Start me up

As this country's highest profile IT entrepreneur casts doubt on the UK's ability to cultivate an industry giant, we ask what it takes to make a great technology business

He may often have been dubbed the British Bill Gates, but Mike Lynch recently said in a speech that, in the current business and legislative climate, he doubted that a UK tech start-up could grow into a true global giant of the scale of Microsoft.

But that did not stop a room full of UK entrepreneurs listening intently to the Autonomy founder give a speech on how to build a great business, and offer his take on where he believes too many firms in the tech space get it wrong.

In this week's Spotlight we run through some of Lynch's insights, and ask sales, marketing, technology, and finance professionals from across the IT industry to answer five key questions that can define what separates a great business from an also ran.

Do technologists underestimate the importance of marketing?
The maxim ‘build a better mousetrap, and the world will beat a path to your door' has long been a mantra for many in the technology industry. But perhaps the fact that the saying is a misquoted mash-up of two statements hints at its inaccuracy in the modern world.
James Richardson, a director at Metric Accountants specialising in tech start-ups, o pined that coming up with a great idea is only a fraction of the battle.
"Look at the number of patents that are filed every year; if all you had to do was develop the product and get the patent, by definition every one of those ideas could create a multi-millionaire," he said. "But they do not, and the reason is that that there is much more to it than just having the best product or service. You need to have the right business plan and strategy, and recognise that marketing is at the forefront of that strategy, and everything else falls in behind."
Heather Baker, chief executive of Technology Marketing Company TopLine Communications, claimed that customers get "great-idea fatigue" from listening to so many tech firms pitching the efficiency benefits of their product or service.
"Too much time is wasted by pre-launch businesses getting NDAs signed and guarding their ideas, when the reality is that an idea that has yet to be proven in is unlikely to be stolen," she added. "Instead, they should be seizing every opportunity to talk about their businesses and setting aside realistic budgets for marketing. It takes both a strong product and clever marketing to build a successful tech business and it almost always takes longer than anticipated."

Is there too much emphasis on minimising risk?
As he plots where to spend his £1bn investment fund, Lynch believes that too much energy is expended examining the drawbacks of potential investments. He advocates 10-minute discussions about why a technology or service is a great idea, followed by 10 minutes examining why it will not work, ensuring that there is "clear space between" the two.
"The fundamental problem is no-one is ever going to start something because they can see the problems," he said. "It should not be about minimising risk, but having risk for return. Be very careful in embracing modern corporate culture, which is about over-analysis. Sometimes you need to have a leap of faith."
Barrie Desmond, group marketing director of Exclusive Networks, a distributor specialising in emerging vendors, is another advocate of the occasional leap of faith.
"There was a big ad in The Financial Times in the 1980s that I pinned to my wall which said 'Hide from risk, and you hide from its reward'," he said. "We have a saying: 'We may be wrong, but we are not confused.' When you decide to go with a disruptive technology, you cannot keep looking over your shoulder."
David Barker, founder of UK colocation firm 4D Data Centres, claimed that businesses must strike the right balance between pragmatism and innovation.
"There is a duty of care to the investors - whether they are institutional or individuals - to manage that investment as best as possible," he explained. "However, this doesn't mean that companies should be entirely risk-averse, otherwise opportunities are missed and new innovations may not be developed - which in itself is a risk, as you are opening up the potential for a new competitor to innovate your market and do a better job at supplying your market than you do."

Should businesses be more willing to make U-turns?
The tech industry, and the wider business world, is littered with the remains of firms which stayed the course too long pursuing a doomed strategy. Meanwhile perhaps the IT industry's grandest name - IBM - passed its 100th birthday a couple of years back; it is hard to imagine that its founders had a vision of evolving into a global software and services giant. Are young tech firms, particularly those in the first flush of big outside investment, nimble enough when it comes to admitting they would have a better chance of success taking a different route?
Todd McKinnon, co-founder and chief executive of cloud-based identity management vendor Okta, said: "Technology start-ups should not be afraid to do a U-turn. For example, the specific product idea we had when looking to start my own company was very different from what we ended up doing."
Kevin Scott-Cowell, chief executive of 8x8 Solutions, claimed that firms should be primed to tinker with their strategy, but should avoid knee-jerk changes.
"Quick U-turns confuse everybody," he added. "But you've got to be able to fine tune your strategy as you go forward, especially as these days the market changes so quickly."

Should there be more cohesion between technologists and sales and marketing professionals?
Lynch told the story of a recent speech he had given to a room full of business students in Cambridge, many of whom approached him afterwards to relay terrible ideas for companies. He encouraged such people to seek out their peers down the road in the engineering department.
"Yes - it's true: they don't wash. They are not trendy. But they are working on the most brilliant ideas," he said.
Nick East, chief executive of start-up cloud vendor Zynstra, claimed that assembling the right team with the perfect blend of skills is "the first and most important element" in building a successful business.
"You need to recognise that there is a gap, know where it is and explicitly go looking to fill it - it will not happen by accident," said East. "[Getting the right team] comes from knowing people, working with people, sometimes competing against or partnering with them, and also about [calling on] the VC network and the recruitment agency network."
Shaun Fröhlich, growth coach at GrowthAccelerator and former leader of reseller Teksys, claimed that focusing on business issues, rather than the complexities of technology, should remain the focus for sales staff.
"Salespeople obviously need to understand the technology they're selling, but knowing more about the intricacies of the technology won't necessarily help them to sell more," he said. "What's crucial is the understanding of customers' pain points and business needs so that they can address these and add the most value to the customer."
Richardson from Metric Accountants claimed that the biggest cultural change he would like to see to benefit UK tech start-ups would be more interaction between companies.
"If these tech firms were to collaborate a little more with one another, rather than squirreling away and working on their own projects, that is definitely something that would make a big difference," he said. "What we do is try and introduce one firm to another, if we think they could have a mutually beneficial relationship."

Is there too much emphasis on youth?
If you asked someone to visualise a tech entrepreneur, the chances are the image that might spring to mind would be of a 20-something clad in a hoodie and Converse, strolling into a funky office somewhere in the Valley or Silicon Roundabout. The benefits of having no commitments and four full decades in which to rebuild your career no doubt make it easier to take the risks inherent in starting a business.
But perhaps an extra decade or two of experience, a wider network of industry contacts, and a few more lines on the face are of more benefit than they are given credit for. A recent study, funded by the Kauffman Foundation, found that about 40 was the most common age for a successful tech company founder. There were more than double the amount of successful entrepreneurs over 50 as under 25, the study indicated. Almost three quarters of voters in a recent CRN poll believe the peak of one's entrepreneurial powers is not reached until the 50th birthday has come and gone.
Okta founder McKinnon said: "I was in my late 30s when I started Okta, but I think it is rarer to see a first-time entrepreneur at that age. Typically, people at that age have good jobs and are making good money with important companies. The biggest challenge for someone in that situation, like I was in, is giving up your job."
GrowthAccelerator's Fröhlich, like most people we spoke to, claimed that a great company can be founded at any age.
"Youth is a fantastic catalyst for business growth as it often proves what's possible with a new perspective," he said. "However, more experienced entrepreneurs have more developed business acumen to enable them to grow their company - for younger businesspeople developing acumen and infrastructure simultaneously can be real challenge."
Desmond from Exclusive Networks admitted a fondness for the UK's burgeoning tech start-up scene, but claimed it may be some way off creating the next Google, Facebook or Salesforce.
"I like Silicon Roundabout; they are coming down Old Street, annoying the City boys, and it does feel sexy," he said. "But I'm not sure if Candy Crush is going to change the world."