Notes from last night: "How to Build a Disruptive Startup"
We have a wide variety of personalities speak at our Escape School evening talks in London. Sometimes we have wonder-eyed wanderers. Sometimes we have quirky coffee-peddling entrepreneurs. Sometimes we have passion-preachers.
And sometimes we have wise, seasoned tech startup gurus like William Todd.
Soft-spoken, witty, and irreverent about the finance industry he’s glad to be disrupting, Nutmeg CTO & Co-Founder William Todd brought his wisdom to the 40 of us huddled in Bathtub 2 Boardroom last night.
You may have seen ads for Nutmeg in the tube. You may even be an early user of their wealth management service.
Nutmeg is on a mission to make personal wealth management easy, simple, and inexpensive. Investors like you and I can sign up for an account in less that 10 minutes, create a balanced and hassle-free investment portfolio, and go about our life while Nutmeg manages our money.
In the Q&A session led by our own Adele at Escape the City, several points stuck with me when embarking on any sort of innovative venture. In no particular order, here they are.
Build a foundation of trust
William started Nutmeg with his nephew Nick, a seemingly odd couple to start a business together since they’d never worked together. Nick had the business, networking and hustling skills; William had the tech and industry know-how. But each of them could have easily paired with someone else with similar skills. So why did they choose to work together on Nutmeg?
The answer is trust. Trust between co-founders is insanely important.
When times are good, it’s easy to get on with almost anyone agreeable. But when things get rough, you need to be able to count on your co-founders and partners to be there for each one another.
“You need to really get on.” William reiterated.
The concept of trust can be transferred over to your first employees and your customers. When you build a business on a foundation of trust, you’re in a much stronger place.
“If you can’t create an atmosphere of trust, it’s going to break.”
Keep it Simple
The Nutmeg business model is about keeping things simple.
Which, in an industry like that seems to concoct complex investment vehicles and formulas on the daily, is a breath of fresh air. Nutmeg focuses on investing in ETFs that offer low maintenance and management fees, but produce returns that are comparable to more complex options.
This principle of simplicity passes through the entire organization and has become a value the Nutmeg team strives to live by.
Think carefully about outside investment
When Nutmeg attracted attention from VC firms, William and the team decided to take them up on their offers. In June 2014, Nutmeg secured $32 million from City investors.
One of the questions that came from the room was “How much equity do VC firms usually want?”
William’s response: “It depends.”
It depends on your timeline, how much money you need, and how badly you need it.
William estimated that their stake in Nutmeg would be nearly twice as much as it is now, had they not taken VC money. Yet on the flip side, Nutmeg probably would not have seen the customer growth and success it’s enjoyed since the VC investment.
Adele chimed in on behalf of Escape The City to offer another story of investment.
When offered VC money, Escape the City founders decided to try to raise money from the community instead (an unproven, uncertain, unknown method at the time). Fortunately, things worked out. Escape raised £600,000 in just over a week. In return, they gave away 24% stake to members.
Persistence is the difference
Another question from the audience came. “How do you go about getting funding from large firms?”
William attributed their fundraising success to Nutmeg CEO Nick’s hustle and persistence.
“Nick is absolutely relentless. He’s a machine.”
When trying to secure funding (or acquire customers, or seduce new employees, or basically do anything as a fresh startup), persistence is the difference between achieving your goals and seeing them fall flat.
“It’s about relentless determination.”
One way to get early adopters? Try the Tube
Like most early startups, Nutmeg’s first customers were friends and family.
But as they looked to grow, they decided to spend a large portion of early funding money on Tube advertising. A somewhat simple approach (albeit very low-tech), it seems to have done the trick. With loads of eyeballs staring at their ads with smartphones in hand, Nutmeg was able to grow beyond friends and family. William credits this campaign to their customer growth success so far.
Dating site OK Cupid inspired Nutmeg
This was possibly the most interesting part of the conversation for me: Nutmeg was inspired by dating site OK Cupid.
CEO Nick wanted to build something to disrupt the finance and wealth management world. When tossing around ideas he wondered: Could you build a service with dating site-like functionality between investors and IFAs?
That germ of an idea eventually led to what we now know as Nutmeg.
Have fun with it
Wealth management, disruptive startups, and technology can be serious and intimidating. Luckily for us, William kept it light with his dry humor and the occasional F-bomb. At times, it felt like comedy hour at the Escape School.
Here were some of my favorite quotes:
“The idea that investors are into risk is laughable.”
“Protection? I don’t worry about protection at this age!” [When asked how they keep Nutmeg and their customers protected.]
“I sometimes feel like one of the carthorses.” [Alluding the cart-horse characters in George Orwell’s Animal Farm, on speculating that he could one day be replaced by someone even better than himself.]
Which I guess, to me, means that no matter how serious things are — you need to have fun with it. Because after all, if you’re not enjoying what you’re building and doing it with the excitement of adventure, what’s the point?
Thanks to everyone who came out last night. Hope to see you at a future one!
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