Scaling a creative-tech business
Starting a business might be easier than ever before, but what comes after you’ve developed your big idea? To scale a creative-tech startup you don’t just need to think big, you need to develop a strategy early on.
That was the lesson our speakers shared at this year’s Creative3 Forum, with both entrepreneurs and investors discussing four key tactics that creative-tech entrepreneurs can use for growth.
1. Understand your customers
“Your customer is your first investor,” said Paul Bennetts from AirTree Ventures, and his sentiments were echoed by a number of other panelists. No matter how sophisticated or innovative your product or service is, your business becomes redundant if you don’t understand what your customers want.
By talking to customers early on and continuing the conversation at every stage of business, you give yourself the best opportunity for success. And as Steve Baxter reminded us: “Funding business from your customers is easier.” If you can get this relationship right, you may even find yourself standing in front of investors less frequently.
Having scaled Smartstudy from South Korea into global markets in China and the US, Ryan Lee explained that customer research is not only crucial for product development, it’s also critical for informing your pricing and distribution strategies. These four elements may vary from market to market and need to be right for a business to survive when it comes time to scale.
Bethany Koby from Technology Will Save Us also highlighted the importance of understanding customer motivations. She makes toys, gadgets and wearables that teach kids tech, but explained that parents aren’t actively seeking out her products.
“For us retail is actually customer acquisition. Most importantly it’s about brand building and awareness,” she said. “This is a problem we have a identified – not a lot of parents are at home saying ‘I hope my kids learn about computational thinking.’”
Instead, she explained, they have found that parents know their kids need to learn about tech, but they don’t know how to teach them the skills. So by using retail as a distribution point, Technology Will Save Us is able to better connect with potential customers looking for educational resources.
2. Target the right investors
When you are seeking investment, the trick is knowing which investors to target and how to speak to them. Developing a targeted investment strategy is critical as the creative-tech sector develops, with Chris Smith from Area360 explaining that investors are becoming far more analytical and niched.
Chris, along with a number of panelists, explained that when seeking out investment, you should be chasing smart money. That is capital from investors who have already cultivated the connections you need to grow. As Lindsay Stewart from Stringr said on smart money: “It’s up to you as an entrepreneur to go: Who is this investor, who does this person know and how can this person help me?”
Consider which investors can add value to your operations, your customer set or the next vertical and go after them. Then, once you have an investor in the room, speak their language. Know what that investor is looking for, pre-empt their questions and try to be as concise as possible.
“It’s about potential,” Chris said of what investors are looking for in a pitch. “You don’t have to have it now, but it’s about how you will get there.” He then outlined the three areas you need to consider when discussing your scaling strategy with an investor.
- Productising: How will ensure your idea can be replicated quickly and rapidly?
- Distribution: Once you productise something, you need to be able to distribute it through different channels.
- Growth management: What will do you with your capital? If you spend it in the wrong way at the wrong time, it can disappear very fast.
3. Form partnerships
“We used to rely too much on designing and developing really good products and we thought that was enough,” Alex Naghavi from Josephmark said. “Organic growth only takes you so far – partnerships are the accelerator.”
By forming strategic partnerships, you can start to scale your business sooner. Having recently launched Travelshoot, a company offering professional photoshoots for travellers in 70 cities around the world, Tim Jones explained that partnerships rather than digital have been the key to scaling for them.
By partnering with Flight Centre, Travelshoot is tapping into a network of sales consultants on the ground, who are selling the product for them. “That is the strategy rather than SEO, which is competitive in the travel space,” he said.
Hamish Jolly from Shark Mitigation Systems agreed. By forming partnerships with key stakeholders, he has addressed growth challenges such as research, development, manufacturing and marketing. “If you keep trying to do it alone you’ll be drinking the ocean through a straw and it will be impossible,” he said of the importance of collaboration. “So form those partnerships.”
4. Think digital
Digital is a scalable tool not just for software, but also for products and services too. In his presentation, Chris pointed to Citizen Wolf as an example of a product-based company using digital to scale. Based in Sydney, Citizen Wolf creates custom-made t-shirts. When an order is placed from a new customer, Citizen Wolf sends out a guide t-shirt to get the person’s measurements. These are then saved, allowing customers to easily order custom-made t-shirts online.
“It’s a fantastic example of taking a concept like tailored clothing, which traditionally is not scalable because of physical place,” Chris said. “But now they have productised and found a distribution model for tailored clothes.”
Stringr is another example of a business that digital to expand. By fostering a network of videographers via a central platform, Lindsay has created a model that can be replicated around the world.
“As I start to think of scaling a business like Stringr, it’s really important that we focus on really great imagery as opposed to getting involved too much in the editorial conversation.” By maintaining her focus on the scalable aspect of her business, she is now preparing to expand into new global markets, including Australia.
Smartstudy is another example of a company using digital strategically. Rather than limiting itself to a single platform, it distributes content in its own app, as well as on third-party platforms including YouTube and China’s Youku. This strategy opens up new markets as well as new avenues for revenue through subscription models and advertising.