Earning stars and stripes
LESLEY SPRINGALL, KIM TRIEGAARDT AND AMANDA CROPP
Christchurch startup BIMstop was named Best Startup Company at the 2013 NZ Hi-Tech awards recently .
That's not bad for a business that started as a one man band five years ago, when architect Scott Barrington got frustrated because he couldn’t find suitable three-dimensional models to fit his design plans.
"Once I figured out the how to solve that problem I knew I had something that could be developed further. One of the things I learned while I was on the Massachusetts Institute of Technology’s Entrepreneurship Development Programme was that to be successful you have to solve a need.
That’s just what BIMStop does.
At its core it’s a collaboration tool that works across a range of different formats so users can view manufacturers specifications and share their content within the industry.
It’s a start-to-finish solution for building products manufacturers, especially those looking to achieve high specifications with their products.
The architect can supply the exact specifications and the manufacturer knows he has a sale. Architects have free access to the site while manufacturers pay us an annual fee to have their products modelled and added to BIMStop's online catalogue.
We learned early on that the market was small in New Zealand and we would need to look offshore if we wanted to grow the business.
We initially headed over to Australia and did well, but the pull was always the US. Our early research showed even just California would be bigger than the Australasian market.
The biggest shock when you start working in the US is the moment you realise nobody cares that you are from New Zealand.
In fact, unless you work in the tourism industry, it’s often more of a hindrance if people know you are not American.
Americans want to work with US companies because they believe they have more security, as there is a greater level of commitment from the business.
Once we understood that, we incorporated a subsidiary, set up a US-based office and hired US sales staff. We looked at everything and even changed the paper we used from A4 to US letter, and made sure everything had American spelling.
We were unprepared for how different communication is in business in the US. It’s a lot more aggressive and hard-nosed up front.
I think our decision early on to employ an American salesperson with significant experience in the field helped us through that initial learning curve.
At the moment we are going through a phase of organised chaos.
The management team is basically just me, so we need to recruit some senior operations people to support our rapid growth.
We are also planning a rebrand to position the company better within the market. We have been flying under the radar, but that is slowly changing and we need to be ready to move to protect and grow our markets.
This means working on capital raising and putting the right people in the right place to support the growth.
One advantage we do have over our competitors is that, while they may be big, they tend to waste money by throwing it at the old way of doings things. Because we don’t have lots of money, we have to be smart about how we use it.
This has forced us to be more inventive and provided opportunities to offer clients access to bigger ranges."
- Kim Triegaardt
Vaughan Rowsell is the founder and CEO of Vend, which has sold its point of sale software system into 2000 US stores.
"We picked San Francisco as our geographical base and opened an office there about 18 months ago, because it’s a 12 hour flight from Auckland, and because it’s close to the tech hub of Silicon Valley.
I personally spend a week a month there doing business development stuff with Google, Intuit and PayPal, and all the other big name internet companies.
We constantly ship people backwards and forwards between our Auckland and San Francisco offices. After a couple of days in San Francisco, your mind just melts because there’s so much going on there and [there's] so much energy.
It’s really important to get our team into that vibe. Every time they come back they’re blown away and it gets things up to another level.
Americans are very good at selling themselves, so when you’re recruiting staff [there] it’s very hard to figure out who’s full of hot air and who’s really good.
You need to get your networks pumping to find the right people.
Incorporating a company and getting office space in the US is really pretty easy, there’s so much co-working and office space, and most San Francisco tech startups don’t have an offices, they just work on their laptops in cafes.
When you’re planning a trip to the US, email everyone you want to get in touch with one or two weeks out, and they’ll open up their calendars. Because you’re from far away, they’ll make the time.
They’re also very generous with advice. Even if you meet someone who’s not the right person to connect with, they’ll go out of their way to find other people they know who can help you.
If you try to do everything via email or, heaven forbid, Skype; you’re not going to have very much success.
You’re not showing any commitment to being in the US market if you can’t physically be there.
The US is very much a credit card-driven economy, so we had to tailor our products to work with credit card schemes.
All our competitors are 100% focused on the US market. The real advantage New Zealand companies have is that we typically take a global view.
For Vend, the US [accounts for] only 30% of our customers, so it’s not 'do or die'. It’s never a good idea to have all your eggs in one basket."
- Amanda Cropp
Follow the money
Want money from US investors? Then move to where the money is, says US angel investor and Kiwiphile Bill Payne.
If Payne got $1000 every time a budding entrepreneur rocked up to him with an idea and little else, he’d have made a pretty good return on investment.
The US entrepreneur-turned-angel investor, who spent several months in New Zealand as the 2010 Auckland University Entrepreneur-in-Residence, doesn’t even want to admit he’s invested in a Kiwi company – he has: business owner risk management franchise Triplejump - as he knows he’ll get plagued by requests for capital when he next visits.
His reticence, however, doesn’t stop entrepreneurs from all sorts of places thinking they can call him to see if he’d be interested in giving them money. But it really doesn’t work that way, he says.
“Angel investors and venture capital investors are adverse to travel. We all want to help our portfolio companies. We invest time and money, so our preference is to invest in companies that are next door. The further a company is, the less attractive it is.”
For companies looking for funding in the US, Payne says they should start at home; raise money in New Zealand and then spend that money getting traction in the market where most of their potential investors are.
This is especially true for capitally-intensive startups such as life science, hard-tech and clean-tech businesses.
“You have to go where the money is,” he says.
Some US angel investment groups in the big centres, like Silicon Valley and New York, may be willing to help open doors for young Kiwi companies with a view to investing later, but realistically it’s Kiwis who are most likely to help other Kiwis get traction in new markets, says Payne. “[Kiwi startups] should be using the (expat) Kea network or the Kiwi Landing Pad in San Francisco.”
The other big assumption entrepreneurs make is angel investors invest in products and technologies. They don’t. They fund people and companies, says Payne.
“If you don’t know what channels you are going to use to sell your products and you haven’t built up a management team that can execute, you are not likely to get funded.”
Given the high risk nature of early stage investment there’s always an altruistic reason why people become angel investors, says Payne.
“There’s an important intangible return that comes from being engaged with our portfolio companies and helping them be successful. So once we have an inkling that we have a know-it-all entrepreneur, who really doesn’t want any advice; any help from someone who’s been there and done that 20 times before, we call them ‘uncoachable’ and we just walk away.”
- Lesley Springall
Do you feel better off than at this time last year?