Posted by Ian Brookes
21/11/16 08:54

From Nikola Tesla, to Steve Jobs to Elon Musk, entrepreneurs’ vision and endeavour push civilisation forward. They are the driving force of human evolution, the vanguard of innovation leading us into the future. Innovators are not limited to those who run a business as entrepreneurs, an innovator is anybody who is consciously building the future that has an impact on society.

Posted by Ian Brookes
15/11/16 08:33

This blog post represents my personal views, and should not be taken as those of Cake Invest.

On January 20, 2017, we will bid farewell to the first African-American President, a man of vision, integrity, dignity and generous spirit, and witness the inauguration of President Trump. It is impossible not to react to this moment with anything less than profound anxiety. This almost puts the toblerone fiasco into perspective.

For the party of Abraham Lincoln, Trump is a profound embarrassment. The folly of the masses has overtaken the wisdom of crowds. Trump’s manifesto was hollow on content but overflowed with hyperbole and bombast. The campaign mirrored the EU referendum, marked by intense polarisation and absence of civility. ‘Political integrity’ - words which repel each other like similar ends of a magnet, has lapsed for a generation.

However, let’s set aside the political polarity and consider what Trump’s presidency could mean for one vital section of the economy - tech startups, both in the US and in the UK. Here’s my take from reading a number of articles, and my own thoughts.

Investment There is a maelstrom of uncertainty as many investors did not anticipate this outcome, and if there is anything that investors hate, it is uncertainty. However, some of the best companies have been created in times of economic turmoil, and, because of that, some of the best startup investments have been made in times when everyone was risk averse.

I am certain that investors will continue to invest in disruptive tech startups where their innovative value proposition offers product-market fit. While the financial markets may be volatile, there is no correlation between startup success and strong financial markets. Investors who understand what makes a startup an investible proposition will continue to act accordingly and be rewarded over the long term for doing so.

That means entrepreneurs looking to raise money in the coming months may have to wait it out and be conservative with cash as the senses settle, possibly hampering near-term growth, preserving cash and find a way to survive. But a great startup is a great startup. Startups encourage an equilibrium shift towards investment-driven growth, that wont change.

Entrepreneurial attitudes Entrepreneurs don’t confuse uncertain times with a lack of opportunity. If you were excited about your business two weeks ago, you should be excited about your business today, but don’t be blind about the macro environment you are operating in. It’s going to be choppy for a bit.

It would be unfathomable to think that someone who has been in business all his life is going to do anything that would hurt businesses and that the pendulum will swing to more realistic and sensible policies.

The platform business models, online businesses, Blockchain, crypto currencies – there is no reason why startups in these domains should not move forward. They are global businesses that know no borders, and innovation will continue to drive opportunity.

The US is the most entrepreneurial tech country in the world, and will keep producing Teslas, Googles, Amazons, Apples, Kickstarters, Twitters, Facebooks on the back of disruptive entrepreneurial thinking and behaviours. The globalisation of capital (in contrast to labour) means that when growth falters capital can go elsewhere, and equally, success will pull cash towards them.

Business ethics Startups fail, we all know the low probability of success and the cash burn of startup failures. No one sets out to fail, no one sets out to lose the cash and confidence of investors.

However, Trump’s behaviour - setting up businesses, letting them fail, using bankruptcy laws to avoid taxes, then setting up another business somewhere else – is the perfect symbol of the immoral asset-stripping form of ‘old style’ capitalism.

Tackling inequality and promoting opportunity should be a central objective of economic policy, for economic reasons every bit as much as social reasons. Startups offer an opportunity to reconnect a company with society, and instil a sense of broader obligation, rewarding value creation over value extraction.

Most startups operate with a strong community ethos, most startup founders are driven by making a difference, not money, money is the applause not the objective. Trump is not an entrepreneur as I would define one, he lacks the humility and operates to the indulgent capitalist stereotype of winner takes all as long as it is me.

Economic policy encouraging startup ventures While Trump was vague about his platform on the campaign trail, the broad strokes with which he painted his economic policy don’t bode well for the broader tech community. Trump is definitely a problem for that model. His economic policies are focused on punishing China for its trade abuses and returning manufacturing to the US.

If Trump moves ahead with his plan to impose steep tariffs on goods manufactured in China (rolling back more than twenty years of economic policy focused on increased economic interdependence), it won’t bode well for any US tech businesses that relies on the global supply chain and a global customer base – as most tech businesses, both in the US and UK, do.

Enabling free movement and diversity of labour markets Beyond tariffs, making tech products more expensive (and hypothetically forcing companies to return their manufacturing to the US), Trump is likely to have a significant impact on the issue of immigration, the free movement of labour and diversity in the workforce – all key drivers of startup growth.

Silicon Valley has made a huge push to support and expand the H-1B visa system, which enables talented workers from overseas to remain in the US and give them a path to a green card while filling the demand for highly skilled jobs. Trump said he would eviscerate that system.

For tech startups, the H-1Bs are a high-tech iteration of the message of compassion inscribed on the Statue of Liberty — Give me your tired, your poor, Your huddled masses, yearning to breathe free - except they’re highly educated, highly skilled workers rather than huddled masses yearning to be free.

It’s not the robots that are the problem Trump’s not a tech guy, that much we know. He also doesn’t know his economics. Robert Solow, the emeritus MIT economist, researched and developed a model which shows that around 80% of economic growth is down to technological progress, leaving capital and labour driven growth by the wayside.

I worry that for the sake of creating more American jobs, Trump might somehow slow tech, including self-driving technologies. Trump promises to bring back manufacturing jobs, but robots won’t let him. I don’t think he understands the tectonic shift that AI and robotics have reshaped the economy, and it's not reversible. Indeed, robotics have already helped reduce reliance on labour overseas for US manufacturers in automotive, electrical and electronics industries.

If manufacturing returns to US per his aim, jobs aren’t coming with it in high numbers. Automation has left workers in developing nations without employment, and the US like other developed economies faces the same challenge. Startups creating interesting robotics that stand to replace jobs from people, both in the UK and US, will continue to attract seed and venture funding.

It’s not just startups innovating with AI and robotics, large brands like Nike and Adidas have shed staff and embraced robotics, for example 3-D printing of shoes. Large agricultural business deploy drones in the field and major companies like Amazon and UPS rely heavily on robots for logistics and warehousing.

And the robots aren’t getting dumber. Advances in VR and AI promise to make robots and the software-brains inside of them even more competitive with people. It is not the robots that are the enemy, Donald.

Curating and enabling entrepreneurial flair Trump reserved some special vitriol for the folk from Cupertino. He called for a boycott of Apple’s products over its encryption stance following the San Bernardino shooting and bombings.

He had harsh words that harnessed his distrust of China to announce his plans to quite literally make Apple manufacture its products in the US: We’re going to get Apple to build their damn computers and things in this country instead of in other countries. Tim Cook, a composed and thoughtful man responded in an articulate and reasonable manner to this threat. Just imagine how Steve Jobs, a more abrasive character, would have taken up the challenge.

While it remains unclear if these comments form part of Trump’s policy on technology and business, his rhetoric will be of concern to Apple. In response to that uncertainty, Cook told employees to be confident that Apple’s North Star hasn’t changed.

Tim Cook’s leadership message in response to Trump’s threats was an example of the stark contrast to be made of intelligent liberalism against Trumps thoughtless populist sound bites: Our company is open to all, and we celebrate the diversity of our team here in the United States and around the world regardless of what they look like, where they come from, how they worship or who they love.

He’s also focused on Jeff Bezos and Amazon - If I become president, do they have problems, he said back in February, taking specific issue with Bezos’ purchase of The Washington Post and his support for Clinton, and for swaying political influence to benefit himself and Amazon. For his part, Bezos reserved Trump a special (one-way) ticket on one of his Blue Origin rockets.

While Trump was vague about his platform on the campaign trail, the broad strokes with which he painted his economic policy don’t bode well for the broader tech community. Sam Altman, president of startup incubator Y Combinator, and Shervin Pishevar, co-founder of Hyperloop One, even suggested that California secede.

This leaves the US tech industry in an uncomfortably uncertain position. Total contributions to the Clinton campaign from the Internet industry came in at 114 times the level they did for Trump. High-profile figures in US tech such as Zuckerberg, Benioff and Hoffman, all took unusually public anti-Trump stances. The notable exception was Peter Thiel, the billionaire PayPal backer and Silicon Valley's resident contrarian.

However, it was Dave McClure of 500 Startups, a startup accelerator and seed fund – who made his feelings known on stage at Web Summit, which perhaps showed the schism potentially opening:

We provide communication platforms for the rest of the f------ country and we are allowing s--- to happen. It's a propaganda meeting. Even if people aren't aware of the s--- that they're being told, if they're being told a story in fear, if they're being told a story of 'other,' if they're not understanding that people are trying to use them to get into f------ office, then yes, a------ like Trump are going to take office. And it's our duty and our responsibility as entrepreneurs, as citizens of the f------ world, to make sure that s--- does not happen. This s--- will not stand, and you've got to fight for your rights and... stand the f--- up!

Quite how a flawed personality, a populist billionaire, a hotel developer, won election as POTUS, for a country seen as a ‘beacon of hope’, based on his manifesto, defies analysis. We can only believe that the driving force of passion for entrepreneurship and innovation, from economic, technological and sociological perspectives, carries enough momentum against the voices of the Trumpkins.

Outgoing President Obama today visits Athens as part of his ‘farewell tour’, partly to talk about democracy in the place in which it was born. There's a lot for us all to consider. In Ancient Greece, not far from the Acropolis, populist speakers used to rouse crowds with the promise of action against the state's enemies.

Those speakers were known as demagogues. You have to wonder whether or not that will remind the outgoing president of the man who will succeed him. In turn we have to hope that Trump gets educated in the business of technology and the technology of business, to enable our tech startup cultures to continue to thrive, and that any economic policies do not constrain because of a flawed, stale and utterly misguided set of ideological principles.

Posted by Ian Brookes
07/11/16 08:12

Theo Epstein is the President of Baseball Operations for the Chicago Cubs, crowned Major League Baseball’s World Series Champions last week, ending a drought of 108 yeas since their last victory. He is acknowledged as the driver behind their reinvention, with a unique strategic approach to identifying, recruiting and developing talent, which has resonance beyond baseball.

Posted by Ian Brookes
31/10/16 08:55

The Great British Bake Off ended last week with a nail-biting final that proved a triumph for Candice Brown. Mel Giedroyc brought the last bake to a halt by announcing: You can do no more ! You’ve finished! However, the climactic Showstopper Challenge failed to feature the one dessert I craved, namely, a custard pie. Being slammed in Paul Hollywood’s face. What a tart.

Posted by Ian Brookes
24/10/16 07:53

The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life and the procedure, the process is its own reward.

Posted by Ian Brookes
17/10/16 13:15

Cake Invest hosted the launch event for The Startup Factory at Code Node in London last Tuesday, a technology Startups As a Service business with its origins in Manchester where it was founded in 2013.

Posted by Ian Brookes
11/10/16 14:47

The RNLI is the charity that saves lives at sea, providing on call, a 24-hour lifeboat search and rescue service around the UK and Ireland. With lifeboats, lifeguards, safety advice and flood rescue, they are committed to saving lives.

When their pager beeps to call them to the lifeboat station, breakfast, dinner or tea, the volunteer crew leave their families at a moment’s notice to commit to their purpose of saving lives at sea. I imagine that countless meals have gone cold or been left uneaten.

To me, it is an organisation of ordinary people doing extraordinary things. I like the way they have framed their purpose as an organisation, with simplicity and clarity: The RNLI saves lives at sea.

The RNLI has saved more than 139,000 lives since its foundation in 1824. The charity was founded, with royal patronage, as the National Institution for the Preservation of Life from Shipwreck after an appeal made by Sir William Hillary. Hillary lived in Douglas on the Isle of Man, and had witnessed the wrecking of dozens of ships from his home.

The name was changed to the Royal National Lifeboat Institution in 1854, and cork lifejackets were first issued to crew members that year. In 1891, the first RNLI street collection was held in Manchester. The C20th saw the RNLI continue to save lives through two world wars, and lifeboats moved from sail and oar power to petrol and diesel, and the first women joined their crews.

Without doubt, the bravery, performance and contribution of the teams of voluntary lifeboat men and women can give us clear learning points to take into our business about teamwork. However, at the heart of a great organisational success you will see a team transformed from a collection of individuals into a single entity with a shared identity – team members become a plurality with a single-minded focus and purpose.  

It’s the concept of a clear, shared purpose of an organisation, and how the RNLI have captured this, which is the key learning for me to explore in this blog, and why it is essential a startup defines it’s north star around a clearly articulated purpose.

I define ‘purpose’ as Organisational purpose expresses the company’s fundamental value – the raison d’etre or over-riding reason for existing. It is the end to which the strategy is directed, why the organisation exists in the first place and what ultimately matters in its work.

Research shows that most people want their organisation to
have a purpose beyond making money. A purpose
of simply maximising profit leads to employee disenchantment and a lack of loyalty and commitment. In contrast, an invigorating purpose conveys something distinctive that is uplifting.

Leaders draw people into a shared sense of purpose by creating a distinctive, well-crafted and compelling vision of the organisation’s future. This is essential for a startup in terms of attracting and retaining early employees and early adopter customers, as advocates.

Harking back to the RNLI, although the organisation has significantly expanded its services and its geographical presence since 1824, its core purpose remains the same - the charity that saves lives at sea. This unifying purpose underpins the organisation’s vision, values and strategic and operational priorities.

How the purpose enables the RNLI business model offers insight for startups. For example, all its funding is from donations, the general public give to the RNLI because they respect the purpose and the work the organisation and lifeboat crews do. Maintaining the organisation’s reputation amongst the general public is thus key to sustaining the organisation’s business model.

Also aligned to the organisation’s core purpose is maintaining a strong volunteer ethos. This ethos enables the RNLI to prioritise spending on areas that allow it to achieve its core purpose, as opposed to staffing costs.

What also resonates with startups is that the purpose helps with high levels of organisational engagement too. While most staff find it relatively easy to identify with the organisation’s core purpose, not all staff find it so easy to appreciate the impact of their individual contribution on the wider purpose of saving lives at sea.

For a startup, the thinking that it should stand for something bigger than profit has become an important dialogue around creating customer engagement. When your customers can identify what you stand for and why you do what you do, this creates alignment with their own values.

The hard part is figuring out how to make it more than just words. For purpose to really count, it needs to go beyond an initiative or fine words of intent that sit around the organisation. It needs to be a central part of ‘why we do what we do’ and customers can see tangible existence in your every day work.

I find that entrepreneurs want to make a profitable living, but their purpose is to make a difference. Creating a culture of purpose is how you do both, create enduring customer value and leaving clear footprints. Simon Sinek’s work where he states people don’t buy what you do, they buy why you do it captures this.

This is why you must find the deeper purpose of your business. Here are some example of deeper business purposes:

  • An architect’s practice: Architecture design that inspires.
  • A furniture factory: The most beautiful tables in the world
  • An electrical contracting business: You’re in safe hands

If you were in the market for a table, wouldn’t you like to check out the furniture factory? Of course you would.

For other examples of purpose, look at ING, the financial services company Empowering people to stay a step ahead in life and in business, the Kellogg food company Nourishing families so they can flourish and thrive and IAG, the insurance company, To help people manage risk and recover from the hardship of unexpected loss

A good example comes from Volvo, which found its new purpose by looking to its customers’ needs, rather than simply their demands. Their purpose is epitomised in its company slogan: human made – making people’s lives easier, safer, better. To help in this came a new organisational approach to reinforce the new ways of working, with new independence, which in turn led to new ways of thinking. Volvo is focused on its customer-centric purpose.

For your startup, you need to have the same clarity on your north star as the RNLI and the corporates highlighted above for your purpose, and then you need to know how to do this in a manner that make a difference to your customers. Some companies are obsessed with growth, and have forgotten to see the real purpose they started up in the first place.

Having a purpose creates a sustainable and scalable competitive advantage. Competing on price is not a sustainable strategy for success of your startup. You can avoid having to compete on price if the purpose of your business relates to your customer’s needs.

Focusing on profit as the purpose of your startup has one major flaw: your customers have no interest in supporting you to just make money. They are quite happy for you to make a profit, but only after you have met their needs and delivered value first.

In other words, customers want you to explain to them why your business exists, what it is here for and why they should care. In working with my startup clients to find the deeper purpose of their business, I always ask them those questions first and invariably I get the following three answers:

We do great work. At a great price. And we give great customer service.

Undoubtedly true, but all your customers expect those three qualities as a bare minimum starting point and secondly, your competition makes exactly the same three claims.

So, as a startup, what is the purpose of your business? Have you clarity of this? Do you ever think about that throughout the course of the day? Ten years ago I would have gone with Peter Drucker's answer - The purpose of a business is to create a customer. Today, after years of working with several hundred small business owners this very question, I have to say that your why matters more than just your what.

I had one client who’s reply to my question What is your purpose? was to provide the highest quality technical support within the terms of the service level agreement. An interesting answer, sincere intent, but is it a genuine purpose, or a KPI? It certainly could be a valid purpose, but surely it is description of what the business does. It’s the thing they do which, if they do it well, will achieve their purpose. It wasn't their Why?

In the end, we reworked it and decided that the purpose of the business was to enable customers to continue to trade in the event of a technical failure. That was the problem their customers paid them to solve and where they made a difference and it created alignment. With this definition of their purpose, it was easy to see how they could grow the business.

Founders need to truly believe in the purpose of their company. Although many of us see Facebook as a social media platform, founder Mark Zuckerberg encompassed his personal vision in the purpose of his company.

Through Facebook, Zuckerberg aims to give everyone in the world the power to share and make the world more open and connected. By making the mission personal to the founder, it is authentic and sets the tone to attract a like-minded, vision-aligned team where everyone is working towards something in which they can believe.

A purpose-driven organisation believes it can advance society by harnessing the influence and power of its impact. The company’s purpose provides the fundamental reason for its existence and underpins its product or service offering. That’s exactly what the RNLI is all about, and is an authentic role model for startups.

If you do believe in purposeful organisations, then support the RNLI. This weekend, 14-16 October, there is a major fund raising event, Host a Fish Supper. The RNLI ask that seasoned chefs and amateurs alike dish up the fish for their friends and family in a fun themed evening.Every penny raised helps to protect the brave crew and the families who love them. Visit the Fish Supper website to sign up and receive your free fundraising kit full of recipes http://fishsupper.rnli.org/

Purpose really comes down to mindset that taps into your sense of being. At dna people, my purpose is to help build a more entrepreneurial society. I want to enable innovation with purpose from people with great ideas, intelligently investing in the future. My purpose drives me to ask better questions - to challenge, inspire and unlock new solutions. Why am I doing this? Because, quite simply, I couldn’t imagine doing anything else, it’s my purpose.

Posted by Ian Brookes
26/09/16 08:43

The picture of Alistair Brownlee giving up his own chance to win the Triathlon World series in Mexico, and helping his brother Jonny over the line, evoked strong emotions of two brothers in arms.

With the 1500m swim and 40km bike completed, Jonny and Alistair were out on the road on the run in front, battling for gold and silver. Then Jonny uttered one word to his brother – ‘relax’ – and Alistair, who interpreted it as a sign of weakness, attacked to retain his title. Jonny kicked on, and surged back into the lead.

Posted by Ian Brookes
19/09/16 07:37

Your startup is fixed to stages growth just as your own human development lifecycle, although obviously a different set of laws apply. Birth begins when we shoot out of the womb. From there we learn to walk and talk, ride a bike and go to school. Having your first kiss, passing your driving test and losing your virginity, casting your first vote...to marriage, first house, kids, life is a series of milestones as time passes.

Posted by Ian Brookes
12/09/16 08:28

Reality television shows are the dominant cultural mode of address, we currently have the Great British Bake Off, Strictly Come Dancing and The X Factor. For me, it is a lazy formula for ‘entertainment’, it’s simply an opportunity to pander to our less wholesome voyeuristic tendencies where the combative, hectoring setup aims to humiliate contestants for our morbid pleasure.