Value Drivers invited Andrew Ward, author of Execute Your Tech Idea: A Step by Step Guide for Non-Techies, Professionals, Managers, and Startups on the program to discuss startup success strategies. Andrew is the Founder and MD of Scorchsoft, a software development agency. Andrew is also a three-time IPF British Champion in the Bench Press (2020, 2021 and 2022), and has been invited to represent GBR in the World Championships in Lithuania and Kazakhstan.
| [Podcast interview transcript generated by AI] |
| Peter Ho: |
| Today it is our pleasure to have Andrew Ward, author of Execute Your Tech Idea: A Step by Step Guide for Non-Techies, Professionals, Managers, and Startups on our program. Andrew is the founder and managing director of Scorchsoft, a software development Agency. Andrew is also a three-time British champion in the Bench press and has been invited to represent Great Britain in the World championships in Lithuania, and Kazakhstan. Andrew welcome on the program. |
| Andrew Ward: |
| Great to meet you, Peter. Thanks for inviting me on. |
| Peter Ho: |
| Oh, it’s a pleasure. Andrew, tell us a little bit about your book. |
| Andrew Ward: |
| The book is called, Execute your tech idea. and it’s aimed at professionals, managers and startups. And the real reason I created the book is because in running a tech business since 2010, I realized that, regardless of the size of business that somebody is in, they tend to go through a similar journey. People encounter similar problems along that journey. Some people started at one point some people start it a bit later, and the journey repeats in cycles. So really the inspiration for the book was to address every one of these areas where I’ve seen gaps in people’s knowledge so that people have the best chance of being successful when they’re looking to embark on a tech project. Whether that’s a startup or it’s a brand new tech project, or that it’s an existing business. It might have a team in it that’s looking to implement some kind of innovation, they might be looking to go to tech product, too. So that’s really where it came from. |
| Peter Ho: |
| Perfect. So if I understand it correctly, basically this is a recipe and hands on guide for entrepreneurs/startups as well as folks who might have been doing this. They might’ve started a while ago, but they have gaps in their execution. |
| Andrew Ward: |
| Yeah, that’s right. Exactly right. The book split into 3 parts. You got part one which is all about finding and qualifying your idea. You’ve got part 2, which is all about implementing it. Sort of putting the meat on the bones. And then the third element of the book is launching and maintaining the idea. And what you tend to find is that people go through that cycle. If you’re an existing business with technology at some point, you’re going to be looking to decide what you do next with it. You go straight back to the idea generation stage and then you implement, and then you ultimately you want to launch. |
| Peter Ho: |
| Great. Andrew, tell me a little bit about the first part of the book which is finding and qualifying the idea. What is the best way, or how do entrepreneurs go about qualifying the viability of the ideas? |
| Andrew Ward: |
| You get a range of different ways. Entrepreneurs who have been able to sell the idea as early as possible and that is the point of qualification. Now, ideally the best way to sell an idea is to literally acquire your first customer if you can. You can’t really get much better than that. Someone’s willing to pay for it. But sometimes technology ideas aren’t always ready for that straight away. In the absence of getting a buyer for the real product, you can do things like qualifying it more widely in the market, speaking to perspective customers and interviewing them about what they think about your early ideas. We’re thinking of doing this. We’re thinking of solving this problem in this particular way, and so trying to get a sounding board from them whether they’re excited by what you’re looking to do. With the caveat that sometimes customers don’t always know what they want. You got to be a bit careful with customer feedback, because some people will tell you I would buy that if you built it. Then you build it, and then guess what. They don’t. You’re trying to get incremental commitment from prospective customers or prospective users as best you can. And if you can’t do that. You’re not ready to do that yet. Then the next fall back is market research. So is there anything that we can see in the market that’s going on right now qualifies. This idea is the evidence that there are other competitors playing in the space. Is the business being done in an area that we feel that we could disrupt because even if you haven’t necessarily decided on the right way to solve the problem in that space. The fact that people are in there trading, you know there’s some business going on is often a good indicator that this there’s potential. |
| Peter Ho: |
| Perfect. If I heard you correctly, Andrew, basically it’s a combination of both quantitative as well as hands on interaction with the customers to validate the business idea? Looking at the data, and see what people are doing in the marketplace, and see if there are white space in the market space, but it sounded like the most important part is the direct interaction with a customer (If you can get him or her to pay for it.) |
| Andrew Ward: |
| Yes. You’ve got macro big picture stuff/birds eye view, and you’ve got micro factors. You’ve got to combine both to have success. There was one person I was speaking to. I won’t name their exact business idea. When you spoke to them about the market size, you actually crunch some numbers, the total addressable market size when you did the real simple back of the envelope calculation, it was like a $100,000. The person just hadn’t done the back of the envelope test to figure that out. If they have done that, it doesn’t matter if they’ve gone to market and sold it to a potential customer. The maximum market size is 100 grand. They’re going to hit the ceiling really quickly. You’ve got to combine both of those factors. The playing field that you’re on is big enough, but when you’re actually playing on the field you need to make sure that you know you’ve got a strategy to score a goal. |
| Peter Ho: |
| Make perfect sense. I think a lot of people who came from a business school training are familiar with market research and obviously getting someone to pay for it, I would say, it’s as important, maybe even more important. |
| Andrew Ward:
It’s the most important thing if you can get someone to pay for it. That is such a strong, validation signal. I can’t express how strong it is. In some market, where you can’t charge your customer until you got enough traction in the marketplace. |
| Peter Ho:
What about two sided marketplace? |
| Andrew Ward: |
| Yeah, two-sided marketplaces are very tricky. What I can say is marketplace businesses take a long time to get traction. They take a long time to get it to maturity, to the point where it can become cash flow positive. A lot of venture capitalist funds specialize in investing in these kinds of businesses expect it to take 3 years. That’s like a standard rule of firm. It’s gonna take 3 years for you to get sort of meaningful traction and potentially hit cash flow positive. In those situations you have to recognize that you are taking a higher risk. You are going to potentially have a longer period of time before you can test all of your assumptions. In the absence of actually knowing that the end to end proposition works, you have to qualify the business in other ways that don’t go full circle. For example, you might have a go at engaging with the buyer on the market, seeing if you could sign them up for early interest, saying, If you can do the same for a seller, seeing if you can speak to them and survey them as to whether they’re interested in this. Some of what their behaviors are to see if they correlate what you’re trying to do. They are soft validation points. If you imagine a graph where you got a line on it, and then it’s got error bars on either side of it. The more points of data that you can have, you kind of narrow it. Ring down your error bars, the trajectories where you want it to go, you know, with marketplace businesses, you might not fully be able to get that error bar down to align. But you can combine some techniques. |
| Peter Ho: |
| That is a great explanation. I really like how you describe it, trying to narrow down the error bar. You would like to talk to customers. Get as much feedback as you can so that you can navigate to the perfect product, if you will, to basically minimize the error in your navigation. |
| Andrew Ward: |
| Correct. And the thing you got to recognize is, you may not be able to reduce the error bars behind a certain point, and you may just have to accept that. You have to go forward with incomplete information. But you know quite often on the start of journey, you think you’ve collected enough information to do the error bars, and it’s only when you actually start executing. Do you realize that you’re missing some really key variables? If you’d consider them, you’d have realized your error. Bars are actually much bigger than what you thought in the first place, anyway. So sometimes, when you think you’ve collected enough information to have certainty sometimes you haven’t, especially if it’s a startup where you’re acquiring capital from elsewhere. There’s a lot of uncertainty, and you can’t get away from that, and you’ve really got to accept that. The risks of failure, or what you’re gonna do in that. In that case, at least, you know, if you’re occupying yourself, if you’re operating in a market that has trading in it, you know that even if your initial ideas fail, you might be able to change your approach a little bit and find a new way to address that market, even if it wasn’t what you thought at the beginning. But if you smart about the way that you approach your idea and you pick the right things, you should have like one or 2 full backs that you can do in mind should your initial ideas not work, and that’s another way to reduce your error bar. Because now you’ve got 3 lines on the graph. I can’t reduce my error bar on all of them, but at least I’ve got 3 lines, so you know chances are that one of them is going to be good. |
| Peter Ho: |
| How do startups figure out if they have a sustainable value proposition or revenue model? What is the typical journey that you have seen in terms of how they figured out if the revenue model is sustainable. |
| Andrew Ward: |
| Yeah. I try. I define sustainable as you’re achieving a position of cash cash flow positivity. You’re no longer having to rely on in what’s investment to sustain the idea. Whether it’s going to be sustainable or not is a function of the amount of cash you’ve got. The burn rate that you’ve got. Whether you can raise more cash or not, and the time that it’s going to take you to reach cash flow positive. You might create a very simple product. You’ve designed it in such a way that your revenue model can evolve over time. You might not be expediting the full value that that can bring, but you can start charging for it upfront right and because you can do that you could start to get some revenue that supports the rest of your endeavors. You saw this with Elon Musk when he first set up Tesla. He started that business as a luxury car company and he did that because he recognized that gave him a way to enter the market and start making money put in his capital to good use before he could go after the mass market. If he had tried to do mass market initially, he wouldn’t have had the capitalization for it. I don’t know if you’ve heard of something called the Gartner Hype Curve. So for for the listeners, the hype curve is like an S shape. To begin with this curve goes up, it peaks, and it starts to go down again. It’s a trough, and then it starts to go up again really high. And the idea is that every technology that exists sits on that curve somewhere, right? So if you’re right to the left before it’s hit the first crest. You’re probably going to have to invest quite a lot of money for that technology to reach mass market adoption and really start making money for you. So if you’re starting a tech idea in that space, you you’re probably not going to avoid having to raise large rounds of funding, exposing yourself to a lot of risk that technology may not take off, and having to wait until that mass market point. I try to get over that curve and to the point of mass adoption. You could probably argue it’s what Facebook’s Meta is currently doing at the moment. AR side of things. They recognize that that is on that hype curve somewhere. They probably recognize. Hey, look! This is gonna take a while for our investment to yield a return, but they they’re prepared to stick it out because they see that in the future, we think this is going to be where the markets are. What I would recommend to start up founders is to recognize where you are on that hype curve and make sure you have a strategy for capitalization that gets you over that curve. If you’re picking up a technology that’s already close to maturity. You might be entering a market where there might be many competitors. But it means that if you’re able to get successful, you might be able to get to the point where you’re making money much faster and require less capital investment. If, however, you are adopting an emerging technology, you might have no choice but to stick it out for 18 months, 2 years, 3 years, whatever it takes to get over that curve to the point of being able to generate money and that’s gonna make a massive difference to the profile of what capital you’ll raise. |
| Peter Ho: |
| Perfect. That’s a good segue to talk about raising capital. Among the clients you’ve worked with who are successful in raising money. What do you think are the secret sauce or things that they do really well? How they pitch, the idea or the team? What is the secret sauce, if you will, in their success in terms of raising money? |
| Andrew Ward: |
| I’ve worked with a lot of businesses that have raised money at different stages of the startup life cycle. So, for example, some of our customers have had small ideas, and they’ve raised sort of 20 to $50,000. That kind of price range from independent angel investors. Others have raised, say, 300,000 to a 1 million from VC Funds, and I’ve had others that have raised multi millions that are established businesses that have raised it from private equity companies. That’s kind of the cycle I’ve experienced in our customers what I would say about the early stage. In the early stage businesses, [investors] are looking to the skills of the founder who is the person or people that are setting this up? Have they really got the drive for it, and the energy for it. And how are they prepared to go the mile? Because experience investors know that you need a lot of staying power with the startup. You can’t just have an entrepreneurial idea and let it fizzle out and not be a start to finish. So I think the credentials of the people become way more important than [other factors]. There are other things that can be important to it. If you’ve been able to achieve traction. If you’ve been able to prove and qualify your ideas and be able to then sell that to investors that’s massively going to increase your chances. This person’s got something that’s different about them. It’s gonna make them successful on the other side, though, if you look at sort of the private equity side. This may be a feeling this is [not] necessarily empirical. You’re doing very well and it’s clear that the opportunities for you as you’re not even tech enabled yet. It’s like you’re operating with a handicap. Yet, you’re still doing really well. A private equity company is gonna be all over you because they’re gonna see this business doing well when the cards stacked against them. If they could properly leverage tech like we’re seeing in sort of Silicon Valley, and that makes it very attractive. I actually think there’s more money at that level competing for a smaller number of businesses. So if you can get there and have a business that’s turning over like a few million, and then be a target for private equity funding, you can really raise some serious amounts of money, and of it’s almost like a different world to the startup. |
| Peter Ho: |
| Absolutely. Now, what advice would you have for entrepreneurs in the day to day, financial management or maybe things that you see in your interaction with your clients, they probably should be aware of. For example, some may have made mistakes in how they manage their P&L or managing capital efficiently. Do you have any advice for that? |
| Andrew Ward: |
| I studied corporate finance when I was at university, so I know a bit about corporate finance, and you would be surprised at how little finance and accounting skills people have when they go into running a business. You’re talking about like looking at P&L and doing forecasts, and judging the cost of capital, that kind of thing. They are not doing that at the start up level. They might be doing it if they’re raising a private equity round. But for venture capital/seed around, they’re not doing it. They’re not thinking like that in my experience, anyway. So you know, the advice I would give really would be. It is going to sound really basic. Don’t look at your bank balance as your money. I know that sounds really basic, but you’ve got to look at your balance sheet and I’ve seen a lot of startup founders at the beginning of their journey kind of see that bank balances their money. They use that to influence what they might pay themselves what they might spend. And then, all of a sudden the tax bill comes out of that and then they’re in a lot of trouble. In terms of analyzing the profit and loss account. I think that’s more useful when the business is larger than when it’s smaller. And the reason I say that is because when you’re very early on in your startup journey you’re having to do a lot of things that are based upon uncertainty, and that you know you’re making the decision if this is going to be a wise investment and you can’t scrutinize the profit and loss to judge. It’s going to be spending money and there’s going to be high uncertainty behind the way that you spend that money. But as you start to mature, we need to get to a point where we need to become cash flow positive. You 100% need to be looking at the profit and loss of making sure that you’re optimal. One other thing I see is that when people raise money sometimes they see it like this infinite money tree. It’s almost like the psychology. I’ve raised money. That is the event of success. I now have all of the capital to me to do whatever I want, and it’s surprising how quickly they can burn through it if they’re not careful. So I would encourage people to, even though you know there might be a degree of uncertainty when you’re looking at the profit and loss. I would try to judge every commercial spend decision that you’re about to make on whether it delivers a return on investment for the company, even if that return on investment might be in 5 years time because what you don’t want to end up in is in a situation where you create a business. You’re getting close to the end of the runway. The cash flow positive situation is nowhere inside. You know that you’re going to need to raise another round in order to survive. And now you are desperate, and all of your focus now becomes how do we raise money through another round or another? You know another crowd funding round, or whatever it is, when really you need to be focusing on business. You can avoid that situation by being really smart with what you’re spending money on, and really taking care of those decisions. And I tell you, like the startup founders where they’ve invested their own money and it says they are always so much more careful than when they’ve raised from elsewhere. And I would say, try to imagine that it’s your own money. But just imagine that whatever money you just raised from the investor, imagine you put that in and treat it with that same care and respect, and I think that will adjust all of your behaviors. |
| Peter Ho: |
| Basically what you’re saying: there is a cost of capital. I think, couple of years ago, it feels like money or capital is unlimited. There’s really no return required because interest rate is essentially zero. But now the reality has come back to more or less normal. The interest rate is higher, and people really have to look at every single investment with a return on investment in mind and I think your advice make total sense to me. Maybe switching gear a bit to the launch of the business. With so many startups out there launching different ideas and there are a lot of people pitching and trying to convince customers on different business products in the market. How do founders get the story out there? What are the tricks to make sure people heard your story and get your product idea across efficiently. |
| Andrew Ward: |
| If you qualify your idea properly and get traction, that is your story, and people will be interested. The rest will fall into play If you’re so focused on marketing yourself as a startup founder for the sake of marketing self. It’s up to you to get investment. You’re thinking of it the long way around. So you know, focus on the commercials that matter and the other stuff will fall into place. Once you start to get some traction, maybe then you can focus on personal brand building, you know. Maybe write a book, you know, but until then you haven’t got a lot to talk about unless you got traction and you’re gonna sit in front of investors, and they go to the same question. They want to know some proof. They were gonna want to see some proof that what you are doing could work. |
| Peter Ho: |
| The traction of the customer validation is the best marketing? |
| Andrew Ward: |
| Yeah, you’re gonna need a solid pitch that, you know, with all the standard stuff in it, what your team, what’s your own fair advantage? What does the competition look like? What’s your vision for the future. All of it. You know what’s the financial return on investment for investors? All of that stuff is needed. You can promote your pitch deck in different ways. You can reach out to different VC funds. You can have a look at angel networks that exist around you. You can look at my angel list and see what other people are doing in the space. You can do all that stuff and you know that’s a good place to do some research, but just remember that it’s like a website, right? If you create a website and you just build it, people are just gonna come. You gotta do the leg work to generate leads and it’s no good just getting traffic to that website, either, because unless you got a compelling value proposition. Nobody is going to submit the contact form or you’ve got to go the whole hog, and not only generate, create the website. You got to have the right value proposition on there, the right products. When you’re raising money and then looking to get yourself out there as an entrepreneur. |
| Peter Ho: |
| Andrew, tell us a little bit about Scotchsoft. The company is based in Birmingham, right? |
| Andrew Ward: |
| Yeah. We’ve been trading for 13 years. I started the businesses with just me, and we now employ 17 people. The whole vision of the business really was recognizing that not every business is tech business. In fact, a lot of businesses are not tech businesses, and there’s a massive opportunity. you know, not just for those individual businesses, but for the economy as a whole. If we can get more of those non tech businesses to being tech businesses so that that’s really the core focus of scorchsoft. I want my business to help as many companies as possible to become tech enabled. And sometimes that is introducing products, you know, new startup has a new product. Existing team wants to add a new product to the ecosystem, whatever it might be. But sometimes it’s a business needs to mature in its processes needs to automate something and do something better. And technology plays its role there. Most of the things we do, and most of the projects that we take on aligned with that mission. |
| Peter Ho: |
| What is the key trend or the startup climate in Birmingham? |
| Andrew Ward: |
| We got 3 universities in Birmingham. You see a lot of startup entrepreneurship schemes coming through those universities. Now we’re trying to take a bit more of an active role in supporting entrepreneurship, and there’s even routes to funding. But some of these entrepreneurship programs through the University exclusively offered to just university students. There’s the ability for people who never went to that university to go and take them. I don’t know if it’s the same case over in the States, but you know there tends to be a lot of startup investment events. You can go to where there’s big companies turning up, and you can present what your idea is. You can find out where one of the big rail companies in the Uk was giving a talk, and then then you went in there. And it was like all these different rail company startups are there, and it’s quite an interesting space. You tend to see sort of around a 150 to 300 K. raise. I know that’s a bit lower than over in the states. 20 to 50k raise per angel invest is fairly standard. In the UK, at least there’s some startup entrepreneurship schemes that the government is running. One’s called SIS, which stands up for startup enterprise investment scheme, and once called EIS, which is for slightly later stage startups. And what that allows is, if an investor want to invest in a UK startup and that investment was to fail, they would be able to offset their losses against their capital gains. I can’t remember the exact figure, but it’s something like you might invest 100k but only expose yourself to 25k. The levels of funding and investment that you get, because people are looking to invest enough to make the most of their SIS or EIS thresholds. |
| Peter Ho: |
| That’s interesting. Now switching gear a bit outside of startup and writing books. I know you compete competitively in Bench Press. In fact, I heard you have a competition this weekend, so tell the listeners a bit about the sports and how did you get into it? |
| Andrew Ward: |
| I’ve always been into sport. So powerlifting is where you do a squat which we have a heavy weight on your back. You do a bench press where you lie on a bench and push the weight way away from you, and you do a deadlift where you pick the way up off the floor. Because I’m a short guy, but it’s stocky, so I like big arms. I’m very specialized at doing the Bench press. I’ve competed for Great Britain now twice, once in Lithuania and the other time in Kazakhstan. I came fourth in Kazakhstan and I’m, currently the British champion in my weight class. I weigh 74 kg and my best bench pressing competition is 170. So this weekend, this the British Bench Press championships, and I basically go in and hoping I do all right, and that again this year. So yeah, if you come in the top 2, you get a chance for international selection. So I am hoping to do at least that. |
| Peter Ho: |
| That’s fantastic. Are there skills in power lifting that is somewhat similar to what is required to be successful in the startup world. It seems to me they are pretty different. |
| Andrew Ward: |
| 100%. The gym is a really good analogy for this. So what happens when you hit the new year. People go into the gym. I’m gonna start sign up for a membership, and i’m gonna go to the gym every year, every month, or every week, or whatever it is. What happens is few weeks in, people lose focus. They stop going to the gym. They keep paying for their membership, and they don’t achieve anything in this or being a start up. Founder is very, very similar to that. It’s no good just having this buzz and this dopamine around this startup idea. You’ve got to see it through to the end. You’d not just gonna have that gym membership which will call like raising money. You’ve also got a turn up to the gym every single training session, whether you feel like it or not, and that takes a lot of discipline. And sometimes, in the absence of motivation. You don’t want to do it, and you do it anyway. And that is called grit. Grit is everything. It’s a skill. If you are a startup founder and you can’t make it into the gym, maybe that’s the first step. Build that discipline muscle, and you know, give you the transferable skills to be successful and running a start up |
| Peter Ho: |
| Exactly right. Basically you need the endurance. You need to have the mental muscle to see through just like a good powerlifter. That is the analogy. I think our time is running out. Thank you so much, Andrew. For all the listeners, the book is called Execute Your Tech Idea: A Step by Step Guide for Non-Techies, Professionals, Managers, and Startups. Andrew, where can the listeners find the book? |
| Andrew Ward: |
| You can either go on to Amazon and search for, execute your tech idea, or if you go to execute your tech idea.com. There’s links to the Amazon page. There’s also an audible one if you prefer to listen to audio books, you know. That’s my preferred way of listening to books. |
| Peter Ho: |
| Thank you so much, Andrew, and good luck with the competition. |
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