The startup mentality is attrition until it works… or you give up
Marty Neill founded AirPOS in 2009 as a spinoff from e-commerce company No More Art. He previously worked in the record industry and music publishing.
“It began as a notion over a beer in a Belfast record shop that my friend inherited. We realised that one of the things we’d have to do to save it would be to sell online. I assumed there would be a system that would help us. But we had a problem in the shop that I hadn’t seen before.”
There was a very limited supply, often just one copy, of each vinyl record to sell in store and online. But traditional electronic point-of-sale (ePOS) solutions for small retailers weren’t built to track stock levels of unique or limited quantity products.
One of Marty’s existing customers had a similar problem selling individual high-end guitars that could not be resold once a shop or online customer had placed an order.
“We started to see the inventory monitoring problem everywhere — it was rife — any place that had limited stock. No More Art had been part of the problem because we had been selling e-commerce to these guys paying no regard to their existing processes and systems. So we become part of the solution and in 2009, we proposed the world’s first EPoS and e-commerce system as a software-as-a-service company.”
Marty admits that back then he didn’t really know what a startup was. “We just did stuff,” he says.
“I got a £10,000 loan. We were involved in StartVI, Belfast’s first tech incubator, but to us it was a big dusty room with wifi and electric points. We were doing all this with no knowledge whatsoever that this was happening all over the world.”
Belfast-born investor David Kirk visited the small team in Belfast. He had a retail software background as senior management experience at AOL and Cisco Systems. “He told me I had to go to San Francisco and meet him at The Chieftain bar on St Patrick’s Day. And if I could do that we could talk. So we did.”
Attending the Irish Leadership Technology Group’s Silicon Valley awards, Marty met back up with David. “It was St Patrick’s Day and we were having a drink in The Chieftain when he called me outside to hand me a cheque!” AirPOS had its first investor who is still on the board today. That St Patrick’s Day he also met another future board member, Mike Gill.
“Adult supervision is so important in the early days. If you don’t have it, you’ll fly off a cliff. You do need capital. But if someone came to me tomorrow with a cheque for half a million pounds and I didn’t understand their expectations and they didn’t have experience, I would be duty bound to say no. We learned that the wrong investor kills a business quicker than any of amount of capital. You need an investor’s experience and their tough questions.”
AirPOS participated in an early version of InvestNI’s Propel programme. But Marty says that their best mentoring came from US-based investors.
“We’ve had extraordinary adult supervision, but it came from San Francisco expats. We had David Kirk, Mike Gill, John Hartnett and Jonny Gilmore. It was our startup school. The only problem was that it was in the wrong time zone. You had to be on a call at 9 o’clock every night, which when you’re married and you have kids is certainly not romantic.”
Seven years after starting to build the software, Marty struggles to give a straight answer to the question of whether AirPOS is still a startup?
“At the point where you suspect that you’ve solved the problem, and you have some proof points that say you can grow predictably and sustain yourself, can retain customers, then, arguably, you may be moving out of startup. But I would be reticent to say that AirPOS is no longer a startup.
“I’m the only executive. If you come back in two years’ time and there are three executives — and it’s not the founder wearing four hats and scrapping his way to the next milestone — I’ll consider us to be beyond startup.”
Later in the interview he admits that “going bust is no longer an option for AirPOS” which may mean that they’ve gone “slightly beyond startup.” He sees their options as settling as a niche boutique software business, slow growth that lessens the gap between the burn rate and profitability, and doubling the existing investment over the next two years.
“We are classic software-as-a-service company, built to scale. This whole organisation, every single piece of its DNA has been geared towards removing impediments to scale. It’ll be a terrible shame to me if it doesn’t get the opportunity to do so.”
From a beer in a record shop to a cheque outside a San Francisco pub and now a company with 10 staff and loyal customers seeking further investment and growth. They’re well on their way to their goal of raising their next £500,000. Has the journey been worth it?
“It’s extraordinarily destructive to your mental and physical health. The truth is that there are times when you think you’re going break and you tell yourself that you shouldn’t have done this, it’s going to ruin your life. And then you have breakthrough moments.
“The thing for me is that I don’t want to not solve the problem. I’ve always done startups, our record label was a startup, our magazine was a startup. I’m stupid enough to go and do this to myself again and again.
“Startups are an act of lunacy. To make a product and try to sell it in the same room is an act of lunacy. No one else does this: car manufacturers are not trying to sell cars out the back of their factory for a reason. Startups are bizarre organisations.
“If it was an easy journey then everybody would do it. You have to have a certain mentality. This is not a job. This is not a career. Anyone who thinks this is cool is deluding themselves. This is attrition until it works … or you give up.”
Marty’s lessons learned
The two commandments of building tech (passed on from Mike Gill)
1. Coding is an administrative task: you should never write a line of code until you have a plan for why you’re doing so.
2. Nothing ever works until version three. A startup’s prototypes accumulate huge technical debt if you do everything too fast. The AirPOS product is now working at version three!
Know your metrics
Startups work on a very tight set of metrics: cost of customer acquisition and customer lifetime value. It’s terrifying to meet people from local programmes who don’t know these numbers. It should be the culture of your business: it’s the yardstick for everything.
Someone could come to me with the greatest marketing idea in the world and I will go what’s the cost of customer acquisition going to be? Because if it’s above a certain level it changes the dynamic of the business and we have to raise our price and then we’re anti-competitive.
Last year, AirPOS experimented by raising funding through CrowdCube crowdsource platform. I’ve realised that crowdfunding can never be a replacement for Venture Capitalists. It’s not the same thing at all. If you don’t get expertise along with the capital then you’re hosed.
Paying it forward
Spending time in California, especially in San Francisco, I discovered a genuine mentality of ‘paying it forward’. When you have contacts, you share them. When you know how to do something, you have to help. That generosity drives startups forward.
Lots of people in Northern Ireland have done well and have built up great experience. But there’s a curious disconnect between some successful entrepreneurs in Northern Ireland and new startup entrepreneurs. And there’s a low awareness and appreciation of the diaspora who could help introduce local startups to investors.
This article originally appeared on Sync NI https://syncni.com/interview/909/the-startup-mentality-is-attrition-until-it-works-or-you-give-up