We all know the saying, “Nothing worth having comes easy”, as it resonates with the majority of us, whether in our personal or working life. For Richard Waldron, CEO of tray.io, it was no different. Here, he explains to Kat Aznar of RevTech what it’s really like to be the CEO of an innovative and growing, tech start-up.
“How will I get out of this situation? We’re hedged up in debt with no customers and I can’t see past the next couple of weeks! How are we going to continue to build this thing?’ All phrases commonly used at the start of this adventure. If I’ve learnt anything it’s not necessarily about how smart you are; it’s about how long you can ride it out. A good business partner is vital to get you through these things mentally.” Rich Waldron
tray.io wasn’t set up on a whim, from an early age Rich Waldron knew he was destined to run his own business. With a father and grandfather who have both run their own businesses, he was brought up with the entrepreneurial mentality. Fast forward several years and Rich is now CEO of tray.io, a business he founded with his friends Alistair Russell (CTO) and Dominic Lewis (CBO).
tray.io provides a platform that makes connecting software services a breeze. In short (for the non-techies) it allows different types of software to talk to each other.
Meeting in a quirky, trendy Shoreditch office, I was immediately put at ease with the relaxed environment and Richard’s friendly, non CEO like persona. Here I wanted to find out about his experiences of growing a business, seeking investment and what he believes it takes to be an entrepreneur and a CEO in one of the UK’s fastest growing sectors.
K) What would you say your top three influencers are in business?
R) Generally anyone who takes the plunge and goes for it I hold in high regard. I take particular interesting in how those who’ve succeeded were able to navigate the ‘rough times’. I enjoy reading biographies and learning about the broader history of a company and its founders, 3 recent books I’ve read are; ‘The Hard Thing About Hard Things’is a good book by Ben Horowitz. Also, Elon Musk[SS1]. Tech reporter, Ashlee Vance shadowed him for 12 months to write ‘Elon Musk: How the Billionaire CEO of Spacex and Tesla is Shaping our Future.’ And finally, ‘Shoe dog’ which left me in awe of Phil Knight’s achievements.
K) When did you get that feeling of confidence in what you were setting out to achieve?
R) I was naively confident, stupidly so, all the way through. There was always a belief that it would work out somehow, just never sure to what degree. The assumption always was, we’ll work it out somehow, whether it means this company never gets bigger than ten people or that it gets to 10,000.
The UK’s start-up record stands with the best in the globe, with some 608k firms established last year. But how many actually make it? Most of the hurdles Rich felt tray.io faced as a start-up, revolved around the challenges of scalability. tray.io want to scale and they want to scale fast.
Rich simply puts scalability down to two key areas. 1) is this something people want? Is there enough demand for it? 2) Hiring good people quickly. This, he explained becomes a very difficult challenge for many start-ups.
K) So how did you overcome these problems?
R) We got something basic out in front of people as fast as we could. Then asked, how common is this problem? How many businesses are in this space? Does it fit within one specific vertical? What’s the competition like? And do they already dominate? The early version of tray.io was nothing like it is today. Constant feedback and adapting our offering is key.
Hiring is tricky, time consuming and there’s a lot of processes to figure out. For us the most important criteria will always be; do they fit within our culture? I think you can have the most talented person but if they don’t fit with the team then it’s not going to work and will be disruptive to growth. We utilise all resources to find our hires, from working with our exclusive recruitment partner (RevTech), to job boards, sourcing off our own sites, events and referrals.
K) What do you think the biggest problems are for tech start-ups to get funding?
R) You could probably do a whole interview just on that. Our tech market isn’t mature in terms of acquisitions, so whilst we have amazing hardware technology, because the investors themselves haven’t been getting the returns over the years, the barrier to getting that initial funding is higher and harder. There are some great new government schemes which help. Things like SEIS (bit.ly/2d0wFTS) or EIS (bit.ly/2dqp7cR) have made it easier to get £100,000-£500,000. You need to be able to show traction either by a growing user base or growing revenue base before you can raise money. A really good one is Entrepreneur First (www.joinef.com/), they have a great programme for bringing people together and helping them start companies. Ignite100 (ignite.io/) is also one that gets you your first £20k-£50k and the advice around how you go and raise further capital.
K) Did you face many issues when it came to the funding process?
R) Oh yeah, we must have been rejected for funding over 100 times, maybe more. We started out in 2011 and didn’t really get our first liveable amount of capital until the end of Dec 2012. It is difficult, there’s an experience and education that comes with it and of course, perseverance. What people don’t necessarily pick up on in the early days is that an investment decision isn’t as simple as turning up with an idea, shaking hands and walking away. It’s a long process as meeting an investors is the start of a relationship. They’re not necessarily investing in what you’re presenting today; they’re investing in where you’re going to be in 5 or 10 years. What stage they invest at will also affect the outcome of how they valuate what you’re doing. The longer that we were around and persevered and demonstrated that we’d evolved what we were doing, the greater our chance of raising money became.
K) Do you have a few tips that you’d give to someone starting out in the funding process?
R) When you don’t necessarily need money you should still be taking time to meet investors, not to the point where it eats away all your time but enough to actually start building relationships. These investors are not bankers they are people that join the company, they’ll join your board, they will become part of the company that you create and they want to help you. Therefore, they shouldn’t be seen as a parent that you’re going to, to ask for capital, they’re a partner in the company. In the same way you want to pick your Co-Founder, you want to pick the right partner. You want to get to know them as much as they’ll want to get to know you. Start early, go and do the rounds, there are plenty of lists of investors in different areas. A lot of them do open office hours where you can drop in and get to know people, and the sooner you do that the better.
K) How did you manage your investors; did you have to go through a process of saying how much do you want? Or, how much of our company do we want to share?
R) There’s a lot of good material online. Let’s assume you’re going to raise an Angel round, a Seed round, a series A and a series B, the earlier rounds you’ll probably lose a larger percentage of the company. You’ll probably lose 15% in the first round, 25% in the 2nd round, 20% in the 3rd round, and 15% in the 4th round. How that gets divided up all depends on where you’re heading, but I think a good rule of thumb is it’s roughly 20% per round (which decreases as you grow in value). If it’s a company that you’re going to try and sell in 2 or 3 years then you want to try and retain as much percentage as possible, if it’s a company that you’re thinking more long term about then you can perhaps relax a little bit, because you’re going to need a greater amount of capital in the early days and you want to be able to have a decent pool for your employees that join as well.
Meeting with Rich was an insightful experience, he highlighted that success in business is less to do with being amazingly smart and prepared, but more to do with the right mindset and mentality. He gave me that overwhelming feeling that if you persevere enough and believe in what you’re doing you can definitely achieve what you set out to. Going from quitting his job, with no back-up plans and no savings, to becoming the co-founder and CEO of a rapidly expanding, successful tech business, I’m sure Rich is a source of reassurance to many budding entrepreneurs.
tray.io… watch this space!