10 things I learned when starting, scaling and selling a 7-figure business in 4 years.
Despite having many attempts at 'doing business' before Molzi (see here), the reality was that I started out on my first proper entrepreneurial journey with no real clue about how to do it, but a solid confidence that I would somehow make it work. During my four year adventure starting and running Molzi I learned a huge amount. Below would be my top 10 things, purely because, well, everyone loves a top 10.
1. It's OK not to be a billionaire.
For many people reading the title of this blog, I think they would question why they would take advice from someone that had only built a 7 figure business. Surely there's no point doing it unless you're shooting for 9 figures or 10 figures.
During my time at Molzi I didn't have an account on Facebook or Instagram. To be honest I'm very easily distracted and I figured I could live without stalking my old school friends for a few years if it helped me achieve what I wanted to do. But after the acquisition I installed Instagram with the goal of starting to build my personal relationships back up (another way of saying, make some friends again). Within a week or so the algorithm was just feeding me post after post of 20 year olds that had made £50m by flipping property. Or built a crypto empire. You know the ones. It took no time at all for me to genuinely be questioning whether I'd actually done well at all. Was I kidding myself that I'd been successful when all I'd made was 'some' millions? I can't imagine the impact it would have had on me before I even started Molzi. Of course I knew deep down that it was all rubbish and these people only made any money if they managed to convince enough of us that they had. But still, I had to delete Instagram, after only 1 month.
The reality is that we are only fed the stories of hundreds of millions, and billions. But really I think there is a huge opportunity for people happy to make more realistic sums. I could have kept running and growing Molzi when I got the opportunity to sell. And maybe I'd have made more, but maybe I'd have lost it all. Instead I got the security of the first sale under my belt and now I can go again, and again.
2. Take advice from people who've done what you want to do.
If there's one thing you won't be short of as a founder it's advice. Free advice tends to be the worst and is offered to you even when you don't ask for it. "That won't work", "are you sure you should do that", "I know a person that would be perfect for that" etc.
Of course I received all of the advice offered graciously (after all our company motto was to work hard and be nice to people). But I actively sought out people that had done what I wanted to do. And not just roughly what I wanted to do, but quite specific.
We took investment twice before Molzi sold, and neither time was about the money. It was about the experience of the investors. As a digital agency, we were super fortunate to gain investment from 3 people that had started, scaled and sold digital agencies. And also some investors that were leading some of the biggest global digital agencies.
The confidence this gave us in making big decisions was incredible, and if you plotted out our monthly revenue over the 4 years on a graph, you would be able to tell at which stage each of those super smart people joined us.
3. Think about the end, at the start.
Now I'm not just saying everyone that starts a business should do so in order to sell it. But I think there is huge value in imagining a potential end while you are starting out. That end might be an acquisition. That end might be your retirement in 40 years time. But if you have an idea of the end it will help guide some big decisions.
If you are looking to quickly scale and sell, then you should probably consider investment if it lets you go quicker. You should probably look to niche your offering so it's attractive to potential buyers. You should probably start connecting on LinkedIn to people that may just want to buy you one day so they can watch your journey. And you should probably think about how much money you want to make, so you know when you get the right offer.
If you're looking to build and grow a long-term sustainable business (which in reality will probably be easier to sell one day that the blitzscaling startup!) then you probably want to avoid investment as you won't want to be justifying every decision to a board of investors for the rest of your life. You probably want to consider co-founders that will support you along the way, and make it more fun, without having to worry about what impact their equity will have on yours.
Having a very rough idea of the long game just helps you make some key planning decisions, and helps to warn your family of how crazy the next few years of their life will be!
4. Recurring revenue is your friend.
Whether you want to build to sell, or create a lifestyle business, your life will be so much easier if you find a way to charge a retainer to your customers. Nothing causes a founder more stress than looking at their pipeline and seeing big gaps to fill. Recurring revenue allows you to accumulate turnover rather than have to constantly replace it.
I'm pretty sure every business can find a way to create recurring revenue. Go on, test me. But even retailers like Costco and Amazon have shown how important finding a recurring revenue stream is versus simply selling products. There's a reason why car dealerships push the finance option (as well as the high interest rates). They make it so easy for you to just get a new car at the end, with no extra money and minimal paperwork.
Whatever business you're in, try and find a way to get some kind of retained income. your future acquiring companies, and your sanity, will thank you for it!
5. Business can be pretty easy, don't over complicate it.
I will let the Molzi team correct me if I'm wrong here, but I'm pretty sure that every 'failure' that we had when building the business was as a result of some kind of added complication.
An agency business, and probably most service based businesses, are pretty simple. You sign clients that bring in money. You hire people to service that business for a little bit less money. You make a profit. Simple you would rightly think. Why would anyone that is doing that successfully, change it.
Like many agency businesses, we sought to create some kind of tech or SAAS element to our offering because it would be super profitable and build a moat around our offering. The reality, we had to hire people for lots of money before we'd found any clients to bring in money for it. The opposite of the tried and tested agency model basically.
We also thought it would be a good idea to start owning and touching the product that our clients sold, instead of just watching it from afar as we send our monthly invoices. Shock horror, it made it much more complicated and less profitable.
I'm not sure why we did those things, and why many companies before us did too. I think there's something about not trusting how simple business can be. But it can, if you can be disciplined and not just chase the rainbow unicorns.
We should never starting touching actual stock, but for some reason it seemed like the sensible next step.
6. Make sure you're selling a product, even if you're selling a service.
Clear as mud? Well this will help.
As a founder you are very busy. Even without knowing you, I'm confident to make that bet. I'm also pretty confident that the person you're selling to is also busy. No matter how ground breaking your product or service is, the person on the other end of the pitch only cares about the impact it'll have on their career or wallet.
The Molzi service offering was fairly complex, made up of lots of specialisms like PPC, data analytics, graphic design, copywriting, translation etc. But we didn't pitch that. We pitched growth on Amazon. We pitched the fact that we could make that person a hero internally, or a little bit richer. Even though we were offering a complex service made up of hundreds of processes, we pitched it as a product that you could get out of the box, switch on and make your life easier.
The best thing about productising a service is you can avoid having to price by the hour. You price for the value that the client receives, not the number of people working on it.
7. Culture doesn't have to be nice.
My only experience of culture before starting up Molzi was what you used to read in articles about slides in Google's offices, and free lunch Friday's. My goal was to offer all that, as soon as we built the business up to a level where we could afford the table tennis table etc.
The reality was that while building the business up to a sustainable level we actually created our real company culture. In order to win business and grow quickly we were tenacious, we were ambitious and we were constantly changing things to make them better. People were joining us and getting fully thrown in at the deep end, sinking or swimming. This was driven by necessity not strategy.
It became the norm that we would spot something that we could do better, whip out the whiteboard and change everything that we did overnight. This could happen every month, it was bloody exhausting for everyone.
But it meant that even as we got a bit bigger, we kept striving for better and quicker. Even when it was a bit more awkward to change things with a bigger team.
But while people joining a 5 person startup were expecting this environment, as we hired the 50th person or the 70th person we found that they may have been expecting more stability and a bit less pace. We tried introducing extra benefits, or more time off etc. But the only way we got around the issue was to start warning people in interviews. "This is a very hard place to work, but it's exciting and you'll super charge your career". We lost a lot of candidates, but I think it's people we'd have had to replace down the line anyway.
Our culture was hard, but we did have an office swing in Hong Kong...
8. The team right for day 1, might not be right for year 2.
When you're starting a business you need to hire people to start to grow. And as a bootstrapped start-up you're never going to be people's first choice. So you have to pitch your heart out and sell the dream about the future plans etc. At this stage in a business you need great startup people. People that can roll up their sleeve's and do pretty much any job that's asked of them. People that can go off and research something and make it happen quickly. During these early months and years you'll build a great bond and team spirit with these people. You against the world.
But the downside of scaling and growing quickly is that you'll start hiring experienced specialists to do many of the jobs. Clients will get bigger and more demanding. And suddenly these early day heroes may no longer fit with the business. We definietly experienced this and found ourselves moving people around on spreadsheet to try and find things for them. But the unfortunate reality is that they need to be released back into the world of startups. And identifying that quickly will save you both months of awkwardness.
9. Growth is uncomfortable.
It's easy to daydream about the end game when launching the latest fast growth startup. I guess it's what keeps us going during the long days and nights. But I learned first hand that fast growth is great for the top line revenue graphs, but it really screws up everything else.
Assuming your first hire isn't an HR manager then your quick growth is going to require constant hiring and firing. At the same time managing clients yourself and wining new ones. Trying to document your processes so you don't have to onboard each new person or client yourself.
Even the quickly growing revenue can give you less cash, weirdly. Unless you're lucky enough to have customers paying you up front, you'll likely have to wait 30 or 60 days for your money, while you're new employees will expect payment at the end of each month.
Don't get me wrong, growth is brilliant. Just be ready for the ride!
Fast growth meant that sushi and Red Bull were sometimes needed.
10. Age and experience is a superpower.
I think it's amazing to see so many young people leaving school and aspiring to build a business rather than the more traditional routes we were taught at school. But looking at social media you'd be forgiven for thinking that you'd have missed the boat if you hadn't completed your first series A by 22. In my opinion, starting a business with years of experience of good and bad working environments, a 15 year network of previous colleagues and business acquaintances and a supportive family to help take my mind off things was invaluable.
I absolutely support entrepreneurial ambition at all ages, but especially for us slightly older crowd that have life experience on our side.
I hope the above were helpful in some way, and I would love to hear your own learnings. As always, thanks so much for reading and see you next time!