Tech founders admit their biggest mistakes

The founders and CEOs of some of the world's fastest-growing and most exciting startups and scale-ups tell Computing about the moments when it all nearly came crashing down around their ears...

Starting and growing a business is universally acknowledged as both incredibly stressful and challenging. Add a global pandemic into the mix and a tricky task can become almost impossible.

Over the last few months, Computing has been speaking to the CEOs and founders of some of the world's fastest-growing and most exciting young companies in its podcast series 'The Spark'. Guests have discussed their highs and lows, discusses what they wish they'd done differently, and talked about the advice they'd now give their younger selves.

Here are their thoughts on those low points, the events which made them wonder if their idea was ever really going to get off the ground.

You can find The Spark on iTunes, Spotify and Stitcher, and it is published every Monday on Computing.

Tony Pepper, CEO and founder, Egress

Tony Pepper, co-founder and CEO, Egress

There's not one moment when I thought it was all going wrong, there are probably a hundred!

This was the first time we'd ever started a business from scratch. We made loads of mistakes. One thing I'd be mindful of, is when you're setting up a business it's easy to say it has no customers, it just has a dream, so its actual worth is quite low. So it's easy when you're bringing people in to the business to issue equity like it's candy.

Ultimately I'd be very mindful now - it's critically important for those people who come into the early stage to have equity, to have skin in the game, because it's a tough ride. But there are so many ways to structure equity that I know now that I didn't now then. Doing things differently just might have made later decisions that might have been not one year down the line, but ten, a lot easier.

So how you structure your equity and how you distribute it, is a really key point. If you're that confident that you're on to a winner, assume success ten years down the line. The VC scene in the UK was different ten years ago when we set up. And the founder network was very different. We've become very West Coast now in the way founders come together and help one another, and that's awesome for UK tech. The access to funding was different then. We took on funding after about five years. Looking back now that was beneficial.

Tech founders admit their biggest mistakes

The founders and CEOs of some of the world's fastest-growing and most exciting startups and scale-ups tell Computing about the moments when it all nearly came crashing down around their ears...

Christian Owens, CEO and co-founder, Paddle

Christian Owens, CEO, Paddle

We realised we were doing £100k per month in volume of sales going through the platform, which was a huge milestone for us. We hit it because we realised that some of the one to two person businesses we were serving would become 10-20 person businesses. The core problem for them stays the same. So we started to get a couple of these largesr customers. We had some advisors on board at this point, and they told me: '£100k per month is £1.2m per year - you're growing quickly. It's going to be £6m next year. You need someone who understands finance. You need a CFO.'

I said I don't know what a CFO is but sure. So we went through the process and met lots of people, and eventually met this guy called Hugo. I remember having a conversation with him, he'd just left his job in investment banking. He was the most professional person I'd ever seen - actually had a job, and was an adult.

We convinced him to join somehow, I've no idea how. He had to work out his notice period though at his previous job. So about six weeks later, it was the Friday night before the Monday he was due to start. Our largest customer left because the platform fell over, they were frustrated. They were the first customer we'd signed that wasn't doing a couple of grand a month in sales - the first real business.

On the Saturday I had to call Hugo and say I know you've decided to quite your job and join this business that's growing at 3x per year and has finally hit this £100k mark, but as of Monday it goes back down to £3k per month because this customer that was doing the other £97k has just decided to leave because using their words, we suck.

He said he needed to think about it. At that point I was thinking okay, this is only ever going to be a hobby. We're going to service a couple of hundred or maybe eventually a couple of thousand small businesses, processing a few million a year and taking a small percentage of it, and probably doing a good thing for the world. But we're never going to be a real business. Then Hugo called me back and said I'm still in, I still think it's a great idea, we'll figure this out, I'll be there on Monday.

This was person who's had a job before and he says it's going to be okay so I'm going to believe him. And he's still our CFO today.

Tech founders admit their biggest mistakes

The founders and CEOs of some of the world's fastest-growing and most exciting startups and scale-ups tell Computing about the moments when it all nearly came crashing down around their ears...

Julian Chesterfield, CEO and founder of Sunlight

Julian Chesterfield, founder and CEO, Sunlight

Raising capital during the pandemic was really hard and I wouldn't pretend otherwise. Our timing was really poor in that respect. You can't always control these things.

We had a very robust plan in place, coming into 2020 we were getting ready to go out and start our series A round and then the pandemic hit and the bottom fell out of the investment market. Most investors didn't really know where things were going so they held back for a while. It was a very stressful and worrying time. We had a number of people on the team and a lot of cost and overhead associated with running the company.

It was a double whammy because the market slowed down so the commercial opportunities for the company, and a lot of our best laid plans were really tested. That was difficult.

Other challenges were that we were trying to raise money and nobody could meet face to face. Typically for a tech company like ours we would travel to different places were investors are located, like the West Coast of America. None of us could travel, so everything had to be done over video conference. For our two new investors who came in, we were the first investment they'd ever made where they'd never met face to face.

It was a new experience for everyone, both the investors learning to trust and get themselves comfortable with investing money, and for us trying to do all of that remotely.

Tech founders admit their biggest mistakes

The founders and CEOs of some of the world's fastest-growing and most exciting startups and scale-ups tell Computing about the moments when it all nearly came crashing down around their ears...

Matthew Knippen, CEO and co-founder, Charge Running

Matthew Knippen, co-founder and CEO, Charge Running

Our highest point was when our app got featured by Apple. We were in their ‘new apps we love' section. We were called app of the week by Mac World. We had a surge of around 25,000 downloads within two days, way more than we had ever anticipated, so we were on cloud nine.

At that same time we had two major issues come right after launch. We weren't ready for a full 1.0 for thousands of users. We thought we might get 100 downloads and test a few things. And it turned out that the subscription mechanism didn't work at all, so people couldn't buy it and get full access.

But we were able to send out a rushed fix and that low point was resolved in a few hours.

The bigger problem was after that no one knew how the app worked or what it did. We didn't have an onboarding experience, we didn't keep track of what people were doing with the app, we didn't have a ton of data analytics.

So we churned over 90 per cent of those 25,000 downloads within a few days. They opened it once and never came back. They didn't understand what it did or how it worked.

So it went from being 'hey were going to be this huge company' to all of a sudden 'oh crap'. We either released to early, or just should've explained how it worked in a different way. That was hard. Imagine getting all these downloads and now you're rated on conversion rate, and at the start that was literally zero per cent and you have to grow from there.

Tech founders admit their biggest mistakes

The founders and CEOs of some of the world's fastest-growing and most exciting startups and scale-ups tell Computing about the moments when it all nearly came crashing down around their ears...

David Garfield, co-founder and CEO, Garrison

David Garfield, founder and CEO, Garrison

Our lowest moment was during one of our very first investment rounds - and doing investment for me was a new skill, something I had to learn, and you learn the hard way.

That first investment round was about testing the market, getting great responses, and thinking therefore you're in a fantastic place. Then the hard graft comes in as you start the develop the pitch and it all gets very serious. For sometimes very strange reasons you can find that process moving away from you very quickly. You can find investors falling because they find something to be not ideal for them.

As a founder you're suddenly sitting there with a cost base, a runway and a limited amount of time to get funding. That can be a very dark place.

Luckily we experienced that in the very early days and were able to overcome it.

That experience has stood us in good stead for the future. We focus a lot on those fundraisers now, and how you prepare in advance. It's stressful and dark when you're there, and you learn to use your peer network very effectively on the back of it.

But it's not all doom and gloom, check out the full podcasts to hear about the good times, how to manage the highs and lows, and what piece of advise the founders wish they'd had in the early days.