Tae Hea Nahm is the cofounding MD of Storm Ventures, which invests in tech and SaaS start-ups all over the world. He’s the author of the book series Survival to Thrival: Building the Enterprise Startup, which provides B2B entrepreneurs with all they need to know to grow and then thrive. His latest title in the series, Change or Be Changed is out in April. Here he tells us the secrets to growth and the lesser addressed topic of how to manage it.
What business problem for entrepreneurs do your books address?
The first book was all about unlocking growth – the thing that every start-up wants to address. We came up with a concept which we believe is the missing link to unlock enterprise growth. It’s called ‘Go-To-Market Fit’. Many start-ups will know about finding ‘Product-Market-Fit’ (PMF). But even when they find PMF, they still often find it hard to transcend from survival mode to thrival mode. The bridge between these two modes is finding your unique ‘Go-to-Market-Fit’.
The first book also helps founders anticipate their start-up journey from founding to $1 billion company.
Book two is about what happens after you’ve unlocked growth. Why is change so hard on the team, including the CEO? Our book looks at how the whole company from the team up to the board needs to change their roles as the company grows.
So why exactly is growth so hard on the team once it’s underway?
Finding the growth formula is hard to start with. Then once you have the growth formula (i.e. GTM Fit), the company must change its strategy, execution, organization and even its people to scale and succeed.
Here’s why: As the company grows, roles change. Yet there is little institutional knowledge passed down to help start-up leaders understand how their jobs change, and therefore how they must change themselves to succeed. Some of what makes people successful in the early stage ironically must be unlearned for the next stage. This theme of ‘unlearning’ is what I focus on in my second book. Unlearning is an invigorating and transformational experience, yet painful and turbulent for the team, the CEO and the board. Common company culture becomes more important during this stage and the thing which holds the team together.
Can you give an example of how growth can be hard on the team?
A classic example would be when the CEO hires the first “Grade-A” role such as a VP of Sales. Adding this is critical to company growth, but it can make a CEO and others uncomfortable. The VP will push everyone in the company—the CEO, the product team, the marketing team—to the next level. They may point out that early customer-acquisition processes that were the pride of the company were actually a one-off, unrepeatable sale, and will demand that the company develop a repeatable sales model (a playbook). Everyone realises that the old ways of making decisions and doing business will have to change. But the good news is discomfort is normal. Embrace it.
What sort of companies do you invest in and why the interest outside of Silicon Valley?
We invest in early stage B2B companies all over the world. Many VCs stick to the Bay area but we want to invest outside Silicon Valley, because i) you don’t have to be in Silicon Valley to access the best technology (Cloud, open source etc are available everywhere), and ii) Silicon Valley has a fundamental cost and retention disadvantage. Most importantly, we have seen huge success for our investments outside Silicon Valley.
What are the trends you are seeing in the tech SaaS arena?
Rewriting SaaS architecture to leverage AI. Traditional SaaS (like CRM) was architected for automating workflow and built on transactional data models (like Oracle). Companies have been trying to bolt on AI to SaaS. We believe that the application should first be built for AI and then add SaaS. AI is architected to predict behavior and is built on behavioral data models (like Google and Facebook).
Considering you invest in tech services for enterprises, does your company use super slick apps on a day to day basis – if so, which are the must-haves?
As a small tech office, we find that we must communicate with everyone everywhere. So we use WhatsApp for Europe, and Kakao for Korea, FaceTime for apple users, Google Hangouts for some video, zoom for basic video conferencing. We are constantly adding new communications apps
For our base deal workflow, we use copper as our CRM and Google Drive for document sharing.
Tae Hea Nahm’s first book The Company Journey can be found at the following link: https://www.amazon.co.uk/Survival-Thrival-Building-Enterprise-Startup/dp/1684014905
DIFFERENTIATION – THE KEY TO THRIVING IN A SATURATED MARKET
Graham Glass, CEO of Cypher Learning
What has enabled Cypher to continue to grow in an increasingly saturated market?
Recognising opportunities for growth around the world is actually one of the things that has helped us grow. We realized that there were so many opportunities outside of the U.S or Western Europe and actually, a lot of our revenue comes from outside of these regions. For example, with our education based LMS, NEO, we have schools and institutions in the Philippines, Latin America, Norway, Australia, and more. The way we have created the product allows the flexibility for it to be tailored to each educational institution’s exact needs and because of this process, we can provide different languages, different elements of learning and really help the teachers in each country make the most out of the system.
You have recently expanded into four more locations: Australia, Indonesia, Malaysia and Russia. What was the reasoning behind deciding on these locations?
The growing popularity of our learning platforms has made it possible for the company to expand quickly and cover more of the market around the world. The selection of the new sales offices came as a natural move, as we started to get more and more customers in those locations, and we wanted to seize the opportunity to expand even more. We also wanted to provide local support to our customers, which is an important aspect in our strategy. Since we already had an office in The Philippines, opening new locations in Indonesia and Malaysia was essential. In the case of Australia, since we launched the APAC version of our platforms, with servers hosted in Sydney, it was also vital to have a sales office as well.
What is different about your products compared to your competitors?
CYPHER LEARNING is currently the only company on the market that provides a learning platform for each e-learning segment: academic, corporate, and entrepreneurs. Our products are built on the same core platform. They share some functionalities and the overall design of the platform, but they’re targeted towards different markets. NEO is an LMS for schools and universities, MATRIX is an LMS for businesses, and INDIE is an LMS for entrepreneurs. For each of our products, we have created special functionalities that address the needs of each market.
Our platforms are very intuitive, easy to use, and visually appealing, which makes the whole experience more engaging and enjoyable for all users. The navigation is simple, and you can customize the platforms to match your brand and fit your needs.
Our platforms are built to ensure a smooth implementation and they’re easily adopted by students, teachers, trainers, and entrepreneurs. We offer support for 40+ languages, mobile apps for all devices, and accessibility features so all users can enjoy the platform.
CYPHER LEARNING products provide complete solutions with powerful features for managing all teaching and learning activities for schools, organizations, and entrepreneurs.
We’re also focused on bringing innovation through our platforms, by creating cutting-edge features that other systems do not support such as automation, adaptive learning, and competency-based learning.
How do you see the e-learning market changing and developing in the future?
I’m very excited about the future of the e-learning market. Machine learning and artificial intelligence hold great potential in terms of making learning truly personalized. We’re already on that path, taking steps forward with automation, multi-layered neural networks, feedback algorithms, amongst many other developments. And things will advance on a massive scale, rather quickly. With AI in online education, we’re not talking about 20 years until it will become the norm. Some of these technologies are going to be available and mainstream in the next few years. Keeping up with these changes and making sure the incredible amounts of learner data will be used correctly will be challenging, but I have high hopes of what the future has in store for us.
What advice would you offer other individuals and businesses in the e-learning industry?
We’re all in this together so we need to stay true to ourselves. In order to provide the best tools, the best solutions and the most memorable experiences that support people of all ages to learn new things, we need to keep on learning ourselves. That’s the only way to continued growth, both personally and professionally.
IPO: WHY GO PUBLIC?
By Sandy Campart
The main objective of an IPO – Initial Public Offering – is to raise capital in order to allow a company to grow. However, during a global economic slowdown, investors are increasingly cautious. In times like these, how should you prepare to go to the market?
Reasons for an IPO
A company’s motivation for going public is often linked to the idea of “creating one’s own currency” in order to fund internal and external growth, to diversify future sources of finance and strengthen the financial structure of the company. Listing a company on the stock exchange results in tradability and liquidity, allowing previous shareholders to exit, realising a gain on their capital. It also creates a valuation for the company which will be useful for future succession plans. At a strategic level, an IPO can enable the company to clarify its strategy, refocus its activities, increase its visibility and credibility, and ultimately differentiate itself from competitors.
Nonetheless an IPO will significantly change the way a company operates. Corporate governance has to be overhauled, support functions professionalised and financial communication must be made transparent. All studies show that, when information is withheld, the negative impact on the share price is greater than if the bad news had been announced.
2019: a mixed bag
In 2019, newly listed companies have seen their share price grow by almost 13% on average. However, the figures vary greatly. Software and IT security companies have performed the best with an average of nearly 40%.
Nevertheless, the stock market performances of SmileDirect (dental aligners), Peloton (exercise bikes and fitness) and even Uber attest to the increased scepticism of investors for unrealistic or exaggerated levels of profitability. Uber’s price has been particularly disappointing since the latest results presented were well below the expectations of the investors. In the second quarter of 2019, the turnover was more than 5% lower than expected and the profit – or rather the deficit – per share was 53% greater than expected. Uber’s growth has been slower than that of rival app Lyft, and the restructuring costs associated with many departures, lay-offs and resignations do not seem to be controlled. Additionally, Uber’s CEO, Dara Khosrowski, told his employees that the teams were too large to be compatible with the pace of growth needed, while Uber’s CTO, Thuan Pham, believes it could take decades for Uber to achieve its “vision”, suggesting there could be a later than expected ability to turn a profit.
Towards a better year in 2020?
For a company wishing wanting to maximise its initial flotation price, there are two strategies to pursue: the first is to float when the company is performing exceptionally, the second is to wait until the stock market is in a more favourable position.
In the context of a global economic slowdown, investors have for several months been moving towards “safe haven” shares in order to protect their assets. This, combined with the chaotic path of some recently introduced companies and the abundance of private financing, makes it difficult to see an acceleration of operations in 2020.
Even though the flotation of Airbnb remains topical, Postmates (delivery service) and Endeavor (talent agency) have paused their entry to the stock market. It is possible they are prioritizing interest from venture capitalists and risk capitalists. Palantir (Big Data) and Stripe (internet payments) could also look for private funds instead.
The WeWork failure
WeWork is the most prominent example of our current inability to distinguish a unicorn from a chimera. Investors have to learn – or re-learn – how to resist those appealing equity fairy stories and to see beyond the innovative nature and rapid growth of a concept. Cash flow, debt level and governance remain key decision-making factors. In the WeWork prospectus, the word “technology” appears more than 120 times. The Coué method of repetition is here being used to suggest that traditional valuation models should not apply to this business. There is little doubt, however that WeWork is more of a property developer with an innovative business model than it is a technology company.
About Sandy Campart
Sandy Campart is a lecturer and researcher. He is a member of the Centre of Research for Economics and Management (CREM), part of the French National Centre for Scientific Research (CNRS). M. Campart is director of IUP Banque Finance Assurance de Caen – a finance school in Normandy – and author of “If we dared to invest in the stock market”.
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