Know what you code: the most important factor to launching a successful FinOps start-up
As a veteran of the start-up world, I can’t tell you how many times I’ve heard from founders, “I have an app idea. Do you know any programmers?”
I cringe when I hear this because it’s not that easy. You can’t expect to be able to just hire someone to build your idea.
Building a business software app requires a lot of skills, chiefly among them knowing how to find and collaborate with the right engineer and how to get people to use your app. Just because you have a great idea doesn’t mean people will immediately see its value.
So what happens more often than not? The app flops and their start-up fails, if they even get that far. You’d be lucky to reach this stage of business – particularly now as valuations have dropped and it’s increasingly more difficult to convince investors to back your vision.
Where do these companies – and their leaders – go wrong? Or, more importantly, what should they be doing right?
Two best practices for start-up success
As a serial entrepreneur who has developed several highly successful apps serving retailers and restaurateurs, I can offer two pieces of advice that might prevent at least 50% of these start-ups from failing before they ever get off the ground:
- Make sure you have an extensive, working knowledge of the target audiences and businesses you’re creating your app for. Ideally, you should have been responsible for that function at some point in your career.
- Know how to code (or at least understand best practices for software development).
Okay, maybe this isn’t exactly unlocking-the-secrets-of-the-universe-level wisdom, but it reflects the common sense you need if you want to launch a successful FinOps business.
Skeptical? Let me share how my own experience following this advice has resulted in two very successful high-tech start-ups.
Learning from experience
After earning my coding skills managing software development projects at PwC and for a Wall Street trading desk, I left to start a greengrocer and wine store in 2004.
I loved building these businesses. But I hated the user-unfriendly old fashion point-of-sale (POS) systems my employees and I were forced to use.
So, I decided to use my coding background to build a better POS platform.
It wasn’t as easy as I’m making it sound. POS software has been around for 20-30 years, so I had to be intentional about what problem my platform would solve. I decided I would build the simplest system to do the tasks I needed for my own retail business. Finding the right engineer was part of this work. I found a strong engineer and built a prototype with him to test his skill because you can’t just hire any engineer even if they look great on paper. When he passed my test we turned that prototype into the first version.
It turned out a busy grocery and wine business was a bad place to test such a core operational software system, so I found better beta businesses in my neighbourhood. And even after deployment, it went through multiple updates until everyone was satisfied with its speed, functionality, and ease of use.
After we added an iPad as the main interface and stopped using expensive touch screen terminals ShopKeep exploded in growth. Eventually, more than 25,000 retailers became ShopKeep customers, using the system to streamline payments and scale their operations.
Since selling ShopKeep in 2021 to LightSpeed LSPD, I’ve started several new companies. One of these is a bookkeeping firm that provides client accounting services to retailers and restaurants.
Working side by side with my team of bookkeepers and certified personal accountants (CPAs), I quickly learned how frustrating the job has become with the proliferation of e-commerce platforms and online payment and fulfilment systems.
Many brick-and-mortar retailers now sell their products online using e-commerce platforms like Amazon Marketplace, Shopify and Etsy. Most restaurants use online reservation vendors like Resy and OpenTable and delivery vendors like Grubhub and Uber Eats. And each one of these online platforms may use several online payment vendors.
While these online services can make life a lot easier (and more profitable) for business owners, they create endless headaches for bookkeepers, who have to log on to each portal separately and then download an often-bewildering variety of sales reports to capture and analyse the various sales taxes, service charges, discounts, commissions and fees these platforms deduct from each sale.
After witnessing firsthand the pain my bookkeepers were going through, I decided to launch an accounting automation platform that enables bookkeepers and accountants to automatically download and post daily journal entries from Amazon, Grubhub, Shopify and other platforms into QuickBooks or Xero and reconcile them against bank deposits in minutes.
I knew I had a head start on potential competitors because, as both a retail entrepreneur and business owner who’s managed his own books for years, I understood what my platform needed to do to be successful.
Beta testers are important when developing new technology and they will share honest feedback, but you don’t interact enough with them to get all the necessary details. Using your tech in your own business to solve real customer problems is how you gain the nuanced insight necessary to properly refine your tool.
Right now, my company, Bookkeep, owns its category. But it will never be “finished”. Every new client brings its own challenges, and we’re constantly updating the software to accommodate their needs.
So, whenever an aspiring tech start-up founder comes to me asking for advice on how to get their firm off the ground, I always tell them that they shouldn’t even begin to put their features list together until they’ve stood in their clients’ shoes.
This kind of hands-on experience will help you shape what your product needs to be, rather than what you think it should be.
And then, once you have that information, start coding it. Preferably yourself.
Why is coding knowledge important?
I’m not saying you actually need to write every line of code in your app. That’s for your engineers to do.
But I do think it’s critical for tech CEOs to have some knowledge of how code works. I didn’t do much of the coding for ShopKeep and wished I had. So when I started Bookkeep I intentionally handled most of the product coding. I had foundational knowledge from my past work experiences but I needed additional guidance and coaching. Here are the steps I took and others can follow to get started:
- Download self-learning apps like Solo Learn and view workflow automation tools you might already be using in your business, like Zapier, for their educational purposes. Zapier’s simple no-code drag-and-drop process is basically like a code module, offering the user a mini-lesson on what code can do. It won’t teach you how to write software or a social media app, but it can be helpful for understanding B2B and back-office coding. Airtable is also a great app to use to learn how databases work.
- Decide to be responsible for coding a portion of your product. Work alongside your team of engineers if you need the support but take full ownership of its design and implementation. I eventually programmed our onboarding and billing system. So I can tell you from experience that the more you know about coding, the more efficient the software development process will be.
- Related, test every piece of the code. In the early days, you need to be the No 1 power user of your product.
When you know code, you’ll understand that software development is an iterative process. It isn’t about building the perfect app in one fell swoop. It’s about going through multiple iterations and prototypes, testing yourself, then testing with live businesses. Even if you’re not writing the actual code, you should know enough to be able to use prototyping tools to create screens and workflows that illustrate how you want your app to work. Show these to people who could be your future customers. Get their feedback on what’s working and what’s missing.
Once you’ve got it to a place where you’re satisfied with your prototype, hand it off to your engineers so they can start building the actual app. But don’t take your eyes off it, be sure to continually test it as they are developing it.
If you know how code works, you won’t be at the mercy of developers and product teams who try to convince you that what you want can’t be done – or can’t be done quickly or inexpensively. You know enough to be able to counter their arguments. You can even write some of it yourself to show them how it can be done. And if what they give you doesn’t match your vision of what it should be, work alongside them to fix it.
You’re using the tools of the trade to build your start-up from the ground up. You’re giving your customers what they want. And you’re leading by example. That’s what successful tech entrepreneurship is all about.
He is also the creator of ShopKeep, a cloud-based POS system used by more than 25,000 retailers and entrepreneurs.