At first glance, the world of entrepreneurship is a shallow affair. Just consider social media, which is infected with nebulous aphorisms about the key to success, taking risks, working hard and never giving up. It’s enough to make anyone but a lunatic take up residence in the nearest and largest investment bank.
On our televisions, self-styled entrepreneurs lambast wannabes with bad ideas. But these judges are rarely the world’s best entrepreneurs. Although most are have been successful at some point, they’ve transitioned to another type of entrepreneurship – that of the media personality. Their advice to businesses may be entertaining, but it’s as shallower than the commercials that intersperse their shows.
Entrepreneurship at it’s best isn’t about unbridled optimism and crowd-pleasing. It’s about some of the world’s cleverest and canniest people coming up with ideas to make money and change the world. We had Andrew Mullinger, one of the founders from Funding Circle in our offices last month. He is exactly the sort of entrepreneur this world needs: smart, thoughtful, ambitious and honest.
Mullinger founded Funding Circle at the end of 2009 with a couple of friends from university and launched it in 2010. Funding Circle is a peer-to-peer lender, and has funded around 12,500 businesses by connecting them with investors. They’ve lent over $1.3bn and expect to do about $1bn to $1.5bn over the next 12 months. Investors include individuals, long and speciality funds and government.
They’ve raised around $300m of equity capital and have offices in San Francisco and London, employing about 350 people. Since founding, they’ve grown between 120% and 170% a year on average – but it hasn’t always been linear or exponential, with phases of growth and consolidation.
At a recent lunch, Mullinger discussed the challenges of growing Funding Circle – specifically, the challenges of short versus long-term targets, growing a people organization and building controls and structures.
Mullinger thinks there’s a tension between short and long terms targets. In the process of setting up the business he spoke to investors, mentors and other business people. On the one hand, he says, “you’ll get a whole bunch of people who will talk to you about the importance of iterating, getting things done quickly and producing a minimum viable product. They’ll say move fast and break things, get it out quickly and test-learn-test-learn.” On the other hand: “Other advice will suggest that the important thing is making sure that you invest for long-term goals and long-term achievements.”
It’s a challenge that changes over time. Mullinger explains that when he started the business they had to iterate really quickly; then, as they got bigger, the impact of failure or things not working out as they had planned has become larger and therefore they had to invest more time, effort, energy and planning for the longer term: “It’s something I’ve always wrestled with and I think it’s a difficult thing to do.”
Funding Circle launched with five people (three founders), but before they knew it they were hiring a new person every week. Mullinger says “I’ve learnt that with a business like ours, which is trebling every year, some people change and grow with the organization, but some people who helped get you to where you are today aren’t going to get you where you want to go tomorrow.” Mullinger wrestles with the balance between his loyalties and achieving goals.
He thinks the skill is making good, quick and fair decisions about how you grow people, how you develop them, and how, frankly, you deliver the results to make sure your team delivers. “This is one of the most important and challenging things in growing a company.”
Mullinger thinks start-ups pay too little attention to building controls and structure – not least because its existence in large companies is what pushes people to become an entrepreneur in first place. As Mullinger explains: “For most people entering a start-up these are extremely negative ideas.”
Funding Circle identified early on what they thought their culture was about and developed a set of values. “If you’d asked me when I first set up Funding Circle what I thought of creating values for companies, I would have thought they were nonsense, artificial and that no-one cares”, explains Mullinger. However, he found developing the values both useful and important. But it’s about more than just words: “You have to make sure everyone fits within those values, lives those values and that ultimately their success is associated with them. Otherwise, they’re viewed like they are at large companies – where people just don’t believe that they are relevant.”
Bringing in structure and controls isn’t easy: “I’m not going to lie to you: it’s really complex. But the inevitability of our growth is that we need these controls and we need structure, and I think bringing that together in a way that actually changes your culture, your core values and core style of the company – what I think of as the soul of the company – is the same.”
We should back Mullinger’s brand of entrepreneurship. These are the challenges that face successful entrepreneurs and the ones that I wish were given more of an airing on TV and social media. We shouldn’t fool ourselves that success is just based on an entrepreneur’s character and cunning alone. To pretend otherwise dissuades the best men and women to take the calculated risk of starting and business and encourages those that don’t have what it takes.
