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Episode 22: Why it’s important to quit, fail and make mistakes

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All Xero In episodes

Hosted by Jeanne-Vida Douglas and Rob Stone

Disrupt or be disrupted. It’s the mantra of the modern workforce. But what’s it really like to quit your day job? How do you know when the timing is right? And what happens if you make mistakes or your business fails?

In this special episode of Xero In, JV and Rob head to Sydney fintech hub Stone & Chalk to talk to some of Australia’s leading entrepreneurs about their business journey from corporate career to startup.

“It wasn't my intention to launch a startup, or to do something on my own. Something happened to me, and it wasn't life changing but it was so exciting, and it led to me thinking that to follow this, I’d have to step outside my corporate role,” says Katherine McConnell, CEO and founder at Brighte.

Tune in as we delve deep into the world of starting out with a range of guests, who share their stories of success, failure and taking that overwhelming first step.

Small business resources:

Millennials founding tech startups: calculated risk with enduring reward – theguardian.com

Seven business lessons from seven female entrepreneurs – Xero Small Business Guide

Episode transcript

Hosts: Jeanne-Vida Douglas [JVD] and Rob Stone [RS]
Guest: Jack Stevens [JS], Katherine McConnell [KM], Hamish Oglivy [HO], Annie Le Vavalier [ALC]

JVD: So today we're mixing it up a little bit at Xero In. We're actually having a conversation with a range of really smart fin-tech entrepreneurs that operate out of a fantastic new startup hub called Stone and Chalk.

RS: Yeah that’s right. Some of the great things about hubs like Stone & Chalk is the environment for innovation, it’s a great space for co-sharing, support to elevate your business...

JVD: If you're about to leave your day job and become an entrepreneur for the first time, these startup hubs are the places where new services, new products, new opportunities are going to come. They're not just going to come out of San Francisco, they're going to come out of Australia this time.

RS: That’s right JV. There are just so many great entrepreneurs that are going to come onto the world stage. And I think we’re getting to a stage where we can almost create a new collective noun for entrepreneurs; something like a space of entrepreneurs or a disruption of entrepreneurs.

KM: Hi, I'm Katherine. I'm the founder and chief executive officer of Brighte.

I did use Google a lot, how do I know when it's right to quit my day job and join a startup, and there's an answer for that. Actually, there's a great Forbes article on that. Google did help me a lot. I couldn't obviously talk to colleagues about it. It was something that you had to keep really private but my husband was able to go through monotonous, and repetitive, and quite emotional conversations, and really just be a great sounding board, and guide me through that. I was emotional but he was logical, methodical, and rational, and I think I really needed that to offset, you know, this is so exciting. He was, "Let's just one step at a time. Let's just think about how we can do this."

Brighte is a provider of no interest ever payment plans for homeowners that are looking at putting solar batteries, or just doing general home improvements on their home.

I have been working in investment banking, financial services for 16 years. Mostly at Macquarie Bank.

For me, I didn't have to make the decision about changing industries. It was more of a risk about going out on my own, backing myself, trying to navigate every aspect of the job rather than having a support frame, a support network behind me in a corporate environment.

I was in a meeting, and it was with someone providing an energy management service for batteries. I walked out of that meeting thinking this is just going to change the world, and it just made me so excited. I went home, and got a battery. The next few weeks of household battery, got this energy management service. We are an early adopter. We were one of the first Australian families to get it, and I guess that whole experience it just made me so excited getting the battery. So excited thinking this is just going to change everything. I just couldn't think about what I was doing at work anymore, and I don't know. I didn't know what I had to do but I just had to be a part of this change and a part of this big, I call it a movement that's really going to happen.

More and more as I started doing my day job, I started thinking about how could I be involved? What could I do, and then as I started thinking about it an opportunity became more obvious for how I could be involved, and it was something that I could do outside of corporate, I could do on my own. That wasn't my intention. It wasn't my intention to find the startup to do something on my own. Something happened to me, and it wasn't life changing but it was so exciting, and it led to me thinking to follow this I have to outside a corporate.

It is really hard to manage, and you've just got to be focused. You've got to be focused if you want to exercise, if you want to go on a diet. If you have a small business you've just got to... It's a conscious decision.

I left Macquarie Bank, and within the week, I was a full time resident at Stone and Chalk. I went to visit a few different hubs, and for me with what I'm looking at doing in financial services this was the right place. So being able to just turnaround and ask someone, "What did you do on your KYC, or on your AML policy? How did you get this form? How did you get this web developer?" Every part of my business I've been able not have to go and 10 get quotes. I've been able to walk around, and speak to two people in usually 15 minutes, and I've got an answer. Often a lot cheaper, you know with a greater outcome. Just the collaboration has been unbelievable, and also the diversity I think.

People here are just all backgrounds, and it's quite different to corporate I think the diversity that's here, and just having that different thought process from people has been amazing.

I was able to use networks, just networks reaching out to different people just through being in finance for 16 years, specifically drawing on people. I was saying, "I can't afford to pay you what you used to but if you come and work here, it's going to be exciting," and I think everyone's feedback was it's not about the money. You are from banking. It's always about the money for the bankers but here it's... You know, we'll join for the love, for the excitement, and just for the vision.

I never thought I'd be an entrepreneur to begin with, just this idea came, and it happened, and I had to do it. At this stage, that's all I can think of. There may be other opportunities down the track that catch my energy and my attention as much Brighte has but for now all I can think about is growing Brighte. There are so many different ways that I could see how that growth could organically happen. For now, that's what excites me.

ALC: My name is Annie Le Cavalier and I'm the community manager here at Stone and Chalk.

The momentum around fintech at the moment is like nothing we've ever seen before.

Stone and Chalk is an independent, non-for-profit fin-tech hub that was established based on a series of recommendations that were put forward in the KPMG report called Unlocking Sydney's fintech Potential.

We currently have over 200 entrepreneurs in this space, made up of roughly about 70 to 75 businesses.

We also run a whole series of master classes, office hours and workshops, lunch and learn sessions, those type of things with our corporate partners.

From the very start, we have had a huge pipeline of potential residents to join the space. We put people through like an interview panel to be accepted into the space. They have to present their business case to us. We vet them and then invite them to join the space.

I think that there is so much momentum in this space and there are hundreds of people in Stone and Chalk currently disrupting financial services in some way, shape or form. We have 25 corporate partners who for them, they all want a seat at the table. They want to understand what is happening, and how might they be disrupted, and clearly it's in their interest to be a part of that conversation because it will ultimately affect them as well.

A lot of these guys are providing very niche service or some kind of innovation that could really add value to a lot businesses across Australia. They should see themselves as potential customers of these startups.

JS: I'm Jack. I'm the founder and CEO of a business called Edstart, which is offering financing solutions for education.

We help people pay for education using a peer-to-peer style-funding platform.

I think that when you do make this leap, and for me this was a little while ago now but thinking back to that point. Once you start allowing people into your idea, or you start discussing what it is that you are doing, you do get a lot of advice, and particularly in an area like this where it's a fairly global commonality. Everybody understands education, and that sort of thing. It's not a unique sector that nobody knows about. A lot of people have a view on it, and a lot of people will give you advice on all bits and pieces of that.

The challenge, and I think this is absolutely across the board for all entrepreneurs is trying to then filter that out, and to filter what it is that is actually valuable to you, and what it is you can actually let wash over you because, and it's not my quote but I've heard it from a few people: the worst thing you can do to listen to no advice but the second worst thing is to listen to all advice. And entrepreneurs I think need to back themselves in that regard. You have decided to take this leap. You are obviously there's some initiative behind you. You've got some skill set, and you should back your own ability to be able to filter that advice.

My background is in the world of finance, business, accounting, and I had a career in a large consulting firm for about five years before I made the leap into this latest venture.

The main thing for me was trying to find people that were outside of my original world, if you like. Those in the corporate world, or professional finance world, I mean, I've got a fairly broad understanding of that already. For me, it was trying to seek out those people that didn't necessarily have that point of view. They were from walks of life, or areas of business that I had never come across before, and specifically trying to shift my point of view a little bit, and to get myself into their shoes was really useful.

Incubators, accelerators more formally certainly add a huge amount of value. Co-working spaces are valuable as well, no doubt. It's incredibly difficult to do something like this in isolation. For a period there, I was working from home after having quit the job, and working out what to do. That is a tough thing to do. You do have to force yourself out and go meet with people a lot to try and open up your eyes. Once you are sitting within a co-working space, or an accelerated incubator type of environment you are automatically exposed to all of these different bits and pieces, which is valuable.

I think Stone and Chalk is a little bit unusual when it comes to co-working spaces. I say that because there's a lot of people in here that have come out of a long career in their field of expertise, and have become frustrated with that, and have gone onto try and solve a problem that they've seen. For some people, that's been an entire career. We are talking 20, or 30 years working in the sector before jumping out, and then having a crack at something themselves. That means that just the access to talent, or the wise heads around here are everywhere. That's hugely valuable for someone like me who only had a five-year career before jumping out.

One of the most valuable things, and I don't know if that's a particular source of advice but it's really just about start. Go and try, go and do something.

Just get going. Whether that means leaving your job or not, it is a fact that most people have an entrepreneurial idea. Everyone's got this business idea that they've thought about, and maybe think is the next big thing. 99.5 percent of those never go past thinking about it, and even if it's the smallest amount of action, it's amazing how exponentially powerful those first few steps are.

The people that are out there changing the world are no different to you. The only difference is their point of view about the fact that they have confidence to go and do something. That is what I always tell the people. If you are thinking about something, then go and do something. If that's doing five hours a week for a couple of weeks and seeing where it gets to, those first few steps are exponentially powerful.

HO: I’m Hamish Ogilvy, CEO at Sajari. Safari with a J.

We do health learning search, and recommendation. We don't quite fit into the fin-tech space purely but we are a big data startup, which fits in here pretty well.

I think that we had probably a million mistakes in that first run through. It was actually a physical product, which was different to what we do now but mistakes are the same. Mistakes in funding, mistakes in all sorts of things. We were waiting on a government grant, and it was approved not signed off, and then the budget changed, and we had investment waiting, and that budget change basically threw away three million dollars of total funding at the time. That was the final nail in the coffin for that business.

I started to think well it actually made me think I want to do something different, and it was a point in my life where I said, "Okay, now, I'm going to go on and so something very different." Maybe it pushed me away from what I'd been doing because it was a kick in the guts, and you'd almost go on a line up for that again. You go and do something completely different. Maybe that's why I did.

I have a PhD in physics. For a while, I did design for medical applications, and then I moved into the data space, data and analytics.

It's a pretty interesting story that I guess when I was going through my PhD I did some research that they thought was worth commercializing. The university actually spun out into a startup. That startup went on to fail, which was an interesting experience for me but it probably got me going in terms of being an entrepreneur.

If you don't replace yourself, somebody else will, if they can. It's just the way it is. Definitely, seeds are always sown, and often the first person who makes strides away in an industry doesn't dominate it. It's the person who comes behind. They don't have to educate people. People understand it. They don't have to spend all the money to get to the same point. They just execute a lot better, and away they go. I think that's a constant thing that you see. You don't have to be first. Sometime it's worse to be first.

In terms of entrepreneurship in Australia, it's changed immensely in 10 years. I can't even compare it really. Where we sit today, communities like Stone and Chalk, and there must be another five or 10 around Sydney. They didn't exist, and the concept of starting your own business was incredibly difficult, and very, very people in Australia would take that risk. I think that's also a shift into IT because IT business is a little bit easier to start than I think back to some of the laser stuff. You needed millions to even do anything whereas you see some of these guys can sit down at a café with their computer, and start things, which is a different world.

We collaborate with a lot of people. We got to a lot of different meetups where people will then go and sit around, and have beers, and jump on a whiteboard together so you didn't know someone the week before, and then you are helping each other even if you are in a competing space.

I do believe in fail first if you are on the wrong path then pull the pin, get out but if you are on the right path it may take longer, and for most companies that I've seen it takes longer to than they think it will. No limits.

JVD: It's great to see Australian business culture finally embracing failure and seeing failure as the seed for the next success because really, that's what has set the US and other entrepreneurial cultures ahead of us for so long. It's fantastic to see it becoming part of the landscape here as well.

RS: I agree. It’s fantastic to see the celebration of learnings from failure. There’s so much support out there for entrepreneurs right now not just from the communities such as Stone and Chalk but also from the top down at a government level – we finally have a bit of optimism in there and I think people are willing to have a go now, bringing their business idea to life.

Thanks for listening, we’ll catch up with you next week.

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