Introducing ClimbWorks

Scaling Challenges| Fractional Management

As I mentioned in my last newsletter, I have been working on a new service to help founders transition from startups to ‘real businesses’ with a colleague, John Zaheer-Flaherty. It’s called ClimbWorks, and we are now in the middle of a soft launch. This edition is therefore focused on the challenges founders face in growing their businesses beyond the initial startup stage—and our initiative to address them:

We’re not in startup any more…

Carlos Eduardo Espinal nails it in his post outlining the challenges of scaling:

Scaling a company, particularly after having received substantial funding, is no easy feat. It requires an entirely new set of skills that are not exactly those that allowed a founder to succeed in finding product market fit in the first place.

In a thorough article with case studies, Mark Suster describes the mistakes that have led founders to fail after “extreme early success with an initial product adoption”:

  • They didn’t build an experienced or well-rounded management team,

  • They didn’t establish a well-articulated strategy or source of differentiation so that when they had hundreds of employees joined they could all pull in the same direction and for a common purpose

  • They didn’t establish a strong culture or norms that allowed for great decision-making without the founders having to intervene

  • They didn’t devolve authority or decision-making outside of the founders or a tight-knit executive group leading to delays by indecision or lack of authority

  • They failed to invest in internal systems to support growth

  • They didn’t establish enduring processes to allow the broader company to have a roadmap for how to operate.

Innovate, Systematize then Scale

Mark goes on to list some of the key questions that startups need to address to avoid these mistakes:

As companies get this initial customer feedback on their product they start to have to ask harder questions about unit economics:

  • How much does it cost us to acquire a new customer?

  • How profitable is my product or service?

  • How long does it take me to pay back my original customer acquisition costs?

  • What sized team can I afford in order to sell, market & provide service to these customers?

    I always push companies to hire “an operationally focused CFO” during this phase because in order to systematise you need somebody who brings economic rigour to decision making.

    When companies get ready to add scale it’s important to bring in industry experts who bring real-world experiences from world-class companies that you aren’t inventing things for the first time.

Solving the Chicken and Egg Problem

John and I have worked with lots of startup founders and seen these patterns repeat themselves. But we’ve also noted a chicken and egg problem: It’s really hard for startups who only have seed funding to afford the experienced industry management they need at this stage.

That’s why we’ve developed ClimbWorks. John has experience building big brands, and I have taken companies through the extreme growth transition as a CFO and General Manager. We have been there and done it at every stage of growth.

With us, you get a Fractional CMO and a Fractional CFO, a term we borrowed from Chris Brogan.

We will work with clients part-time for a limited period of 3-6 months, and our fees are partly deferred under a revenue-based model. This means we are affordable, but can make a big impact. We can extend the period we work with a company, which means they get continuity. But we also transition out when they are ready, which means they get flexibility.

There’s lots of more info on our website. We’d love to know what you think. Given the nature of the service we want to provide, we are only going to take on 2-3 clients at at a time. If you know of anyone who might be interested, please let us know and we’ll schedule a call with them.

As always, thanks for reading this far. If you liked it, why not forward it to someone who might find it useful?


What kind of business are you building?

Real Businesses|Revenue-Based Investing

I hope you’ve had a good summer. I’ve spent some of it wrestling with a conflict in the way I make my living: I help startups to get investment-ready, but I often wish they were bootstrapping instead of going for investment. Because in many cases, it’s either the wrong thing for them to be doing, the wrong timing, or they’re going for the wrong kind of investment. 

I’ll get back to that last point. But first I want to talk about the three different kinds of business you can start, and how to make the right choice.

The first is a ’lifestyle business’, which I would define simply as any business aimed at funding your lifestyle without getting a job.

Why would you want to do that? Simple, autonomy: the (relative) freedom to choose what you work on, how you do it, when you do it, with whom and for whom, and how hard you work. Or, as Seth Godin’s put it, you’ve just decided to “pick yourself”:

If you’re hoping that the HR people you sent your resume to are about to pick you, it’s going to be a long wait. Once you understand that there are problems just waiting to be solved, once you realize that you have all the tools and all the permission you need, then opportunities to contribute abound.

No one is going to pick you. Pick yourself.

I’ve run Slingshot Venture Development as a lifestyle business since 2001, and it has served me well. I won’t pretend that it doesn’t have its drawbacks. As with any other kind of startup, your income is precarious and volatile. 

But the main problem with lifestyle businesses is that they are difficult to scale, because you are usually working on your own. Which is only a problem if you do need minimum scale to make the business model work, and/or you need investment.

The second type of business you can build is the traditional venture-capital funded startup. But this choice comes at a significant price, not just in terms of the equity you give away, but the loss in autonomy and the increased risk of failure. You lose autonomy not only because you are giving up control, but because you now need to follow your investors’ priority, which is to exit at a huge valuation. As Claire Lew puts it:

The minute you accept money from someone or an institution—be it an angel investor, a venture capital firm, or a bank—their interests inevitably bleed into your interests. Your interests aren’t your interests anymore. And they definitely aren’t your customers’ interests, either.

Which means that you have to significantly increase your risk in two ways: First, they will want you to focus on prioritising growth over profitability in order to build that high-value unicorn:

By nature of venture capital’s business model, a $100m business is considered a failure. Taking 10 years to generate multi-million dollar profits is a failure.

Second, you’re less likely to even get any funding at all—you’ve now given up the chance to “pick yourself” and put yourself back in the “permission” game (According to Bryce Roberts, co-founder of Indie.VC, only 0.6% of founders raise VC).

Real Businesses

It’s been very difficult under this model to build “real businesses” which fall between these two extremes. Meaning businesses that do scale, but ones which want to prioritise profitability over growth, built and managed by founders who don’t want to exit, but want to retain autonomy. As Bryce Roberts puts it:

Real businesses make products and sell them for a profit. They focus on customers, revenue and profitability not investors, valuations and the next fundable milestone. Real businesses prioritize their customer’s needs over their customer’s eyeballs. They have a functioning business model, not a believable financial model. Real businesses want to stay in business, not run for the exit. They create their own source of funding and don’t have to ask anyone for permission to exist. 

Revenue-Based Investing

This may now be changing because of the emergence of revenue-based investors, as seen in the US. David Teten has just published an excellent series on this model. Here are a few of key points:

RBI is…designed to replace equity with a patient, flexible, long-term growth funding framework…providing capital that is paid back over time in the form of a modest, fixed percentage of monthly revenue.

Monthly payments equal a set percentage of monthly revenue (typically 1 to 9%). Monthly payments continue until a set dollar amount has been paid back, usually 1.3–2.5X the amount of the financing (this multiple is called the “cap”) 

A similar—but different—model has been developed by Earnest Capital:

We invest via Shared Earnings Agreement, a new investment model developed transparently with the community, and designed to align us with founders who want to run a profitable business and never be forced to raise follow-on financing or sell their business.

What these models have in common is that they are designed to allow founders to retain ’optionality’, and focus on building profits instead of exits.

I’ve been asking around to see if anyone is following this model in the UK yet. Unfortunately, I haven’t found any examples. I suspect it’s because of the same reason convertible loans aren’t popular here, namely that it means investors have to forgo the tax-advantages of SEIs and EIS. But if you know of any, please let me know.

If I had huge amounts of capital, I would start something along these lines myself. But I don’t. However, I am close to launching a service to help founders transition from startups to ’real businesses’ with a colleague. Watch this space—and get in touch if you want to hear more.

In the meantime, here’s a list of the best posts to learn more these choices and the emerging funding options for real businesses:

  1. After 5 years of bootstrapping a profitable business with 15,000+ users, we raised $500,000 with Here’s why.

  2. Permissionless Entrepreneurship

  3. The Powerful Habit of Profitability

  4. The problem with Silicon Valley’s obsession with Blitzscaling growth

  5. Revenue-Based Investing: A new option for founders who care about control

Thanks for reading this far. If you liked it, why not forward it to someone who might find it useful?

You can let me know what you'd like to see more--or less of--or tell me about tools and programmes you'd like me to feature by replying to this email.

Thanks again,


Two Months to 1,000 True Fans

I’ve always been fascinated by Kevin Kelly’s legendary 2008 essay arguing that you only need 1,000 True Fans to make a living, which he recently updated.

Here’s how the math works. You need to meet two criteria. First, you have to create enough each year that you can earn, on average, $100 profit from each true fan. That is easier to do in some arts and businesses than others, but it is a good creative challenge in every area because it is always easier and better to give your existing customers more, than it is to find new fans.

Every thing made, or thought of, can interest at least one person in a million — it’s a low bar. Yet if even only one out of million people were interested, that’s potentially 7,000 people on the planet. That means that any 1-in-a-million appeal can find 1,000 true fans. The trick is to practically find those fans, or more accurately, to have them find you.

This is a very exciting and potentially liberating idea, but how can mere mortals like you and me put it into practice? Learn from those who’ve cracked it. Dianna Allen figured out how to take the first step—get 1,000 subscribers—in two months with Monthly Budget Planner, a no-code project.

Every Friday, she sends her subscribers a weekly meal plan that they can use to eat for only $5 a day. What I love about this story is that she has taken a series of simple steps, always focused on providing the core benefit her subscribers value:

When I first started Budget Meal Planner at the end of March this year, it was actually only a newsletter sent through Mailchimp. After all, that’s the basis of it: a new meal plan every Friday.

After two months, I noticed there was a demand to have the previous meal plans accessible. That’s when I found it was time to upgrade the project and introduce a website.

I wanted to get something up quick, so I went with Wix. Sure, it’s a more costly option than if I were to code it myself. But, in this situation it was a matter of time is money and I didn’t want to spend much time on coding.

This is a master class in launching an MVP and validating it while also exploring the right way to reach a community.

You may scoff that she’s not charging yet, so it doesn’t count. But she has a plan to follow up:

If I can get 500 people to pay $2 a month for this content (which I know I can, thanks to Patron proof) then that’s $1,000 a month. For me, that’s ramen profitability and then I can finally begin to work on Budget Meal Planner full-time.

I’m betting she will make it. The point is that all of us are capable of thinking of something that 1,000 people will value enough to pay us for it. All you need to do is figure out what you know that will help others. And then you need to get off your arse and actually start!

Antifragile Planning: Optimizing for Optionality

If you’re struggling to follow Dianne’s example, Taylor Pearson has some interesting ideas about how to address one reason so many people never actually build something: the tension between focusing on one project and not knowing what the right project is. Which I see as analysis or research paralysis.

He is trying to develop a system to develop “optionality” as a way to cultivate Nassim Taleb’s concept of Antifragility:

If you “have optionality,” you don’t have much need for what is commonly called intelligence, knowledge, insight…For you don’t have to be right that often. All you need is the wisdom to not do unintelligent things to hurt yourself…and recognise favourable outcomes when they occur.

Low-cost mistakes, with known maximum losses, and large potential payoff (unbounded).

The article is long and rambling at times, but I recommend it for his 90-day sprint planning system which forces you to commit to shipping something every quarter, while doing a clean-slate, blue sky evaluation of where you are going before defining and committing to the next sprint.

Every 90 days (quarterly), I re-evaluate what I want (my long term vision), what people will pay for (the market), and what I’m good at (my strengths) on a high level basis. I then set a single, falsifiable (yes/no or quantifiable) goal which I hypothesize to be the most impactful move towards that objective.

Personally, I’ve found that 90-days is not necessarily the magic number and do 45-day sprints instead. But you can experiment to figure out what the right rhythm is for you. As the saying goes “your mileage may vary.”

We Don’t Sell Saddles Here

The latest FFWDLondon cohort started last week. Every time we start the programme with an intro to the job-to-be-done concept. And every time I give that talk, I’m asked the same question: “do customers actually know what they want.” I usually answer that they don’t necessary know what they want, but they do know what frustrates them, etc.

Stewart Butterfield has a more expansive answer to this question in this 2014 post about the start-up he co-founded. It’s called Slack, and they just went public at a valuation of $24 billion, so it’s probably worth checking out what they thought they were doing back then at the very beginning.

Our position is different than the one many new companies find themselves in: we are not battling it out in a large, well-defined market with clear incumbents (which is why we can’t get away with “Other group chat products are poisonous. Slack is toasted.”). Despite the fact that there are a handful of direct competitors and a muddled history of superficially similar tools, we are setting out to define a new market. And that means we can’t limit ourselves to tweaking the product; we need to tweak the market too.

We are unlikely to be able to sell “a group chat system” very well: there are just not enough people shopping for group chat system (and, as pointed out elsewhere, our current fax machine works fine).

What we are selling is not the software product — the set of all the features, in their specific implementation — because there are just not many buyers for this software product.

However, if we are selling “a reduction in the cost of communication” or “zero effort knowledge management” or “making better decisions, faster” or “all your team communication, instantly searchable, available wherever you go” or “75% less email” or some other valuable result of adopting Slack, we will find many more buyers.

That’s why what we’re selling is organizational transformation. The software just happens to be the part we’re able to build & ship (and the means for us to get our cut).

We’re selling a reduction in information overload, relief from stress… We’re selling better organizations, better teams.

Most luxury brands sell something that comes down to “being better than you are” (richer, better looking, more attractive to those you find desirable, etc.)

Confirms that the first step in building any business of any size is to identify your minimum viable segment. Get to know a set of people who have the same notion of “what being better than you are” means in a specific context of their life, and help them do it.

Catching Up

Quite a few clients, ex-students, and FFWD alumni have been in the news this month. Here’s a quick roundup.

Afrocenchix were part of FFWD last year. They just raised £510k. Rachael Twusami-Corson just published a great post to tell others how they did it.

Maria Moreno Pinart took my Business Design course last summer. Since then, she’s left her corporate job and launched two businesses. Her newest one is bat2go, a very original portable battery renting service in Madrid, which looks rally cool.

James Harford-Tyrer went through FFWD in 2015. During the programme he completely pivoted away from his original idea to found which sells pre-owned luxury goods. You can read more about it in the June 30th issue of The Sunday Times (paywall).

Finally, if you know anyone with a MedTech startup idea, the MedTech SuperConnector is taking applications for its next cohort.

Let me know if you have any announcements you’d like me to include in next month’s email.

Thanks for reading this far. If you liked it, why not forward it to someone who might find it useful?

You can let me know what you'd like to see more--or less of--or tell me about tools and programmes you'd like me to feature by replying to this email.

Thanks again,


You need a Flywheel

The Big Lies of Strategy | Revenue Development

I had a go at a regular newsletter two years ago as an experiment. I published five issues and the initial feedback was good. But then things got extremely busy and I put it on the back burner, which I regret.

I realised I shouldn't start it again until I was seriously ready to commit to a monthly schedule, which I am now. More information on what I’m trying to do in the about section.

You need a Flywheel

Image Credit: Jim Collins

I’ve been listening to longform podcasts lately. Which is how I came across this great conversation between Tim Ferris and Jim Collins, the author of “Good to Great” and a bunch of other business books. I haven’t read these books before because I thought they mostly dealt with large companies, and that’s not a big interest for me.

But their conversation ranges over a bunch of topics I wasn’t expecting, including how Collins makes sure he puts in a 1,000 hours on creative work a year (47:42). The whole thing is definitely worth a listen, but I would suggest listening to it in small chunks.

As a result, I bought Jim Collins’ monograph Turning the Flywheel. There’s a lot startups—even freelancers— can learn from corporate strategy as they get ready to grow.

What is a flywheel?

In Engineering, a flywheel is an energy storage unit which is used to increase momentum. But Collins applies the same principle to building a business:

In building a great company or social sector enterprise, there is no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment. Rather, the process resembles relentlessly pushing a giant, heavy flywheel, turn upon turn, building momentum until a point of breakthrough, and beyond.

The Flywheel seems like an essential tool for startups making the transition from product-market fit to scale readiness. It’s about looking at your company as a system and creating a virtuous circle of steps:

  1. Reduce friction

  2. Increase strategic focus

  3. Integrate your development, operations and marketing systems

  4. Accelerate growth.

Collins describes a 7-step process for designing your own flywheel. The key is to identify the 4-6 components that drive your success and use them to answer the following questions:

What’s the ultimate goal of the flywheel? Where do we start? What’s after that? And, after that? Each component of the flywheel should be a side-effect of the last, and the loop should be completed by the last element of the flywheel perpetuating success back into the first.

This is a deep concept that is best understood by reading the book and sketching your own flywheel.

Hubspot has as good post on how to apply it to inbound marketing. But it’s important to remember that the concept works best when you apply it to your whole business, not just one function.

The Big Lies of Strategy

Roger Martin is one of the most practical writers on strategy, because he is skeptical about most traditional approaches and he gives you actionable insights as he does here. My favourite is his advice to focus on asking yourself “what would have to be true?” and doing reality checks instead of trying to predict the future.

Expenses are completely within a company’s control. A firm can decide exactly how much in the way of raw materials to purchase, how many people to hire, how many square feet of office space or manufacturing space they need; all of those are completely within the company’s control, so you can actually plan for these things. On the other hand, sales targets are entirely dependent upon customers. You can hope for future sales. You can say, ‘We want to hit one billion dollars in sales this year’, or $10 billion — as much as you want; but that is not going to make it happen.

Sales will come from making choices that compel customers to want to buy your products. Yet we never see any mention of that in any strategic plan.

…but often, when you look backwards, your actual strategy changed and shifted, based on emergent conditions in the marketplace. This is a great insight…Unfortunately, some strategic planners have taken it to mean that ‘You shouldn’t bother planning ahead’.

You can’t say, ‘We have done the analysis, and we have come up with the right answer’. What you can do is imagine possibilities and make choices that you believe to be the most compelling you can make. Sometimes you will be right, and sometimes you will be wrong. That is the nature of strategy, because that is the nature of life.

The challenge is to figure out ‘What 10 things must be true for this strategy to be a great one?’ Your answers might be things like, ‘Customers will have to behave this way; the distribution channel will have to value X; competitors will have to not do Y’, etc.

Revenue Development

Sometimes it’s useful to be reminded of the basics, and shown how to implement them. Manu Kumar’s post on Revenue Development is a good example:

We quickly figured out that though we had a product built, and the product was exactly what our customers wanted, we still had another problem on our hands—our customers didn't want to pay! It wasn't that they didn’t want to pay, but for anything above a certain dollar amount, it had to be committee decision.

what we’d failed to do was validate how much our customers would be willing to pay, and what it would take to get them to pay.

In my mind, there are two facets to Revenue Development: a) Business model iteration, and, b) Pricing iteration.

The goal is to try and answer a few key questions:

  • Does your target customer have the capacity and ability to pay?

  • How much would they be willing to pay?

  • How should you price your product/service?

  • Is it a one-time purchase, a recurring purchase, a subscription, a pay-as-you-go offering, etc?

  • Can you build a sustainable business at that price point?

Google’s first business model was to sell/license search to the major portals (Yahoo! being the dominant one at the time) So it wasn’t that they had the right business model to start. But they were thinking about it, and they iterated on the business model to get to something that worked.

In a nutshell, Product Development is about building something. Customer Development is about building something people want. Revenue Development is about building something people want, and are willing/able to pay for, while letting you build a sustainable company.

Shameless Self-Promotion and Free Coaching Offer

I’ve been running this two-week intensive Business Design Course course for the past three summers. It's the most comprehensive course I do every year and gets really good feedback. The course is aimed at anyone who wants to learn how to use the latest methods to plan new ventures--from lean to design thinking. Useful for designing a new corporate innovation initiative, a startup, or a lifestyle business.

But it usually only gets filled up at the last moment, which means I can’t plan as far ahead as I’d like to. So if you refer anyone who registers before 3 June, I will give you—or anyone you choose— a 90-minute business coaching session. Just email me their names once they've signed up. The course is aimed at anyone who wants to learn how to use the latest methods to plan new ventures--from lean to design thinking. Useful for designing a new corporate innovation initiative, a startup, or a lifestyle business.

You can also check out interviews with two previous students below:

Becks Armstrong Founder, Clarity

João Lopes de Almeida

Thanks for reading this far. If you liked it, why not forward it to someone who might find it useful?

You can let me know what you'd like to see more--or less of--or tell me about tools and programmes you'd like me to feature by replying to this email.

Thanks again,


For the love of God, please tell me what your company does

Back after a long summer break. The focus for this issue is growth and scaling. But let’s start with the basics first:

As the saying goes “If you can’t explain it simply you don’t understand it well enough.” And if you don’t understand your business well enough, you’ve got work to do.

This article nails it when it comes to the need to be completely clear with your customers as to what your company does.

More and more often, upon discovering a new company or product, I visit their website hoping to find out what it is they do, but instead get fed a mash of buzzwords about their “team” and “values”. And this isn’t a side dish—this is the main entrée of these sites, with a coherent explanation of the company’s products or services rarely occupying more than a footnote on the menu.

Case Study: AirbnB

You may have seen this post as it got a lot of shares over the summer. But just in case you didn’t I’m including it as it’s one you shouldn’t miss.

Wait too long to automate, though, and problems grow so enormous they’re harder to fix. And if you don’t have your basic processes well in hand when you take the next big plunge — a next-generation product, for example — the complexity could be defeating. In the early days of a marketplace, there’s always a struggle between growth plans and mundane maintenance. Keep an eye on your edge cases so you’ll know when it’s time to pull resources away from expansion to clean things up closer to home.

An existing feature, which we finally decided to pay attention to, generated more growth than any other feature to date! Building something isn’t always enough — you need to understand the emotional and operational needs of your users to get the most out of a feature. Indeed, sometimes the heaviest lifting in product development is telling a story for your users, showing them a better path forward.

From Zero to $100 Million: Growth Lessons from Brian Balfour

A useful framework for scaling up a company that avoids the dangers of being product-centric. Balfour’s framework takes you through four stages of fit:

  1. Market-Product Fit

  2. Product-Channel Fit

  3. Channel-Model Fit

  4. Model-Market Fit

The biggest mistake that most entrepreneurs make is they think they can build an amazing product in isolation, and once they have a few customers loving it, they can Frankenstein channels onto it afterwards. But it’s actually the exact opposite — you have to build your product to fit the channels. You control what your product is, but you don’t control the rules of the channel.

3 Questions That Can Help Save Your Business, Before It’s Too Late

Great advice on how to avoid being disrupted if you’re an established business. Which also therefore includes some gems on how to disrupt an established business.

Disruptive startups go after high retention, low satisfaction products.

Disruptive startups will unbundle your products

A product is merely the current state of which you deliver value. With some creativity and guidance, you can deliver even more value in a different form while building on your strengths and vision.

The Simple Lovable Product

Lean Startup is great as philosophy, but people often struggle to implement it successfully. This article identifies why, and suggests a better alternative which customers will more readily accept, the Simple Lovable Complete Product:

In order for the product to be small and delivered quickly, it has to be simple. Customers accept simple products every day. Even if it doesn’t do everything needed, as long as the product never claimed to do more than it does, customers are forgiving. For example, it was okay that early versions Google Docs had only 3% of the features of Microsoft Word, because Docs did a great job at what it was primarily designed for, which is simplicity and real-time collaboration.

Docs was simple, but also complete. This is decidedly different from the classic MVP, which by definition isn’t complete (and in fact is embarrassing). “Simple” is good, “incomplete” is not. The customer should have a genuine desire to use the product, as-is. Not because it’s version 0.1 of something complex, but because it’s version 1.0 of something simple.

Runway | The cash planning tool for startups

Most startups die from running out of cash. Runway helps founders manage this precious resource and preserve and extend their runway. It’s free, provided as a public service.

Before you go…

Thanks for reading this far. 

Conventional wisdom about newsletters says that you are supposed to publish them on a strictly regular schedule. I can see the logic in that, but it doesn’t feel right. I don’t want to send out a weekly issue if I haven’t come across content that is good enough just because there is a deadline. Your email is full enough of mediocre content as it is.

So for the moment, I am going to send it out as often as I have five solid articles to share. I suspect that is going to end up meaning that I send a newsletter out every 2-4 weeks on average.

As always, my aim is to give you practical tools that you can use, so please let me know what’s working for you and what isn’t, either by “liking” it or commenting below, or just hit reply if you’re a subscriber.

And if you like it, please forward it to a friend.



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