So I skipped up to my school office and looked up PM David Lange’s office in the phone book.  A friendly woman answered, and I explained I was a Year 7 student at Wellington Girls’ College who needed to set up an interview with Mr Lange for my school project.  She explained the protocol: write a letter saying who I was, what the interview was for, what questions I’d ask and how long I’d need, then send it to the office for review.  I wrote my letter and posted it that afternoon.

A week later, I called back.  The same secretary answered the phone, and I asked if she’d received my letter.  She assured me that she had and could schedule me in for an interview next Tuesday at 2pm.  That, I felt, was pretty good: an interview with the PM for my first high school project.  I was sure my teacher would be impressed.

She didn’t believe my story.  She called me a liar in front of the whole class — a deceitful child who had concocted a fanciful story to get out of class.  I was humiliated and confused.  Why didn’t she believe me?  What was the big deal?  It was so easy to secure the meeting; I didn’t do anything extraordinary.

Later that week, Lange’s office called my school.  There had been changes to his schedule, and they needed to move my interview time.  My teacher apologized profusely.

When I met David Lange, he was relaxed and charming.  He sat at one end of a huge wooden desk covered in piles of papers with his hands behind his head, his feet up on the desk, a wide smile and a booming laugh.  He made jokes as I asked my list of ridiculous questions about the subjects he studied at school to become a Prime Minister — my interview was clearly the highlight of his day.  At the end, he told me he thought I’d make a fantastic Prime Minister and that I should keep up the good work.

The school made such a big deal out of my interview that I was embarrassed.  The headmistress called me up in assembly and announced my accomplishment.  I also scored an A+ for my project.

I was surprised when my teacher didn’t believe that I’d set up the interview and when my headmistress thought it was an amazing accomplishment.  It was simple.  They assumed there would be huge barriers, but there were none.  The barriers existed in their imaginations.

When I was 19, I decided to create a concert in my hometown of Wellington to raise awareness of youth suicide.  A friend who worked at the local student radio station had Neil Finn’s home phone number.  I called him, he answered the phone, and I shared with him my vision for the event.  A few days later, he agreed to play.  When I first launched Posse for music, I managed to sign up Ticketmaster as a client before we’d built a product or raised any money.

When I first launched Posse, we were struggling to build a technology team.  I approached Lars Rasmussen at a lunch break at Tech 23, shared my vision for Posse, my challenges as a non-tech founder, and asked if he’d help me.  He agreed to meet for coffee, interview my existing team, and then help me recruit new people — before joining the board and investing in the company.

One of the key components to the success of Posse has been our capacity to enlist the help of some of the best people in the world.  When I share the Posse story and our list of investors, directors and mentors, I’m asked how we developed those relationships.

You can reach almost anyone in the world by picking up the phone.

P.S. I’ve started writing a weekly column for The New York Times.  Check it out here.

Despite this, I find it hard to recruit good people.  Landing a job at a startup offers a career breakout opportunity.  You’re on the frontline, creating an impact, making a name for yourself, working with a small, ambitious team.  You’re help build a product you love and will share in its ownership.

The ability to sell yourself seems obvious, yet I’m astounded by the inability of most applicants to achieve this.  Most people approach the application and interview process with the same lacklustre indifference usually reserved for a job working for the government.

If you’re one of those who applied for a role at Posse in the past month, and especially if you’re one of the twenty or so who made it to the interview stage but didn’t get a call back, then you may see some of yourself in the stories I’m about to tell.  Please don’t be offended — this is just my experience and I hope my feedback will help you in the future and lift the quality of applicants for other startups.  I also hope it will save founders (including me) from trawling through time-wasting applications and interviews with people who just aren’t right.

When I think of the applicants who impressed me — particularly the ones I’ve hired, it’s clear to see a few simple things they did right.  I can imagine most young job hunters would be intimidated to know that more than 80 people applied for the same position.  Yet from the employer’s perspective, at least 75 of the 80 applications will be hopeless: misspelled, badly punctuated and so on, often to the edge of illegibility, so you’re really only competing with a handful of people.

Before you apply to work at Posse or any other startup, read these tips.  They’ll help:

1. If you don’t want to work at a startup, don’t apply.

Landing a job at a startup is a special opportunity but it’s only right for a few people.  Startup teams consist of ambitious, creative people who’ll do whatever it takes to succeed.  You’ll be thrown in at the deep end and expected to swim without much training or support.  You’ll need to hustle for an organisation that no one has heard of and motivate yourself when things get tough.  The upside is that there’s very little process – everything is agile, you get to make-up what you do every day and there’s often a big payoff both financially and in terms of skipping several rungs on the career ladder if you’re successful. This lifestyle isn’t for everyone, so before you apply for a job, think long and hard about whether it’s for you.

I look for people who are seeking this kind of opportunity and they’re easy to spot.  They’ve usually created some kind of project early in their career.  Perhaps they started a business themselves, built a blog following, or created something in the not for profit sector.  If you’ve done something like this, make sure you lead with it in your cover letter.  I look for people who are obviously ambitious and have accomplished something difficult where they’ve had to overcome barriers – preferably something they’ve created themselves.  I look for evidence that they’re hard working, so lots of extra circular activity is a good sign.  When you get to an interview, don’t ask about the office hours (startups don’t have any, and if you ask then you’re the wrong kind of person).  And don’t, as someone admitted in an interview with me last week when I asked what his biggest weakness was, reply, ‘I’m a bit lazy.’ Although I gave him credit for being honest, I deduct credit for being stupid by admitting it in an interview.  Startups aren’t the place for lazy people!

2. Make your application stand-out

The job market is competitive and even though I’ve said 75 of the 80 applications I received for my recent role were rubbish, someone still has to trawl through all of the applications and notice your one.  There’s a good chance that a great application could be missed, so it’s worthwhile doing something to make yours stand out.

The best way to apply for a role at Posse is to find a contact that I know and get them to tell me about you.  We have more than 60 investors, lots of partners, tens of thousands of merchants, and I even have some friends.  Just find one person who knows someone at the company and get them to put in a good word for you.  This time, three applicants came with referrals from people I knew and I made sure I paid special attention to them.  They all got an interview.  If you can’t find anyone then do something special.  We often get weird and wonderful packages delivered to our office with someone’s CV inside.  It won’t win you the job but it will make sure someone looks at your stuff.  At the very least, make sure you write a punchy cover letter to accompany your application.  It needs to grab me within the first paragraph because I won’t have time to read the whole thing.  This must be personal to the company and sell why you are the right person for the role.  I always delete any application that comes through without a cover letter – if you can’t be bothered writing something that outlines why I should consider you then it’s a good sign you’re not the person I want to hire.

3. Take care in responding to questionnaires

I always send out a questionnaire to everyone who applies with a cover letter.  The type of questions vary depending on the role – for example, our engineering team has a problem-solving exercise to assess logic and coding abilities. We set a deadline for the questionnaire to be returned and any that come in after the deadline are not read.  The first aim in the recruitment process is to test the applicant’s integrity.

I am astonished at how little effort many people apply to these questionnaires.  They are our first tool in assessing you for the position.  Many come back with one-line answers when the questionnaire specified 200 words.  Others are littered with spelling mistakes and grammatical errors.  If you’re applying for a Communications role where writing is a key part of the job description then you’d better show that you know the difference between ‘their’ and ‘there’ in your application!

4. Present well

So you’ve made it to the interview.  Again, it’s shocking how many people with strong resumes and who’ve done a good job on the questionnaire, mess up their interview.  Startups are looking for people with a lot of energy and enthusiasm.  Show that passion during the interview: don’t talk to the ground as if you’d rather be somewhere else.  If you’re nervous then learn how to fake confidence.  Speak clearly, smile and engage your interviewer.  Try to form a personal connection.  If you’re a woman don’t wear too much make-up, and do wear an appropriate quantity of clothes.  If you’re a guy don’t wear a suit (even if your Mum insists), but don’t wear a tracksuit either.  Just be normal and well groomed!  I should also note that most interviews take place one on one in a small room, so think about how you smell.  It’s not a good idea to smoke right before an interview and it is a good idea to wear deodorant!

5. Think about the company and the questions you might be asked.

I only want to hire people who sincerely want to work at Posse.  It’s going to be a tough gig and I don’t want someone who’s likely to give up.  I test how much people want the role by finding out how much they know about the company.  If they’ve read every press article on us, all of my blog posts, have spent time using the product, discussed it with their friends, and have spoken to someone involved in the company then I know they’re serious.  But when I ask them if they have any questions and they come out with something like, ‘So how did you get started?’ then it’s obvious they haven’t done any homework.  Make sure you have questions prepared that show that you’ve thought about the role and how you would succeed in it.  It’s ideal if you can subtly make the employer sell you the role; it shows you value your ability and want to be sure that this is the right company for you to invest your efforts.

There are some questions you’re going to be asked in every interview.  For example, what are your strengths and weaknesses and where do you see yourself in five years time?  Think about good answers before you come to an interview and test them on people you know.  I’ve seen candidates who I thought were exceptional completely stuff up these basic questions and reveal things about themselves that would rule them out of contention for the role.  Be honest: make sure you describe a real weakness because you need to show that you’re self-reflective and are aware of what you need to work on.  Just, don’t say anything stupid.

6. Follow-up

Startups are for hustlers and so we appreciate when people hustle us.  I’m busy and I admit I often don’t reply to emails from people I don’t know.  But if you email me several times, find my phone number, contact me on LinkedIn, Twitter and Facebook and seek out someone I know to make an introduction then there’s a good chance I’m going to notice you.  This is not an open invitation to hustle me for a job.  I’m simply stating that this is what I do when I want to get a meeting with a potential client or investor.  It’s what I’d like members of my team to do and so if you do that during the recruitment process then that’s a good sign.  So long as you can back it up with talent, otherwise you’ll just be annoying.

Of the 80 people that applied for our recent Communications Manager role, approximately 20 were ruled out instantly for not including a cover letter.  Half of the remainder we struck off for not returning their questionnaire on time.  That leaves 30, and half of these I didn’t read because they had too many spelling and grammatical errors.  Half the well-written ones didn’t put much effort into coming up with well-considered answers, leaving seven whom I interviewed last week.  One of the seven is coming back for a second interview along with another two candidates who came through contacts.

I decided to write this post out of frustration with time wasted sifting through terrible job applications.  For startups to succeed we need great teams.  For ambitious team members, one year in a startup will teach twenty times what you’d have learned in the corporate world.  But it’s hard work and requires a special combination of passion, determination and talent.  If you have that, then I hope these pointers help you in landing the job of your dreams, which may even lead to you starting your own thing one day.

Applications for our Communications Manager role have closed, but if you want to work at Posse in another capacity and are the right person, you’ll work out how to find me.

It all starts so well.  You meet a VC and deliver a knockout pitch.  They love it, you exchange business cards and they set out the next steps.  First, you have to meet a few other people from the firm: they’re busy so it could take a few weeks to secure the appointments, but they’re genuinely interested and ensure that you are seen quickly.  You meet again for lunch, then dinner, then drinks.  You become friends.  You discuss the wondrous opportunities for your business and ways in which they can help in reaching them. Watch out: you’ve started to fall in love.  You discuss generalities about the deal terms, big stuff like valuation, how much they’ll invest (a lot) and, of course, they’ll want a seat on the board.  You’re excited; this will transform your world.  In no time, you’re planning how you’ll spend the money, looking at new office space and thinking about recruiting new team members.

One of the senior partners you needed to meet with was travelling, so you wait six weeks for the meeting.  It’s promising too; he wasn’t as excited as the junior guys, but he likes them to be autonomous, and allows them to pick their own deals.   The senior partner suggests you meet a friend of his who runs a big company that, he says, would make a great partner for your business.  It sounds helpful but you know he’s checking out what his friend thinks of you.  The company is based in Melbourne; you have to travel and the meeting takes two more weeks to set up.  All goes well and after a week you hear the team at the VC wants to move forward with your deal.

Phew.

Next comes due diligence.  This starts with a long list of requests and a promise that, once all the information is together, this won’t drag out.  They assure you’ll receive the term sheet within two weeks.  You pull in your team and work late — very late — to assemble the material quickly.  It may include questions like, ‘who holds all these shares on the cap table?  Is there anyone here without an employment contract, why did you model revenue a particular way, will you really need all those engineers? (Looks expensive.)  You diligently answer all their questions, repeatedly rework your financial model, and make changes to or write new contracts.  More than a month passes; you’ve spent money you don’t have getting help with contracts, accounts and a revenue model to satisfy the VC.  You’ve answered almost every tricky question about your business plan, competition and the market that could be asked.  Everyone seems happy and the VC reassures you that due diligence is almost complete.  The term sheet is only days away.  Four months have past since you first met and then there’s one more thing – a meeting, a problem, a question – something that’s going to take more time.   Finally, you start talking about investment terms.

Then something happens.  It could be any number of things, but it’s a knockout blow that kills your deal.

The first time this happened to me, I negotiated for six months with a big name brand.  They proposed to invest $3 million dollars and the association would have catapulted Posse’s profile to the stars.  I liked the executives leading the deal and couldn’t wait to build the business with them.  They assured me they could move quickly, and would reach a decision within a month.  But the months dragged on and more people became involved, asking more questions.  I wasn’t even worried; I was so sure we’d close the deal.  After all, they wouldn’t have invested so much of their company’s time if they weren’t serious.  But the terms they came back with killed the deal; they were nothing like the proposal we discussed when we initially met. They would invest, but placed a valuation of less that half our expectation.  I might have accepted, but our board refused.   Another time (last year), I spent five months attending to the whims of a New York Women’s Angel group.  I answered their questions, recreated financial models and met every relevant person full-time for months.  They said they’d invest over a million dollars, and the process required only four to six weeks.  Then they discovered they couldn’t invest nearly as much as they claimed.  The exercise had been a gigantic waste of time, distracting me from talking to other, serious investors.

I remember venting my frustration during one of these drawn out funding situations to Matt Barrie of Freelancer, who mentors me from time to time.  He said, “Never start due diligence until you’ve agreed on a term sheet”.  With hindsight, it seems so obvious.  If I refused to do any work until a term sheet was worked out upfront, then I wouldn’t have spent months and tens of thousands of dollars pleasing investors who weren’t serious, didn’t have the money, or whose deal expectations were vastly different from ours.

The problem is, refusing to do any work until a term sheet is signed sounds great but is hard to implement.  When you first meet, you’re excited and the investor promises that the process only takes few weeks.  You can afford to invest a few weeks.  Even as time drags on, everything appears to be proceeding well; you’re certain the deal will close.  As more time drags on, costs pile up and cash reserves dwindle. You realise that, with so much time invested in this deal, you can’t afford to start the process again.

To any investors reading this: for the good of the industry, respect the time and resources of entrepreneurs.  An entrepreneur can only afford a few months to launch a business; if you string them along, you’ll distract them from building the business and talking to other investors.  Then if your deal doesn’t go through, there’s a good chance you’ll kill their company and their spirit as well.

I will never get stuck in this situation again.  I’ll never let an investor seduce me into believing that a term sheet is around the corner while I invest time and money into more meetings and answering thousands of questions.  I will ensure that a term sheet is agreed upfront and then start the due diligence process.  Of course, if the VC finds something they don’t like during due diligence they can always back out of the deal, but at least I’ll have established that there’s a deal to be done in the first place.   Even though I know your firm is big and my company is small, I’ll do this because I know that time and energy are my biggest assets.

I grew up in small town New Zealand.  I was an only child so I spent a lot of time alone thinking up things to do.  My first day as an entrepreneur was a failure: I cut flowers from our garden and set up a stand outside our house, selling them for 1 – 20c each.  We lived on a main road and as the cars roared by, no-one saw seven year-old me and my flower stand.  I passed a whole day without a single customer.  That night I asked mum to buy me some balloons at the supermarket, and the next day I tied these brightly coloured balloons around my stand and erected signs and balloons down the street, so oncoming traffic would notice my enterprise and have time to stop.  It worked!  That day I sold all my flowers.  Mum asked me to pay her back for the balloons, so I only made a small profit but I had set the foundation for a life of entrepreneurship.  I learnt many business lessons that weekend: marketing, profitability, but most important of all – resilience.

Poster advertising my pet business (age 10) made on our Commodore 64

By the time I reached high school I’d set up five businesses.  I had run my flower stand, collected golf-balls and sold them back to a shop, set-up a dog-walking and cat-minding business, for which I also employed my best friend.  I sold rides on a friend’s pony at a Saturday market, which made me one of the richest twelve year-olds in school, and ran a pamphlet distribution business where I’d get delivery jobs and subcontract other kids to do the work.  At high school, we were taught our ultimate goal: to build an impressive resume so we could land good jobs.   Every year I’d endure a mandatory appointment with the careers guidance counsellor.  I always told her I would start a business but I wasn’t sure what kind (and I’m still unsure!).   She made me write a CV anyway, writing out the types of companies that might want to employ me.  This was how my school taught us to think about our careers.  I suspect it’s the way most schools continue to persuade kids to view their careers.

This is why programs like Club Kidpreneur matter.   The camp runs from 9am – 1.30pm for four days, with a market day on Saturday.  The Kidpreneurs set up their businesses either as a sole founder or with a partner with whom they’d need to split the profits.  They choose a product to make, set a goal and budget — how many they hope to sell and for how much — design a prototype, make the products, and ultimately sell to real customers.  I worked with the Eastern Suburbs camp, where I mentored kids making candles, greeting cards and jewellery.  They were all so excited, creating real products for real customers; I enjoyed sharing my skills and then watching them learn the fundamentals of business.  Eight year-old Ellie decided to make greeting cards.  The program allowed three hours for the kids to make their products; after 90 minutes I noticed Ellie had only made 4 cards when she’d set a target of selling 25.   She was making each card individually, thinking up a new layout each time.  I suggested she start a production line, doing all the card-folding, then the cutting, the writing, finishing up with touches like stickers and feathers.  We laid out 21 pieces of card, and planned how many ‘Happy Birthday’, ‘Thank-you’ and ‘I love you’ cards she’d make of each.  We decided against phrases like ‘It’s a girl’ — one that she’d initially considered — as it would limit our potential market.  Then she started in earnest.  An hour and half later, Ellie was proud to finish her 25^th greeting card, ready for market.

Danielle lights up after making her first sale!

On Saturday morning, we set up the Club Kidpreneur stand at Bondi market.  The kids came early to assemble their stands, price stickers, and company incorporation certificates, and had business cards ready to hand out to customers.  At first, they stood nervously behind the table waiting for people to approach them.  Along with the other mentors, I encouraged them to stand in front, approach people, and ask if they’d like to look at the products.  Danielle, age 9, was the quietest kid in the group.  All week, alone in a corner, she’d made beaded bracelets.  At the market, she was scared to talk to strangers, so was not selling at all well.  I coached her to walk up to people and ask if they’d look at her jewellery.  Imagine a tiny nine year-old girl tapping on your waist, whispering.  Most said, ‘not today thank-you’ or, ‘I’ll come back later’ but it didn’t matter.  I told her that it’s fine for people to say ‘no’, and she was doing a great job.  After ten minutes, Danielle made her first sale — to another young girl who was shopping with her Mum. Her eye’s lit up as she sold her creation for actual money.  She started approaching more people, didn’t care when they said no, made more sales and her confidence soared.  By the end of the market, Danielle had ripped her stand from the table and carried the whole thing around to other stalls, hustling for sales.  Right on closing time, with a smile as wide as the Harbour Bridge, she sold her last piece of jewellery.  In two hours, Danielle had blossomed from a shy little girl into a confident hustler.  It was incredible to witness the birth of an entrepreneur.

A hustler is born!

Club Kidpreneur is a wonderful organization.  They make money running paid camps, secure sponsorship from companies like Google and St George, and with it take the program to disadvantaged areas.  The company itself is non-profit-making, and through it, kids develop both business and life skills such as innovation and resilience.  They encounter failure and develop self-confidence.

Reflecting on my own entrepreneurial journey, I know my early business experiences shaped my view of the world.  Most people grow up thinking of shops or banks as big faceless organisations that one day might give them a job.  They don’t think about the person who had the vision to start the business, or that they could be that person.

I’m sure many of the Kidpreneurs will go on to high school with ambitions to start something, rather than build an impressive résumé and land a job.   For kids like Danielle, that entrepreneurial sparkle in their eyes guaranteed that life would never be the same.  I’d love to see more kids gaining access to programs like Club Kidpreneur.  Better still, business creation could become part of the school curriculum.  Club Kidpreneur are always on the lookout for adult entrepreneurs who’ll act as mentors and advisors.  Find out about them here and email me if you’d like an introduction.

If you knew me personally, you’d discover I’m an exercise-obsessed, non-caffeine, virtually non-alcohol drinking, twice daily meditating, vegan, yogi.  But I’m not about to preach stress-management techniques; thousands of articles tell us how to reduce the effects of stress.  I’ve read many of them and, as you can tell by my controlled lifestyle, take on each suggestion with zest and commitment.  This summer holiday I’ve been wondering; what are the causes of my stress?  In 2014, I’ll address these causes, rather than adding more stress-control techniques.  I’ve run out.

Before revealing my thoughts about my own stress, I’ll share the conversation I had with my friend Chris over brunch this past Saturday morning.    Chris works for an advertising agency in the city and he’s having trouble at work.  Chris is a mid-level manager who runs a sales team for the agency.  His boss in Melbourne just placed a family friend in his team who, rather than reporting to Chris, has been hired to co-lead the team and report directly to the manager.  Chris is stressed because the new woman with whom he’s supposed to be working is becoming obstructive, undermining him to the team, and badmouthing him to the boss.  Because they have a personal relationship, he can’t address the problem.  He’s terrified he might be fired and lies awake at night, angry and frustrated.  He looks worn out and I’m worried about his health.

I’ve long assumed that being an entrepreneur with so much responsibility and risk, surrounded by uncertainty, must be more stressful than having a job.  But even after my tumultuous 2013, when I look across the table at Chris, he may be a lot more stressed than I am.

Can we access the key causes of stress?  Instead of managing them, would it be possible to remove them from life altogether?  Obviously, I’m not a doctor or psychologist.  But as I sit at the kitchen table of my parent’s house on holiday, these are my thoughts.

Control:

A lot of my stress comes from feeling out of control.  Suppose I’m waiting for a funding round to close and a key investor goes silent.  I feel there is nothing I can do and lie awake at night, heart thumping, waiting for an email.  Chris is stressed because he can’t control his co-worker and her vindictive behaviour.  He lies awake fretting about what she’s going to do next.

Control is one area where we entrepreneurs have it much better.  Sure, it’s stressful when we have to rely on other people, but there’s usually something we can do about it.  The next day we can scope out new investors or cut costs.  We’re never at the mercy of someone else.  Chris feels as if he’s out of control but he’s a talented, hard working guy; he could always quit and find another job.  To remove ‘control’ as a stress factor I must remember that I’m ultimately in control.  There are always other opportunities.

Expectation:

Another major cause of stress comes from worrying that things won’t work out the way I’d hoped.  Much of the pain that I experience, lying in bed waiting on an investor to email, comes from a future I’ve created in my head — a future where our investment round closes smoothly — a future that may not exist.  This feeling is similar to grief.  When I suffered the loss of someone very close to me, much of the pain was for the loss of a future I’d imagined.  I think it’s healthy to hope for an investment round to close or for a product to take off, to plan and work towards those goals.  But I also think it’s important to remember that the future hasn’t arrived.  The only thing that’s for sure is now.

Perception:

Last year, I wrote a post about professional jealously.  I was flooded with emails and Facebook messages, so obviously it struck a chord with many people.  I find it difficult to avoid comparing myself to other people or worry about what others think of me.  I know this is pointless but it’s very hard to stop.   When I compare myself to others, it always leaves me thinking that something’s wrong with me, which knocks my self-confidence.  And it’s crazy to worry about what others think of me because no one actually cares much about what I’m doing.  Everyone has their own stuff going on.  The world is big and I am small.

Self esteem:  

I’ve been thinking about self-confidence this holiday and it struck me; I might not have as much as I’ve thought.  Often, people who seem the most confident externally (like entrepreneurs) are, behind it all, the least.  They just act confident to compensate for that voice inside their head that tells them they’re not good enough.  Self-esteem and self-confidence — that’s a whole other issue.  I’ll write about that later.  I do believe that, through cultivating a deep sense of self-belief, I could kill stress entirely.

Stress is an invisible energy drain; it wears us down.  It doesn’t matter if you’re a struggling startup entrepreneur like me or you have a corporate job like Chris.  We all suffer.  With so much opportunity out there in the world, I want all the energy I can have.  This year, rather than work on ways to manage stress, I’m going to address its root causes.  Then I’ll be able to relax my stress-reducing routines and have a bit more fun as well.

A nice pic from my stress free holiday in NZ

Sheryl Sandberg told the striking story of a Harvard Business School experiment in her book ‘Lean In.’  Two identical resumes, one for an entrepreneur named Howard and the other Heidi were shown to students.  Both ranked as equally competent but significantly more people wanted to work with Hank.  I’ve pitched to hundreds of investors around the world and can pinpoint times when a great meeting didn’t lead to an investment.  I’ve wondered: would it have been different if I’d been a man?  I suspect the answer would sometimes be yes — particularly in the US.  But without performing a gender change, winding back time, and conducting the same discussion as a man, it’s hard to say.  I’m no expert in how different genders fare in business – I can only share my experience of life in this crazy tech startup world and some of the disadvantages and advantages of being a woman on the journey.

In early 2010 I was invited to speak to a group of Angel Investors at a fancy dinner in Sydney.  It was my first big opportunity to raise investment and I was nervous.  I’d practised my pitch for days, arrived early at the venue and darted up the stairs.  A shriek rang out from reception: ‘Come back!’  The porter explained that this was a gentlemen’s club; to reach the event at which I was pitching, I couldn’t use the stairs.  As a ‘lady’, I had to take the elevator.  The guests began to arrive, and as the room filled up I felt uneasy.  Something odd was in the air, but what?  Then I noticed.  In a room of sixty investors I saw no other woman.  I’m not easily intimidated but this threw me; now I was uncomfortable.  At last, one female investor showed, we made eye contact and I felt relieved.  She remains a mentor today.

My first year as a tech founder was lonely, for my friends couldn’t relate to my challenges.  I encountered many new people, particularly as I raised investment.  All were men, mainly in their 50s and 60s.  Their advice was great, but the softer emotional support was missing.  I suspect that male founders have quite different relationships with their investors.  Maybe they’re invited to golf and the pub — that’s different for women.  Now, we have more than 50 investors in Posse and every one is male.  I’ve developed great friendships with many, and have formed a close group with a few other female tech entrepreneurs in Sydney, so I’m happy to report that I’m not lonely anymore.  But it all took time.

The emotional roller coaster of running a tech company is a challenge, one that I handle differently from my male counterparts.  Again this is just self-perception; other women may have different experiences.  Naturally, I push myself hard: I’m responsible for other people’s money.  Early, when I was finding my feet, I’d work around the clock and made a few mistakes.  For a while, I had an unfriendly board who hammered me close to breaking point.  I’ve seen guys in this situation and they fight back, becoming angry; it’s their natural reaction and is expected. I’m not wired like that.  I can become upset and that’s my way of releasing stress, but I soon learned this was unacceptable in a business setting.

As a woman, I think I bring different skills to a technology business.  Most of our team are software engineers.  They’re all male, and I’ve discovered the way I think and make decisions differs from theirs.  I’m more people-focused and instinctual.  I talk to customers, using this information to decide what they value about our product and what needs to be changed.  When I present my findings to the engineers I have difficulty convincing them my research is valid.  They want numbers.  I believe that great start-ups are a combination of customer-based intuitive vision, and the ingenious application of metrics to engineer a good user experience.  I’ve learned that to win over engineers I must back up my assumptions with data.  It’s a powerful discipline, for in combining the strength of both approaches we design much better products.

There are advantages in being a female technology entrepreneur.  I’m the exception, so I suspect my business and I both receive more exposure than if I’d been a man.  I’m frequently invited to speak at tech events and often I’m the only woman on the bill.  I suspect that organisers sometimes make a last-gasp discovery: we don’t have any women.  Other founders sometimes ask, ‘how do you get so much media?’  I have to admit, being a chick helps.  And, let it be whispered, business editors want their quota of photographs and stories about women.  With only a handful of us out there, we probably get more opportunities.

Overall, the positives of being a woman may balance the negatives in this male dominated industry.  I’m passionate about our business and love every minute of what I do — even when times are tough.  Being unusual can be lonely but it can be awesome.  I raised $300K that night at the gentlemen’s club where I was one of only two women in the room, and went on to raise another million or so through their contacts.  Being a woman might have helped me.  I’m sure it made me stand out.

We must inspire more women to launch technology-focused businesses, raising the profile of female entrepreneurs.  Then younger girls may view technology as an attractive career option, with more women drawn into early stage investment.  I hope I can be part of that next wave.  It matters.  Why?  Because the entire industry will be enriched by our customer-based intuitive vision.

That’s why.

‘I’ve read my fair share of business books and have friends that work at places like Google, so I know something about the steps that major companies take to keep their employees happy.  Big conferences, overseas trips, bonuses and fancy offices all help to make people love their job no matter how boring the actual work may be.  Start-ups have to compete with large, established companies for staff.  We have little time, money or resources.  We can’t employ an in-house chef, pay big bonuses, construct slides between floors or send team members to stimulating overseas conferences.

Startups recruit team members who have vision, passion and the drive to make a difference.  It’s hard but possible to hire people from companies like Google; it’s tougher to develop a culture that sustains team enthusiasm during hard times.  I believe all startups can be successful if they have the money and energy to power through obstacles, to learn and evolve until they hit the right formula.  We’ve heard the stories of Airbnb who, after two years of struggle, sold cereal at the 2008 political conventions to make money, keeping their startup dream alive.  Or Twitter, who floundered for three years as a podcasting company before pivoting to the concept we now know as Twitter.  Imagine the culture in those companies during the tough years.  We’ll never hear the stories of team members who left for jobs with better conditions when times got tough.

We had a hard year at Posse.  We’ve been working hard for two years and launched our latest product in March at SXSW.  I spent the next six months in New York, raising capital and building a community of US users.  The team stayed behind in Sydney.  The lease on our office expired, so they temporarily moved into a garage underneath a friend’s office.  I ‘met’ with the team on Skype most nights NY time and could see they weren’t enjoying the premises, which were cold and lacked natural light.  I couldn’t be there to lift morale and was often exhausted myself.  A couple of people gave up and left, which further deflated the team’s resolve.  It was brutally hard to keep going!

I came back in August, ultimately successful at raising both money and our profile in the US.  I felt more positive than ever about our chances, and was excited to return, working directly with our team again.  When I arrived at the office I found a tired, miserable group.  People were coming in late, leaving early and productivity was low.  It was obvious that, after closing the funding round, my next challenge was to rebuild our company culture.  Here are five things I did to shake things up.

Team breakfast (when we were still in the garage)

1. Productivity & Community.  

The first issue I had to address was low team morale and lack of productivity.  I’ve found that one of the best ways to lift morale immediately when you’re in a slump is – communicate with everyone every day.   This enables you to reinforce the company’s objectives, ensure that everyone’s ideas and concerns are heard, and create transparency. That’s easy when your team is small.  And I had to address the team’s low productivity, caused by people coming in late as much as lack of motivation.

I solved this by holding team breakfasts every morning at 9am.  I’d buy cereal, fruit and baked treats; we met as a team and chat about life and work.  It was a great opportunity for me to hear everyone’s ideas as well as get the team back onside with our goals – and the last person to arrive was responsible for washing up.  It was rare for anyone to arrive after 9.30, though I can’t imagine why.

Our beautiful new office

2. Location.

Only recently did I realise the importance of office environment.  I worked in the garage office for six weeks and hated it.  Even I couldn’t wait to escape at the end of the day.  I started looking for new premises as soon as I returned to Australia, and with a bit of effort found an awesome spot on Oxford St, in the heart of Sydney’s trendy shopping and cafe district.  I cut a deal with the council, which wanted to encourage creative young companies like ours into the area, and paid less rent than for the garage.  We ran an online competition for interior design students to fit out our office on a budget of $2000.  More than ten entered, and the winner has completed an amazing job, making our space feel like a palace.  It’s a delight to arrive at work in the morning, and I often find myself working late into the evening with several members of the team.  People want to stay behind and work because it’s an awesome place to be.

Dev team hacking together a new feature idea at the offsite

3. Offsite events.

Every 3 – 6 months we hold a company offsite, renting a house in the country and spending a couple of days discussing our progress and planning for the future.  A few weeks ago, we went to the Blue Mountains and were there when the fires broke out!  Being trapped between two large bush fires is pretty powerful for team bonding!  Other than calling the RFS to track the fires close to us, we spent two days reviewing our company values and user personas, brainstorming user stories, featuring ideas for the product, and prioritising the next few months of marketing and development.  We had a great time together and returned to work excited about the future.

4. Progress.  

No matter how great your culture may be, a smart team only remains motivated if they feel they’re making progress.  Nothing is more disheartening than slogging it out on site, then marketing a product that people don’t use.  We’ve been lucky; our cultural changes have coincided with a major release of our new iPhone app, on which the team have worked for four months.  It hit the app store on Wednesday afternoon and we surged to #10 in our category on the Australian & NZ App Stores and #1 in Singapore.  I can’t express enough how motivating this is for the team; it trumps every other initiative.

Our office party last week

5. Celebrating wins.

Every start-up has a mile-long list of desired achievements.  Every time we finish something, I’ve mentally moved on to other things that haven’t yet been completed.  It’s hard to stop and celebrate victories, but it’s incredibly important for team morale.  Last week we threw an office party to celebrate the launch of our new app and invited friends, investors, ambassadors, media and retailers to check out our new premises.  More than 80 people packed out our office, the dev team demoed their creation and another exciting new feature that’s not yet launched.  It was a great way to get the community talking about Posse, and gave the team an opportunity to be proud of the company.  Magners sponsored the drinks and Mad Mex served up tasty Mexican food.  The whole event cost us less than $200.

The dictionary definition of company culture is:  ‘The behaviour of humans who are part of an organization and the meanings that the people attach to their actions.’ Some companies define the success of their culture by a ‘Net Promoter Score’ which measures how likely an employee is to promote working at the organisation to a friend.  I think culture determines how excited team members are to come into work in the morning.  How hot is the fire in their belly.

Culture can’t be dictated.  For instance, I’ve learned that mandating work hours doesn’t lift productivity but inviting everyone to a team breakfast does.  Startups can’t afford the time or money to build culture in the same way as Google.  We have to be creative, using what attracts people to work at a startup in the first place.  People join startups because they want to make an impact, for their ideas to be heard.  They want to be a part of building something they believe in, to sense rapid progress and be part of a tight team that has fun and respects each other.  None of this costs much money – just a bit of effort and creative thinking.  Two years in, I agree with the investor who encouraged me to focus on culture.  Culture determines what else is possible.

Celebrating our superstar designer’s birthday last week

Wow. That took me a couple of minutes to process; I’d never thought of honesty like this.  As a child, I learned that telling lies was bad.  To be good, I should tell the truth.  As an adult, I don’t tell outright lies but there are times when I’ve been guilty of exaggerating or omitting facts for my own advantage.  I’d only ever thought about honesty as bad verses good.  Peter views honesty as the access to ultimate power.

If we were honest about it, we’d admit we all lie every day.  A recent study of 2000 Britons found that the average man lied six times per day and the average woman three times per day.  The same study found that 40% of people lied on their resumes and a whopping 90% of people looking for a date online lie in their profile.  The study didn’t investigate the number of lies told by entrepreneurs looking for investment, but it would be interesting.

Peter asks the same two questions after every pitch he sees.  “What is your customer delight story?” and, “What’s the lie in what you just told me?”  He says there’s always one, and as soon as the entrepreneur admits it and opens up with the truth, they can start managing what to do next.

Some lies are big and others small.  Children lie to avoid punishment or impress other kids in the playground.  Adults can lie to gain respect, like a former coffee getting intern who told an employer he’d worked with us as a ‘research assistant’.  People lie to stave off the consequences of making a mistake or to spare someone’s feelings.  Their heart may be in the right place, but they’re still telling a lie.

Peter thinks telling lies is the #1 reason why entrepreneurs fail.  Not because telling lies makes you a bad person, but because the act of lying takes you out of the present moment and prevents you from facing the truth about your business.  Every time you exaggerate a metric, under-report a cost, or are less than transparent with your team, you create a false reality, and start living in it.  In that moment when you told a lie you knew the right action and chose another.  You separated yourself from what was happening around you, lost control of the situation and soon focused on managing the fallout from the lie.  I know people who appear to spend their entire careers inflating the truth and fighting to meet the expectations they’ve set.

Peter’s philosophy is based on Buddhist teachings: the present is a more peaceful, creative and productive place from which to operate.  Everyone knows the right actions to take; by having the confidence to accept your surroundings you can make right decisions and be open to opportunities that come your way.  His commitment to remaining in the present borders on spiritual; only by remaining in the moment, being honest with yourself and others, can you trust that the true outcome will emerge.

Our conversation inspired me to test the theory over the past couple of months.  I’ve focused on telling the absolute truth all the time and being ultra transparent even when I didn’t need to be.  It wasn’t easy but I have to say it transformed my sense of peace, and coincided with the company’s most productive period yet.  Coincidence?

Two weeks ago, I experienced the dark side of dishonesty.  I’ve been involved in a charity organisation for a few years now.  We do a lot of great work in the community, but as a group we’ve always floundered, and our projects never reach their potential.  We’ve had a stream of difficult people in the organisation but I couldn’t identify the root cause of the problem.  Then it struck me: I discovered a senior member of the organisation lying.  Not a whopper, just insignificant tales about why someone couldn’t make a meeting, why emails hadn’t been read, why he was late and so on.  When I confronted him, he immediately admitted them, justifying his actions by saying they avoided irritating consequences.

As soon as I caught the first lie, it was obvious why the organisation wasn’t working.  Within it lay a culture of avoiding reality; no one trusted each other.  The result was a culture of obfuscation and back stabbing in which nothing was achieved.  Volunteers became disheartened with the politics and lack of progress, and eventually they left.

Truth and its relationship to creativity, peace and ultimately success have played on my mind in the past couple of months.   If you’ve read this post and thought, “that doesn’t relate to me – I never tell a lie,” then you’re probably lying to yourself.  For one week, try being honest and transparent about everything.  I’m confident you’ll find it both difficult and worthwhile, and that it’ll make a big difference to your business.  I seldom adopt esoteric business philosophies but its impact has been such that I believe this powerful secret should be talked about.

I’ve not been able to find other articles or books on this topic.  If you have, it would be awesome if you could share them on the comments below.

When I started Posse I didn’t know much about company boards.  A family lawyer helped establish our companies.  He suggested I set up a board and try to find some impressive-sounding people to join it.  His objective was to make the ‘team’ list in my fundraising presentation look more appealing to prospective investors.    So off I went on a mission to meet big name folks who’d look good on my deck.  It didn’t seem to matter how many, the more the better.

Within a month I’d assembled a board of eight, including myself, and we called a meeting.  A friend lent me his board room, a big office in the city.  I expected a casual, friendly affair where we’d chat about business and strategy and they’d agree to introduce me to some potential investors.  I was in for a surprise.  First of all they wanted to know everything.  How much money did we have in the bank?  What were the liabilities, the budget, how many people had visited the site last week, last month, how long did they stay for, how much money had we made?  And so on.  I wasn’t prepared and it was overwhelming.

After a couple of hours of grilling, I gained a sense of what a board expects from a founder.  I’d run my own business for eight years and didn’t report to anyone.  In time I came to appreciate the rigour of reporting.  For the next meeting, I made sure I sent out the cash-flow report, budget, metrics, and a presentation outlining what I wanted to talk about — all in advance of the meeting.

Six months in, our group hit its first challenge.  The business had started well; we’d raised some money and gained traction.  Everyone became excited, then out of the blue one director presented us with a proposal involving a full-time job and a lot of equity.  The group wasn’t sure how to react.  He left the room while we discussed his proposal, and when we rejected it he was hurt and embarrassed.  He quit the board and sent us a huge invoice for his time, which we spent a year fighting and eventually settled.

Some members of our original board were excellent and are still active in various capacities today.  Others drifted off: they had an expectation that we’d be a huge hit within months and when hard work set in they disappeared.  Some stuck around and were destructive when things didn’t go their way.

I learnt the hard way how bad things become when you have the wrong board.  I’ve also learnt how powerful it can be to have the right board behind you.  Here are five tips for start-up founders looking to build and run an effective board of directors.

1. Set expectations up front.

It’s easy to procrastinate finalising deals with advisors and directors.  Everyone is there to be helpful, and at the start it doesn’t seem worth negotiating to pay them a share of nothing.  The problems kick in after few months when things start going well, and you realise you and they have different expectations about payment.  Most start-up directors will expect to receive equity rather than cash, and in my experience the standard rate is 0.5% to 2% vesting over two years.

You must determine what you expect of the director.  How will they help with fundraising, strategy, introductions and the like?  If appropriate, you might want to agree on how much time they’ll commit to your business — although when you have the right people onboard it’s likely they’ll be bugging you with ideas and suggestions for how they can help.

2. Be transparent and organised.

Your board should be the one group of people with whom you can be completely transparent.  It’s their job to help you work through challenges; so they must understand those challenges if they’re going to add value.  I remember at one of the first meetings of our new board, I announced that the product we’d created wouldn’t scale.  We had to go back to the drawing board and try something else before we ran out of money.  No one flinched.  We put a process in place that would devise a better strategy.  I’ve also found that board meetings are much more effective when I’ve put time into thinking through the agenda and have written a presentation to talk through.

3. Make sure your directors have the right experience.

My original board sounded impressive, but many were impressive in the wrong industries.  They had no experience of the challenges of a start-up like ours.  So I received bad advice which led us to hire the wrong team and spend too much too quickly.  A couple of our early directors had never used Facebook or Twitter and wouldn’t even join Posse.

Everyone on our current board has incredible expertise in different areas of early stage companies in our space.  They know what other businesses are doing to grow, engage users, monetize, save costs and much more.  Almost every day, one emails me with an idea or opportunity that I wouldn’t have thought of.  And through them, we can access almost anyone we’d need to help our business anywhere in the world.

4. Keep the numbers small.

We have four directors on our current board, including me, and one regular observer who acts like a director except he doesn’t vote.  It’s a tight group: everyone knows the others’ strengths; everyone is committed to making Posse a hit.  I’ve heard that the reason to keep boards small is to ensure that as a founder you won’t be outvoted.  I suggest that if you even think this, you either have the wrong board or you’re the wrong founder.  For me, the benefit of having a small board is that I can spend time with each person regularly. Everyone is in touch with what’s happening and can contribute.

5. Make sure you like and trust people before inviting them to join.

Directors have much more influence than I originally thought.  They decide who leads the company, what deals to do and when to exit, so you must make sure you all share the same vision upfront.  You must know they’ll do the right thing, and that they’ll stick around and support you when you hit tough times.  I’ve heard many stories from founders whose advisors and directors vanished when it looked like the company might fail.  We’ve had hard times and I can honestly say that our group pulls together and digs in, no matter what the circumstances.

At my first board meeting I learned what directors expect from a founder.  It took me quite a while to work out what founders should expect from their directors.   Our board helps me refine our strategy and operation plans; they’re constantly suggesting new ideas and making introductions; they’ve been involved in fundraising; they hold me to account and oversee the governance of the company.

The names on our board are impressive but that’s not why they’re there.  I’ve learned that a top notch board of great people with relevant experience and a shared vision is a wonderful advantage and has made my founder’s journey easier and more fun.

Posse is my first tech company, and I like to draw on advice from a wide range of qualified people.  Outsourcing, it seems, is one area where everyone holds a different opinion.  I’ve tried almost every different outsourcing model — some were successful, some disastrous — and we’re about to build a significant second team in Manila.  Here are some of my stories and what I’ve learned along the way.

1. Outsourcing the development of a minimum viable product.

When I started Posse, I wanted to get a site up as soon as possible to see if the model worked.  I had no technical expertise and didn’t know how long it would take or how much it should cost.  I didn’t have enough expertise to hire my own developer so I outsourced to a dev shop in Sydney who then outsourced much of the work to their team in India.  I paid for a part-time product manager and part-time graphic designer in Sydney and around six full-time developers in India.   It cost approximately $50,000 per month and took around three months to get a minimum working site live.

This got us going, delivering a working site within three months.  It wasn’t great but worked enough to prove that the model had legs, enabling me to fundraise for the next stage.

But the approach was flawed and I wouldn’t recommend it.  Having a team of part-time developers in Sydney meant that no one was focused on the project.  A startup struggling to devise a new model needs focus and commitment.  I wanted smart people who’d wake in the middle of the night with brilliant ideas for the site design and implementation.  But for them, we were a one- or two-day per week project.  No-one cared that much, the design was poorly conceived and riddled with bugs.  The code was sloppy; it wouldn’t scale, and was abandoned when we put our own team in place.  It had to be.

2. Partial outsourcing of development.

As soon as I closed our first funding round, I hired a CTO to run the development of our product right here.  To develop as much as possible on the available budget he decided to hire two other developers in-house and outsource the rest to a different team in India.  The Indian crew were a dev shop that built products to spec.   We spent around $15,000 per month on the Indian team; that gave us six full-time developers including one who managed the rest of the team.  The entire tech team (Sydney and India) cost around $40,000 per month.

This approach worked slightly better as our Sydney team was more focused on the product design.  We started running regular user tests and developed agile processes, and the Indian team were quicker and more responsive in our direct dealings with them.

Again there were drawbacks.  The Sydney team spent a lot of time writing specs for the team in India.  It’s impossible for a technical spec to cover every decision that the implementer has to make.  For every major definition in the spec there were a hundred micro decisions left to the Indian developer.  We’d never met them; they didn’t speak good English, or understand the business problem we were trying to solve.  So, they often came up with wrong decisions.  For instance, they programmed the events database so it displayed events from furthest in the future first; closest to the current time last.  This makes no sense if you’re looking for something to visit next weekend.  The quality of the code wasn’t great and the site was slow as a result.  Developers would take longer to fix it because of the “shortcuts” they’d taken in the past.  The Sydney team members weren’t proud of the product, they were bored writing specs and we couldn’t build an innovative engineering culture as a result.  After about six months, we hired a new team, notably led by Alex North, and brought all our development in-house.

Me with Kaye and Jenny in our Manila call centre

3. Outsourced sales and database management.

One of the biggest lessons I learned from the music site was that we needed a scalable sales process.   I looked for a way to streamline the client on-boarding process so it could be done by anyone from anywhere at low cost.  Now, when you recommend a shop on Posse, a call centre in Manila contacts the store owner, lets them know you’ve recommended them and asks if they’d like to list on the site.  We obtain their details and design a hand-drawn Posse storefront, converting 95% of the shops that people list, and the entire process costs us $3 per store.  We now have over 35,000 merchants on the platform from all over the world.

The process works incredibly well for us.  We started by calling the stores ourselves, managing the whole process from our own office.  Once we had the script working to a point where one caller could onboard 100 stores per day, we outsourced the job to a call centre in Sydney.  They own a call centre in Manila and planned to get the processes running in Sydney first.  Once they could obtain the same result as us they’d train up their Manila team to take over — at a much lower cost.  Within a month we were ready to start handing over to Manila and a month after that we had a team of two callers, two graphic designers, one database researcher and one manager on the job for a total cost of $5K per month.

Manila floods almost every day at this time of year

4. Building our own team in Manila

Now that we’re growing, we’ve decided to launch our own team in Manila.  I went over there last week to scope out the scene and investigate different approaches.  I learned about Manila’s thriving startup scene and was shown two of the largest startup incubators, packed with enthusiastic entrepreneurs and engineers building their own products.  I was surprised to hear how many startup competitions, hackathons and meet-ups there are.  Google has just leased a five-storey building and plans to open a major office there.   It felt a very different culture from India, where developers seem to work more for pay than for passion.  Another advantage of Manila is that English is the main language of their education system, so communication isn’t a problem.

During my time in Manila I found a lead developer, an office and a recruitment company who’ll help us assemble the rest of the team.  For around $20,000 per month we can employ six engineers, four callers, a database and customer support person, a graphic designer and a manager.  We’re building the team in partnership with the Sydney company we worked with to outsource our callers, and aim to have the whole operation up and running in November.  The team will compliment our in-house development, design, community management and sales team in Sydney; we plan to send our lead designer and two lead engineers to work with the new team in Manila, at least for the first month or two until they get going

Encouraging a great Manila developer to join our team

Through trialling different methods of outsourcing and learning from others who’ve done it well, I value the time and effort put into getting it right.  My trip to Manila was eye-opening: I never visited the Indian teams and as a result thought of them as existing in cyberspace, rather than as real people.  I never took the time to understand who they were, their motivations and challenges — I just became frustrated when things didn’t work perfectly.  I never thought of them as being part of our team.

In a startup, every team member makes an impact and a team member in another country is no different.  Now that I’ve spent time in Manila, met the people who make the calls to retailers, and engineers we’re looking to recruit, I’m determined to ensure that the Posse culture is the same for our Manila team as it is for our Sydney team; we’ll all be spending a lot of time there to make sure it works.  I’ll write back in a few months and let you know how it works out!

If you’ve outsourced successfully or unsuccessfully I’d love to hear your experience and tips in the comments below.

I haven’t lived in New Zealand since I was at university but growing up there, I remember we always seemed to get new technology early.  When we travelled to Australia on a family holiday, I couldn’t believe they didn’t yet have Eftpos!  Because of its small market size, isolation, population density and demographic similarity to America and Europe, innovators often use New Zealand as a test market.

Looking back, I wish I’d trialled Posse in New Zealand first. I’d have used the lessons we learned to improve our product and strategy before launching in Australia or the US.  Now we have momentum there, I’m going to ensure we work steadily at developing the market.  Other than it being an awesome place to hang out, here are five other reasons why startups should consider market testing in New Zealand:

1. New Zealanders like to be market leaders and try new things.   I think it’s inherent in the Kiwi attitude to be enthusiastic about new products.  There’s a culture of inventing and of applauding innovators.  We receive more feedback from New Zealand users than any others: they often write in to say what a ‘neat idea’ Posse is, and how they’ll help spread the word in their area.  Stores are excited when we call to tell them a customer has recommended them on our app and want to find out more.  If you tell people you’re launching in New Zealand before anywhere else in the world, I imagine you’d get a tonne of support.

2. Word spreads quickly.  The media in New Zealand is centred in Auckland.  There are a handful of TV news shows that matter, and radio mainly broadcasts from Auckland to the rest of the country.  There are quite a few large local papers and lots of great business and entrepreneur focussed websites and magazines.  In Australia, we paid to hire a PR company but in New Zealand, we did it ourselves.  A friend at The Icehouse helped introduce me to a few folks, and we just approached the others cold.  Everyone was welcoming.  Within a few days we’d set up interviews on one of the highest rated evening news TV shows, almost every major newspaper, the top talk radio station and several magazines.  The response was amazing: everyone was genuinely interested in the idea and our story; all ran positive articles.

For some reason, when things catch on in New Zealand they catch on big time.  New Zealand is regularly the biggest per capita market for odd music artists (Robbie Williams went more than 30X platinum in NZ!) and they all like to use the same technology.  Local eBay copy ‘Trade Me’ grew to become a billion dollar company even though it only operated in NZ because virtually the entire country was addicted to it!

3. The demographics are similar to Australia, the US and UK.  Culturally I’d say New Zealand is halfway between the UK and Australia but with an awesome Pacifica vibe thrown in.  It’s likely that whatever problem your business is aiming to solve will exist in New Zealand too.  They consume the same media and use the same apps.  If your product works in New Zealand then it’s likely it’ll work in bigger markets.

4. It’s easier and cheaper.  When you’re starting out you’ve a host of problems to solve: getting the team right, improving the product, and staying solvent are just a few.  All round, New Zealand is an easier test market.  There’s less competition and everything is cheaper — even Facebook app advertising is significantly less expensive in New Zealand than Australia.

5. It’s isolated and you can make mistakes: If you do a major TV interview and your site crashes (like ours did) you can learn what went wrong and improve it for less forgiving markets.  No one is going to write your product off in New Zealand, even if it is buggy at first.  In the US and even Australia, the media can be quick to judge new products and it’s hard to get people to take a second look.  In NZ, you can develop a product under the radar of media scrutiny and launch something slicker in the bigger markets when you’re ready.

You also get to visit beautiful places like Queenstown!

The startup scene in New Zealand is thriving.  Wellington-based cloud accounting company ‘Xero’ was recently valued at $2 billion and there’s a long list of others making global waves from the bottom of the world.  The universities are world class so the technical talent pool is strong.  There’s also a vibrant investor community.   Wealthy folks like Peter Thiel and others from Silicon Valley have second homes in New Zealand for the lifestyle or the lack of a capital gains tax – or both.

New Zealand is perhaps the perfect place for startups to test a market.  I’m certainly going to make sure I try my next idea out there first.

New Zealand Startup Resources:

1. Business incubation & Angel Investment: The Icehouse
2. Helping NZ startups export: Katabolt
3. The conference for NZ Entrepreneurs: Morgo
4. Free online mag for NZ Entrepreneurs: NZ Entrepreneur Magazine

Don’t do it!  The deals these guys offer may be bad for the entrepreneur and investors don’t like them.  And you miss out on all the benefits of fundraising.  Yes, it’s painful but the fundraising process is the best education you can have for the next stage.

I made this mistake, not once but twice in the first six months of Posse.  It’s hard to say no to these guys because they’re so charming and fundraising can be difficult and daunting.  The pitch that someone can raise a million dollars for you from top investors quickly is very compelling.  For me it sounded too good to be true and it was.  I ended paying huge retainer fees that supposedly covered ‘costs,’ and then 3 – 10% of anything we raised.  These deals are very hard to escape from.  A few months later when I gave up waiting for his contacts and raised the money myself, I was still paying someone a success fee on money he didn’t even bring in.  I raised the money; he collected the commission on my work!

Another reason for avoiding corporate advisors is that professional investors hate dealing with them.  Two VCs actually asked me to write about this in a blog because they don’t want to be the ones to say it.  Investors back people.  They want to know you’re resourceful enough to get to them on your own merit, not by paying someone else to do it for you.  If you’re introduced by a corporate advisor whom they know you’re paying, you’re immediately on the back foot.  It’s not nearly as good as being introduced by another entrepreneur or investor they respect.  And investors want to know that the money they invest goes towards getting the business up and running.  Not paying some guy to introduce you.

In many ways, fundraising sucks.  It takes up a huge amount of time that you’d rather spend building your business, and it’s hard to take knockback after knockback.  But where there’s pain there’s often gain, and with fundraising there’s a huge upside.

- Very smart people will challenge your idea and make suggestions.  In the course of fundraising, I’ve met some of the smartest people out there, with direct experience of building businesses similar to Posse.  These challenging conversations about my product day after day helped shape my strategy.  Many of our best ideas started as suggestions from prospective investors or concepts sculpted by their questions.

- You’ll build a network of people who will help you later.  I often catch up with people I pitched to but who didn’t invest and ask for connections to other businesses or media partners.  I’ve pitched to more than 1000 people so I amassed a pretty large and powerful network.

- You’ll refine your pitch.  By repeating the same pitch over and over, I soon sensed what people found exciting about our product strategy.  I polished my pitch until it shone, which helps when I talk to media or sell to customers.

- You’ll be careful with money.  I’m sure you’ve heard stories of companies who raised tens of millions from a VC and spent it all in a year before falling over.  When you go out and meet people one on one, and they write you a personal cheque to invest in your business, I think you take spending much more seriously.  Every time I notice waste at Posse I can’t help but think of the individuals who invested.  They trusted me to spend it wisely.  As a result, our investment has lasted much longer than other businesses, raising our chance of success.

Fundraising is hard, lonely and distracting.  Since I started Posse in 2010 I’ve probably spent at least half my time talking to investors, planning meetings with investors, answering their questions, preparing my pitch, negotiating terms, drawing up paperwork and chasing people for their paperwork.  When someone comes along and says ‘Your business is great.  I can raise money for you and you won’t have to do the work,’ it’s a compelling proposition.  In my experience, working with a corporate advisor often doesn’t work out; you end up frustrated, wasting time, money and equity.  And you miss out on terrific groundwork for your business.