Phil Morle is one of the people would-be web entrepreneurs turn to for a chance to turn their dream into reality.
As a co-founder of start-up incubator Pollenizer, Morle and his partner Mick Liubinskas are approached by as many as 100 budding entrepreneurs a fortnight, with each vying for the investment and expertise that the founders and their team put into a new business.
“We invest up to $150,000 at the very beginning, at the riskiest, most tenuous time of a company’s life, when it’s just a sketch on a napkin or a thought,” says Morle.
The hopefuls effectively have to audition for Pollenizer, and once the team spots people they’re interested in, they put them through a “bootcamp” for an evening, where they develop and grow a mini-business in a fast-changing environment. Five to 10 businesses win funding each year.
To outsiders it can seem that entrepreneurs make a fortune from websites with one great idea, but Morle says the person is more important than the concept.
“The idea’s important, but the idea shifts through time, it evolves and learns from its environment,” he says.
“But the person is the person. You’re stuck with them, and they’ve either got the confidence and the audacity and they’re comfortable with the fear of running their own company and they’re comfortable with failure and all those things, or they don’t.”
The key attribute Pollenizer is looking for is an unusual blend of obsession and flexibility. “There’s a sort of duality. On the one hand you want somebody that is stubborn and obsessed with an idea and will chase it down in a determined way. On the other hand you need the person to be able to listen and actually hear what the market is telling them,” says Morle.
Pollenizer's ultimate aim is to co-found companies and grow them to a point where the founders can exit for a profit. Its biggest success is group buying site Spreets, which it helped build and sold to Yahoo for $40 million in under 12 months. Others include Posse, Pygg and Wooboard.
To protect Pollenizer’s investment Morle employs what he calls “start-up science”. Sydney-based Pollenizer puts a team with technical and marketing expertise onto a start-up to test the idea in the market as quickly as possible. This “massively de-risks” the company’s investment.
The entrepreneurs run through a process developed by Pollenizer, working in bursts of three months, with a target set for the end of each quarter.
They call the first stage “discovery” – researching whether the start-up solves an existing problem and whether customers will pay for the solution. Next is “validation”, testing that real people will actually want to pay for the product.
About half of the start-ups fail to make it past the second stage.
Third comes “efficiency”: ensuring the site is scalable when more customers come on board, that it isn’t overly reliant on manual work or that it’s not paying too much to acquire each customer. Finally comes “scale” – pouring money from a venture capitalist onto the site to get it out to a wider market.
“There’s a goal at the end, which is this big problem being solved and lots of people paying for it. But you don’t quite know how you’re going to get there, you’ve just got to follow your instincts and try things along the way and learn from those experiences and through that the idea changes and you find the value. You hunt it down,” says Morle.
To survive beyond the start-up phase, a web business needs to win funding from an angel investor before it runs out of money. But angel investors want proof, such as revenue or customer numbers, of a start-up’s viability, which is what Pollenizer aims to do.
Most start-ups fail because they because the founders lack that sense to timing, says Morle.
Technology had always been a hobby of Morle’s and about 15 years ago he decided to make it his career instead of theatre directing.
After a career included stints as a web designer and as chief technology officer at infamous file sharing site Kazaa, which was sued by copyright infringement by the major US record labels and motion pictures studios, Morle founded Pollenizer with Liubinskas in 2008. They each put in $500 because they felt there was little support for start-ups in Australia.
The start-up scene is “immensely richer” than it was four years ago, says Morle.
A recent start-up weekend – where aspiring entrepreneurs spend a sleepless 48 hours building a company in hothouse conditions much like a reality TV show – attracted over 200 people, ranging from forklift drivers to bio-physicists. “There is almost a mainstream trend towards entrepreneurialism,” he says.