From Strathclyde Business School to Building a Start-up

Strathclyde graduate Daniel Austin is building a start-up in Bangkok and in this blog he offers some valuable lessons he's learned from doing so.

Over the last year, I have been building a start-up in Bangkok called gigit. The vision for gigit is similar to Uber but for almost any service a user may need, from getting an electrical appliance fixed to finding a dog walker or hiring a wedding photographer.

I have always been intrigued by the gig economy and its potential to open new earning opportunities through technology, particularly across emerging markets such as Southeast Asia (more on this in my other blog).

During this time, there have been some good - and bad - decisions made. A lot of start-up advice focuses on the exciting parts such as finding the idea, raising money, launching the product and growing quickly. In reality, the experience can be much less glamorous. It is a process of making decisions with incomplete information, solving problems and adapting to things going wrong and learning from mistakes. 

It’s still very early in the journey of building gigit but over the last year I’ve learned some valuable and practical lessons. Most of them have come from real setbacks and mistakes, but all of them have been useful learning experiences.

Here are five of the most important lessons I have learned so far, but they are certainly not the only ones!

Accept Things Will Go Wrong, Often

This may be the most important lesson. You will make mistakes, and that’s okay, but you must always be learning. It’s when lessons are not being learned, that it becomes an issue.

With this in mind, the best thing you can do is get comfortable with things going wrong. It may sound counterintuitive, but it's a valuable skill I have learned over the last year.

We previously worked with a vendor to build our website, the vendor was knowledgeable, presented well and spoke reassuringly about their ability to build to our requirements. However, what they delivered looked good on the surface but underneath the UI, the product was unstable, poorly designed and ultimately unusable. We wasted a couple of months working with this vendor, and it would have been easy to be disheartened by this experience, but this episode ultimately led us to our current tech partner who has been a real asset.

Understand Your Weaknesses and Fill the Gaps

Launching a company will teach you many things. It will certainly teach you about your shortcomings, so it is better to be prepared beforehand. The most painful example of this for me has been the most obvious one: launching a technology start-up without a deeply technical co-founder. I have worked in technology for many years, but not as a software engineer.

This limitation has reared its head many times throughout the journey. A key lesson for me has been to never take anything at face value. However, when you are in technical conversations and do not have the knowledge to critically analyse what you are being told, it becomes far more difficult to know what questions to ask or whether an answer is credible, which is always a recipe for disaster (see lesson 1). We have now fortunately plugged this gap with our current tech partner, but it would have been much better to have addressed this weakness sooner rather than later.

To avoid this pitfall, you should reflect deeply on what you believe to be your weaknesses, identify them, and take action to develop the skills yourself or bring in the necessary expertise to fill the gaps.

Your Distribution Strategy Is More Important Than the Product

Take the example of Coca-Cola. Does it have the best-tasting drink in the world? Maybe some would say yes, but for me and I am sure many others, it’s a no. I think a stronger case could be made for the company having the best distribution in the world, and this is a key component of their success.

You can spend all your time building an amazing product, but if your distribution strategy is “build it and they will come” you will be waiting forever. From day 1, you should be thinking about your distribution strategy: how will you reach customers at scale in a cost-effective way? Building a distribution engine that compounds over time, seeds network effects and reduces customer acquisition costs are the gold standard.

Not all distribution is equal, you can spend money on advertising and generate a wave of new customers, but once the spending stops, the flow of new customers will slow with it. Alternatively, you can invest in distribution systems that have the potential to compound over time.

This is the type of distribution founders should be looking for: systems where the work and investment made today can continue generating value long into the future. Referrals, partnerships, communities and network effects all work in this way. The idea is to build a distribution engine that can reduce Customer Acquisition Costs (CAC) and compound growth over time.

Don’t Take Anything at Face Value

As a founder, setbacks, poor decisions and mistakes can have outsized consequences, particularly in the early stages. You can’t prevent everything from going wrong but you need to reduce the frequency of bad things happening. In my experience, this means challenging assumptions, not taking anything at face value and asking lots of questions until you deeply understand how a specific topic applies to your specific business.

This lesson became clear when we were evaluating different payment gateways for our marketplace platform. Payment gateways are complex so there are hundreds of potential technical, commercial and operational questions that can be asked in these meetings. In many business contexts, the people on the other side of the table will often give you broad, reassuring answers that may sound like what you want to hear but are not necessarily what you need to hear. In these situations, it’s important to probe further, dig deeper and understand the nuance.

This was a lesson we learned the hard way, after several meetings we selected a payment gateway and integrated their technology into our platform. Later, we discovered that due to their internal company policy, they could not support our particular use case at that time. We had invested significant time and effort into the integration, time which could have been saved if the right question had been asked earlier.

Understand Incentives

Towards the end of the software build of our marketplace platform, we ran UAT (user acceptance testing), and the platform was functioning well. After this round of testing, the vendor asked us to sign off on the testing, and this sign-off formed the stage gate for releasing the final payment instalment.

As we had been working with this vendor for a long time and had built a good relationship, I agreed to sign off on the testing, and we released the final instalment. The next phase was the warranty period. Our UAT had gone so well that we thought the product was in a good state for our beta launch, which was targeted for the following month.

However, as we moved through the warranty period, more issues and bugs began to appear, and getting these resolved became increasingly slow and difficult. In hindsight, the mistake was not signing off too early but failing to recognise that after payment was released, the incentives would change. If I had taken a step back to consider this before making the decision to sign off, we could have structured the final payment differently.

The lesson is to always consider the incentives at play and structure your decisions accordingly. Where possible, design incentives so that everyone remains motivated towards the same outcome.

About Daniel Austin

Daniel Austin is an alumnus of Strathclyde Business School, where he completed both his BA and MSc degrees. A former management consultant turned entrepreneur, he is the founder of gigit, a Thailand-based platform focused on digitising and formalising the country’s informal gig economy.