NZ Entrepreneur: Hi John-Daniel, what’s the story behind your business, how did it get started and why? How did the founders meet?
John-Daniel Trask: Mindscape, which started Raygun was founded in early 2007 by Jeremy Boyd, Andrew Peters and I. We each took a third stake in the business. I had started working at Intergen in 2004, fresh out of university. I’d been assigned to work with Jeremy, who had also been one of the people to interview me and hired me into Intergen in the first place. Jeremy is a brilliant software engineer and I was always in awe of his ability to build software, teach people and show sound judgement. Andrew joined Intergen later and was also a solid engineer. I had never made it a secret that it was my intention to operate my own business one day. I’d even bought shares in Intergen hoping I could eventually buy enough to be one of the major shareholders.
When that plan failed (the shares were just too tightly held), I decided it was time to set out on my own. I knew I wanted business partners – I have my strengths, but I’m also reasonably aware of my weaknesses. I approached Jeremy and Andrew independently and asked each of them: “If you could have one other person involved, who it would be?”They both responded with each other’s name! We met at a bar after work in late 2006 and agreed with a handshake that we’d leave and build a product company.
We decided on software development tools for our product domain as it was an area we were experienced in. Simply put, software development tools typically sucked. We wanted to build great tools that empowered developers to build more robust software while also enjoying the experience. We achieved all of that, but it has been a long road with many lessons learned along the way.
We also invested in several businesses since starting our own and have enjoyed watching them grow. We were also involved in Givealittle, an online fundraising platform that was sold to the Telecom Foundation in late 2012. Givealittle has helped raise millions of dollars for New Zealanders in need and I’ve always been proud to have helped bring that vision to life.
NZE: How did you survive those early days? Did you have any money? Did you make any sacrifices? How did you pay the bills and keep growing your business?
J-DT: I started Mindscape when I was 23 years old and therefore didn’t have significant outgoings beyond my rent & food budget. I wasn’t a big partier and didn’t have any particularly expensive hobbies. I had built up cash reserves to the point where I was sure I could live about 12 months without taking in any income. Thankfully I ended up only waiting a month or so before reinstating my salary.
I’d grown up knowing that you always needed to keep some cash in reserve. It boggles my mind how so many people in our society not only never save, but are running a negative personal balance sheet.
Even when I was employed prior to starting Mindscape I would feel extremely uncomfortable if my cash reserves dropped too much. I think I gained this trait as a benefit of growing up in a family where my parents were self-employed. We discussed finances, business and the share market at the family dinner table every night. My father helped me start investing in shares at a very young age and I read all I could about business.
Mindscape itself was bootstrapped, meaning we did service work while building a product range. We were extremely fortunate to get a service agreement with Microsoft New Zealand on our first day of officially starting our company – in no small thanks to Jeremy’s strong relationship with them. That contract gave us a significant boost in capital reserves and enabled us to reinstate a small salary for ourselves.
When I was about nine years old, I read an article about Bill Gates. One part of that story has stuck with me all this time. Gates was a perpetual worrier, and was always convinced Microsoft was on the cusp of going out of business – despite its success. He took the approach that Microsoft should always have at least enough cash to survive at 12 months without earning a dollar. It resonated strongly with me and I’m always trying to apply that principal to myself & my businesses.
NZE: Have you experienced any bad times? What was the most painful lesson you’ve had to learn in business?
J-DT: The most painful experience was when one of the founders decided to leave the business after about a year. It came as a significant shock to me that he would do this after agreeing from the outset to a significantly longer period. We had some cash in the business at the time, but I can tell you right now that it was not earmarked for buying back a third of the outstanding shares!
We did buy those shares back and for a while it was significantly stressful to me. Like many bad things that occur, you often look back and realise you were focused too heavily on a door closing and not enough on another one opening. Today I own 50% of the business with Jeremy owning the other 50%. The amount we paid to buy back third of the shares looks very small now.
The lesson here was about integrity. I always looked for it, but it’s been hammered home consistently in my life that integrity is a virtue to look for above almost all others. If you cannot trust somebody then you won’t get very far. I’m thankful that Jeremy is one of the most high-integrity people I have ever met, it’s helped our business go from strength to strength.
Interestingly enough, if you read The Snowball, a substantial and thought-provoking biography of Warren Buffett, you’ll find that integrity is the number one trait that Warren looks for in the people that he invests with. Through my experiences I can see why.
NZE: Is the business vision you have today the same as the one you started with?
J-DT: Absolutely not! If you’re not constantly revising what you’re doing and where you’re going then you’re dead meat. Furthermore, if you’ve never been in business before then you’re in for a surprise. I smile every time I see a new business owner think they know what the market wants. I don’t say that as an insult, I was in the exact same boat. In particular I had to up skill on marketing. I came from a technology background and generally believed if you build something, amazing people will find it and use it.
Our most recent product is a testament to continually adapting our vision. We released Raygun in early 2013. It’s a cloud hosted crash reporting product that supports every major programming language & platform. It automatically collects data when an application crashes and our service groups those crashes and helps developers fix their software faster. It uses a software-as-a-service (SaaS) model of monthly recurring revenue. Raygun has been growing fast and part of that comes from supporting all development platforms – not just Microsoft’s platforms. This is an alteration from our original vision, but an important one.
NZE: Do Entrepreneurs need lots of money or external funding to build a big business?
J-DT: Business certainly takes capital, but the amount needed to start can be small. We formed Mindscape with $10,000 from each founder, giving us a total starting capital of $30,000. We were frugal with that and bought the bare minimum required, we contributed our own existing computers to the mix so as to not need to spend on new PCs etc. We then got contract work to bring more capital into the business.
Too much money at the outset can also be an issue. There’s truth in the fact that constraints breed creativity. It’s far more common to see a successful business run by somebody who watches every dollar than one where a company spends freely on everything. I’m certainly somebody who keeps an eye on spending. We were fortunate that Xero launched just before us so from day one we had everything in Xero. A day doesn’t go past without me checking our profit & loss – having a great accounting software experience from the start helped ensure that our team (with a background in programming, all of us) learned the essentials of accounting.
One key signal that a business won’t be going far is when they spend up large on having an amazing work space from day one. If that’s the best place to spend your limited start-up capital then there is something seriously wrong. Our first office was a tiny box on top of a drug & alcohol rehab clinic – our daily elevator rides were with people in seriously bad shape. You probably don’t need to start with something quite so rough, but I’d warn against investing heavily in wants rather than needs.
NZE: What are the three most important business skills you would advise up and coming entrepreneurs to develop?
J-DT: Focus on the money. To a business, cash is your air supply and therefore needs to be front of mind a lot of the time. I see too many people taking the Silicon Valley style approach of growth with no revenue. Every business could have charged sooner, probably charged more and done better. If you’re delivering value then you absolutely should be charging for it.
Worse yet, people who don’t/won’t pay for your service are the worst type of person to have use your service – they don’t value it. They’re a cost to you. They won’t magically change into paying customers one day. My experience (shared with many others) is that the less somebody pays, the more of a pain in the backside they are – high expectations, high support demands etc.
Learn how to survive the roller coaster. Business is exhausting. Learning to ride that roller coaster is important for your mental health & for your business. There are certainly times where you may feel like it’s not worth the effort, but you need to soldier on because there’s no value in dwelling on a low. Get busy getting to the next peak. Everyone can manage this in different ways, but you do need to figure out what works for you.
Be more introspective. There’s a million self-help books out there and I don’t necessarily recommend any particular one, but I would say that they can help improve self-awareness and situational awareness. For example, there are times where I’ve found I need to be fairly ruthless in avoiding certain people due to their general negativity. Being aware of what helps you succeed and what hinders you is very important. Achieving success is far more than what you do at your desk every day – it permeates everything in your life.
NZE: What has been the lowest point you’ve faced in your entrepreneurial journey so far and what do you do to keep yourself going when it all gets too much?
J-DT: There’s plenty of times when you’re feeling low – it’s the nature of business. You get amazing highs and terrible lows. Sometimes twice before lunch. It’s insane.
Learning to manage the lows is an important task for any business person. For me, personally, I go for 10km runs every other day. Usually outside in the fresh air, through some bushes and around the bays of Wellington.
Often I prefer doing this alone since I can clear my head or get in the zone and process something on my mind. I also like to set myself a physical challenge every year.
I’d also be remiss not to mention the phenomenal support I get from Zheng Li, my fiancé. She’s an accomplished business woman in her own right, and we both are pretty good at helping each other realise that the lows are not that low, as well as encouraging behaviour to avoid dwelling on things. She certainly has been key to me holding on to some semblance of sanity over the years.
NZE: What does it take to be a successful entrepreneur?
J-DT: Revenue to exceed expenses and sufficient return on capital invested! If you achieve those, then you at least have a successful business. Achieving that effectively though comes back to the personality traits of the entrepreneur themselves.
I don’t think there is a specific set of traits that equates to success, but certainly some behaviours can assist:
• Tenacity
• Confidence
• Calculated risk taking
There is also ground work before starting any business. Understanding the competitive landscape, appreciating the level of work required to have a viable product and having a view of the macro direction of the industry you’re entering are all important pre-requisites.
NZE: What do you think are the things New Zealand needs to improve upon when it comes to creating more successful businesses?
J-DT: In the product space I see too many businesses flame out too early. They build something, expect immediate success, and then when that doesn’t eventuate they give up on it. It takes an age to really polish a product.
Yet I see experienced business people pulling the plug on further investment in features I’d consider necessarily in a first version because they can’t see the return potential of doing it right away. I’m always amazed at this because it’s just such short term thinking. The nature of a product business is that you have high costs at the outset but hopefully see a solid return over the future lifetime of the product.
Conversely the other big challenge I see is from businesses who believe they need to achieve perfection before getting a product out the door only to find out too late that they misread the market. Execute a minimum viable product (MVP) well and be prepared to iterate like crazy as you engage with your early customers about how to take what you thought was needed to deliver a great product.
NZE: You’ve already achieved so much in terms of business success. What’s next for you?
J-DT: At present my entire focus is on Mindscape and, in particular, the Raygun product. I’m passionate about business and technology in general. I see myself doing this for some time yet.
I think there’s something in an entrepreneur that means you’re never happy with the status quo – even when you achieve a goal, the satisfaction is fleeting. You’re already thinking about the next awesome achievement to hit. It’s both exciting and exhausting at the same time – I wouldn’t trade it for anything.
I do have a strong interest in robotics and virtual reality so perhaps one day I’ll do something in those areas. The next awesome achievement to hit. It’s both exciting and exhausting at the same time – I wouldn’t trade it for anything.
