The Elements of Startups | Simon Yencken from Fanplayr

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Simon Yencken 0:00
You truly need to fight to found a business with a unique opportunity hygro where you have differentiating technology, and you have accelerating traction

Alexander Ferguson 0:21
Welcome everyone to UpTech Report I’m very excited to with for my guests here to join me Simon Yencken, who in our first part, we talked about his product Fanplayr, which is behavioral personalization for website and E-commerce definitely check out his fascinating this this space that how it’s moving both on we talked about the personalization. But yes, also privacy and the the balance between the two. But this time in our founders journey. I’m excited to hear more about your story. Simon’s Can you take us back seven years to the beginning of fame player? And then before that, even how did you get to where you are today?

Simon Yencken 1:02
It’s been a fun career. I went to university Monash University in Australia and did law. And I also did a Bachelor of Science in mathematics. So I always had that interest in business and science. I started my career in law, I was 15 years 10 As a partner at the international law firm, Herbert Smith Freehills. And I was actually recruited by a client, who was then CEO of Reuters, which is now since was acquired by Thomson Reuters, but in those days was a very large news and tech company headquartered in London. And he offered me the position of General Counsel there. And it was funny because I actually decided to move to London from Australia, and three of large London law firms that offered me a position. And then I had this offer from a client Reuters, saying, you know, did you want to be general counsel. And so, you know, often people in large law firms in those days, it was a pretty elite legal career. And General Counsel, a major company, didn’t really have the same ringtone in those days. So I remember actually, Reuters kept improving their offer. To me, because I initially said, I’m really flattered. But no, I think I’ll go to this law firm they kept kept getting better. And I had lunch with one I’ve former partners in Melbourne. And I said, Tony, I don’t know what to do. I’ve got these three law firm offers, I really want to go to this firm. In London, it was actually Clifford chance. And that’s it. Then I said, Reuters of me this, what do you think he? He said, Simon, if you don’t take the Reuters offer, I will. So I ended up at Reuters. And I was immediately thrust into the business side of things. And really, their business was heavily technology. News was the heritage. But in those days, it was all about technology data feeds. And I actually was working with very close with one of the executive directors who was in charge of the tech side of the business. And one day, he said to me, Simon, can you come with the Deputy Finance Director and I were getting the Concorde to New York. We want to negotiate an acquisition. And I said, Yeah, sure. And we literally got the Concorde in, flew in. That evening with straight to the hotel, straight to a private meeting room and negotiate an acquisition of this company was then called technical on software systems, and later changed his name to Tipco. And in the meeting was the CEO, CFO and a banker. In those days, he was at Alex Brown, and literally in that at that dinner, we negotiated the deal later broke lawyers in and they produced acquisition documents this big, but that’s it. That was when my Tipco journey started, and then three years later, and it’s hard, probably for current Good business to even imagine that it’s but in 1996, which was the year, the internet was just taking off. And it wasn’t really people weren’t really sure how much of it was actually going to be a thing. And the CEO of Tibco, came to Reuters and said, I really think we should IPO this company. And Reuters actually didn’t want to do that, because they bought a product, which is really positioned around.

How can you actually best display data in a deep bank dealing room. And so I work with the CEO, CFO of Tipco, worked out a way of splitting the company, the technology between two companies Tibco software was created as a new company, right is kept the product they originally bought. And that journey started and then CEO said, Actually, Simon, I’d like you to join the board of directors. So I did. And three years later, the company was IPO on NASDAQ. Reuters kept what they bought at the peak of the market, that company was worth $30 billion, all around the opportunity that Tibco created and saw around the birth of the internet, the internet infrastructure. And having done that startup. Well, it wasn’t really a startup having worked in that tech company and being part of their IPO. From then on, really, I, my career was in the tech world, not in the legal world anymore. That was the transition point, the transition point. And I did a start up called Next set software, which ended up being sold to raise the risk to technologies and raise a risk was a is still a risk management service, particularly for exchangers exchanges, and banks. And that company was a public but it was acquired in the end by TMS x, which is the Canadian stock exchange. And then I went from there, I did a lot of work with a Kinect where I was, as I mentioned before, on the board for 10 years I invest in the first round 2000 helped take an x rays, a light stage round in 2008, just before the GFC just for Lehman’s went down, and we got a term sheets and ended up raising around from Francisco partners in San Francisco, we raised 57 million. And the CEO said Simon, Would would you like to join the board? I joined the board. Three years later, he said would you like to be chairman temporarily. So I was chairman for three years. And then we ended up taking the company public in Australia in 2014. and sold to Oracle a couple of years ago for 1.2 billion US dollars. So around during the Ikonics journey. My fat co founders and I we found a fan player and the name. People often asked me why he called Fan player and it doesn’t make sense, or do you provide gaming software? Well, what’s the story? And that actually relates to the genesis of the company because when we started fan player, we saw the opportunity being in E commerce around the use of data. But we actually started offering gamification as part of the service, and hence the name fan player. And we did that for quite a while we actually quickly signed up about 1500 SMBs using that service. But we started to analyze the data. We found actually the gamification may have made no difference.

Alexander Ferguson 9:23
underlying purpose of it wasn’t doing

Simon Yencken 9:25
anything it made no difference. we pivoted to personalization, but based on on the data based on user behavior, and fees later, after we made the pivot. I started to talk to my fellow executives say look, we really should change the name of the company. What about this name? And we even I even actually bought the company bought an alternative domain name segmentation.com cuz I’d mentioned in the earlier interview how segmentation is key to our service. Yeah. And so I was talking to my fellow executives and founders. Look, I’d really like to change the name segmentation.com. What do you think it is? No, we love fanboy. Veritas care. It’s quite funny,

Alexander Ferguson 10:22
though, was the original purpose of the name no longer there, but it’s just inherently it’s, it’s enjoyed and loved internally how well how long into it until you made that pivot that transition.

Simon Yencken 10:34
We were we were into, I think about a year before we made the pivot. So I think

Alexander Ferguson 10:44
it’s a lot of powerful to look at your own insight and not be afraid to look at the data and say, Wow, we could keep going now we got to change something. And you made the change. Now, this is the first company that that you have first founded and you’ve you’ve led a lot of leadership in several companies. But this is the first one that you’ve found it.

Simon Yencken 11:05
I was a co founder of next year, which Rajiv was actually hit a product with next year. Rajeev is co founder and CTO at fempire. And, but we had also some other co founders who ran and set up a dev centers in India. And but fempire, we set up also with Derek alien, who’s a co founder. And we had no air co founder who left after the first, probably a couple of years, Mark Schreiber, who he was more focused around the marketing side. But it’s been a it’s been an exciting journey. And part of any startup journey is always focused on fundraising. And I’m probably one of the world’s expert. Some fundraise ago would say, having spoken to numerous venture capital firms and other investors. But, you know, we’ve now got to the point with fan player, we’re actually profitable. We, pre COVID We’re expanding in a revenue center, the 100% year on year, it’s probably now averaging between 50 and 70% growth, but it’s still growing strongly and we’re doing that profitably. And we’ve been able to expand geographically just through working with personal contacts and people that are experienced in the different regions. So we now have offices in in the US Palo Alto, New York, and then in Europe, in Milan, London, Manchester. We have a an affiliate based in Paris. And then we have an office in Mexico City, Buenos Aires, we’re about to open an office in Brazil. We have a big office in Japan, and Melbourne, Australia. I think that’s it.

Alexander Ferguson 13:15
With your expertise and funding itself, can I ask what what are the biggest mistakes one could make when seeking funding?

Simon Yencken 13:27
I think most founders don’t have much idea about what investors are really looking for. And so you need to have a unique product in a growth a growth market where you have achieved product market fit. And I think, in this day and age, investors have got more demanding and what is expected now in a Series A round, which is basically your generating revenue, and you seem to have a good trajectory. Previously, you know, I think 10 years or you could have started a company and raised a Series A round based on a PowerPoint and some good guy found that’s not the case. Not anymore. So I think it it’s not, it seems mysterious and elusive to many founders, what is it that investors are looking for? But you truly need to fight to found a business with a unique opportunity. high growth, where you have differentiating technology. And you have accelerating traction, if you don’t have those things, you’re going to have a lot of trouble getting funding. And then investors are looking also for founders team that have the right skill set to get the company to the next level. And so I often get approached by people asking advice, say, they can be alumni, fellow alumni, or even family members and extended families saying, I have this great idea, what do you think, and honestly, one of the most common things people lack is the right co founders. So you can’t, you can’t found a company, if you don’t have the right talent in your team, and you can’t be successful in raising funding. So

Alexander Ferguson 16:05
I think are essential.

Simon Yencken 16:07
Well, you know, for example, in the tech field, if you don’t have the CTO, that’s writing the code himself, designing the product, designing the architecture, but you’re planning to outsource that, I’d say you’ve got no chance of getting funding, because you have to have that skill in house, you need to have somebody, if you’re building a product in FinTech or in ad tech, or travel, whatever the vertical, where you’re building your startup, you have to have domain experience. If you haven’t got it, you need a co founder with that experience. And then you need differentiated product product market foods, you need to have really good customers and demonstrated traction.

Alexander Ferguson 17:03
powerful insight right there before even get funding is the those main pieces. Once you have and you start to build the team, obviously, hiring the right people after that is essential to what when it comes to building a team, have you seen our common mistakes when it comes to hiring.

Simon Yencken 17:24
I think one of the most common mistakes is over hiring, building to bigger team and running out of cash.

But it happens so often. And if you actually think about any startup, one of the most valuable things that you have is capital, you have your own personal capital, and you have capital investors give you and the more you spend of investors capital, the harder it is for the employees and founders to make a return because the investors want to get paid back first. So if you raise a lot of money, which on the face, people applaud you for that you get big write up and TechCrunch or any publications. That’s amazing. But actually, the more you raise, the higher the hurdle you’ve got if you want to get any return for the founders. So really, your question was around hiring. I think a big mistake is to hire too many people and burn your cash, burn your capital out too quickly. Because then you’re actually making it harder for founders and employees to get a return. And you can never assume that there’ll be another capital round.

Alexander Ferguson 18:56
That’s a great way to look at it. It’s a give us some frame of reference. How many people did you start off with and how many people do you have today?

Simon Yencken 19:07
So we started off with three people literally in a room in plug and play Tech Center in University Avenue in Palo Alto. And we now have more than 50 people globally it’s expanding every week and but the good thing is that we only hire people if we know we can do that and keep growing profitably. So it’s pretty exciting story. And you know just with any literally this this year in last few months, set up the UK office we’ve got an amazing business there already. Three people who incredible. Yeah, look, it’s exciting when you do it off your own endeavors and you’re not doing it purely by spending other people’s money. And we have a great culture in fan player where it’s a really close team. And because the way we had expanded organically, the first expansion really was to Europe and Japan both happened organically, people approaching us and saying, hey, I can sell this in Japan. Sure, go ahead. Hey, Simon, we actually had a TechCrunch article written about us when we launched, this guy had never heard it before. And we’re on Reiko koroni Contact means that, hey, Simon, I can I can sell this in Italy. And sure enough, he could. We now have a massive office. They’re all based on hard work and sales and business. So it’s actually all that expansion has been organics, we know everyone knows each other. We work together very closely. And I decided several years ago that in order to be really effective as a team, we should actually get together annually, we typically have done it in January, in person and agree on the strategy. And we did it twice in Italy. And the first time it was like, really cheap hotel, cheap conference room now. You know, it’s a tough first conference to get really good alignment of the company, and the key executives around, hey, what’s our mission? What’s our vision, and but we did that. And then the next one was, again, in Italy, this time, we went a bit in Milan, and then we went, like for two days to like a small little ski town. And but again, we had the alignment, but then it was, alright, what’s our strategy for the next year? What are our goals and objectives? This lot this January, luckily, we got in pre COVID was so lucky. We went to Japan, we got this incredible business in Japan. And we invited obviously, it was primarily to agree on our strategy for product engineering, for sales for marketing, that we also invited our customers in Japan to come along. And they presented to us. And we said, hey, we’d like you to tell us a bit about your company. How you use fan player, what results you’ve achieved, you’ve seen? And what would you like from fempire in the future. And so the I was staggered, we had a room in a hotel, conference room, room, large room, packed full of executives from our clients. And they’re all large companies in Japan, like really large public companies. And they got up and showed the slides about their business, how they use fam player, what results they have. And honestly, it’s best summed up by one of the executives, one of our clients in Tokyo, and he said, these were the results that we saw. My problem was that no one in the company, believe me, they were too good.

And so that’s a great experience to actually get the team together to be aligned on strategy, get our customers together. And then the last question was, what would you like to see at a template? So I was really asking that because we, although we had designed the product to display on site, in multi languages, the actual portal administration was all in English. And so what did they ask for? They said, We’d really like fan plate to be in Japanese and Japanese characters. And that was like, a big thing. So sure enough, just after the conference, what are the engineering team deliver? internationalized nationalized version of our servers, you can now go and you can choose like 10 different languages, click a button. Everything’s random in Portuguese, Spanish, Japanese, Italian, anything you want. So just getting people together really around part of our culture, that bringing in the clients tell us what are we doing right? What are we doing wrong? What do you want? Hearing that message. It’s it’s grant

Alexander Ferguson 25:03
powerful. I’ve heard of getting customer insight, but I’ve never actually heard inviting your customers to your yearly internal conference. Yeah, that’s a, that’s a great strategy. Last question I have for you, Simon, looking forward it overall technology itself, what kind of tech innovations do you predict we will see in the near term the next year or so. And long term next 510 years from now?

Simon Yencken 25:26
That’s a very hard question to answer. And I think if I had had the crystal ball, I could make a fortune on the stock market. But one thing I will say is that if you think back to the.com, bubble and the bubble bursting, well, tech fell right out of favor, but I never felt that tech wasn’t the biggest opportunity ever. From a business standpoint. The bubble notwithstanding, and look what’s happened with the journey with Amazon, and more recently tests for Google, or alphabet, Apple. That is that belief, I had certainly proven to be true. And I think in answer to your specific question, we’re going to see more innovation and more growth in technology, it’s going to become more and more key to all business. And I think, in particular, we’re going to see much more use of artificial intelligence, in driving that technology in all applications and all verticals. And some people say it’s scary. And I know I Elon Musk famously has been quoted to say, you know, it could be terrible machines that are running the world. But I’m more optimistic and think is actually a good thing. And it will lead to a better experience in tech and a better experience for all people.

Alexander Ferguson 27:08
I agree with you on that, Simon, I appreciate you sharing your your love of the future and technology, this this journey that you’ve been on and the insights you’ve shared, and some some good tips and suggestions when it comes to funding and hiring. Thank you for your time seven.

Simon Yencken 27:26
Thank you, Alexander. It’s been a pleasure. Everyone again, thanks

Alexander Ferguson 27:29
for joining us on UpTech Report our founders journey, definitely check out part one if you haven’t seen it, with Simon hearing more about fan player, our sponsor for today’s episodes. TeraLeap. If your company wants to learn how to better leverage the power of video to increase sales and marketing results, head over to TeraLeap.io and learn about the new product customer stories. Thanks again, everyone. And we’ll see you guys next time. Thanks, Moto. That concludes the audio version of this episode. To see the original and more visit our UpTech Report YouTube channel. If you know a tech company, we should interview you can nominate them at UpTech report.com. Or if you just prefer to listen, make sure you’re subscribed to this series on Apple podcasts, Spotify or your favorite podcasting app.