Full transcript: Andrew Mcdonough on London Real
0:20 Here we go. This is Silicon Real, the video podcast dedicated to the people of the London technology startup scene. I am Brian Rose. I also host London Real, which is a similar trialogue, three-person format. We just had Bruce Perry from the BBC series Tribe here.
0:35 We’ve had Tim Ferriss, the 4-Hour Work Week guy, and we’ve had a few athletes recently and since Andrew’s here I thought I’d mention them. We had Kelly Starrett who opened up one of the very first CrossFit gyms in America like nine years ago, and we’ve had, of course, Dan Hardy, the fighter in the UFC as well. and a whistleblower recently, and a whistleblower here with you for that. So yeah, it’s all kicking off at London Real. Come check us out, but we are here to talk Silicon.
0:58 So let me welcome my co-host, who is entrepreneur Colin Pyle, who comes to London from Canada, sometimes going through various exotic countries like China and India riding a motorcycle for months on end. You’ll be on Travel Channel with your India ride soon, is that right? Yeah, just come, should come out first quarter next year. Yeah, cool. Man, I’m looking forward to that.
1:17 I really like your China ride, so thanks for being here, and thanks for also doing double duty on London Real. Awesome, last few weeks. So cool, man. Our guest today is Mr Andrew McDonough. Is that right?
1:28 That’s right. Yeah, fantastic. You’re the co-founder and CTO of Tribe Sports which is a social network for sports people. I believe it’s connecting active people everywhere in the world to revolutionize the sportswear industry. Pretty good, that is.
1:41 Yeah, that’s close. Anyway, all right, I’m not done. I’m going to keep going You recently completed a Kickstarter campaign, which was in August, I think. Yeah, I think you raised, correct me on the number, like 120,000. Yeah, so it was just a smidge in under 120,000.
1:54 Okay. Very quickly, right? In a week or two. Yeah, it was. So it was four weeks we went for, so we set a target of 30,000.
2:02 We hit that in about a day and a half, and then, you know, it just kind of picked up the pace, and then at the end it was just under four times what we had aimed for, so it, we were pretty happy. That’s crazy. We’re definitely going to talk about that. I know you raised the money in order to create the world’s first community-powered sportswear range. I took a look at your stuff, I like it already.
2:21 Before that you, I think you raised just under 3 million from angels and strategic investors in, like, December 2011. Absolutely. Yeah, awesome. Welcome to Onre. Thank you.
2:30 Thanks for being here. Thank you very much. Thanks for having me. I think we got to talk right about right away about this Kickstarter campaign, because, like, when I heard about it I was like, okay, another company that’s using Kickstarter to get themselves out of the basement and to get out there and launch a product, and then I’m like, wait a second, these guys have already raised a chunk of capital. So these guys are doing this for a different reason, obviously.
2:50 So I was wondering why the Kickstarter, why was it oversubscribed in your opinion, and why not an equity-based platform? Well, so as far as an equity-based platform, that’s not really what we were looking for. We already had investors in the company. We, having gone through this period of running a sport social network to encourage people to do more sport and be more active. One of the things that people came to us time and time again saying was, you know, we find it really hard to find affordable equipment and particularly apparel.
3:24 They were finding that they were spending a lot of money, or sometimes, if they couldn’t afford it, they were having to compromise in quality and going for low-cost things, which just weren’t performing very well. So we started to look into the market, and we found that whenever the major brands were making their sports gear, a large chunk of the money, probably about 40% was going on above-the-line advertising, on big money celebrity endorsements, on bricks and mortar stores, and on all the middlemen along the supply chain, so the wholesalers to the shops. And so we discovered that actually it wasn’t necessary for sports apparel to be as expensive as it is, and that it would be possible for us to manufacture right from scratch.
4:11 So the stuff that we’re making is not our logo printed on somebody else’s kit. This is all our own stuff, designed by sports apparel designers who’ve worked at some of the major brands. We’ve got fabric technologist working with us, basically bringing us the best fabrics, the most cutting-edge fabrics in the market, and we’re able to deliver a product to the end user at 30 to 40% less than before. We obviously thought this was a great idea, and we knew that people would like this, but we weren’t, you know, we needed to know that they were definitely going to buy it.
4:52 There was no point, because obviously to that the factories that we’re using don’t really deal with small players. They are looking at, you know, if you’re going to do this, you got to go big. So we needed to make sure that we had the backing of our community. It’s a very big community, but we needed to make sure that they were going to back us. How big was your community?
5:13 So the total number of users, about 200,000. They’re very active and very engaged, particularly our top users are on the site all the time. It’s kind of a way of life for them. They almost define themselves as Tribe Sports people. If you look at things like their Twitter profile or other presence online, that they actually, a lot of these people are actually saying, “I am a Tribe Sports user,” that kind of defines them.
5:37 Are these Brits or Yanks? No, actually. So our user base is actually, it’s around the whole world. It divides down about 40% of the US, 30% are the UK, and then 30% rest of the world. So we see ourselves like our audience pretty much exactly.
5:52 So we see ourselves a global platform, and we see the sports brand as well as a global platform, and that’s why on Kickstarter when we were offering this, we opened it up to everybody with free shipping to both the UK and the US, and then just a small token of M for the rest of the world because it’s a bit more expensive to get that out there. So we’re definitely with this, launching it as a worldwide brand, but targeting particularly the UK and the US, and yeah. So our users were telling us, this is what we want to see.
6:22 The Kickstarter campaign was firstly a way of raising some money to be able to put the order in, and also to just make sure that this was not just something that people were telling us to do, but that they were going to back us on it as well. Right, now I guess nothing shows that more than someone actually paying up, right? That shows. Yeah, it’s not just a vote or a retweet or something. It’s actually, I guess, vote with your money, right?
6:48 Yeah. So now it’s oversubscribed. What do you do with extra money? What does that tell you? Does it tell you you’re, you need to make more of this stuff, do more of these campaigns or what it does.
6:55 Yeah. So when we saw that the campaign was going well, it allowed us to place orders for more variation of products. So it meant that in the beginning it was just the technical tees, but we were able to add a couple more products to the Kickstarter campaign, because we knew that it was enough money to be able to place the orders for those products as well. Then, as it increased as well, we were able to investigate doing more colors and more variations on the product, so that all of the money went back into the products.
7:24 And that is the way that we see it going, in that this money is going to be plowed back into developing new products and investigating other products across other sports that we want to make as well. Wow, it’s really a cool idea, and that’s great PR for you, right? Sure. Yeah, I mean, Kickstarter was a great platform in that way, in that we got a lot of press off the back of it. We were featured on a lot of different sort of, not just tech journalism, but for us actually, because we don’t really see ourselves as completely a tech company.
7:58 We see ourselves as more a consumer company, in that our target audience is more the sort of normal people on the street. It’s not the, it’s not the kind of tech scene so much, although there is quite a bit of crossover as well. Obviously, a lot of people in the tech scene such as yourselves are very keen on, you know, keeping fit and keeping active, and also measuring it as well. Interesting. You know, I want to jump into Tribe and find out a bit more about it.
8:25 We always ask people some basic questions, which is, when it comes to Tribe Sports, what have you guys done, what are you planning to do, and why will you win in this space? And it’s a massive space, like, that’s, I think that’s fascinating, because what you did before was, I think, it was unique, relatively unique, and now getting into the apparel, where are that you’re going up against some pretty big. We are competitors. Numbers like 250 million people.
8:48 Is that your potential consumer base, or well, I mean it’s more, it’s bigger than that really, because, you know, who doesn’t do at least some sport, and it’s also, it’s for us, it’s about education as well, in that we’re not targeting, when we say it’s performance sports, where we’re not just targeting elite athletes. We’re targeting normal sports people, as in normal people who just, you know, they’re at home. They maybe go out for a run once a week, once every two weeks, and quite a lot of the time people who are doing this are doing it in clothing that isn’t really suitable for this.
9:21 So a lot of people when they start running pick up a cotton t-shirt, and that’s possibly the worst thing to go running in, because is, you know, you start to sweat. The sweat basically makes the T-shirt really heavy. It doesn’t get wick away from your body. They feel really uncomfortable, and so they’re less likely to do it again. So it’s, it’s for us, it’s as well about the democratization of performance wear, and educating people that performance sportswear isn’t just for elite athletes or people who are doing it competitively, but it’s also just the normal people in the street who should be wearing these sorts of clothing whenever they, you know, just go down to the gym, go for a run, go for a cycle, or do anything else like that.
10:03 So you mentioned 200,000 users in your community, so just to get, so people can get an idea what Tribe’s all about. You know, what have you guys done? You set up this kind of this social network for these, for people in sports, and yeah, like I said, why do you think you guys have the solution to this space? We believe we have a solution to make people be encouraged to be more active. It certainly worked for me.
10:27 I mean, I think that one of the nicest things about our site is that I can genuinely say that it’s worked for me. I wasn’t doing a lot of sport before the site. It was something that I was really interested in. I’d done a lot of sport in school, but, you know, in my 20s I’d become not particularly active. I’d always made the excuses, a lot of people do that.
10:48 I don’t have the time, and I discovered through our own website that actually you can find the time, and it’s not just finding an hour and a half to go to the gym, where having to go through the whole taking a shower, getting there, getting back. A lot of the stuff on our website is showing people that it’s possible to keep pretty fit by doing exercises at home, exercises in the office, finding little ways of hacking their day, by taking sporting challenges, which is one of the core elements of our website, and finding ways of using those to stay active and to keep fit. So we’re kind of trying to do something different from what is the traditional fitness industry, which I think the fitness industry, there’s a lot of bad things about it.
11:35 I think that the traditional high street gym is not really possibly the best approach for a lot of people, because they, a lot of the time, make some of their money by getting people signed up to contracts and hoping that they don’t go. Yeah, I mean, that’s a big thing. I mean, everyone showed up to the gym who had a membership, it would work, it must be like 10% of the people use it, or maybe 20, I don’t know what number. It’s a guilt thing as well, in that people sign up and then, January, don’t do it, January, but instead of canceling, you know, there are a lot of social hooks in it, like sign-up fees and cancellation fees, long contracts, and so they feel a bit guilty about it.
12:15 So, Tribe Sports is, it’s not a substitute for the gym, but it’s showing people that they don’t necessarily need a gym. They could do a gym, whatever works for you. So we feel that we, that our website can show anybody how to be more active and show them the encouragement to do so. And what, what is your business model? Obviously you’re making your own gear now.
12:36 I mean, before that, is this like a community that you monetize in very traditional ways, advertising, that kind of thing? Or, so we actually, the one of the ways that we were originally making some money was through helping people find sports products online. So we would help them find, say, tennis rackets or running shoes or, as we are selling now, some, you know, sports apparel, so things like technical t-shirts, cycling gear, that sort of thing. So we weren’t actually selling it ourselves, but we were indexing, you know, something like 3 million sports products in the UK and the US, and helping people do things like, you know, price comparison, finding advice and recommendation on that.
13:18 We find that worked pretty well for us, but it wasn’t, we were finding that some of the focus on it was taking us away from the focus on what we cared about most, which was building a really active and engaged community. We also have some advertising on the site, but at the moment we’re actually focusing more on building the sports brand. Okay. What, what made you get involved in Tribe Sports at the very beginning? Was it your inactivity in your 20s, or a little bit?
13:50 So sport has always been a passion for me, in that before Tribe Sports I was working at another company building sports websites. The way it all started was actually, I met Steve, who is the CEO, through a mutual friend. So at the time the kind of the start of Tribe Sports is that the three other co-founders, other than myself, were working at a startup called MyDeco. The most interesting thing about MyDeco is it was founded by Brent Hoberman, who made a lot of money by selling lastminute.com, which was one of Europe’s most successful tech exits.
14:31 So he made a lot of money, bought that, who bought that? It went public, I think, didn’t it? Did it? Yeah, I think so he’s at ProFounders. That’s, yeah.
14:39 He is. Yeah, yeah, I think it went public. Okay, yeah, gotcha. So he was he obviously sold that, and his first venture after selling lastminute.com was to start a company called MyDeco and MyDeco are a company focusing on furniture and helping people find furniture online. So say, for example, you need a sofa, and you want it to be, you know, between 2 and 3 m long and red and leather.
15:06 It would help you again find that product online, and do you know, comparison of various features. It was a company that grew quite a lot. I think they had quite a lot of people working there, and my co-founders were all the other three were working there. So Steve was their head of finance. He’s now the CEO of Tribe Sports.
15:28 David was the head of legal and strategy there, and he had also been the in-house lawyer at lastminute.com through their IPO. So quite a lot of knowledge on that. And then Jenna had been their head commercial person there. So Steve decided that he wanted to leave and do a startup. His passion was sport, in that he has done multiple Iron Mans and various double marathons and crazy things like that.
15:52 So he decided that he would take what he knew from MyDeco, which was this idea of finding products online and trying to apply it to sport. He at the time needed a technical person to join the team to build the website, and through a mutual friend, I met him. I was actually working on an idea at the time, in my spare time, which was a similar sort of model, which was helping people find clothes online. So say, for example, you want to find a pair of jeans that are 32 in and 34 leg.
16:29 You would be able to use this software to do that. I’d been working on it but hadn’t launched anything, and it was the same sort of technology that he would need to basically sell to find these sports products. So I had coffee with him. I went away and built a prototype, a very, very basic prototype, over the weekend. He liked it a lot, and saw that we would work very well together, so asked me to join the company as the technical co-founder, the CTO.
16:58 It’s four years ago, that’s just under four years ago. Four years ago. Okay. It’s amazing, when, you know, a lot of people think, just turn these around quickly, and here you guys are four years later, now getting into a whole new pile of mess. Potentially, like, well, not bad, but you know, it’s just like you’re not exiting.
17:18 You’re starting over again, almost. It’s not so much starting over again, and then for us, the social network is still absolutely core to us. It’s core to our community, of course. The sports products and finding people, sports products from other retailers, isn’t core anymore, and in fact it would clash with our current business model. People couldn’t, other retailers wouldn’t really want us showing their own products alongside ours, because we’re obviously going to be cheaper.
17:46 We’re going to, we’re going to be cheaper, and better. So that’s one of the reasons we decided to remove that aspect of the site. So yeah, the journey was that that’s sports product side of it as a standalone thing was only really the first element that we were kind of working on for, you know, a month or two, and it became clear that there was a much bigger opportunity, which was to build this social network to encourage people to do more sport and be more active.
18:16 We didn’t think that anything else existed like it, and it still doesn’t. And so we set about building that, as well as this ability to find sports products as well. Okay. Well, they call this Silicon Real, so let’s get real with some real questions. How do you compete against a Nike?
18:36 They’re big, they got money, they could probably create their own social network, you know, with a rounding error of one of their revenue streams. So how do you fight these guys? Well, so when you’re big, you’re also slow. So we’re able to be very much quicker and more agile, and that we can respond to what our community is telling us much more quickly. So companies, some of the big sports brands, they’re planning years in advance, and they are, they can be less reactive to the market than we can.
19:04 They also are tied into to the way that these things work. So they, big celebrity endorsements, you know, they’re paying people, you know, like Rory McIlroy, you know, millions and millions of dollars a year, and they can’t really cut that off. Those costs that are in there are there to stay. They’re not going to suddenly pull the plug on all above the line advertising and all celebrity endorsements, because that’s how they’re, that’s how they operate. So they would never really be able to compete with us on price unless they decided to do that really drastic, and for them that would be very risky thing, because that’s what they’ve built their business model on.
19:44 Okay, fair enough. What do you got for them? Yeah, so if you’re not worried about the big guys, and what about a lot of the little guys that are in your space, maybe not exactly in your space, but are kind of doing the same thing? So one of the things that we’ve discovered with this is, it’s not easy to launch a sports brand. It’s not easy to open up conversations with the kind of factories that we’re working with.
20:08 Sure. If you’re small, you can maybe get some cheap stuff made by some, you know, second or third level manufacturers, but to actually have these serious conversations with the big factories that are working with the big sports brands, you need to have a big voice, and through our community we have that big voice, and it wouldn’t be possible to have had those conversations with them without the community and the backing that we have. So did you just go out to your community and was just like, I’m looking for a big manufacturer in China to make unbelievable quality stuff?
20:46 We did a lot of research. So we looked all, we did a huge amount of research in all of the best places to get sports apparel made. We looked at what factories all of the other big brands were using. We built up a portfolio of designers who had worked in a lot of the big brands. So, yeah, we, this, and just start calling them up.
21:06 Yeah, exactly. So they absolutely just start calling them up, start trying to work out how this whole thing works. Yeah, and things just kind of worked out. We were, we were quite lucky as well to have some personal connections with some of the members of our team that worked out quite well. And yeah, the traditional business model of apparel, correct me if I’m wrong, is cheap labor.
21:29 I mean, that’s what the garment industry in New York was built on. It was built on people that will sew things that computers can’t make and pay them cents. So how do you manage that kind of workflow? You must need cheap labor. It must have to be, you know, abroad in countries that potentially have bad working conditions, you know, Bangladesh comes to mind?
21:47 Absolutely not. Not at all. In that we have been out to the factories, we have been there, and actually one of my colleagues, Jo, you know, they are very, very good conditions out there. Where are these? So our major factory is in Taiwan at the moment.
22:02 So that’s a, you know, they’ve got very, very good laws there to make sure that the conditions are good, and you know, we have been out there ourselves to make sure that everything is above board, and we’ve been on the factory floor a lot, and people don’t really stand for that sort of thing anymore. You know, obviously people are becoming much more, yeah, much more aware of some of the issues that there have been in the past, and obviously you can get, you know, I’m sure some of the, some of the kind of really cheap apparel brands may well still go to those places, and but I don’t think that our users would stand for us having those sort of associations. Yeah.
22:43 And your price point is probably high enough where you can, you can actually afford to pay? Absolutely. I mean, it’s, it’s quality stuff. It’s not just, it’s not just cheap stuff in China these days. With China and Taiwan it’s like almost high high high price labor now.
22:56 Yeah, yeah. I was thinking when you mentioned China, it’s like you pay someone at Foxconn probably a reasonable price to assemble an iPhone. You’re going to have to go somewhere further to get really cheap, you know, $2 t-shirts. I guess that’s where Bangladesh comes in. What else did I miss when it comes to real questions?
23:13 Yeah, it’s cool. I just, maybe, sort of, where do you see your guy, yourself, in sort of five years? You going to get into the sport tech, or, you know, I think that’s obviously it’s talked about so many times on this program, but seems like your platform is sort of ripe to take advantage of really cool technology in the sports arena? Absolutely. Well, there’s a lot of interesting technology out there, and actually David, who is our kind of legal and strategy guy, he’s one of the co-founders of Tribe Sports.
23:40 He is spending a lot of time looking into kind of new technologies, and a lot of some of the really interesting sensor-based stuff out there. There, there’s a lot of really interesting things going on in that. And there’s a lot, particularly with things like Kickstarter, it, it has spawned this whole new generation of people being very, very intuitive, innovative around products, and so yeah, that’s definitely something that we’re keeping an eye out for.
24:07 For a lot of things. Cool. What if, what if Nike calls you up and we’re like, we want it, we want Tribe Sports, here’s 100 million pounds, here’s the check. What do you guys do, cuz there has to be a price where, you know, for your investors, you exit, right? I, who knows, who knows.
24:23 I think, we need it. It is a hard, it is a hard question. Down 100 million, I don’t know too many people, but it would be tricky. It would be tricky. You’d have to really, you know, it’d have to be the right fit.
24:34 You’d have to sell it your community as well. I mean, this is our passion, and that we’re not just, we’re doing this because we genuinely believe in this as an idea, and we want to see people being more. I mean that the, it just makes us all feel so amazing when we see stories on our website of people literally having their lives changed by taking some of the challenges and using our platform to encourage themselves to to be more active. And so yeah, it’s something we believe in, in it as a movement.
25:06 How, how are you worried about scalability in terms of cash flow problems, because, you know, these big players, they’re good at it because they have so much cash that they can. Sure. Because it’s a, hey, you know, heavy inventory business, right? It is. Yeah, and obviously knowing how much to order of what and making sure that the supply chain is effective is something that we have to be very, very careful about.
25:32 Jenna, our president and my co-founder, did a huge amount of research in sort of making sure that all of the range planning, so making sure that we ordered the right sizes of things, and that we didn’t want to end up ordering a whole pile of extra large and find out that everybody was small, and we’d end up with a huge stock that we couldn’t sell. So yeah, absolutely, we need to be very careful about making sure that the supply chain is efficient, and also with the, with delays and things. I mean, from going from nothing to having a product takes some time, you know, because not just having to sort of kick up the machines to start milling the fabric, to putting it all together, but then sitting in a shipping container for eight weeks.
26:17 It’s, it takes a long time to get a product from an order right into someone’s lap, so we need to be very careful to make sure that we order the right of mind of everything, and can scale that process as well. There’s a reason that was, is it, Tim Cook, as the president or CEO of Apple right now? I mean, he was their COO before he’s the one that made it all happen, and Apple doesn’t exist unless they have their Jesus, their production operations. It’s insane.
26:45 You know, you look at Amazon and Apple, and these guys that are just moving so much product every single day. It’s just incredible. Absolutely. There’s a reason he’s the boss, because that is the job of that company really, and one single element of that supply chain falls and Yeah, you could write articles about that. You know, you guys are a global company, which is interesting.
27:04 You guys didn’t say, okay, now we’re going to decide to go to the US, or we’re going to decide to go to Germany. I mean, you’re selling things everywhere. When you look across the Atlantic at those damn Yanks over there, what do you see that you like what they’re doing, that you wish you guys could emulate more? And what do you think they do wrong when it comes to tech startups? I think that one of the things, so I went over to San Francisco a bit at the beginning of this year, and I just hung around there.
27:29 It was a, it was a trip that a guy called Jack Gavagan organized, a London to San Francisco trip. The community out there is amazing. One of the things that I would like to see us emulate more than anything is their attitude of paying it forward. So one of the great things about the community out there is everybody is out to help each other without the expectation of being directly paid back. Everybody wants to see each other succeed.
27:57 They don’t see it as a zero-sum game. They see that if they all help each other, then they will all succeed, or that they’ll all increase their chances of succeeding. I think that London has had that less, but I think that I’m seeing huge changes in London, and that kind of attitude of helping people and wanting to see each other succeed is starting to take hold here. You know, with events, that The Three Bears, I think, kind of represent that. You know, more than more than anything, in those events really everybody is so friendly and just wanting to kind of help each other, so I definitely think that London is catching up on that, but I definitely like to see that more.
28:37 Yeah, it’s a big part of, I just assumed it was happening everywhere in tech, but I guess the traditional business way is not to do all these things. You know, I mean, this is a new media form, and like, people are surprised when I get a call from, like, someone at 60 Minutes, and I’m like, yeah, come in, you can have our footage, you can have this, we’re not going to charge you, and they’re like, what? We’re used to fighting battles with each other, not trying to help you.
28:57 You know, yeah, I think it definitely sort of areas where there’s density in the ecosystem, because you just, you feel more like, just engage with people, and that personality comes out when I see you or bump into you guys all the time or at events. You just become friends. Almost. It’s not that sort of separated piece of, you’re just to someone else on the other end of the phone, or just want to help. That if you had to sign a non-compete, like, tomorrow, and you could not work in the sports space anymore, what, what would you go do in London, like, what, else do you think is exciting right now in London or in San Francisco, as far as, like, a sector you would go get into?
29:32 I mean, you’re a CTO, you can go work anywhere. I don’t know. I guess, I guess, from two points of view, uh, for one, a passion thing. I guess my two passions are sport and music. I’ve always wanted to work on a music startup at some point.
29:46 I would quite like to do that, having said that, though, I think that’s a really crowded sector at the moment, and so unless you do something that is really, really innovative, I’m just not sure that that’s a good place to go at the moment. Um, but there’s a lot of there’s a lot of really interesting stuff out there, so maybe I’m wrong as far as kind of a, you know, business side of it. I think the kind of sharing economy is the sort of stuff that’s pretty hot right now, so obviously people having resources that they’re not using all the time, whether it be, you know, your apartment through, you know, Airbnb or a car.
30:24 You know, there’s a lot of stuff in the States now where you can park your car at the airport, and then somebody else can hire it while you’re away. You get it back valeted, and people are doing it here with, you know, drive, you know, being able to park at your driveways. So I think the sharing economy and being able to kind of share resources at the moment is really interesting, and there’s a there’s a lot more, I think, that’s got to be done on that: sharing sports attire, possibly some golf clubs, or I’m not sure I’d want to share, maybe somebody’s sports, maybe not undergarments, but absolutely.
30:58 But yeah, definitely things like tennis rackets or something. How often do you use your golf clubs? They probably sit and they take up room as well. I just moved flat, and I moved, when I moved there I realised there was a lot less storage than in the previous one, and so I’ve ended up storing a little bit of my sports equipment at work at the moment, which, thankfully, being a sports company, I always get away with. Yeah, we’ve seen companies in America that scale really well in America, and they’ve got a huge consumer base, and they do that really well, but a lot of times when they come to London and they come to Europe, they just don’t get it right, because there’s something subtle about the marketing message or the way people buy, or that kind of thing.
31:36 And I was just wondering, what do you think that sometimes people get wrong when they come to Britain, and they’re like, we’re just going to own this because it’s the 51st state, they speak English, they got a funny money. What do you think they get wrong when it comes to Europe or the UK? I don’t know. Well, I think the, I mean, UK are very forward thinking as far as internet usage, and that e-commerce over here is massive. I think we’re one of, are we the biggest country in the world for e-commerce spend per capita?
32:00 So people are a lot more forward thinking with that, there’re maybe slightly less forward thinking about, you know, those other things that we’ve talked about, maybe the, you know, the sharing economy. I don’t think a something like Airbnb is quite as big in somewhere like London as it is, say, in, you know, San Francisco. Well, it’s illegal in New York, so I guess that’s, uh, yeah. I think they, I think they brought in, so New York has some old law that makes it that you can’t do short-term leases, and I think it was some element of rent protection or something, that it was because they have rent protection, I think, in some of the apartments, and so they didn’t want people taking advantage and renting their sort of cheap apartment and then making money 10 grand a month on every.
32:45 Anyway, there’s some law that means you’re not meant to do short leases, and I think they sort of turn the blind eye to Airbnb a little bit, but I think they’re starting to apparently clamp down on it. I don’t know what, whether that’s, yeah, how serious that’s being taken, but that’s what I’ve heard. Just open up the door to someone else, you’d think. But yeah, if you had to make an investment in something in London right now, what’s the sector do you think that we got right in this city, or the one that’s going to really go far, if you had to put your own money into it?
33:14 Well, so I actually think at the moment London is a big financial center, and one of the mistakes I think that we make in the tech scene is everybody in tech well, not everybody in tech, but a large number of people in tech try and solve problems that they, as tech people, have, and that’s why you see so many startups that are just another social media platform, just another Twitter client. What I think that people should be doing is they should be solving problems that they see in other sectors. And in London, obviously the biggest one is finance, and so I think that London fintech is going to be big.
33:52 It already is. You know, obviously you guys interviewed somebody from TransferWise. I have a friend who’s working in another kind of FX startup, but a lot of people, some of our most talented programmers in London are actually working in the financial sector, and they’re working in banks. I have friends doing this, and whereas they enjoy it, and they get paid a lot of money, they don’t get the same autonomy, they don’t get the same feeling of ownership as they would do in a startup, and so what I think you’re seeing increasingly is these people are getting frustrated at maybe some of the kind of outdated processes that some of the big financial institutions have.
34:30 They quit their jobs, they solve it externally, and then, you know, they almost sell the software back to the institution. So I think that we’re going to, we’re seeing that a lot. I think we’re going to see it a lot more, and so I think that sort of fintech and London is going to be, it already is, and is going to be a big growth area, and I think it’s kind of obvious because there’s a way of making money straight from the beginning. You don’t need to work out a strategy for monetization.
35:00 You already have it, because it is money, it is money, you know, we’ve seen Twitter, that’s going to IPO soon, and they’ve built up this huge, you could say, social network, this community over the last so many years, and yet they’re still not profitable, like on a quarterly basis, you know, and and I don’t even know if Facebook is technically profitable yet, but you guys are in a similar space where you’re trying to build up this community. You even said it earlier, communities first, communities first, before we push this product or that product. what do you say if people say to you, it’s great to do this, we’re going to monetize it in the future, but we’ve seen so many people fail to do that.
35:37 How do you know you guys will do that? Obviously we don’t know, we’ll do it, but we hope we will. We hope that more than anything, we hope that we’ll be able to sustain it as a business, and be able to keep our community going, because otherwise we’d be letting down the community and our users. So obviously we don’t know the future, but we hope that by working hard, and by having a good team, and by listening to our community and our customers, that we will be able to to basically keep that going as a global community.
36:11 Do you guys think you need to be on the ground places other than just London? So we do. Yeah, and we definitely, we can do a lot from London, but we would like to have some presence. We had a presence for a while in Asia, so we had a guy working from Singapore for a bit, which was great. So he grew the community quite a lot there.
36:31 I think that we will probably at some point need something, something in the States as well. Probably, probably West Coast. A lot of the sports companies are there, so I’d say that that’s quite likely. I think we’ll more likely as well, start to spend more time out there as well, but yeah, we see the UK and the US as probably our biggest market. So I’d say that it’s quite likely that we will have a presence out there at some point.
36:57 And is it important? It’s, it’s not essential, but I think it is important. Yeah. I’m going to hit him with a bit of advice questions. Say there’s a 20-year-old that’s listening to us right now, and they’re like, you know, I love hearing Andrew’s story.
37:10 I love how they did that. They read all the tech news we were talking about earlier. They want to grow up someday to be this big, you know, startup king. What a piece of advice do you give them as far as what they should do? You know, if they want to be a CTO like you, if they want to be part of this, you know, startup tech community, what do you tell them they should do, or even younger even 15?
37:29 Well, as a tech person, I’d like to sort of see more people maybe trying to learn how to program but programming isn’t just it, in that actually it’s only a small part of what we do. Actually, it’s sometimes harder in London to find good product people or good designers. I think just getting people to find what they’re good at and trying to pursue that, and try to just get really good at it, and work out how the skills that they have, or can develop, can be used to start businesses, and to start to work on ideas.
38:03 So yeah, I guess, sort of working on programming or the creative side a little bit, little bit. I don’t know that it, you know, how building an online product works. You don’t necessar. So my other founders, they don’t know how to code, but they at least know the processes that go through to take an idea and make it into something. So it’s not necessary to know how to code, but it’s good to know how the process works.
38:34 But I think, as a 15-year-old, I think that the advice would just be to try and go to a lot of events, talk to people. I mean, things like Silicon Drinkabout, or something like that, obviously wouldn’t recommend that to a 15-year-old, because it’s in a bar. But there are a lot of, we’re in Britain, it’s close enough. Yeah, yeah, it’s close enough. There are a lot of other events that happen for kids you know, there obviously Young Rewired State goes on.
39:00 I would recommend people go and work on that, and again it’s not necessarily, it’s not necessary to be a programmer there if you’re a design person, or if you want to learn how to be a product person, then something like that’s a really good thing to get experience. But I think just more than anything, go and do stuff, go to events, go and talk to people, volunteer to help on something. Okay, that’s a good. And if you had to give a call to the 20-year-old Andrew McDonough and give that some advice, what would you tell him to do differently?
39:31 So actually, strangely, I did my first startup almost as soon as I left university. I kind of, I’d always been interested in the web, and I wanted to be involved with it pretty much straight away, and I worked for, sort of, I worked for a company which I didn’t know was called a startup at the time, but it kind of was, back in Belfast, and I worked there for about 9 or 10 months, and then realized, hang on, I could do something like this myself. So I actually left and started working on a product, and it didn’t really work out in the end, because I didn’t really get it in front of people.
40:09 So technically it was really good, but I didn’t really have the confidence to sort of actually phone people up and try and get people to use it. So I think that my advice to myself as a 20-year-old would be to actually try and just, again, get out there more, put your software in front of people so that they can touch it and try and get them to use it. I just thought that I would be able to sit around and wait for people to discover my software, and then they, what was the product?
40:35 It was a product, the whole thing. It was a, the company, it, it sounds a bit twee, but the whole company was called Manage My World and it was a suite of products targeting small to medium enterprises. So it was sort of a, a software as a service solution online to help small businesses manage various aspects of their online presence. So this is about maybe 2002. So within it, so the suite of products, there was one called Manage My Content, which was a content management system, so a little bit WordPress-y, that would allow people to create their own corporate website.
41:13 There was a customer relationships management tool called Manage My Customers. There was a recruitment tool to help people do online recruitment, C Manage My Recruitment, so it was a suite of tools, and I built them, and I thought they were really good, but I just didn’t manage to get enough people using them, and in the end I ended up running out of money and having to go and get a job again. Good story. Yeah, that is a good story. Do you think that’s a CTO versus a CEO sort of play, where maybe everyone’s looking for the technical co-founder, but maybe you needed the sales co-founder?
41:48 Well, strangely, actually, that there is another aspect of that story, which is, I did find, I did go searching for somebody, and that was actually the biggest downfall of the company. so I recognized exactly the thing that you’re talking about, and I recognized that I needed somebody at the time. I was only sort of 22. I realized that maybe people wouldn’t take me, you know, companies might not take me seriously, although that was a mistake, because I should have just got out there.
42:17 I thought that sales was hard and so I happened to, in the first bit of work that I did afterwards, I ended up meeting a sales guy who talked at a big talk. He was about 10 years older than I was, and I at the time thought that he was really good at selling software, so I decided to go into business with him so that he would sell the software. He ended up not selling anything, and actually rinsed the, not the bank account. The bank account didn’t have any money, but I discovered after a few months that he had rinsed the overdraft of the bank account, had taken about three grand out of, and then disappeared.
42:59 So yeah, I learned the hard way, and it kind of burnt me from doing any other startups myself until I was really ready again. So I worked for other small companies, but I wasn’t ready to make that sort of commitment again for another sort of six or seven years. What’s the biggest mistake that you see startups making in London? I think well, possibly not talking to their customers enough. I mean, I talked earlier about the fact that a lot of people make things that are just focusing on targeting a tech market, which is a market that is, you know, those products that it’s overcrowded.
43:38 I don’t think people sometimes make enough that just target normal people, and I think sometimes we in danger of not talking to normal people enough. We are a little bit in this bubble here, and so if I have an idea and I say to Colin, you know, this is an idea, he might think it’s great, but that’s possibly because he thinks in a similar way to me, and some, a normal person may not, not a, not that we’re not normal people, but somebody who is less tech focused might not agree. So yeah, that is a danger of this community is, we all assume, like, for example, we assume that you know what Kickstarter is, a lot of people that don’t, or you assume that you use Twitter.
44:18 You know, that’s a very, you know, tech person to kind of using that stuff all the time. It’s probably easy to forget there’s actually a real consumer there at the other end. The Twitter thing is interesting, because, so, what one of the things that I find interesting when we built Tribe Sports was obviously these days when you register for services, you can, a lot of places will allow you to sign up with Facebook, with Twitter, and with your email address.
44:41 One of the things that I wasn’t expecting is we worked quite hard on integration with both Twitter, Facebook, and with people signing up by email. When we looked at the figures after a couple of weeks, we realized that approximately 90.5% of people were using the Facebook Connect button, about 8% were signing up with our email address, and sort of one or 2% were using Twitter. And that kind of gave us a real sort of eye, you know, a real vision into the kind of integrations that we needed, and showed us that actually Facebook, for a consumer startup, is massive.
45:16 And so we worked a lot, a lot more on hooking into things like their API and things like that. Interesting. I just want to know what’s, what’s next for you guys? Will there more rounds of financing, any more Kickstarter campaigns, and then finally, how do people get a hold of you? So the next thing for us, and that we hope, with selling the products, that we will be able to just keep plowing the money back in.
45:40 We’re not raising any more money at the moment. We hope that we’ll be able to go on with it. Yeah, so that’s the plan. So we’ve placed a large order of products. We’ve sold a good proportion of those, but still have a good stock left.
45:59 We will keep ordering more, keep trying to find new designers as well, new exciting designers. We’re working with some very talented people already, finding more people, finding more places to get stuff manufactured, new lines, new colors, and staying ahead of the technology as well. So yeah, we just hope to keep growing it, and as well with the social network, as well, focusing more, as well, on, well, not just the community but helping people track a little bit more of what they’re doing.
46:32 Being able to visualize their training, and just anything that we can do to encourage people to be more active. Will you use Kickstarter again? Possibly, I mean, it was a great platform for us. We were launching a new product. We probably wouldn’t use it again for a similar thing, you know, in that I think it would be not the right thing to do if we were, say, launching another apparel range, but we wouldn’t rule it out.
47:00 Say we had, say we had an idea for, say, a hardware product or something. We certainly wouldn’t rule that out, that we would use it to as a way of gauging whether something was a good idea or not. It’s, F, I mean, Kickstarter is such a weird mix of, you know, like social media PR, and then you get people to buy into it. It’s hard to quantify what, and it’s so hard to succeed too. So many people, yeah, there’s a lot of just fail fizzle.
47:28 And it’s, you know, I’m looking, probably, do a Kickstarter in a few weeks, and it’s just like, it’s tough man. It’s like movie like, it has to happen that weekend, and it’s also, you know, you guys come from such a unique, not unique, but very advantageous position, where you already had that community. Sure. Yeah, so you already had 200,000 people that you could get going. And so a lot of people that are doing Kickstarters are sometimes, you know, a piece of paper with an idea and a video, and they have, you know, friends and family and Facebook friends, but absolutely, but yeah, that’s, you know, a huge advantage for you guys.
48:01 Dude, it’s excit. How do people find you? Websites, Twitter, what’s the best way for them to follow what’s going on with you guys? So definitely tribesports.com is the best place to find us. We’re Tribe Sports on Twitter, we’re Tribe Sports on Facebook.
48:15 We’re also by Hoxton Station, so if anybody in the area wants to come up and say hello, we’re in there. We’re also, as I say, at a lot of events, so I tend to go to Silicon Drinkabout. I guess, are you guys coming this evening, or are you? We’re going to try, right? Try by.
48:32 So yeah, so I guess there, I’m also more than happy to, whenever I meet other people doing other businesses. I mean, Colin and I had a bit of a chat about Kickstarter as well. You know, people, if people need to need some advice on that or on tech, you know, I’m always happy to meet people for sort of coffee or a lunch or something like that, and these products that you’ve, you’ve designed on the back of this Kickstarter. When will those ship? So those, those are currently in a from Taiwan at the moment.
48:58 Okay. So I’m a backer. When do I get my stuff? You were a backer November. You were right, you were.
49:03 Yeah, yeah, you were. Ick, Colin puts his money where his mouth is. Yeah, yeah. So the product should be here in November, and as a backer you will be the first to get it, and yeah, got some for my wife. That’s cheap birthday and Christmas presents.
49:17 40% off, even, even more in Kickstarter. It’s 40% off when they go into the store. Exact. So maybe 80% off on Kickstarter. Excellent.
49:25 Good. What did I miss anything? No, I think that’s great, man. I think it’s great story, and maybe you could end it off with, you know, you’ve had a great experience as a CTO over the last four years. I have.
49:37 If you could maybe, what’s the one thing, one advice you could give a CTO about to startup a company right now that you’ve learned over the last four years. Well, I think the most important thing about being the CTO is not the technical side of it. It’s, it’s actually the bus. It’s the business side, and it’s being able to talk to people and understand the business process and understand the kind of consumer focus of their product, and not just get caught up in code, cuz it’s quite easy for a technical person to get caught up in code and not see that there are people at the other side of it, and the code is actually just an artifact of the fact that what we’re trying to do is build something for people.
50:16 Good, good well said. That was funny, cuz I was looking down and I’m asking him all these business questions, and he’s the CTO but he answered all of them like flawlessly. So yeah, I guess you’re living that, you know, because I guess you need all the people at the top with the same kind of vision, right? You all need to know where you’re going. Yeah, absolutely, why you’re doing what you’re doing.
50:32 Well, yeah, I’m very lucky to have, we have a great team, and we have a very diverse team in that, we’re not just all tech people. A lot of tech startups are a lot are very tech heavy, whereas we’re kind of more focused on the consumer side, and so the F the founders, in particular, my colleagues are very focused on sort of speaking to real people as well, for co-founders. Four co-founders. A lot of people, you know, that’s a lot of personalities to sort of G me for position.
51:03 Sometimes, is it, is it you guys just work? Would you advise new startups to keep it two, one? No, we’re, I wouldn’t have, in fact, I’d almost have a fifth if I could do it again. Uh, we’re really lucky because Steve, the CEO, as I say, he’s very IND, very, very passionate about sport, but his background is in accountancy and finance. So he is very, very, so, like, for example, when we raised our investment, just about a year and a half ago, the first thing that he did afterwards was sit down with us and work out exactly where it was going to go, and how long it was going to last, depending on different plans, whereas a lot of startups, I guess, would just think, we got some money, we’re going to go out and blow it.
51:46 So he’s very, very focused on the numbers. David, again, with his background as a lawyer, although he’s more strategy now, can make sure that with term sheets and things, that we’re not getting, we’re not agreeing on something that we don’t know about. He has a lot of experience in that. And then Jenna, my other co-founder, her commercial experience and just absolute focus on the market and the fit, and what the actual people want. So yeah, I wouldn’t have it any other way.
52:18 Wow, nice to see that working. I love this story. It’s a homegrown, like, London success story. I love how you guys are scaling, and it’s a great example for, you know, people can do here and to lose our inferiority complex to the States and all that stuff. So thanks so much for being on here.
52:32 Thank you for having me, and being very honest. He said he would be honest. Yeah, he did. Yeah, if you’re listening to us on iTunes, you can come check us out on YouTube. You can see all of our smiling faces.
52:42 Channel Silicon Real. We are on Twitter at Silicon Real as well. We’re always looking for guest suggestions. We’re still looking for people with business development skills to hook us up, so tweet at us for that. What else?
52:54 Yeah, just keep listening. We’re enjoying this. Is this 15? This 15 or 16? 16.
52:59 We’re getting to that point where episode 16 we’ve been picked up for our second series, second season, third season, like Breaking Bad. But yeah, no, it’s great. As we say, it’s about the people. That’s our tagline, obviously. So yeah, thanks guys for being here.
53:14 Great talk. Yeah, great, enjoyed it. Thank you. All right, take care. That just are taking ideas from the US and trying them out in Europe, or do you find that things are completely separate, like your own?
53:25 They’re very inter. I mean, the information sharing between kind of Europe and the US is constant. We like backing concepts that are already working in the US. We love taking companies to the US like Presy and ISU and Podo that that are working in Europe and can work as well in the US. The US is the largest domestic market for, for software products, right?
53:45 And
