By Qing Li
No office. No investor capital. Less focus on growth. A 28-year-old co-founder explains his ups and downs in running a lifestyle startup in the media industry, and how he keeps doing what he loves.
“We are not the typical startup so I don’t know if we’ll fit your project”, Jason Toesan Wen, the 28-year-old co-founder of LeadSocial, replied to my interview request. I was (desperately) searching for interesting startups in the media industry and found him on the Amsterdam Startup map.
The idea of non-typical startup made me more curious. We met the day after in a Starbucks in Amsterdam.
LeadSocial, as specialized in social media data reporting, provides automated custom reports and KPIs (Key Performance Indicators) for media agencies. Although they specifically focus on Facebook, 50%-70% of their customers are media agencies, for whom third party data and analysis are handy to report back to their clients.
With the social media data, companies are able to monitor their online presence. “For instance, one Dutch company targeted at 13-17 years old female with their online advertisement. But our report showed that the target group was actually over 17. Then they realized that they spent money on nothing.”
Lifestyle businesses tend to grow slowly
Apart from what they do, I was also amazed by their way of working. With no office, four full-time staff work remotely at home, in Starbucks, libraries, or while traveling in Asia. With no investor capital, the two young men financed themselves and took loans from the banks. There are also no deadlines. The company is able to work with flexibility like most other software companies.
More importantly, they tend to grow slowly. As Jason explains, there are two important matrixes for software companies – growth and retention. LeadSocial has a very high retention, which means most of the customers are willing to stay with them. Growth, which is tied to sales, is their weakness.
This non-typical startup is categorized as a “lifestyle business“. “We will be making less money. We will not grow as fast as a typical startup. But we really love what we do. Maybe it’s not for everyone, but this is what we really want. ”
“We should make decisions based on what we want to do, not what we are supposed or expected to do.”
The hardships of adjusting the direction forced Jason to see more clearly who he is and what he wants. I am very glad to share with you how this 28-year-old explains the ups and downs in running a lifestyle business.
1. Having an office is not necessary
The Starbucks where we met is actually where Jason usually works. They used to have a nice office by the canals in Amsterdam city center but soon realized that it is not what they want. “I don’t like to manage people.” They decided to go small and work remotely.
Freedom is the biggest bonus. “I love traveling. I can travel to Asia and work there for a few months.” It is also possible to work remotely since what they are doing is completely digital.
Communication is not necessarily a problem. It could be hard if there are new team members, but the two young men already knew each other Since they also understand the tasks and responsibilities very well, “there are not many things need to communicate.”
2. Venture capital is also not necessary
In the beginning, Jason applied to two big accelerators in the Netherlands, Rockstart Accelerator and Startup Bootcamp, but was rejected. Jason invested most of the capital, around 30,000 to 40,000 euros. After they landed the first corporate client, they received 25,000 euros from the bank.
The biggest bonus is that they don’t have a boss. “It was one of the reasons why we started the startup. Shareholders’ values are always not in line with the company’s best interest for their customers. If you really love your company, you always want to put your customers first.”
But if you need salesperson on the team, you probably need investors. “It can take up to six months or even a year for sales to close a deal. If you have outside capital, you have no choice but to go for growth. You made the decision when you took the capital.” Jason decided to not hire any salespeople on the team.
Jason thinks it’s a unique situation for them. “Most of the people are not in the situation to say no because they need money to survive. Also, some people cannot work in our way. They are just not this type of person.”
3. Don’t waste other people’s capital
It is always easy to spend money.
Many companies in their growing phases would go for larger offices and hire more people. “I think it’s just bad business practice because eventually growth is gonna stop. The human weakness of spending what you have is also reflected in business.”
The odd of startups is that 9 out of 10 will die. “It is very tempting to just take the money, even if you know it’s not gonna work. The investors will not know what you think. So if it does not work out, are you going to give it back? ”
4. Split equity equally with your co-founder
Jason’s co-founder, Mauricio Kruijer, is one of his old friends and colleagues too. Mauricio has a computer science background and is devoted in developing.
They did not have equal equity in the beginning. “I invested most of the capital and also started earlier than him. But I realized this was very unfair to him.” Looking back, Jason still feels ashamed that this happened.
“You have to trust your co-founder. In most cases they are also your friends. If not, ask yourself if you made the right decision”. They finally decided to split the equity equally. “It’s the best decision I could ever make.”
5. Ideas are not most important, but the execution is
“Be open about the ideas. No one will steal them, mostly not. People will not drop everything they are doing in their lives, just to steal your idea. The chances are so low, but the benefits of sharing are much higher.”
Jason came up with the initial idea around 2012. He firstly started a social media agency and noticed a strong need for social media management tools among clients. He invited his co-founder to build CoreSocial, which took them one and a half years. But they changed the direction to work on LeadSocial and to provide social media reports.
“You will change your idea eventually. Execution is the most important thing.” As Jason explains, “You may have the big picture of what the market really needs, but a small change can make a big difference. You can only find the small changes by monitoring how people use it.”
One mistake you can make as a startup is to ask investors to sign a non-disclosure agreement (NDA) before sharing the idea. “Investors have dozens of startups coming every day, they can’t remember what can or cannot share. It’s not even viable to do so.”
6. Deadlines don’t work in software companies
They don’t like deadlines, like most of us. But also, deadlines are always not working in their cases. In these three or four years, Jason thinks they have never made it to deadlines.
“It is a general thing in software development that you will never get to your deadlines. We do have our own deadlines to make sure we are working towards the right goal.”
No deadline does not mean you can be laid back. On the contrary, you need to be proactive and self-discipline to make this work.
7. Becoming a millionaire won’t change much
In the beginning, Jason thought they would become millionaires in a few months. But it was not the case. Jason asked himself if he became a millionaire, what would change in his life. “Basically, I would travel more. That’s it.”
“The value in your life should be different than this (money). In my old work, I used to earn a lot, but you spent almost what you had. If you earn 1,000 euros a month, you spend 1,000 euros. If you earn 10 thousand, you spend 10 thousand. It is really like this.”
“Even if you earn 0ne million, you will spend one million. It does not really matter. And you always want to earn more. It’s just an endless thing.”