When is the best time to start a business?
Tech entrepreneurs Tim Jackson, Nick Holzherr and Stefan Siegel on starting a business while young and the challenges of hiring and firing for the first time
When is the best time to start a business? Job first, business second – or jump straight in? If only there was a simple answer.
The avalanche of aspiring tech entrepreneurs descending on the tech clusters dotted around the country to start their first businesses hope now will be their time.
So it fell to three tech entrepreneurs at varying stages of their business lifecycle to impart their life lessons at London Technology Week. In the second of our five-part series (you can read ‘Tech City: Is it working?' here), Tim Jackson, experienced seed investor and founder of QXL.com which was sold for $1.9bn, Whisk.com’s Nick Holzherr, and fashion entrepreneur Stefan Siegel shared the stage at Google Campus to deliver their verdict.
Speaking to founder of Seven magazine and forthcoming website 2210 Fashion Marc Cameron, here’s how the session went.
When is the right time to start a business?
Stefan Siegel: “I think it’s wrong to start a business right out of university, as I think it takes a few years to figure out what you’re actually doing until you’re 28 or 29. When I started I’d already done my fair amount of parties, fancy cars etc. You see some people looking to start a business because they want to be on a yacht and that’s the wrong reason to start a business.”
“As a student you're used to living on a low wage, it's a good lifestyle to be accustomed to.”
Nick Holzherr: “I did start my business straight out of university and, because as a student you’re used to living on a low wage, it’s a good lifestyle to be accustomed to because it’s likely to continue. I funded my first business through HSBC and they agreed to fund it through debt and it didn’t really work. It wasn’t worth the opportunity cost but it was a very good, slightly expensive MBA. Doing a business straight out of uni, when you haven’t got a family or children, there is something to be said for that.”
Stefan Siegel: “Start your business before you have a family and kids. That’s probably the message here and also work somewhere and get paid before you start a business. You need a learning curve but of course there are always the exceptions. The world would be a lesser place without people like Alexander McQueen who started his business straight out of uni but, on the other side, if you get a job and learn from experience, it can help.”
“Start your business before you have a family and kids.”
Tim Jackson: “There are some fantastic entrepreneurs that don’t know that something is impossible and they will go and do it but it’s also incredibly valuable to have the practical experience of having worked and done lots of stuff. As an investor I’m open to either but I think you’ve got to be that much smarter to start a business straight out of university.”
What’s the best piece of advice you have ever been given on your business journey so far?
Nick Holzherr: “Hiring took me a while to learn as I was always thinking about costs. I learnt that you need to look for amazing talent, look for the best people possible and think about costs second.”
Tim Jackson: “The most useful advice I’ve had is about letting people go when you’re starting out and you haven’t managed people before. I remember confiding in one of my board members about a problem I had with a particular person in the company and the board member said to me ’If you’re wondering whether you should let this person go, that probably means you should have done it three months ago.’
“It’s extremely tough to fire people but unless you’re absolutely amazing at recruiting you will have to do it and you can cause harm to the business if you let someone stay for too long.”
Stefan Siegel: “I agree, I couldn’t sleep for four nights before I fired a member of staff for the first time. That relates to the best advice I’ve had which is to hire fast and fire fast.”
“I couldn't sleep for four nights before I fired a member of staff for the first time.”
Tim Jackson: “Netflix offers employees a bonus of $2,000 to leave the company within the first month of working there. If they hire you and you don’t like the job you get a bonus of $2,000 to leave. At first sight that’s highly counter-intuitive but what they’re saying is that if you’re not sure that this is the right job for you and if $2,000 makes the difference, then you probably shouldn’t be working here.”
What advice would you give to budding entrepreneurs looking to start a business while in full time employment?
Tim Jackson: “Set regular hours outside work to dedicate to your start-up, set regular objectives and targets of what you want to achieve this week, this month and so on. Finally, set yourself tests to see how you will know if it’s working. If your idea doesn’t pass the test that you’ve set yourself within a specified period of time, throw the idea away and do another one.”
Nick Holzherr: “Read The Lean Startup by Eric Ries. It’s the start-up handbook.”
Stefan Siegel: “Get a job at a university! That’s what I did, I was lecturing and you get lots of free time to work on your start-up.”
What’s your advice for a start-up looking to hire new employees?
Nick Holzherr: “I have just recruited a HR person to help me as I felt I wasn’t doing a good job myself. Now we have structured, defined specs of the person we want and we interview against those criteria but you can do that on a low budget as well. Teach yourself how to hire by reading HR books or speak with HR professionals, advertise widely, and spend money on job boards if you can. If you come across a candidate that you want but really can’t afford then try and negotiate with equity.”
Stefan Siegel: “I’m in a lucky position where we get about 10-20 applications a week from people willing to work for us for free. Every one of our team has worked for free, for a minimum of three to six months, before becoming a paid employee.
“If your business is exciting enough people will want to join you.”
Tim Jackson: “If it’s just you or one or two others at your start-up the key thing when you’re talking to a new hire or co-founder is to remember that when you’re pitching to them it’s just as important as pitching to an investor.
“You have to want them to think that you’re nice, smart, good to work with, energetic, efficient, and that the business you’re running is going to be terrific. All those things make a big difference. Some entrepreneurs have this magical ability to get people to do things for them for little or no money and that’s not just random, you have to address yourself to it.”