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Cultural DNA: The Hidden Key to Start-up Success

 

 “For us, our #1 priority is company culture. Our belief is that if we get the culture right, most of the other stuff — like delivering great customer service, or building a long-term enduring brand and business — will happen naturally on its own.” Tony Hsieh, CEO of Zappos.

No matter how elegant or well thought out a company’s strategy is, it will only succeed if it’s aligned to the culture of the company. As Peter Drucker wrote, “Culture eats strategy for breakfast”. One of the most important factors for the success of a start-up is to build a robust cultural DNA, where cultural DNA refers to the combination of values, motivation, team spirit and behaviour shared by the team.

At its most basic, cultural DNA is the collective programming of the mind, which distinguishes the members of one start-up team from another. Cultural DNA exists within a start-up, whether the founding team takes the time to clarify and define it or not. The values, beliefs, motivations, and behaviour of the founders are the first genetic strands that form the backbone of the company’s cultural DNA. A company’s cultural DNA develops from the initial social structures inherent within the founding team. It is a product of such factors as orientation to life, behavioural conventions, policies/processes/procedures (or lack thereof), how the team communicates and works together, how the company deals with failure, mistakes and learning, and even national culture. It is counterproductive to try and borrow another successful company’s cultural DNA because the founding team consists of unique individuals, and therefore the cultural DNA of each company will be unique.

As a start-up gains traction, the team will spend an increasing amount of time focusing on growth, expanding the business and bringing in new employees, so investing time in shaping an attractive cultural DNA will make the start-up more effective, a great place to work and increase the company’s chances of building the best possible team. Cultural DNA should be treated like a valuable asset within a start-up, an asset that will appreciate over time if it is managed and developed correctly. Cultural DNA can be strengthened or weakened by adding new team members. If a team member acts in accordance with the fundamentals, then that culture resides in them; if they do not share those values or behaviours, then they do not share that cultural DNA.

The first strands of a start-up’s cultural DNA are defined by the founding team, yet the cultural DNA is not static; it develops over time and it is critical that the founders invest time to develop and nurture their cultural DNA. To build the strongest foundations for their start-up, the founders first have understand what their cultural DNA actually is, decide how they want to develop it, and then start to move the team towards the desired culture. The first step in that process involves understanding the values of the founders, the team and the company.

Part I of a multi blog post.

Next blog – Cultural DNA and Values.

 

 

“If you’re a great fucking developer…”

In the war for talent, employers are having to be more creative about how they catch the eye of top level candidates. Job descriptions can sometimes be your first opportunity to communicate not only the day-to-day responsibilities of the role you’re hiring for, but more importantly why an exceptional candidate should join your start-up over any other. Recently there has been a lot of furore around Snapchat’s inventive ways of trying to poach Uber’s software engineers, and hilarious, forthright software developer job descriptions like this, which went viral recently, show there are ways and means to stand out from the crowd when recruiting.

The software developer job description is great, as it makes it really stand out from the crowd. In the competitive business of trying to attract top talent, it is a great, light-hearted way to get attention, as well as giving a good idea of what the company culture is like, and what it would be like to work there. By also describing the other people who work there, and the perks and rewards of success there, the description answers a lot of questions that a prospective employee might have. Whilst we can’t condone the amount of swearing, we think it’s a great idea.

Another unusual method of recruitment which has been in the news recently is the attempt by Snapchat to poach engineers from other tech Unicorns, especially Uber, but also Twitter, Airbnb and Pinterest. Using their Geo-filter technology, whereby a special overlay for a Snap can be added on in certain geographic locations, Snapchat targeted employees of these companies by painting their rivals in a negative light on these geo-filters, and attempting to entice people to Snapchat instead. This is a good example of using new technologies to try new ways of attracting top talent.

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With the battle to hire Software developers and engineers fierce, it is often Job descriptions and adverts for this role that are the most interesting. There are a number of examples like the one below, where a maths problem is used as a test for engineers. This quirky way of advertising both makes the ad stand out, and help to attract the right calibre of candidate.

Another new interesting way of trying to attract candidates to your job, is through a new range of apps, such as http://blonk.co/ and http://www.jobrapp.com/, which are attempting to tap into the popularity of Tinder and create an equivalent “tinder for recruitment”. As a recruiter, this would require treating your job description like you would a dating profile. You want it to be compelling, and to communicate to the reader your values, sense of humour, what you’re looking for, the benefits you offer, and why they should consider you a tempting prospect as an employer. Use the fact that so many employers use dull, run-of-the-mill job specs to your advantage, by creating a profile which allows the culture and potential of your company to shine through.

Blonk App Screenshot

It remains to be seen as to whether these apps become a success, as it is difficult to be able to assess a lot about a candidate in such a quick fashion. Then again, the same could be said for dating. As an initial method of registering interest, this could very well work, and it will be interesting to find out how apps like these, and other innovative ways of recruiting, will be implemented in the future.

How consumers are embracing the mobile banking revolution

The banking industry is going through an unprecedented change at the moment, with technology at the forefront. Previous Forsyth Group blogs have detailed the Fintech explosion in Europe, with the UK, and London in particular at the forefront. A recent infographic by Econsultancy shows the way that consumers have embraced mobile banking, something unimaginable a mere decade ago.

One of the most interesting facts found in the infographic is that 77% of UK bank customers use online or mobile banking at least once a month, and 14.7M mobile banking apps have been downloaded in the UK so far. This marks a massive shift, from the days when you would have to go to the bank in your lunch break just to do simple banking tasks. When there is such a large shift in people’s behaviours, it offers a clear opportunity for the entrepreneurially-minded to take advantage!

In the UK, mobile phone banking transactions in the UK have nearly doubled in a year, with customers of the 5 biggest retail banks downloading more than 12.4M banking apps, and using their mobile phones for 18.6M transactions per week. This firstly shows the convenience that technology has brought to our lives, saving many hours of queuing in physical bank branches and allowing us to manage our finances much more quickly and easily. It also creates a large amount of data, which companies like our client Meniga can use to offer deals and advice around people’s typical spending patterns.

The infographic goes on to talk about the lack of trust in financial institutions felt in the UK, especially since the financial crisis in 2008, when taxpayers money was used to bail out the banks. Some interesting statistics included are that fewer than half of consumers (49%) trust the bank they are currently with, and only 51% saying that their bank makes managing money simple. A higher proportion, 58%, believe that banks do not have their customers’ needs at heart, and 22% say that their bank does not understand their day-to-day financial needs. Whilst these statistics are negative, this provides an opportunity for the banks to regain this trust, and technological advances makes this easier to do.

Suggestions from the infographic give examples of how to do this, such as leveraging data to enhance their product, and using transaction and customer data to offer the right services and products at the right time. This can create more engagement and more personalised services, and keep customers more satisfied with the services they receive. Again this is something that our client Meniga is at the forefront of. Globally, statistics from this infographic suggest, 51% of consumers want their bank to proactively recommend products and services for their financial needs, and this again shows there is a market for this, and great opportunities for startups and entrepreneurs to seize this moment.

 

https://econsultancy.com/blog/65991-how-consumers-are-embracing-the-mobile-banking-revolution-infographic/

SVB UK Fintech Investment Trends Analysis

Here at the Forsyth Group we have been working with a lot of Fintech startups in recent times, and we have really noticed a momentum building in the sector. Silicon Valley Bank have recently released a report on Investment trends in Fintech, with a lot of statistics that corroborate our recent experiences with Fintech companies.

The report opens by detailing the fact that the fourth quarter of 2014 was the busiest time in the history of this space, with 214 deals taking place globally. The biggest acquirers of new Fintech startups are more established Fintech and payments businesses, and this market saw 211 exits in 2014 alone, making it the most fruitful period of the last five years. Further stats also show that the UK is the hub of Fintech in Europe, with $539M of Venture Capitalist funding in 2014, amounting to half of investment in the whole of Europe in this area.

Perhaps the headline funding round in recent times has been Transferwise, with their recent Series C raising $58M, which is thought to value the company at around $1B. However, this is by no means the only big raise of 2014, with others such as Borro, Funding circle, Nutmeg, Zopa, Block Chain and Powa all raising large rounds as well (see graph below). With press coverage increasing, and the recent FinovateEurope 2015 conference showcasing numerous exciting UK Fintech companies, including our client Meniga who won a Best of Show award, we can only see this trend continuing into 2015.

More positive UK-related stats abound in this report. Fintech is currently worth £20B in revenue to the UK economy, with 18% of this coming from emerging businesses. Due to the City of London’s global reach and reputation, the UK has four Fintech incubators, and it is one of three sectors that the CBI predicts will be worth a combined £300b to the UK economy by 2020. The report points out that whilst Fintech may seem like a new ‘buzzword’, in fact the sector isn’t new. The UK has traditionally been somewhat behind in Fintech, but this is all changing now, with 60% of all Fintech startups in Europe now being based in the UK. With the current support networks in place, such as the aforementioned incubators and the large banking sector, this trend should also continue, and we look forward to watching this space grow.

 

The future of the Games Industry

Our Friends at Digi-Capital have released their latest analysis of market trends, this time regarding the games industry. The Headline information is that 2014 saw a record $24B of game company exits across acquisitions and IPO’s, with more than half of this value being driven by mobile. $15B of the $24B was from acquisitions, with 5 ‘megadeals’ being responsible for $8.1B of this. The other $9B came from IPO’s, which was dominated by Asia. These statistics could be seen as representative of a bubble, but the analysis from Digi-Capital explains why these statistics have a more subtle meaning.

Digi-Capital hark back to an earlier report they prepared at the beginning of 2014, where they predicted that the games software market would reach $100B by the end of 2017. Having re-analysed the data from last year, they have revised this to happen at the end of 2018 instead. This is due to the fact that only mobile gaming is showing strong double digit growth, with the possibility that virtual reality could also become a breakout. This leaves their overall growth forecast for games software/hardware at 8.8%. While this is of course a healthy number, Digi-Capital point out that markets with single digit growth cannot be described as bubbles, as in these conditions “a rising tide no longer lifts all boats”. In this instance, not just any company can be guaranteed to grow exponentially on the crest of a wave, and the quality of the product and company is far more important.

Hit hardest by this single digit growth are the mid-tier games companies, according to the report. Big corporate firms with hit IP’s (Intellectual properties), user scale and cash flow are able to invest in infrastructure and marketing to compete in a stable growth market. Smaller independent firms may not have a hit IP yet, or the advantages that come from being a big firm, but their costs are far lower, allowing them too to compete. It’s the mid-tier firms that Digi-Capital warn could be in for a tough time. They may not have the hit IP’s yet, or the advantages from being a large-scale company, but they still have the costs associated with infrastructure and marketing. It isn’t the end for them by any means, as they of course still have the capability to produce a hit IP, but they seem to be in the most vulnerable position over the next few years.

A further challenge for mid-tier companies detailed in the report is the nature of acquisitions and investments in a stable growth market. The big corporate buyers are already managing their own cost bases, and so acquiring whole teams is low on their list of priorities. It is exceedingly difficult to overtake big companies when you are medium sized, and the investment amount of $1.5b in 2014, while not insignificant, is still 25% lower than it was in 2011. This all adds up to difficult years up ahead for non-savvy mid-tier games companies.

This analysis, while not overly pessimistic, means that companies have to be smarter to see success. KamaGames, who we have worked with, have a portfolio that currently reaches 70M users worldwide. They have now partnered with Manchester United, and will launch special edition s of their games with a Manchester United crest, imagery and theme. As they are one of the most supported teams worldwide, this opens up an opportunity to significantly grow their user base. Another way to keep up growth and attract attention is to focus on the highest growth area of the sector. Both KamaGames and another of our clients, Joybits, focus on the mobile side, as this is the only area with double digit growth. As detailed in a previous Forsyth Group blog, Games are the app segment with most frequent use after downloading, so there is scope for this area to continue to grow.

The report ends with a warning that until there is a new wave of innovation that can accelerate market growth, consolidation is the key. This isn’t necessarily bad news though, as it means that quality is more prized than quick, unwarranted growth.

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