How to start a scalable business from day one

Hello and welcome to the show notes for episode two of Sound Advice, get year one in business right, brought to you by Sage.

We’re bringing you real stories from some brilliant entrepreneurs. Sound Advice is all about finding those practical tips that you can take away and use to grow your business.

We want to be there for you, to help you through challenging times and give you a little lift when a problem seems too big to solve on your own.

Candid and wry, the brilliant Julien Callede shares with Sound Advice how he co-founded Made.com and made the operationally complex, ‘fast furniture’ retail company, a global success. From wonky products to glorious waves of investment, and a new project, The Entrepreneurs Partnership.

How did he do it and what did he learn that you can apply to your business, ecommerce, product-based or otherwise? Navigate our show notes to find out…

Start up with no e-commerce experience

Think about what constitutes meaningful success

Scaling is complicated – but tech will help your operations

Why a partner is invaluable for a complex business model

Don’t be afraid to have differences with your business partners – use them, in fact

What investors want to see in a business – and its employees’ skill set…

How to build resilience when things go wrong, plus pitfalls to avoid

Anticipate growth, build buffers and don’t take unnecessary risks

How to hire smart when you don’t have much cash

Remember, people don’t join your business, they join you

Why building a successful business paradoxically makes its owner obsolete

Take the right shortcuts – but what are the wrong ones?

Common pitfalls and questions for a small business

Selling online is not a debate, it’s a no-brainer, but be careful you don’t burn cash

How to set expectations with your customers, ask for advice, and implement it

Start up with no e-commerce experience

Bex Burn-Callander:

I think that everyone’s heard of Made.com. It’s a massive, massive brand now. Can you tell me everything?

Julien Callede:

I didn’t have a background in building a big business and I didn’t have experience in building an e-commerce business.

But my first job was in a small furniture business. I actually was working with a small furniture importer, where I spend like two years going from factories to factories with a plane a day, a hotel a day, four factories a day learning with other people, gosh, all the mistakes that you could make in that industry on how furniture was made, how much it costs, where not to go, what not to do, how to purchase it.

That is the one thing I knew. All the rest I didn’t know.

Bex Burn-Callander:

You knew what you were getting yourself into?

Julien Callede:

The thing is, we had a pretty good vision of what we wanted to achieve, which was bringing original design of a very good quality, at a much more affordable price than the market, to people who usually at that time didn’t have access to nicer designs at a good price than what they would find at our Swedish friends.

That we knew how to do, we also knew others had tried to do it and they worked OK, but then they failed in operating the business. We knew where we could fail, we just didn’t know exactly how to achieve it.

The one thing we knew, yes, was how to buy products, and how technically furniture was made. I was not an expert, which designers to go for? We were not experts.

But what we built together was an innovative model to design products differently and purchase them differently, and then we used the power of the internet in order to make it possible.

The great thing you have when you sell online, and I used to say that and that summarises a big thing about the business is, by selling online, you can actually target the 60 million-plus customers in the UK with one store, which inventory-wise solves everything.

Bex Burn-Callander:

So you didn’t know the e-commerce part. Did you have an amazing network with people that could help you? Did you do an online e-commerce, mini MBA?

How did you achieve that part if that was the missing piece?

Julien Callede:

I had an amazing network of co-founders. Two of them at least knew the e-commerce space and that did help. You would have asked me at the time who to go for as a CTO [chief technology officer], what platform to use to run my business; I would have had no clue.

You still find a way in this case, you go to people but then you need to rely on those people to give you the right answer and the right contact.

That’s where being a three-plus team does help quite a lot. We’re actually four. If I had been alone, what would I have done?

If you’re alone you go to your friends, if you’re lucky enough to have friends who build e-commerce businesses.

If you don’t have friends who build e-commerce businesses, then you either go to the friend of a friend, but every time you go to people that you know less, the insight or the contact they’re going to give you is going to be average.

But if I had to do it now, if I want to, let’s say I want to go into the apparel business or the shoe business, I just go to LinkedIn and ping people who I think know and say, “Hey, could I have 15 minutes? I would love to learn from you.” People usually answer.

Think about what constitutes meaningful success

Bex Burn-Callander:

Did you know when you started the business, how big it would become? Did you have in your mind that vision of scale from day one?

Julien Callede:

I’m pretty sure that if we were looking again at the business plans we had day one on the paper, the numbers would be pretty high. Then you start slower and then we actually made what is like, just south of 300 million sales right now.

It’s huge in a way. But what you don’t realise though is, what does that mean? What’s a million? You have no clue what a million is. Actually, I still have no clue what a million is. It’s very hard to picture.

There were two days I realised the business got big. One was when it became trendy and you’re at the hairdresser and she asks what you do and you say, “I have a furniture business,” and she’s like, “Hey, I know this brand.”

This is the fancy part. I remember doing the bye-bye speech for one of my employees and just realised we were 100 people.

You’re like, “Wow, we’re actually giving jobs to 100 people.” You always say you go to business for people, to build a company and everything. You usually don’t think about it. You think about your customer.

You think about what you want to achieve, but when you realise that you have now 500-plus people who work with you, that’s amazing.

The second day was… you know that you can use Google Maps to upload a list of postcodes. It’s just like pins all over the screen.

Maybe two years in business, we uploaded all the postcodes of our customers. I just realised that we have a customer in every street in London.

Bex Burn-Callander:

That’s insane.

Julien Callede:

That means more. That means more than we do millions.

Scaling is complicated – but tech will help your operations

Bex Burn-Callander:

Now that is insane. To kind of see how loved you are as a brand on that level, must have been an incredible feeling.

But I asked the question, because I wanted to know whether there were any building blocks you put in place very early on in the business that you think readied Made.com for scale.

Because for anyone listening who thinks, “I want to be a big international business,” what do they need to start thinking about very early and not trying to do over again, three years down the line?

Julien Callede:

OK. It’s a pretty tricky question. The reason why it’s tricky is because the logistics supplier we’re using now in the UK, which is a great one that can help us scale now, refused to talk to us when we were small.

Sometimes you manage to sell yourself and say, “well I’m going to the big guys when I’m small”, and that’s good. But even if they had said yes at the beginning, these guys would never have been a good fit for us.

We were too small. We were disorganised. We didn’t know what we would be doing.

We needed different people. It’s hard to answer because you need to adapt what you do and who you work with along the way. That’s why it’s always going to be a struggle. Scaling is the most complicated thing.

But at the same time, you have a few things you can get right or actually avoid getting wrong. The first one is hiring people you work with. The only times we were too fast, too quick in hiring people usually because we didn’t anticipate it well enough.

We hired too quickly. We made mistakes and those mistakes cost a lot of time, focus, customer experience, cash. Hiring is a big thing.

We can talk about hiring for like hours. I think we shouldn’t only be hiring on technical skills. We should be hiring on fit, soft skills, whatever.

Hiring people who are thinking out of the box, hiring people who are not from the industries blah, blah, blah. There are a lot of things. The other thing which people usually see as a scaling issue is operations, logistics, deliveries, warehousing.

The bigger metaphor of it is your IT, your tech. Your tech itself and your operations are going to be your huge bottleneck when you scale.

If you asked me what ERP [Enterprise Resource Planning] I should have had on day one, we were running everything on an Excel spreadsheet.

I was going back and forth to Paris every, almost every weekend at the time. I was running the operations on Excel, what was coming in the country, who going to be dispatched, which address and everything and my MacBook was crashing five times every two-hour Eurostar journey.

I remember [my colleague] was like, “Guys, we need to implement an ERP system because we have two issues. If Julien’s MacBook crushes and dies, we’re in a bad situation, and/or if he gets hit by a bus tomorrow, the business doesn’t work anymore.”

That’s what actually he called the buzz test; we need to be able to pass the buzz test. First you need to get more people in, who know how to just do the nitty gritty, nothing very technical, just like what tasks are to be done.

Then when you know very well what you need to do on a day-to-day basis, the information you need to send to your warehouse on how your business works, you can implement an ERP system.

If you don’t have that, you won’t be able to scale, just because you need to automate a lot of things. If you don’t know what to automate though, you’re going to do it wrong.

Bex Burn-Callander:

That’s really great advice though for any kind of business. Because most entrepreneurs, founders, they end up wearing loads of different hats and doing so many different jobs.

If they break a leg or something, there’s not usually anyone that can pick up each of those pieces.

That’s good advice from day one, to try and think about who you could pass the baton to if you needed to and build that resilience in, because that…

Julien Callede:

Or if you need to take holidays.

Bex Burn-Callander:

Yeah. I doubt you had many of those in the early days. Or did you? Maybe you did.

Julien Callede:

It took me… I think I took my first one like July 2011. A year and three months into the business, which now doesn’t seem that long; now I’m like a year without holidays is OK.

I worked two Christmases and I remember that at the time I was burnt out. I was like dead; I was flying every month to Asia.

I should have taken them earlier, but you don’t want to, or you can’t just because yeah… I remember going on holidays and thinking that people would be making mistakes in the way they… in the file they would send on stuff like that, all the basic things.

You have some staff who have to perform stuff on a day-to-day basis, like critical stuff, even though not complicated, but if you’re a small business, it’s not like you can replace somebody by somebody else, because everybody has got skills and they’re trained on one task.

But I remember a person was running purchasing in the business, and a year after joining us, he was like, “I need to take holidays.” I was like, “What?” True, he needs holidays, but who’s going to do his job for two weeks?

You need to go train people, you need to staff yourself correctly, which is always very, very hard when you don’t have cash if you’re an SME [small or medium-sized enterprise], if you’re a small business, if you’re a startup – but there are ways around it.

Why a partner is invaluable for a complex business model

Bex Burn-Callander:

I guess you had the benefit of having two/three co-founders because you had Ning [Li], Chloe [Macintosh] and Brent [Hoberman] on board.

Do you think that that made a massive difference in terms of what you were able to achieve? Could you have done this as a solo founder or did you need to have the team?

Julien Callede:

We could not have done this being just three and not four. I think that’s an even better way of saying it. That’s my view. I think, we had three exec founders, one non exec [Brent] who was critical for the business.

Ning, Chloe and myself were all very different, which makes our day-to-day sometimes amazing and sometimes more complicated, but which makes the business go further, much further.

Brent was amazing anytime we had questions, issues, needed to connect with people. We would not have done it with three people.

We would not have done it two people, and one person wouldn’t have done it. Why? Because, especially for Made, the business is very complicated.

We have four jobs. I usually say we wore four hats, we have a furniture specialist hat, we have a supply logistics specialist hat, we have an e-commerce hat and a design hat, and that’s too many jobs.

We do everything from designing the product with designers, developing it and manufacturing with a factory to supply and get them in sea freight, logistics, customer experience, retailing it.

It’s too complex to be only one person. In general, [in my opinion] 80% of the people are better geared to co-founding a business rather than being alone founding it. I’m not saying that you can’t found a business by yourself.

Some people are actually going to do well and can’t actually have a business with other people, because their way of running it, their way of seeing it is them being the sole driver. Some of them are going to do very well.

But for most of the people having somebody on your side who can help you, guide you, challenge you, work 200% of their time like you do for free like you do at the beginning is invaluable.

Imagine you are three people and you’re giving everything you can from scratch in your business. Yes, you get paid a little bit lower but compare that to being yourself and having to hire two, three, four other people to do the same job paying them full price.

Don’t be afraid to have differences with your business partners – use them, in fact

Bex Burn-Callander:

What you said at the beginning – about that tension between very different personalities – I’ve met you all and you are all big characters and all very different, bringing very different things to the party.

How do you balance when you’ve got disagreements, how do you do that as a founding team, when you’re all equally invested? How did you manage each other’s personalities?

Julien Callede:

How do you manage your family when you have big personalities and how do you manage your marriage? I think it’s exactly the same. But this is usually the funny bit, I’m not kidding.

I was thinking of it in the shower this morning and I was like, I always use the metaphor of the marriage. But it’s so true. I was on that panel with a woman who had founded a business, once.

Before the panel we were chatting a bit and she was like, “I will never ever co-found a business. I’ll always found by myself.” I was like, “Wow, me I always give the opposite advice to people, be a few people in founding a business,” for the same reason I just said.

Then I was like, “Why?” She was like, “Every founder teams I’ve seen have been arguing. Some of them have split blah, blah, blah, blah, blah.” Oh, yeah, that’s true. We did argue, quite a bit, but at the end… you go much further when you argue.

For most of the people, if you just stay alone you won’t go far.

What is tricky though is, the most important for me, is not founding a business with people who are similar or different. I think there needs to be a mix of them.

I can tell you that with my two co-founders individually speaking, we were very similar on some points, very different on other points, even on the skill set.

For instance, Ning and myself were very different on the skill set on some part, but we also had crossovers, which were very, very useful. When I was in China working on the supply, I received an email saying my warehouse was going into administration tomorrow.

I could just call my co-founder and tell him, “Dude, we have a problem,” and he just jumps on the train the next day and can do your job.

Yeah, that’s important. You need to go in business with people who have the right set of skills and the right personality, but the thing is, you will think you know them at the beginning.

But then people are going to evolve.

Again, it’s like getting married at 20 and just waking up at 40. You will be very, very different and you need to adapt, you need to learn to adapt to the other person.

The one thing which I think is critical though when you go to business together is, being extremely transparent on your ambition for the business.

What do you want to achieve there. Why are you in business? There are usually two, three, four reasons or maybe one or two, all of them are good.

You might want to make something big. You might love the industry. You might want to make money. You might be willing to go 400% and give it everything. You might be willing to give it a lot of things but not too much.

What you do not want is some people willing to keep going at some point and for some reason some people willing to stop.

One of the things with Made is we had three, four founders who were all in, really loved what they were doing, loved that we were trying to achieve.

We loved furniture. We loved trying to build something big that was disrupting the industry, and we were giving it our all.

Bex Burn-Callander:

You were all united on that purpose. That was all of you. Do you think that was crucial, a unity of purpose then?

Julien Callede:

Yeah, yeah. Then on the way you do it, on what you think is right or wrong, you’re going to have disagreements, but then you have to agree to disagree.

That’s the best sentence I heard from a friend, they were four founders. You set up rules on who should decide, on how you decide when you can’t decide and stuff like that.

But he was like, “The most important is sometimes you agree to disagree when somebody’s making a call or agree to disagree, and then you make a collective decision.”

What investors want to see in a business – and its employees’ skill set…

Bex Burn-Callander:

Made.com has raised and forgive me if this isn’t an accurate figure, but it’s around 100 million in investment.

How did you go about raising that kind of money? I know it was over multiple rounds.

But how did you get the business into a state, where it was professional enough to take on that kind of capital? What advice do you give to other founders who are looking for investment?

Julien Callede:

First of all, you don’t need to raise money. It depends on your business. I just want to start with that saying that, in my view, raising cash shouldn’t be a target in itself.

But in some cases, for some companies, it’s either a huge accelerator or a booster, or absolutely necessary. In our case, it was absolutely necessary.

The thing is every race is different. Usually the first one and the last ones are the easiest. The first one because you have no numbers to show and the last one, because you’re quite secure as a company.

In the middle, you’re trying to scale or you’re scaling and people have numbers to look at and you’re never good enough. That’s what you usually see.

Maybe the second one you are hot enough and then, usually what happens is the third one is tricky. At the beginning, we had, I think we had everything that was needed at the time to have a good investment story.

We had four founders, including three execs and one non exec, two of which Ning and Brent had raised cash before.

We had a huge market. The furniture in the market was already like kind of 10 billion size. It hadn’t been disrupted, either in the online space or in the models or the way things were built and sold. We had some comparable [companies] in other markets that were doing well.

At the end of the day investors are not bankers, even though there is that big thing of not missing the big opportunity and the willingness to the build a unicorn.

But what they want is to bank on teams and a project that they think it can go big, but are quite secure, because they believe in the team.

I think we had the right set of skills. We raised two and a half million on the paper, which at the time was very big I think now.

Even now, by the way, if we’re talking to founders of smaller businesses at the moment, I think the big message to say though is, “You’re going to see all those guys raising one, two, three, four, five, 10, 20 million on the paper.”

You might think, “What the hell? I’m not managing to raise 300K.” It’s not normal. I’ve seen thousands of people like this. You’re going to be questioning yourself.

The fact is very little companies raise multimillion on day one. What you don’t see is those 50% of companies who don’t raise cash and the 50% of companies who raise a few 100k and that’s not a problem.

The press is just the press and the blogs, and the web is just talking about the big stories, because people like it. We raised two and a half from the paper. Then started growing like… we had a very, very decent start as a business.

Great year one, proving that we could design products, deliver them and then sell them as people were willing to bank on us and trust us, and the fact that we were delivering the right quality of product, even though it was half the price for the same quality and they were willing to wait for a few months.

That was a big thing for us, and then we were managing to deliver that with a decent service even though we had a few mistakes. Yeah, that was the tough part.

Then a year in we started growing even faster, which got us into that phase where between October and December, October 2011 and January 2012, we grew the monthly business four times.

We doubled in two months and doubled in one month. We were re-raising cash at that time, so that was good. Re-raised cash and then we entered that phase where we had to face all the growing pains and the scaling pains on the planet.

It took us a few months to stabilise the business, start growing again, build a really good team, even better team, a bigger team first and re-raise cash.

I mean, you just need to show people that you have a business that can go far and that won’t go bust. That’s the way I see it.

When we raised the last round in 2018, the business was showing that even though we were a fast-growing business, still growing like 30%-plus a year in the UK and even more as a business, and doing more than a few hundred… I mean a few hundred million.

We were profitable in the UK. That was one big thing. We were growing profits as a group. We could, in all our countries we were growing the same way as the first business.

The UK grew like this, and then every other country is full of the same growth paths, and people can see that you can replicate your business, which is a big thing.

Bex Burn-Callander:

But that was really interesting when you said at the beginning, you don’t always need to raise investment, because I feel like there’s rhetoric out there that somehow if you can bring investment on board, that you look like a more successful outfit maybe.

There’s kind of this idea that growing from cash flow alone, or through other routes slows you down, but you don’t think that’s the case?

Julien Callede:

But what’s your target? If your target is to build Uber, you’re going to need investment. If your target is to build Deliveroo, you’re going to need investment, because of the size of business, because of the kind of winner takes all thing, because you’re going to grow fast, because of the small margins.

If you want to be Made, you need to get investment too, because you need staff, you need a lot of things to make it happen.

If you want to build a small brand… or if you want to build a brand, doesn’t have to be a small one… but a brand that grows at its own pace, you might need to raise investment or [maybe] at some point in five years, you might own 100% of your business that is worth a lot of money, that is delivering amazing products to people, you’re going to be even prouder of just owning your business.

That’s why I want to tell people that they don’t need investment.

I have one of my amazing guys at Made who built his marketing agencies delivering services to startups and SMEs, and he never raised investment.

Half a year in, he’s got like six staff, doing amazingly well, helping tons of companies, positive cash flows. No, he won’t be making three million year one. But does he need that?

Actually, do you want to grow that fast? Because if you grow too fast, you’re going to have to grow your team too fast. It’s going to be more complicated. You need time to adapt.

How to build resilience when things go wrong, plus pitfalls to avoid

Bex Burn-Callander:

You actually referenced that when you talked about blips along the way.

Tell us about some of the blips that stand out in your memory and what you learned from it as a business, as an operations guy, how you built more resilience into the business as a result of things going horribly wrong.

Julien Callede:

We had hiccups all along the way and I think I don’t… I forget most of them. If you talk about like customer-facing ones or business facing, the easy ones, we received our first batch of production in our warehouse in July 2010, three months in the business.

I went to the warehouse; I printed labels one batch, two batches to test the printer. I stick them all on parcels and I stick the wrong batch of labels and everything got lost, the first delivery of products which was, by the way, for half of it, a bit late [or] got lost.

I spent my Friday evening with my even worse than now French-English accent on the phone with customers telling me, “Where’s my parcel?” You have to be there. I say, “Sorry, guys. They are actually lost in transit and they’re going to come,” but we never know when.

That was the first batch, and actually half of them arrive with broken foot, because the armchair hadn’t been packaged well. Half of them arrived with a broken foot. Then you’re like, “Oh, god.”

And what else?

Then our warehouse went into administration a month and a half into business. Maybe we negotiated prices too hard, which gave us the opportunity to go on the road and find another one where we even had better prices because we went in, and negotiated even further.

A lot of the products got in with a delay at the beginning. Some of it like let’s say, which was a lot for us, like 10%, 15% of the first batches were late, which is huge when you promise people like 10 to 14 weeks.

That was just the beginning.

Anticipate growth, build buffers and don’t take unnecessary risks

Julien Callede:

Then we adapted the business. We built a buffer. We had a target. We needed to have 95 of the customers delivered in advance, rather than taking any risk on the lateness.

We over-packaged stuff. We learned about how to un-assemble the feet of an armchair when delivering it. It’s as basic as that.

Then you have a better moment, because you start scaling and suddenly you have those four times sales in three months and you’re profitable.

In January 2012, we were a profitable business already and then everything goes wrong, because your logistics partners can’t cope with the growth, because your tech cannot cope with the growth, because we have payment issues, and you have to go back to it again.

You switch from answering emails in like an hour and a half to three days, and you still don’t have a phone number, because you thought you had time to do it, blah, blah, blah, blah, blah.

The few things we learnt along the way there was, even though we try to anticipate growth as much as we could, it’s sometimes never enough.

We should have had a phone number on the website, because if somebody is waiting for a delivery on a Monday morning and they took the morning off, and on Monday 6pm they still have no news, and they can’t call you, that doesn’t look good.

Even though you didn’t have time to adapt, even though it’s not your fault 100% because it’s your delivery partners, it’s still your fault. We should have anticipated more.

Also, we were a bit cautious as it was our cash and even though we raised like two and a half million, we were very, very, I won’t say cheap but we were very cautious in how we were spending the cash.

Bex Burn-Callander:

Frugal.

Julien Callede:

We were very frugal. I remember Brent telling me when we were raising the second round, he was like, “You will see a big difference, because suddenly you’re going to be able to hire more staff and people with more experience than actually you have in the field,” which was true and wrong.

That was really true, we could hire people with more experience.

But we hired too quickly people with more experience and too many people in the field, who were not able to adapt to a new mindset, a new business model.

The first thing was anticipation. The second thing was hiring better. We had amazing staff. We have people who are still here and they’ve been crazy good.

But any time we hired people in a rush, and that rush could have been three months, we were wrong. Any time we hired only on technical skills, on experience, we were wrong.

You need to look for the right fit, the right people.

How to hire smart when you don’t have much cash

Bex Burn-Callander:

It’s so hard though isn’t it? Because I hear a lot of founders saying the mistake that they made was hiring too late.

It’s just really tricky to know when is the exact right time where you’re not over committing the business with a big hire and expensive high too early.

But if you wait too late, if you wait too long, you can also do yourself a disservice. It’s just really tricky. I suppose, do you go with gut instinct or, how do you make that call?

Julien Callede:

There are two things that get you to not hire too early. Sometimes you’re too early in your business for people who would be amazing for the next stage.

If they join now, they’re going to get bored, they have nothing to do. But most of the time the issue is cash. You don’t have cash to hire people. I don’t know, there is no rule there. The rule is pay people… if you really need people, you’re going to find a way of getting them in.

Don’t hire too quickly. But when you need to hire people, find the best amazing guys out there and find a way of getting them in.

If you don’t have enough cash to pay them, find something else. They might need chairs. They might need a more flexible way of working. They might need more responsibilities. Just build something around it.

We were lucky though that we had a great, fast-growing brand people could work with. That helped. I remember telling… I was telling people in the interview. That was very easy. I was like, “One of the things you get here is, you’re going to be working hard.

“We won’t be getting you to work just too hard, because nobody wants a job that works them too hard. But it’s not going to be a place where you’re going to be bored by the way or lazy.

“But if you want to grow your responsibilities and you are able to do it, I don’t even have to sell it to you just because we’ll need people, we’ll need people to grow with us.”

But that was a big thing for people. People were talking about it. That helped.

Bex Burn-Callander:

When you’ve got a sexy brand and everyone loves the furniture and you’ve got billboards, it’s kind of an easy sell, because you know you want it on your CV and everyone recognises it.

Even if you think I’ll only be there for a year, and I’ll do my time, even if it’s really hard, I’m working long hours, I will have Made.com on my CV.

Julien Callede:

I didn’t go for that on purpose though, because this only works for a Made or a big, fast-growing company.

It won’t help people who have a smaller business, but I think you can make your brand sexy.

The same way you go to a factory at the very beginning and you have zero business, and you need to sell yourself in, and you do that to investors. And I’m not saying fake it till you make it, because I hate that thing. Just like make yourself sexy.

You have some sexiness inside you in a way your business has something good, otherwise you wouldn’t be here.

Remember, people don’t join your business, they join you

Bex Burn-Callander:

But how? Is there like a recipe? You’re looking at your business and how you would maybe explain it to your pal at the pub and trying to pull out the interesting strands. What’s the process you can follow?

If you’re selling widgets that are used to make machines, make engines, I don’t know, how do you drill down to what is it then that will make people go, “Wow, that’s cool”?

Julien Callede:

You know what, if you’re selling widgets, you might find selling widgets interesting and therefore just sell it to them the way you sell it yourself.

At the end of the day if you’re a small business, they will not join your business, they will join you. They’re going to follow you. If you’re able to show them why you totally love that and why it’s amazing, they’re going to be like, “Well, I got impressed by that person.”

Not saying that that happened to me first, but in small businesses, you need to get people to want to follow you because yeah, by the way, their job might be boring in a way but they’re going to be here because they learn along your side.

It might not be technical skills, but they might learn stuff about business. You might be sharing everything that happens at the company, and that is very invaluable to people when they start their first job and stuff like this.

My first job was in the furniture import business.

At the time, did I care about that? No. I learned though and I learned to care and love it, but I was not there because I wanted that on my CV because nobody never, ever knew that business.

I actually left my first job thinking that I would never go into furniture, but I was working alongside the guy who had founded the business 20 years before, the investor who bought the company and I was learning on a day-to-day [basis] and I followed them.

Why building a successful business paradoxically makes its owner obsolete

Bex Burn-Callander:

You’ve left Made.com now, tell me about how that felt to leave that baby behind? Then tell me about the Entrepreneurs Partnership.

Julien Callede:

It’s never a process of one day. It’s not like you wake up and you decide to leave, or your team wakes up and they decide that you should leave.

That could happen in one day, but that’s not what happened with any of us.

In my case, I think… I had been in the business for four years in 2014. Started hiring amazing people to help the company grow so that we would not be the one bottleneck, especially because we were taking on too much.

Your life does change quite a bit, very positively.

I had all the positive before that of building the business, running a huge part of it, growing it, making big decisions and making it work, being responsible for that, and suddenly that was hard. That was stressful.

That was just too much for a 24-hour day, which you don’t want to be 24 hours and then suddenly you have more comfort, you begin that journey where you know that at some point this is going to be a big business.

This won’t be your family business ever. This will always be your baby. This was always been my, it’s always going to be my baby.

But you know, you won’t stay in your business for 50 years. You start a journey where you start building things around you that makes you replaceable in a way, which is good. It raises your level of comfort, your level of, yeah, your life is easier.

The company becomes much more secure in a way. But it also builds bit by bit your level of frustration, that you’re not making all the calls by yourself anymore.

Bex Burn-Callander:

You’re making yourself obsolete basically.

Julien Callede:

Yes.

Bex Burn-Callander:

I can’t imagine how that must feel to be the agent of your own obsolescence in your own business. That just seems so crazy to me.

Julien Callede:

I bet you it happens to most of the founders, most of them. First of all, because you need your company… I mean you owe that to your company in a way.

Secondly, because if you notice at some point you’re going to want to, you’re going to need to make a move out, you don’t want that to happen. But this is going to need to happen. You won’t be able to do it if you’re still absolutely needed in your business.

At some point, you reach that tipping point, where your business is secure enough, the team you have in place is not only able to run it securely for the rest of the life of the business, but also it’s going to be able to innovate, challenge it.

They’re going to be disruptors too and this is good. You have got rid of most of the day-to-day and your level of frustration of not making the calls, you get that out and you’re, “OK, I think that’s the right time,” and you make a move out.

But as it’s been a process, it’s not that big. I remember telling the team that I was going to move away and I was like, “Is it going to be surprise for any of them, because there’s been quite a bit that I haven’t been in the day-to-day ops.”

I was doing business development for nine months.

You get a lot of them coming to you like, “What the hell? What did that mean? Why are you leaving?”

I was the third one leaving; I was not the first one. But you just have to tell them that you leave, because you actually leave because you’re very, very confident in the business, otherwise you wouldn’t leave.

You leave because now that the business is secure, the teams are amazing, you are now going to be able to do something else and work on something else. It seems easy though, but then leaving is easier.

But of course I think about Made every day. You’re always are like, “We should do things this way or this way.” But then you look at how the business is run, you look at all the new great things that are coming to the market, that makes it much easier.

The guys are doing an amazing job, so no regret. Still very happy to be talking to them on a weekly basis though.

Take the right shortcuts – but what are the wrong ones?

Bex Burn-Callander:

But you talked about how exhausting it was to be always on in those first few years of Made.

But does that become an addiction then? Once you start getting comfortable, do you start yearning for that start-up thrill?

Julien Callede:

That’s the answer.

Bex Burn-Callander:

Yeah.

Julien Callede:

Once you’ve lived it once or you’ve given everything to one project where you actually were running… It depends on the people though.

When you’ve been running fast, making calls, taking risks. But these are moderate risk when you’re a young business, you have much less to lose. That’s why it becomes harder when you’re a bigger business.

Made is a bigger business and you can’t have as much risk. You just want it to happen again. Yeah, so currently, with the Entrepreneur’s Partnership I’m helping founders in that stage, helping them make less mistakes, take the right shortcuts.

I’ve always said that, to build a big business, you should not take shortcuts; you should do things the hard way. Actually not the hard way but like 100%, but actually you can help people take the right shortcuts.

Avoid all the wrong things we’ve done and being their non exec on the side.

Bex Burn-Callander:

Tell me some of those shortcuts. Yeah, what are the right shortcuts? Give me a couple.

Julien Callede:

This is actually a tough one for me, because I don’t think… I think people should not take shortcuts in the way they implement things in the quality of service, the quality of the operations.

The website they build, the quality of the products, they shouldn’t. Sometimes raising cash quicker is a shortcut. When I said you shouldn’t raise cash if you don’t need to. You might not want to, but let’s talk fundraising two seconds.

I’ve been in a lot of debates on this one. My view is, you’d rather raise more cash quicker than at a better valuation for instance, rather than being six months more on the road trying to strike 20% higher valuation.

You’d rather raise now, get done with it, raise more and be able to hire a team. Another big shortcut (actually the biggest one) is surrounding yourself with people who know [more than you].

I’m always amazed. It’s not a criticism, but a bit still, I’m amazed by founders who think they know everything.

When they talk to me, it’s not like I’m an investor. It’s not like they have to pitch me as founder to founder, but they still think they know everything.

I don’t know how they can think that because they might know a lot, but nobody knows everything, especially in very specialised areas.

You have another half of founders who are very willing to get advice and get the right people. I think surrounding yourself with people who’ve got experience in building a company, or people who are expert in digital marketing, logistics, operations, asking them questions, rather than discovering everything yourself again, is a huge thing.

We made tons of mistake, yeah.

Bex Burn-Callander:

That’s a good shortcut?

Julien Callede:

For me, that’s a shortcut.

Common pitfalls and questions for a small business

Bex Burn-Callander:

What are the common pitfalls or the common asks that you’re hearing at the moment?

Julien Callede:

There is everything. Honestly, there is everything. If it’s small businesses, people are always going to come with all the very direct needs, like either I need marketing, logistics, supply or I need HR help or I need fundraising help.

But half of the time you’re going to spend with them is going to be personal. It’s not coaching per se, but it’s like, “Well, how do I deal with my co-founders? I feel bad today, I just need to talk to you,” or stuff like this, and this has value to these guys.

But on the other half, actually it’s a lot about hiring, getting the right team, getting the right people in. It’s a bit about fundraising.

But I do not think that that’s, where the value is. Everybody goes to you because they think you have a huge network of people they can raise cash from, but that’s like 5% the value.

It’s hiring and then it’s 30% of the time, how can I market my business? How can I spend less money on marketing? For quite a few of them it’s, “I’m a good offline business, but I only do wholesale. How do I go a retail?”

Or, “I do wholesale and retail but I want to go online.” It might seem to them, some of them they’re asking because they’re like, “Well, online is supposed to be easy and I don’t know how to do it.”

But then this is the easiest one by the way, is how to help people who are really good in the product they sell, if they’re traditional retail, make the most of this new thing called the internet, which has never been a challenge, which has always been an opportunity and now becomes a no brainer to sell through their customers or to approach their customer more directly.

Selling online is not a debate, it’s a no-brainer, but be careful you don’t burn cash

Bex Burn-Callander:

You say it’s easier now to sell on the internet. But when you were talking about the early days of Made.com and the teething troubles, and late deliveries, the consumer back then.

It’s not even that long ago but the consumer then I think was a lot more understanding than consumers today, who were used to same day delivery, putting an order and then getting it that evening.

Isn’t there less wiggle room and less room to fail now? Are people not a bit more exacting?

Julien Callede:

I think that selling online today is much easier than before. The quality of service providers, partners you can work with now is 30 times higher than before.

For a few months your marketing spend might actually be also be less expensive than before, because of COVID and all that stuff. Media is still a bit cheaper than before. It’s not going to remain like that for a long time.

The quantity of people around you who know how to operate an ecommerce business is much higher than before, is much bigger than before.

So no, it’s easier now. However, if you go to the wrong guys, if you get the wrong advice, if you operate wrongly, if you set up your Shopify the wrong way, you will burn cash and that is true.

It’s very expensive. Selling online is not a debate, it’s a no brainer. It’s a huge opportunity, but it can burn cash if done the wrong way. That’s one big thing. That’s where you can help people.

There is nothing crazy or magic. It’s not like huge coaching strategy, it’s nitty gritty and helping them do things without making the mistakes you could have done or other people do.

How to set expectations with your customers, ask for advice, and implement it

Julien Callede:

It’s more about delivering on time than delivering the next day. If you can’t do next day, just be… it’s about setting expectations with your customers.

That you can do, and if you have an online business you can set up everything. You can talk to them on Instagram. You can send them a newsletter. You can decide exactly what you tell them on your homepage, on your product page, on your checkout. It’s not that hard.

You have full contact; you have full transparency with your customers. What is hard is operating that because even though what people will not forgive you is telling them it’s coming on Tuesday, and it’s coming on Thursday and you’re not telling it’s is coming on Thursday.

Bex Burn-Callander:

You mean just having that open channel of communication, then you almost have the room to make mistakes, because you’re keeping the customer in the loop at all time, and they know that you’re not ignoring them, that’s the kind of sacrilegious.

Julien Callede:

The most important thing we’ve done on Made… OK, we had a few big things that were a game changer I think for us.

There is nothing crazy.

But I think the most important things was, from maybe six months or a year in the business, we started sending any customer, every customer after they got an item an email asking for feedback, or we had long debates on whether we need to ask them for a rating on NPS [Net Promoter Score] and blah, blah, blah, to be able to follow the feeling on customers’ ratings.

I think we still actually do that is, we’ve always gone for asking them to free type their feedback, so that they could just give us advice or directions on how to improve the business.

A lot of times I had people telling me, “Julien, the inbox is getting too full, because we’re getting an amazing response rate.” That’s what people should know is if you ask your customer for feedback, they’re going to give it to you and it’s amazing.

It’s like you don’t ask your wife or husband feedback and you don’t ask your boss for feedback, because you know what they’re going to say.

You’re like, “Oh, my God.” But imagine you were asking your boss for feedback, because you know that this could be done better and he tells you, you’re actually… How do you say that? You’re avoiding yourself an issue later on.

You’re showing them that you’re proactive. Asking your customer to tell you what might have gone wrong to you, is an amazing way because they can voice it to you. They won’t voice it on social media.

Also, you’ll know what to improve in your business, and we change tons of things at Made after customer feedback. This is extremely powerful.

Bex Burn-Callander:

But that’s crucial isn’t it, that you don’t just ask for the feedback, you have to implement it as well? Because a lot of businesses they ask and then it’s just like silence.

But you actually turned it all into useful actions, right?

Julien Callede:

You try as much as you can, which is very easy when you’re the one reading them and you have a team of 15, and you can implement the thing.

Actually you don’t even need to ask for a customer’s feedback, you just need to open your inbox. If businesses… head of… people who make decisions open the inboxes, read through feedback on a daily basis or a weekly basis, they would know how to drive your business.

I remember being bored in China one day like a weekend I was staying there. I read maybe 400 emails and I categorised them. I’m like, “What is the topic?” Then you know what’s going wrong. You know where to save time. You know where to save money. This is big.

But as you said it’s true, customers will always forgive you for mucking up if you do it once and you apologise. But if you apologise and then you do it again, then there is no forgiving. You need to act.

Audio transcript may have been edited for legibility and coherence.

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You can follow Julien on Twitter at @JulienCallede and at the Entrepreneur’s Partnership.