Trading corporate life for a start-up
Cubicle escapee Tim Andrew.
It can be tough starting a business. It can even be tougher when you're leaving the comfortable confines of a lucrative corporate position. In fact, according to cubicle escapee, Tim Andrew, it can be a rude shock.
"It can be difficult if you're coming from the cocoon of the corporate space," says Andrew, 38, who was a senior executive with NAB before quitting in November 2011 to work on his start-up, Splitit.com.au. "There's no one to delegate to, no one to organise your diary for you or to get your coffee!"
He and co-founder David Ingram, 35, have ambitious plans to disrupt the online marketplace for essential services such as health insurance, superannuation, telecommunication and energy. Currently the site, which launched in May, offers price comparisons for health insurance but Andrew says other categories will follow suit.
Price comparison sites are not new and the fees displayed often include a commission which is typically collected by the site owner. So where is the disruption?
Andrew believes that Splitit.com.au has a unique point of difference: customers get cash back. "The commission is split 50:50 with the customer," he says. Andrew explains that if you take out health insurance to the tune of around $2000 a year, you are likely to receive about $200 cash back, depending on which insurer you choose – and thus the level of commission they offer.
The idea for the business was born over beers at the lobby bar of the Four Seasons Hotel in Sydney when both men were working full-time in their respective jobs. Although confident in their idea, the pair realised they didn't have the funds needed to make it come to fruition. So they knew they had to find investors.
"It was clear that this business needs to scale in order to properly do what we need it to do," says Andrew. "And that meant giving other people access to equity in the company."
However, Andrew says that finding the right investors is important. "We've always treated money like a commodity," he says. "We look for the people who have the 'smarts' to help us achieve the business goals we've got. It's your 'smarts' that will give you the right to buy into the business."
Within eight weeks, the duo found their initial round of funding. Ingram quit his senior executive position at KPMG in September 2011 to focus on the start-up.
Now that both co-founders are focused on it full-time – with no corporate pay packet coming in each week - the pressure is on to make it work.
"We've been eating into and watching our life's savings disappear as we've been pushing this business through," says Andrew. "There's nothing like four kids, a fabulous wife and a hungry mortgage to make you focus. These things keep you grounded and ensure that you're working on the right thing. You make it work. After all, I'm not going to move back in with my parents."
The transition from corporate life to start-up not only involves getting used to the fact that there's no mail room to post your letters and no stationery cupboard to raid; it also means getting involved in a new community.
Australia's start-up scene as a very clear identity populated with keen entrepreneurs who live and breathe their online marketing strategies, measure their successes by clicks and conversions and who enjoy largely unstructured meet-ups and all manner of camps (BarCamp, WordCamp, PubCamp and so on).
"I feel that David and I are not typical, particularly compared to those coming to start-ups fresh from uni," says Andrew. "We seem to be in the minority."
Andrew says those who have taken the plunge from corporate life were typically in those jobs so they could earn money while they figured out what to do next.
However, Andrew says that his corporate connections have proven valuable, despite now being in "a whole new world".
"You soon realise that you've only really seen the people and relationships in your network from a particular viewpoint," he says. "When you start talking to those people about your new ideas, you connect with them on another level and this opens up new worlds that you didn't even know were there. We've found new suppliers and customers through people we already knew - we just had to start having different conversations with them."
Andrew is based in Melbourne while Ingram is based in Sydney, where the business is headquartered. As a result, Andrew spends two to three days a week commuting.
"The most surprising thing has been discovering your own individual capacity to get things done," he says. "Every time I think I've found the limit, I discover that I can do more."