Tag Archives: learning pool

Sell first, build later… Otherwise known as validate your market

When I talk to start-ups I often talk about the idea of sell first, build later. When I look back at the Learning Pool story, adopting this strategy was a key ingredient of our survival in the very early days and I have no doubt that ability to execute in this way has stood us in good stead as we’ve grown. Before explaining why I think this is good idea for early stage companies, a few health warnings:

  1. You can really only do this as an early stage company. When you get bigger the stakes and the expectations are higher and the risk around doing this becomes intolerable;
  2. Its easier in a business to business sale than in a business to consumer environment although you can do elements of this in a b2c setup;
  3. This is not a strategy really. It’s more a tactic to get into the market and get in front (virtually or physically) of a customer. You shouldn’t forget this bit because it’s maybe the most important element and you have to be ready to grow away from this approach;
  4. You simply must execute the build bit… otherwise your credibility, and with it your business will disappear down the toilet!

All that said, I think there are compelling reasons for adopting this approach, namely;

  1. Its all you can afford when you are a very early stage company with no cash and a window of opportunity that’s closing fast;
  2. it’s a great way to validate your market and best of all, you get to see, and if your lucky even talk to your customers to find out what they like, what they need and what they might want in the future;
  3. You find out whether you really can build this thing and identify the holes in your delivery machine that must be fixed;
  4. You get track record and proof, or otherwise that your concept is viable;
  5. You get to change direction and focus on the things that make the biggest impact for your customers based on real data and honest feedback. You also get to tweak the business model, pricing or pitch if you need to;
  6. It gives you working capital to get the rest of the product built.

One of my best memories of this in the Learning Pool story is when we’d sold a product to a large organisation before it was completely built. We were totally up front with them about it and immediately got to work on building the product so that we delivered on what we promised. A couple of months later we went to see the customer on a sunny day and sat outside their office meeting our contact and celebrate a successful project. She started the meeting by giving us a cheque for more money than the company had ever billed up until that point. When we got back in the car I asked Mary if she remembered anything of the meeting after seeing that cheque… Nope.. me neither! It was a great laugh nonetheless!

Learning as a service – what’s that all about then?

A while back I started using the term ‘learning as a service’ to describe the service we provide at Learning Pool. It started as a throw away comment but has somehow gathered legs and I often get asked to talk about what I meant by this when I meet people.

The whole ‘.,, as a service’ thing started as a software phenomenon and software as a service (SAAS) is a massive area of growth in that industry. This has been the inspiration or many of the things that Learning Pool has developed over the last few years and it’s a strategy that I and the rest of the management team are really committed to. We think we’re largely unique in the ‘learning’ industry and that’s hopefully got a lot to do with our success so far. Here’s why we love this model:

Its low cost – there are no two ways about it, our offerings are cost effective, not just because there are no upfront fees but because the cost per head is so incredibly low compared to face to face training or bespoke e-learning development. The pay as you go nature of what we offer is also really compelling for new customers who don’t need to eat into dwindling cap ex budgets to use our services;

The service switches on immediately – our customers expect to buy something today and see it tomorrow. While there are practical limits to this for a lot of our customers (getting 10 people to agree to a colour scheme for example), this is pretty much how it is with Learning Pool and because we own the technology, that challenge is all ours so our customers don’t need to worry about any of it;

It scales – our customers range from small organisations with a few hundred staff to massive councils with tens of thousands of staff not to mention partners and associates. Regardless of the size of organisation, our service can scale to meet the need and because we’re in control of our infrastructure, we can keep a couple of steps ahead of what our customers need so that they rarely notice the difference;

There are no set-up fees – there just aren’t. Our customers pay a subscription service that they can stop paying when they decide to. Luckily this very rarely happens;

The service improves all the time – this isn’t all to do with the service nature of what we do. It’s actually more because we are a community and that we listen intently to what our customers need. It’s also because we have a great in-house team who are motivated to continually improve our offerings but the service nature of Learning Pool means that the improvements are almost always free and just sort of happen for customers;

You can make the service do what you need it to because there’s an element of customisation available in the technology. This means that although they sit on the same platform, no two customers need have exactly the same Learning Pool service so it still meets everyone’s needs despite the low costs;

We deliver tangible outcomes and return. This is really important for our customers and because they have the option to switch the service off at any time, we are motivated to help customers demonstrate that they can make real savings by using our services. This is a key element to the service side of Learning Pool. We want customers to stay with us for years and have a proud record of rarely losing customers despite it being fairly easy for them to switch supplier.

Selecting this business model for Learning Pool was maybe the most crucial decision we ever made although I’m not sure we thought about it as much as we should have at the time. Instead it sort of grew organically from that day around my kitchen table… I guess some things are just meant to be.

Coming soon – a blog about the pros and cons of this business model from a more commercial  perspective.

The banks aren’t lending… bollocks more like

I hear a lot of entrepreneurs complaining about the fact that they banks won’t lend to their business and how badly done by they are as a result. I have a different perspective on this which Piggy Bankis that banks are naturally risk averse (seriously, they are) so they are more likely to say no than yes. In the world of a banker they have choices. Things like whether to lend £50K to you to do your web start-up or to lend £400K to someone buying a house or £1 million to a ‘real’ business with real collateral that they can secure themselves against. As a web entrepreneur you need to accept early that you are well down the list of people that a banker wants to see coming through the door. You are just too much hassle, not enough margin and way too much risk. if your business looks like a falling knife, no banker is going to want to catch it.

All of this means that its up to entrepreneurs to pitch their business in a way that can make sense to a banker and make him/her want to put their neck on the line and convince their boss to lend to you. This means you need to:

  1. Build a relationship with your bank manager so that they know who you are, what you are trying to achieve and so that they believe you when you tell them something.
  2. Know your facts about the government backed schemes that are out there and that they can get access to so that they can lend you the money you need.
  3. Have a plan that is realistic and credible, written in language that they can understand and that demonstrates what you have achieved already.
  4. Make them understand your business. This can be hard. Try practicing on your Mum first.
  5. Understand the numbers because this is all that they understand. You’ll be asked lots of questions about the numbers and if you hesitate with the answers or even get them wrong, your credibility will be shot.

Over the last 5 years we’ve raised two lots of funding from our bank to help bootstrap Learning Pool, taking advantage of government backed security schemes on both occasions. We were also refused funding from five banks in the very early days but I really think that’s because we didn’t follow the rules above. Securing bank finance has been really hard, time-consuming and pretty boring but ultimately we did it and it saved the company and allowed us to grow. Its well worth getting this stuff right.

In general, I think banks are willing to lend but only to viable businesses who can demonstrate that they have the ability to repay the loan in the short to medium term and to survive in the long term. If you are going to get any cash from your bank, you really need to be able to demonstate that you can do this so that you avoid that door being slammed in your face.