Learning from mistakes and how to tackle the upcoming headwind

We know that mistakes propel us forward, but how do we make them recognize them and learn from them ss something, what the amazing speakers at inaugural “Business with Champions’ sponsored by AWS Startups are gonna talk about. 

Christina is CEO at Verve and on a mission of building the financial power for women and passionate about ethical investment, impact investment, and ensuring that capital is used to help build a better world.

From the other side of the spectrum, we have Adam Milgrim, partner at Giant Leap, Australia’s first venture capital fund 100% dedicated to investing in impact startups whose mission is to back game changing founders, reimagining industries, and using business as a force for good.

And Nikita Le Messurier, the Startups Advisor at AWS assisting some of Australia’s most exciting startups to scale, innovate, and operate efficiently.

How do you define the mistakes in leadership?

Christina: The mistakes that you make as a leader are probably the worst ones. I think for me, the role of being the leader of an organisation is to set the vision, to communicate the strategy, and to essentially raise funds.

Of all of those, I think that if you don’t have a strong vision, you can’t attract the right people, you can’t maintain the right people, and you really can’t run the business in the right direction. I think errors in strategy are moveable and then when it comes to raising money, I think that’s probably where you can make the most detrimental mistakes.

I think it was Adam that once described it to me, that really the only mistakes you can’t recover from in business, and it was around poor shareholder agreements, poor agreements with co-founders. So luckily, I’ve never made those major mistakes, but I’ve made some pretty hilarious strategic mistakes along the way.

How do you deal with mistakes in VC land?

Adam: As a VC we have to be a really trusted, confident of our investee companies, and we have to accept that they’re gonna make mistakes and hold that and not hold it against them, because if entrepreneurs don’t feel safe coming to their VCs or their investors and talking honestly about the challenges in the businesses, you can’t have a strong relationship and you can’t build from that foundation.

So the first thing to realise is that mistakes are totally normal and fine and that entrepreneurs have to make mistakes that are inherent in their process, that they’re iterative, that they’re doing things that no one’s done before, by definition.

How much personal development stands in front of the mistakes?

Nikita: I know when I look at the different startups that I work with, you can see a marked difference in the businesses and how they operate from first time founders and second time founders.

And that’s because those second time founders have made the mistakes many times over.  They’ve experienced running a business before. They know what the hurdles are, they know what the challenges are, they know how to see around some of those corners. And you see a foresight in them, that is a little bit more preventative.

But also what I can take from that, from working with so many different founders is some of those insights and I can see what works and what doesn’t, and I can help some of those first time founders, to see around the same corners they might not know exist yet. And so that’s the unique position that I get to sit in.

Christina: I think we’ve been on a really interesting journey of the business probably over the last six months, where we began to realise that the issues we were having or some of the issues we were having as a leadership team, but also further down into our executive team, were really these small things that kept coming up and up again.

And it was those sort of moments that make you uncomfortable working with your co-founder or uncomfortable in a way a staff member thinks about something or talks about something. But it was really in these smaller moments that weren’t being addressed properly. And so we’ve really been on this journey of actually bringing in a ‘radical feedback culture’ and really thinking about how do we do this in a really world leading way?

At Verve, we’re trying to work with all of our team members to be able to have pride, instant, honest, empathetic feedback and really training our staff and our team to be vulnerable and open to hearing it. Because what we were sort of finding is when these big things went wrong, they were often being caused by behaviours or ways of working that we could see in minor ways before those big moments were happening. 

I feel like we’re in a really radical transformation as a business where it’s actually forced everyone to be a lot more open and vulnerable about the things that are going on in their minds that are impacting how they’re actually working.

What do you know now that you wish you knew when you started a business or earlier in your career?

Adam: The things that I’ve realised now, that I believe now, that I didn’t when I was starting my career, was to have a growth mindset.

And that actually these things are learned skills. So an abundance mentality and a growth mindset, are not an innate part of your psychology. And I came into the world thinking the business was the way business was and that it just existed to sell stuff. And the normal growth rate was 10 or 20% per annum.

And that’s just not true, right? That doesn’t have to be true! The beauty of working with startups is you get to create the world that you believe should exist. And so if you want a company that grows at 20% a month, you can create that world. If you want a company that doesn’t grow at all, you can create that world.

And the ability to have that kind of abundance mindset to say, I can create the world that I want to live in, is something that I wish I knew 20 years ago.

 What’s the hardest decision you had to make and why?

Christina: The hardest thing I’ve gone through as a business and had to manage was actually having a baby about 14 months ago. And it’s just that really hard reality for women, but also for men. It’s like your prime fertility years knock and coincide with your prime career years and how the hell you manage that.

And I think going into that, I had heard all these stories of, you know, it’s fine. You have a baby, they sleep all the time, you’ll just get to pop some emails down, you’ll be fine…

It was extremely challenging and I think for me, the lesson for that, and I think it’s for men and women and sometimes it might even be harder for male co-founders because you don’t get that same empathy, but you’re still going through it at home – is really having to work on and really think through how to manage that. I would just recommend to anyone who’s got kids on their cards to really sit down, take it seriously, and work out a strategy.

What’s the biggest sacrifice you have made as a CEO or partner? 

Adam: There’s always opportunity cost with decision making. And so I don’t think there’s a unique opportunity cost for being a partner at Giant Leap. But of course it limits what I can do. The primary thing for me, that change was before I was a partner at Giant Leap, I was a pretty active angel investor, and it’s very hard to be an angel investor and a full-time investor at a venture capital fund.

And so I had to choose for myself where my priorities lie. I assume for everyone, it is like you’re trading off family for work. And I’ve got three awesome kids and a beautiful wife. And definitely I can’t spend as much time with them as I want to because of work. But the work is so interesting and gives me so much purpose that the trade off makes sense. But I think everyone makes that trade off – It’s all work, but in a really good way!

Christina: I would say the biggest trade off that I didn’t really think about before I started a business was just that ability to actually turn off. I’ve had really big stressful jobs in the past, but could still normally come home and have some level of switch off, watch something omn Netflix and chill. 

But I think having your own business, that switch off never really happens. It’s just a constant, whether it’s because you’re raising money and so you’re thinking about needing to fund the business or for me it’s normally just a million different ideas going through my head that I try to just write down in my notes and not instantly take action. 

What do you think the Australian startup ecosystem can learn from other ecosystems more advanced?

Nikita: Firstly, I think our ecosystem is unique. We clearly have an incredible community here. Ecosystems like Silicon Valley, the ecosystem in London, New York… there are a couple of things that set them apart. The first one is they have an even stronger focus on community, which is so important, especially for underrepresented founders. We’re just going down that pathway at the moment. There are a number of initiatives to support female founders, which I’m really excited about personally!

And founders from indigenous communities, and more minority communities as well. But that’s still really nascent, in Australia. Another is the focus on hyper innovative investment. We’re a little bit safer in our investment here in Australia, and I think that is because our market is a little bit smaller.

If you look into the sheets over in New York and Berlin, there’s a lot more investment going into, especially from angel communities, high growth technologies like haptics, vr, robotics.

Where is VC land in Australia now, and where would you like it to be? 

Adam: In terms of what’s happening in the VC landscape, certainly there’s a lot of money that’s pulled out as interest rates come up. A lot of the, what I would call ‘tourists investors’ or people who aren’t here as a career find other places to put their money. And so that’s definitely making it harder to raise money and taking investment rounds are taking longer.

Valuations are definitely lower. But I think it’s a reversion to the mean actually, I think we were a little bit hotheaded over the last couple of years and it wasn’t doing any service to founders or to the ecosystem, or to investors; because we’re playing the long game. For the companies that weren’t exiting over the last couple of years, their valuation was just one post on a very long road.

And if you end up with a too high evaluation early in your journey, it can really set you up for failure because you’ve kind of set the bar or the high water mark is too high. And so I actually think that we’re in a much better position at the moment and the companies that are getting funded are getting funded with investors who are there for the long term.

What kind of companies can survive the current markets, or the market in 2023? 

Adam: I think all companies can survive. I think it’s easier for companies that are solving a problem that their customers really want to pay for, and that for me is like the test, right?

Can you charge more for your product, at this moment? I think it’s harder for companies that rely on raising a huge amount of capital with very limited attraction because investors don’t need to put their money there. They can put their money into slightly safer opportunities.

Christina: We were looking to raise $2.5M. We were oversubscribed, we’re about to close $3M. And we did it really quickly. And that was despite all these earlier warnings by people that were, it’s gonna be hard, it was gonna be long, prepare for the worst.

But the investors were straightaway on board because we’d be able to show strong traction. Not exceptional moonshot growth, but a good story of traction and growth. We had set our valuation always at fair, like fair levels hadn’t been over raised in previous rounds.

And so going into this round in this market, it looked like an attractive proposition. And suddenly your investors were way more interested in, can you cover your operating costs? What’s your runway gonna be with this investment? What does that kind of stable growth look like? So it was the opposite set of questions that we were having last time.

Any predictions for 2023?

Adam: I don’t wanna be too pessimistic, but I think next year’s gonna continue to be tough. I don’t think that the economic environment is going to change quickly. I think we’re gonna continue to see interest rates increase. I think we’re gonna continue to, which will inherently force valuations to continue to go down. And companies have to be leaner, and more selective. 

The optimist in me, which you can’t be a venture capitalist and not be optimistic, is that that will build more resilient companies and that will build companies with better core economics. In terms of trends, what we’re seeing, certainly health, is a massive focus area, as is education.

And excitingly, the climate is right in its prime. And I think that there’s a lot of optimism given the current government policies that we’ve got, we’ll see a lot of innovation in that space.