Startup Lessons From My Dwarf Orange Tree

If you have read of any of my previous blogs, then you will know that I love telling stories.

This story begins in our brand new Camden lair,It was new, it was shiny but the office was bare.

Oh no, what could we do!The answer:        An online shopping trip was due.

We searched and searched, alas nothing was there,Until, a beautiful dwarf orange tree we did ensnare.

And to think that my fifth-grade English teacher said I had no talent! Take that Miss Jones*!

Let’s begin at the beginning because the beginning is a great place to begin.

A Simple SeedMy dwarf orange tree began life as a seed. A seed cannot sprout on its own. It needs water, sun and soil to grow. And just like the seed, your startup needs external nurturing at the beginning. One of the biggest mistakes that founders make is keeping everything a big secret.

Well, here is a secret: ideas don’t get stolen nearly as often as you think because ideas are easy, there are many of them out there. The hard part is execution. The hard part is taking an idea and making it in to a business. And that can’t be stolen, that depends on you.

So speak to people and ask them for help. I strongly suggest that you find a mentor. Someone who has been there before and can help you through the ups and downs. The mentor does not need to be an expert in your chosen field but rather someone who can keep you on track, hold your hand after the tough days and give you a pat on the back after the great ones. 

A Solid TrunkMy little tree may not be big but it has a sturdy trunk and that trunk allows it to branch out and bear fruit.

The lesson here is to have a strong core offering. It has been said that startups don’t die for lack of opportunity but rather drown under the sheer weight of them.

This can be a big problem for B2B startups; you will get a potential client excited about your product but they will say, “It’s great but can we just change x, y and z?” The danger here is that you end up becoming a consultancy (not that there is anything wrong with consulting firms, I happen to work for a great one). Consulting firms are good businesses but they don’t scale the way tech companies do.

If you keep making changes to your core product for each new client, then you will end up becoming all branch and no trunk, which is also known as a bush. As I am sure you know, bushes don’t grow nearly as big and strong as trees do.

It may be difficult and you may lose some clients.  But you must focus on your product and be strong enough to say no. 

Beautiful Fruit“Beautiful” – an interesting adjective to describe a fruit, not one I chose lightly. You see, I couldn’t choose sweet, tasty or refreshing because my dwarf orange tree was not blessed with edible fruit. The little oranges are particular tart and nobody willingly takes a second bite.

My little tree is really quite clever; if it tried to sell itself based on the taste of its fruit it would never win. It would be completely worthless. It would have no value proposition. But my tree is way too smart for that, it has not chosen to compete with fruit bearing trees but rather decorative items. Now, as a decoration, it excels. It has a clear value proposition: pretty blossoms, cute little oranges and great deep green leaves. It is no longer worthless! In fact I have no doubt I paid a large premium for my little tree.

In marketing speak, picking your competition is called positioning. Positioning is incredibly important. If I asked you to tell me what type of company Ferrari is, there is a good chance you would say a car manufacturer. While you wouldn’t be wrong, a much better answer is a luxury goods producer.  Ferrari understands positioning. By choosing to brand themselves as a luxury producer they were able to value the company at around $10b using a price-earnings (“P/E”) multiple of 31. For comparison sake most car manufacturers have a P/E multiple closer to 10, so if they chose to brand themselves as car manufacturer their valuation would have been closer to $3b!

When pitching your startup, whether to investors or potential clients, you need to make sure that your value proposition is clear but, more importantly, that it’s positioned in a way that the audience understands how it benefits them. Ultimately, your competition is not really that other startup trying to do the same as you; your competition is actually inertia or “the way it’s always been done”. If you focus on the other startup, you may end up in a pricing war where the lowest bidder wins. But if you are focussed on the problem, then it’s all about the value you can bring when solving that problem. I can assure you from many years of experience: selling “value” is much easier then selling “price”.

I bet you never thought that you could learn all of that from my dwarf orange tree! If you are looking for someone to help you prune branches and grow your tree, let me know @jonathanroomer or [email protected].

*Miss Jones was not actually my 5th grade teacher, I was always very diligent in school and the teachers only ever said nice thing to my parents on parents evening. Except for Mr Smith**, my 8th grade technology teacher who didn’t like me.

**Mr Smith was not actually my 8th grade technology teacher. Come to think of it, in that class we learned how to fix a toilet and change a plug. I really am glad technology has changed in the last 20 years!