrepreneurs.
One such example, Tarique Arsiwalla, celebrated one success after the other after leaving the consultancy firm. From co-founding Protix, which produces insects for animal feed, eventually raising €45 million, to growing a team from 30 to 140 in just 3 years. You could say he made some right decisions. Today, Tarique also invests in start -and scaleups.
“What excited me most was being in charge of a plan from scratch. Learning to execute an extreme diverse set of tasks. From looking at manure flows in the morning to convincing investors in the afternoon. Discovering bottlenecks over and over again. Repeatedly diverging and converging when more insights appeared.”
We spoke with Arsiwalla about where to begin and how to stay motivated. As a bonus, he shares how fairs can be a great place to find customers and investors.
Start with the fundamentals
Starting a startup has been popularized immensely in the last decade. To stand out and attract clients and investors requires a different train of thought. “Bold statements about why you’re different, followed by an explanation of why this will work, will not only catch people’s attention, but also prove you know your market and are on top of current developments. Do the numbers add up? Is the market big enough? Who is your competition? These are all questions you can ask yourself to support your motivation. And this doesn’t mean you have to know everything, but you do need an initial calculation. Doing so will force you to dive into the unknowns first.”
“We’ve invested quite some money in projects that didn’t work out. But if we hadn’t tried, we’d never learned what we know now. The only way to reach the end goal is through educated trial and error. An essential mindset.”
Arsiwalla experienced this first-hand multiple times, when initially, the founders targeted the fish food industry to sell proteins extracted from their insects. Also they planned to use food waste from hospitality businesses to grow the insects. EU legislation, however, still prohibited serving that specific market as well as feeding insects that specific food waste. Talking to insiders showed them an intermediate opportunity in the adjacent market of pet food while in the meantime they successfully lobbied for change of EU regulations. Furthermore, the team built test facilities that showed them the limitations of academic research. “Small scale laboratory testing is quite different from full scale industrial production where reliability and stable quality output are essential.”
“Before we prepared our own factory though, we maximally utilized our small commercial production facility. Our supply of prospective customers exploded with the introduction of a variety of products, that we found ourselves in the luxury position of having to expand. We showed we could run a demo on a serious scale, with that proof, we could attract serious investments and accelerate to an industrial level.”
Keep your head up
No founder builds a company without hardships and it would be easy to cave and quit on many occasions. To stay motivated, Arsiwalla shares several tips and tricks.
Aim for short term wins
“Not only for yourself, but to also keep your investors engaged, you’ll need several wins or valuable new insights at least every 3 months. Don’t be afraid to end a project if it doesn’t lead to anything valuable. It can take a while before you can actually demonstrate you’re on to something, it took us 3 to 4 years. At that time, we also realized the compounded effect of all the short term wins made it harder for competitors to copy us.”
Don’t be afraid to share your idea
“We were really hesitant to share our plans, worried about abuse of intellectual property. We wouldn’t even tell anyone we were breeding insects. Luckily, we quickly learned that if you don’t share even the slightest bit of information, you’ll be getting nowhere. There are so many experts happy to support you with their valuable insights. And if all you can do is worry, just register your IP. Especially in The Netherlands, it’s incredibly easy.”
Be bold to utilize goodwill
“To take big steps, you need other people to run with you and for you. You need them to become ambassadors and take risks with their reputation, for example, when introducing you to someone they know. For this to happen, find people who sympathize with you or your product, so they will not invoice you the moment they provide anything of value. Available budget in the earliest startup phase is usually a challenge.”
Start small and iterate
“Entrepreneurship is a long journey for any type of business. For production-based companies, especially compared to software companies, even more so. Starting small and iterating allows you to constantly improve and grow into your market.”
“When we decided to pursue the pet food market, we could only provide our customers with living or whole dried insects, whereas they needed us to deliver separated and concentrated protein powders and fats. We weren’t market ready. These insights showed us we needed to take steps technologically. By moving back and forth with customers, we developed our product into a valuable solution, leading to opportunities with clients and investors, or so-called problem solution fit.”
“Through this process we also learned medium-sized businesses felt the need to innovate and were therefore more willing to embrace our innovative products and concepts. Also, decisions went faster with these type of customers. We currently work with multinationals as well, but it has taken a while to get there. Startups and corporates are usually misaligned on so many levels, it will take a long time for them to be ready for each other.”
Why fairs are great lead generators
Seasoned scale-ups or vested companies have their sales teams developed and can even consider to use distribution partners. Typically by that time, the company has enough supporting evidence through research and/or customer cases that use the actual products with success. In the earlier phases, it all starts with the founders doing it themselves though. “When you’re early-stage, people want to speak to the founders and there’s just no substitute for being able to passionately explain why you’re building this. Not to mention the unexpected questions only you have all the answers to.”
“An efficient way to get in touch with relevant people,” according to Arsiwalla, “is to visit fairs”. Every startup has its niche and every niche has its own gatherings with an extremely targeted audience. At these events, there’s always someone who can tell you where you need to be and who you need to meet. Merely sitting behind your desk limits you to your own thoughts and those are, per definition, smaller than the combined insights of all the smart people you could discuss your business with.”
Arsiwalla suggests a practical approach. “Make sure you understand if it’s a walking fair or a sitting convention. With conventions, the real value comes from having a speaking slot and interested visitors approaching you afterwards. You need to get in contact with the fair organisers months in advance to try and be included in their speaker list. When it comes to fairs, first test the event and if valuable, invest in a professional booth the second time and be unconventional to attract participants. In our case, that meant setting up a big case of live larvae in front of our booth nobody wanted to miss and inviting the event press agency. Remember: all participants at these events have a dating mindset but you need to find each other, then briefly talking to each other is a great way to get into follow-up meetings later.”
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