(Cue music: 🎶 I said you wanna be startin’ something, you got to be startin’ something 🎶)
The Tech Leading Ladies October meetup featured Lucy Lloyd. During her career Lucy has managed the development of hundreds of digital campaigns, websites, apps and SaaS products and is currently the co-founder and CEO and CEO of Mentorloop.
Lucy is a great storyteller and gave us a fascinating behind-the-scenes look at her journey growing a software “side project” into a thriving business, along with many valuable tips for those of us who might be looking to start or scale up our own side hustle or business.
The Tech Wreck
It’s always a great idea to start Something, but it seems as though right now there isn’t much money for tech early stage founders – after years of growth in technology we have now hit a “tech wreck”, where VC money has dried up. And of course this hits women and under-represented groups even harder. We’ve previously seen all the tech stories in the media being about the millions raised and now they all seem to be about redundancies and businesses going under.
In our industry we need to move beyond the binary of “boom or bust”, “thrive or fail” and think about businesses that can be built at a different speed. Between these extremes there is the “thriving middle”, where businesses may not grow as quickly, but they still create jobs and can make a change in the world. With the drying up of VC funding there is a swing back to profitability instead of a “growth at all costs” mentality. Mentorloop was founded in 2016, it now has a team of 13 in AU and 3 in the UK and is profitable!
What is Mentorloop?
There’s a popular idea of mentoring and it revolves around the “chosen one” – meaning that mentoring relationships are exclusive, behind closed doors and available only for a special few. The problem with this philosophy is that it favours people who already have access to great networks and opportunities, reinforcing the same people moving into positions of power and leadership. This like-with-like mentorship excludes those who are in under-represented groups based on race, gender, ability etc. Mentorloop believes that the right connection can change your life, and that mentoring should be available to everyone. By making this into a platform, mentoring can become more accessible without the need to be in the right place at the right time, or to know the “right people”.
Even though Mentorloop officially started in 2016, Lucy and her co-founder Heidi were thinking about it for 3 years as a side hustle. An important thing to know about starting Something is that it doesn’t have to happen overnight, you don’t have to jettison every other responsibility you have and go all-in, it can be a slow burn.
Where to get ideas
Relaxing with a friend – where the best ideas reveal themselves.
When Lucy moved back to Melbourne from the UK in 2013 there was no Tech Leading Ladies and the tech industry seemed impenetrable. It seemed like there were a whole lot of “dudes with hoodies” running the industry and it was very hard to work out how to make the transition into tech. Lucy and Heidi were talking about how good it would be to connect with a future version of yourself who could help you navigate this path – imagine if LinkedIn optimised for quality of connections rather than quantity! This was the seed for their idea.
Avoiding the “great idea in search of a customer.”
The initial vision for Mentorloop was a bit like a dating site to match mentors and mentees, and the first people that Lucy and Heidi spoke to thought that was a good idea. However, when they started customer discovery and spoke to people already running mentoring programs at a large scale – universities, industry bodies, HR departments at corporates – they realised that the real problems were not with the mentor-mentee relationships but with the administration of the mentoring programs. The customers of Mentorloop were going to be the people whose problem would be solved by getting rid of spreadsheets and emails.
So instead of building the dating site they ended up with a SaaS B2B model and secured customers with both a problem and a budget. (By using this model they also succeeded in avoiding a “user pays”, transactional model of mentorship which could affect the nature of the mentoring relationship and become a recipe for disappointment.) Each new feature built in Mentorloop is tested to make sure it’s something that people are willing to pay for, not just a great idea.
Legitimise the business in your own mind
Not just “a little project I’m working on”
In talking to friends, Lucy would describe Mentorloop as “the side project we’re working on” – looking back now she wonders if she was maybe underplaying it from a fear of failure? Her “more entrepreneurial” co-founder Heidi would correct her and say – “No, we have a business here and we are doing it to make money!” So take your Something seriously and back yourself in the way you think and speak about your efforts. Calling it a “Side-hustle” might be OK, but maybe what you have is a Business.
Seek external validation
When in doubt, look outside yourself to validate your idea / define progress / confirm next steps.
When you start your Something you can get into your own echo chamber – you are excited and keep seeing positive reinforcements wherever you look. It’s easy to fall into a too-optimistic place, so you need to get external validation and balance extreme optimism with intellectual honesty. Talk to customers, advisors, and potential investors (who are particularly great at deflating your sense of optimism!).
At some point you might decide that it’s time to go all-in and leave your other job and responsibilities – it’s hard to decide when the Something is no longer a side hustle. Lucy and Heidi used external validation to make this decision by seeking investment – using what they had to try and get some kind of salary for 12 months. They decided that if they could get that investment then the decision would be de-risked enough that they would go for it, and in 2016 they raised the money and went full time on Mentorloop.
Ask for help
Even if you decide to go it alone, asking for help is a superpower when you’re just starting out (or any time)
Particularly for women and other under-represented groups, when you are starting Something, there may be an impulse to do it all yourself in order to prove that you can do it. You have to overcome this impulse and ask for help: from mentors, advisors, people you meet at events, etc. Lucy found that the Startmate accelerator was great training because you had to end every conversation with “the ask” – “what’s the ask here?”. It’s not only about asking for advice but can be about asking for someone to be a cofounder with you. Lucy said she would never have done it without Heidi! If you start your Something with someone else, there is someone to share the load when you don’t know what you’re doing, or things aren’t going well. Your skills can balance each other.
Q: If you started out not technical, how did you build the first iteration of the app?
A: Lucy had spent shopped out to development agencies to build, and paid using seed funding that Lucy and Heidi had contributed themselves. One of the reasons it took 3 years to get Mentorloop off the ground was the need to contribute funds from the founders’ personal pockets in order to pay for development of the improvements. This constraint made the process take longer but also enforced a very lean development where Lucy and Heidi would build only what they were confident that customers wanted.
Define your North Star
When Lucy and Heidi first started full time on Mentorloop, they found they suddenly had so much time that they spent some of it on things that were not contributing towards their goals. Lucy figures they had maybe 3-6 months of spinning their wheels with lots of activity but not much to show for it – “as if activity alone could lead to success in the business”. For example, discussing hiring app developers when the primary customers at that time were administrators on desktops.
Then they heard a story about the campaign manager for Barack Obama’s first presidential campaign, who had plotted out all the “wins” that were needed along the way to get to the White House. The first of these wins needed was in the Iowa Caucus. Oprah Winfrey, who like Obama lived in Chicago, offered to set up a fundraising concert there and even managed to sign up Bruce Springsteen to appear. But when the campaign manager was told about it, their response was – that’s nice but how will a concert in Chicago help us win Iowa? Of course it wouldn’t, so they didn’t go ahead with the concert (and they did win Iowa). The moral of the story is that if you’ve charted your strategy and the steps to get to your goal, even the shiniest opportunity can be properly evaluated based on whether it will actually contribute to your goal. And from then on Lucy and Heidi could help each other stay on track by saying “Iowa!” to each other.
Q: At what point did you build in validation with your strategy – how do you know that it’s still good as you’re going along? By filtering out all the noise you might miss something that will disprove your strategy, or a different opportunity that might be better – did you build in anything to validate as you went?
A: Lucy and Heidi set an initial stretch goal of a short term recurring revenue target, so they had a metric and a timeframe that they could use as a clarifying focus point, and they constantly revisit these kinds of milestones.
Don’t waste time on brand and legals
(This is not legal advice!)
The key word is WASTE, meaning don’t overinvest and get too excited about your brand. Lucy and Heidi first focused on getting a name – this is part of moving from a “project” to a “business”, your business needs a name! With Lucy’s background in SEO, she knew the value of having “mentor” in there, and a name generator came up with Mentorloop which is something they liked the sound of. The “loop” part has now become the term for the relationship between mentor and mentee – so Mentorloop does what it says on the tin.
On the legal side, while it was important to set up a company, it was initially a very simple structure with two shares, one each for Lucy and Heidi. They planned to revisit the structure later when they actually started to make money but that was enough for the beginning – a business structure and being 50:50 from day 1.
Finding your first customer
The best first customer co-designs your first product
A question Lucy is often asked is “how did you find your first customer”? She and Heidi built clickable prototypes in Powerpoint (much harder than using the tools available today), showed them to about 10 different prospects during the customer discovery journey and one signed up – not for a lot of money at that stage! This customer believed in the product because they had seen it evolve, so they backed it through procurement to purchase and they are still a customer today. Once you have one customer you get some credibility and it’s easier to sign others up. Lucy and Heidi offered early access incentives but did NOT offer anything free because of the idea that people only value what they pay for. This might not be the same for your Something, but they needed people to pay because they needed them to commit.
Q: In the early days how did you balance customer feedback with them wanting you to build something bespoke just for them (that wouldn’t work well for others)
A: Lucy and Heidi always knew that Mentorloop was going to be multi-tenanted and not have separate applications per customer, so they ring fenced what could be customised, like the recruitment form questions. Lucy says it’s hard but you get better at this as you go; Mentorloop initially built one very bespoke recruitment form and had to unpick it for the next customer and then it was easier for the one after that. It’s hard but being firm about what can and can’t be changed is helpful.
Q: When you were doing customer discovery in the really early stages, did you have a delineation between what your IP is and what you actually tell people? I have an idea, but how much should I disclose to people – I need to tell them enough for them to know if they are interested in the thing, but I don’t want to give away too much the core of what it is that I’m building.
A: Lucy said that maybe they did have that fear initially but got better about talking about it as they went on, thinking “anyone can have an idea, it’s the execution that’s the hard bit”. When she and Heidi started Mentorloop it seemed super niche, there were no search hits for mentoring, and now Mentorloop has 11 competitors – they watch the competition but are still customer-first in the way they are operating. You can try to get people to sign an NDA but they’re not worth the paper they are printed on. Your execution and the way you go about it is what becomes your IP rather than the idea of what you’re building.
Raising money, finding time
What will starting your own thing actually cost?
Again asking for help is really important; as non technical founders Lucy and Heidi were often asking for advice on how to build Mentorloop and there’s a saying “ask for investment get advice, ask for advice get investment”. They pounded the pavement for a long time before they were ready to raise, asking VCs and angels: what would Mentorloop need to look like for you to put money in? They got a lot of “No”s but by the time they came to raise they had spoken to 100 different parties, and of those 12 were interested. There’s another saying “investors invest in lines not dots” – the earlier you can get in front of potential investors telling them what your intentions are and then show them that you actually fulfil your intentions, the more likely they are to put money in because you’re derisking the investment for them by doing what you say you are going to do. Investors will rarely invest after one meeting, they want to see history, traction and progress validating the idea over time
It’s also about investment of your time – women still do shoulder the bulk of household tasks in Australia and it’s hard to keep running a business then that’s going on – when you start Something you definitely need some serious support behind you. VC Twitter (which is a terrible place) has these opinion lists of the best kind of people to start a business – “single man”, “man with wife”, “single woman” – these ridiculous ideas that the single bloke is the best person to invest in because there’s no risk he’ll become pregnant, he doesn’t have any hangers-on to distract him etc. – there are still VCs who think like this, who won’t invest in women if they’re pregnant. So it’s not just about attracting and making the case for the money investment, it’s also about lifestyle and the time investment. The other opportunity you have when you start something is to build a business that is the kind of business you would like to work in, when it comes to parental leave policies, flexibility and understanding.
Small stuff adds up
Seemingly insignificant pieces of advice / habits / course corrections
Just start – if you’re thinking about starting just start, even if it’s just putting an idea on a web page and getting emails from people who might be interested. Start to build traction that can be measured in terms of interest from potential customers. These little things add up.
Back to the “Tech Wreck”
It looks like it’s a difficult time to start something in Australian tech at the moment but Lucy thinks there’s never been a better time, there’s so much more support now for all kinds of founders. There are so many more accelerators that are super specific about not only the subject matter but the identity of the founder as well and making things more open to under-represented groups. Low-code and no-code platforms make it more accessible for people who aren’t technical or where the tech that you want to build doesn’t align with the tech that you know how to build. There’s a lot of positivity.
Covid made Mentorloop track to profitability and the drying up of VC funding is sending other founders down the same path – there’s nothing more rewarding than running a business that pays for itself. What matters now in business is the metrics that have always mattered: can I make money? Do I have a customer? Can I sell to that customer? Will they enjoy the experience? Women are great at building businesses that put their customers first.
There’s a thriving middle in Australia’s tech scene, there’s heaps of amazing businesses to learn from – they’re not the ones that are featured in the headlines – but there’s definitely a thriving scene and options for money that aren’t VC.
Q: What values did you and your co-founder talk about when creating your company culture and hiring more people?
A: Lucy and Heidi were initially sceptical about values because they had only seen them in a corporate context where words are used but not in a meaningful way. Then they heard a talk from Didier Elzinga at Culture Amp about the importance of cultural values and the metaphor that it’s much easier to turn around a rowboat than it is to turn a container ship – the bigger you get the harder it is to course correct if you’ve optimised the wrong things. As co-founders they thought at first “well we’re good people so surely that will flow through the organisation” – but no, that’s not how it works. When they got to about 6 people they thought it was time to define the guardrails so they did a kind of workshop exercise with post its and tried to work out what they thought defines ML and what kind of company they wanted to be a part of, and then they formed their values from there. So they didn’t define them up front but Lucy is glad they did them later because now they are used at Mentorloop as a framework when hiring, in their Slack channel as emojis and in everyone’s day to day which is one of the most crucial things about values.