Growing Your Start-Up | Daniel Muggeridge
"...Forget making money. Make value!"
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Sometime in October 2024, I sat down for a conversation with Daniel Muggeridge in Melbourne, Australia to discuss Tela and ask for his advice on growing a tech start-up.
This article contains my notes from our conversation.
Much of Daniel's career has been in consulting, frequently solving business problems with IT-flavored solutions.
Daniel Muggeridge's present roles include:
- CEO at OpenRoad - a digital records and data company for the environmental service industry.
- Founder at 22 Corporate Advisory - a consulting firm specializing in business and financial instrument valuations, transaction advisory services, and restructuring advisory services.
- Co-Founder and Board Director at Oho - an award-winning social enterprise that helps organizations strengthen child safety and risk management practices by automating the revalidation of Working with Children Checks and other safeguarding accreditations.
- Founder at Blue Bike Solutions - a leading partner in business transformation for the community sector, ensuring smooth operations and providing strategic, organizational, and IT infrastructure support.
Daniel's website: https://muggeridge.au/
The first four sections include Daniel Muggeridge's general advice and insights regarding start-ups.
The final section is Daniel's thoughts on Tela.
Advice and Insights
Early Funding and Growth
Business start-ups get their initial cashflow from the ‘Three Fs’ – Friends, Family, and Fools.
This early funding allows them to get a product to market, generate revenue, and grow a client-base.
The ‘Three Fs’ also inform a start-up's early growth – ‘Who can you reach relationally?’
A start-up usually - but not necessarily - has a chosen geographic area. Once sufficiently (/minimally) established, a start-up’s question is: ‘What (/Who) can we reach quickly?’
To which there are two answers:
1. Upscale to a bigger geographic area
2. Upgrade functionality in established geography
A growth strategy usually pursues both answers.
Founders
A team of founders in a start-up should be clear on what they want - Exit / Lifelong Ownership / Investors - and on how equity will be distributed among them.
Investors
A start-up will eventually need investors. At which point, the business will be asked:
‘How big is the market?’
‘What is your revenue like?’
‘What is your growth of clients like?’
The first of these questions is the most important, and to have an answer you need to know these terms:
Total Addressable Market (TAM) = Overall revenue opportunity that is available if 100% market share is achieved.
Serviceable Available Market (SAM) = Portion of the TAM that can be realistically targeted.
Serviceable Obtainable Market (SOM) = Portion of the SAM that can be realistically captured within a timeframe.
Creating Value
"Forget making money. Make value!"
Making money is tomorrow’s problem. If you’re creating clients, money will follow.
Investors will give you time to monetize your work if you have client growth.
A tech start-up is about multiples of revenue, not multiples of profit (as in a non-tech start-up). A tech start-up is about exponential growth – ‘Will it scale to infinity?’
Thoughts on Tela
Tela's mission is to protect your attention online.
This is a good flag to rally around, but the path to achieve that mission may not be the one Tela is currently pursuing.
Tela’s current path: Charge for your attention.
The logic behind this tactic is that online attention is currently treated as if it has zero value. By creating a system that charges a message sender to contact you, we price your attention, which simulates value.
An economy works through signals. A price on attention can create economic behavior that simulates value. Your attention can then be treated as if it has value.
Red flags:
- There is low user growth.
- We do not know what our market is.
Advice
Stay with the problem. Try cheap, different options.
We need to be 'stratactical' (Strategy + Tactics):
Low-cost probes into new directions and quick learning.
Pursue short cycles of innovation, of cheap investment, and show bravery in shifting out tactics.
A question for Tela is “What are the commercial elements around it?”
Look at Tela from other people’s shoes – it is a two-sided market.
Learn what works in pursuing this mission.
Story of the experienced gardener:
An inexperienced gardener will create a garden and lay down paths for visitors to enjoy it. An experienced gardener will create a garden, allow visitors to make their way around the garden, and lay the paths along the routes those visitors unconsciously took.
Tela is looking to change human behavior – 'What will cause people to act as if they value attention?' We should consider bringing a psychologist on our team, with equity, to help us consider the question of 'What will change behavior in this way if not money?'
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