In this latest episode of A Founder's Life we talk to Henry Waterfield and James Kellett, who are the founders of Spotship. First starting Spotship in 2019, Henry and James realized how the Shipping Industry was stuck in the "stone age", and realized the potential in modernising this industry. However, the journey has been tough since they were both not tech guys, and lacked funding. Tune in to listen to the emotional mangel it has been for both Henry and James as founders, and what it really takes to revolutionise such a traditional industry.
Episode Transcript
Victor 0:10
shipping is not something I normally talk about in my day to day conversations. But with the globe so interconnected despite any interruptions by COVID, most of our goods are still shipped by boats all around the world before they get to us. It was surprising to hear, however, that shipping is a business that still has not been disrupted by technology. I'm so excited to speak with Henry Waterfield and James Kellet, the founders of spot shipped to talk about how they're disrupting the shipping landscape. Hi, everyone, welcome to the next episode of A Founder's Life. I'm really happy to have the founders of spot ship, Henry Waterfield and James Kellet. Thank you guys for coming on the show. Thanks very much, Victor.
Henry Waterfield 0:56
Great. Great to be here.
Victor 0:58
Yeah, please. I'd love to hear a little bit about you guys and sponsorship just to start off with.
Henry Waterfield 1:04
Yeah, absolutely. So spot ship is a shipping technology company, what we essentially do is optimise the data use for or for shipbrokers, to make their day to day easier, and potentially more profitable for them. And then there's some really cool things that we can do with the data that comes out of, or what happens on the platform. With regards to myself, I got into this industry in a really weird way. So I was in the military before I before I became a founder, got an internship at a shipbrokers in London as I was leaving the Army, and then just realised that the the industry is is not the digital future I was expecting to see in the private sector, the Army has lots of crawling around, you know, creating models out of sticks and bits and mosques and things to talk about what your what your plan is. And I was expecting the world of the private sector to be slightly more advanced than that. And what I realised was, it's not quite as advanced as I was expecting. And so I was really kind of taken with it, is there a way that I could potentially do this better? And is there a way that I could make this better for the people in the industry. And so that's kind of how the idea of how the idea of sponsorship came about.
James Kellett 2:23
Compared to most founders, I did things the other way around. So I started my career after undergrad as an investor, specifically, a deep value investor within equity hedge funds. So from day one, I had this magnificent exposure and freedom to talk to great management teams and to kind of experiment with what worked for companies and what didn't. And I remember actually not being as humble as I should have been, because one of the things we had to do was assess management teams. And it was pushed on us over and over again, that most management teams compared to others are average. So when meeting management teams or multi billion dollar companies, I would often not be as excited as I would be now because I go in thinking, okay, these guys are probably average. Whereas I realise now if I can get to what I used to call the average, it would be unbelievable, a spaceship would be so lucky. So I think looking back, I realised quite how far I have to go. So after eight or so years, I got tempted across to the unicorn improbability. The founder, Herman Narula, was a close friend of mine, to work on a super secret project, which was actually investing based. And it was there, I really got the bug for startups. But because all my training had been commercial decision making, rather than in any way technical or product, the fact that improbable was such a deep tank with I would say the best engineering culture in the world that overrode what I would think of as the importance of the commercials. So I realised that probably wasn't the ideal setup for me. And that's when I met Henry with his brilliant idea of doing something in shaping. And I didn't believe him at first, when he told me quite how old fashioned the industry was, I couldn't, I couldn't fathom that something would be maybe 2000 years behind the technology curve. And so that's when we clubbed up together. And we sat out in a pub outside three to four different shipbrokers offices, and spent around a month ambushing these guys with pints of beer to really dive into what their life looked like and their problems were. And it became increasingly clear that Henry was absolutely right. And this was an idea that was phenomenally exciting. And with the application of a decent amount, but certainly not a Nobel Prize winning amount of tech, we could change this industry forever. I'm having not just human and financial benefits, but also the environmental benefits that we're so excited about.
Victor 5:07
super interesting. Well, one question I have is, aside from the management team that you met, when you were a deep value investor, you know, what, are there any similarities to building a business where you're doing now and investing in general?
James Kellett 5:24
So for me, a CEO is primarily a capital allocator. And that was, that was the kind of received wisdom of where I was, that was the highest and most difficult calling for a CEO that most of them were able to do. But that was at the very edge of what they could do. And I think taking that value set in that belief into startups, made me quite different from other CEOs. I have learned over the years, the other aspects, that's what most people talk about all of the time, the obsession with the customers, the motivation of staff, and behaving in a way that sets an example to others. But fundamentally, I think I started with what I call the end and work backwards. And I think the, when you think about an investment centre, compared to just a profit centre, you've also you're thinking, on addition, when am I going to get the money back that I put in, and this focus on only ever building something that's going to be profitable long term, is something I think that technical co founders typically mess up so badly. So while I had my own bag of problems, and I would say I've been disruptive in organisations over the years, whereas Henry came in as, as just a fantastic manager, I feel I came in as somebody who was much more comfortable making long term business decisions under ambiguity that were going to be very favourable for shareholders. And that was my motivation. That's what I was psychotically committed to. So I would actually say, I would now I've made one angel investment, it didn't go very well at all behind a pure technical co founding team. I don't think I would invest again, unless there was somebody with some sort of investment background, or at least a feel for investment in the founding team.
Victor 7:24
I mean, he was a deep value investor, how did you guys meet each other? Actually?
Henry Waterfield 7:31
Yeah, so it was very strange, actually. So James, I first met, whilst I was still in the army. So he was at university with one of my school friends. This school friend went on to be a founder himself. So he's founded a company that's gone on to unicorn status and beyond. And, James actually, one of the things he was saying is, once he stopped being a value investor and making mistakes, looking at the world of startups, he went to work for my friend running one of the financial investment teams. And then after that realised, rather than joining a late startup, that's essentially a business, you get more value by joining a very early stage startup. And that happens to coincide with what I am talking about, I think there's an opportunity in shipping, I think there's a way that this can be tackled with a digital solution. I've got this plan. And he said, Yeah, this is the kind of thing that excites me, I can see an opportunity, I can see a business case, let's go for it. So, so that's, that's where we were really. So I spent a little bit of time shipping. And actually, once I saw a business opportunity, I moved away from the industry. So I didn't end up, you know, one getting dragged in and potentially trying to start a business within a business or kind of potentially being seen as someone that was competing with the industry that was employing me. I worked at Amazon for a while as a manager in one of their FCS. So I got a good look at the shipping industry and the commodity markets. And then also actually how a very forward thinking tech company does logistics and optimization and mass use of data, which for me was absolutely perfect. They do. You know, some people talk about the bad things they do with regards to employment and stuff, but actually everyone likes getting cheap stuff very quickly. For the same price as you get everywhere else. You can't argue with that business model, the way they use data is absolutely phenomenal. So it was a really good kind of baptism of fire into use of mass data and optimization of logistics chains. And it's kind of taking that knowledge from Amazon, combining it with the opportunity that I saw in the shipping market. James is really good deep value investments strategic brain, and then kind of putting that into what's now become a spaceship
Victor 9:52
really interesting. Before we started recording, we were talking a lot about the shipping data. I mean, what is the kind of data that you're actually Working with and what are the innovations that you're doing with this data?
Henry Waterfield 10:05
Yeah, so there is huge amounts of data. So it says shipping is, it's a weird injury people, people always think when you say shipping, they think containers, and actually containers is a very small percentage of the market, it's kind of five to 10% of, of the number of ships seen at any one time. So you've maybe got five 610 10,000 at the top end, if you include some of the smaller ones, container ships. And most of the ships at sea are bulk carriers, tankers. So they're kind of a big thing designed to take a homogenous, dry cargo or homogenous wet cargo, so be that gas or oil or, or whatever it happens to be. And those are the ones we're interested in. And the data is vast, so you have all of the information on those specific ships, their names, which change every time they're bought, and sold, their characteristics, so their length, their capacity, their age is quite an important one, the country, they're flagged underneath. So what authority, what taxation authority they come into, and also their live location. So in the early 2000s, this thing was introduced about preventing the Preventing Collisions at Sea, which is called an AI s. transceiver. And so essentially, every 10 minutes or so every ship broadcasts, their live location, they're heading, their speed, their draft, how deep they are sitting in the water. And so that was originally designed to prevent people crashing into each other and see, what people realised is if you capture this data on a mass scale, you have a lot of data as to where those ships are moving around the world. And you can utilise that data. So you have the static data or or the or the slowly changing data of what the fleet is. And then the constantly changing data of where every ship is in the world, where it's come from potentially where it's going. And potentially the understanding of is that ship carrying a cargo? Or is it not carrying a cargo, and you can infer what it's doing based on its draft. The interesting thing is that a lot of that data is not necessarily 100% accurate, so people can incorrectly report what they're doing. So yes, you have a good picture of what's going on. But no, you can't always be 100% trusted. And so that's kind of the live data that everyone has access to, or you can get access to for kind of commercial through commercial channels. Where the data that we are clients, the clients that work with us find most value is the proprietary data that belongs to the ship operators. So actually, what is not necessarily useful is where the ship is right now. But the useful information is where that ship is going to be when it's next available to load a cargo. So for example, if you think about a taxi, if the lights off on the taxi, it's not available, then that's useless. Yes, you know, there's a taxi there, but you don't know you now know that it's not able to pick someone up so you can't use that taxi. What you want to know is when the next available taxi that's open, going to be coming near me. And this is what this is called position data, which is a bit of a misnomer, because it's not the live position of the ship, it's the future position of a ship. So every owner operator sends out all of this data, normally in an email format, either daily or daily, or weekly. And if you have a relationship with those owners and operators, you'll get 10s Hundreds, potentially 1000s of emails every day saying the following ship is opening in, let's say Singapore, on the 11th of June. Its last cargoes were x y and Z. So based on that data, you know that a ship of a known capacity is available for hire to load cargo on the 11th of June in Singapore. And because you have the data to say these are the previous cargoes you know what kind of cargoes you're, you're able to load onto that ship. And so this is, on a small scale, it's a very simple problem, you get three or four position emails, you know, what those ships are doing, you can then look to match match them up with cargoes, where where spot ship comes in, is because you're working with 1000s of of these positions, either
Henry Waterfield 14:32
The standard practice in the industry is to spend three or four hours every day loading these up to an Excel spreadsheet and then using that Excel spreadsheet, or you just scroll through your inbox and try and find a match for any cargoes that are coming in. So we take that data, put it into a Smart database for them with a pretty complicated bit of AI because there's quite a lot of nuance to matching the ship, the location, the accent. etc, because, you know, there's, there's multiple ports in the world called Portsmouth called Southampton, etc, etc. There are lots of ships with exactly the same name. So, you know, when it comes to the six of six of the sixth of May, is it the sixth of May? Or is it the fourth of June, depending on? Are you speaking with Americans? Are you speaking with people in the UK? Like, what are people doing so, so that was a really complicated bit of AI. But we essentially drag that information into the system. And that's the, that's the next bit of data that we can combine. So you've got the static, or the relatively static ship data, the live data of where every single ship is in the world, the proprietary data of when those ships are next available. And we're also looking at introducing the data of cargoes so what cargoes are available, and how can we get them into the system. And this is an enormous problem, if you look at the industry, it's 50,000 Plus ships, it's three 5000 Plus ports, depending on the size of the ships you're working with. And the number of positions and cargoes we're having through our system every day is, it's now in the 10s of 1000s, based on the clients we have, so it's a it dates Data Wise, it's it's absolutely enormous for what we're doing, and so that's what we're trying to simplify. So rather than people just drowning in data, we're given the ability to swim above the data, just show them what they need to see. And when they need to make a decision, we can just highlight the specific bits of data that are most useful.
James Kellett 16:33
And that doesn't override the market feel of the shipbroker. So we like to think of ourselves a little bit as like the targeting computer in the spaceships installed. Most of the time, the targeting computer is going to be right, and you can just follow and do what it says and it's going to help you. If the market is really, really weird, or you need to do something that's almost impossible. You ask the targeting computer what it thinks, and then you switch it off, and you say thank you, and you go and you do what you want. And we really have a lot of respect for shipbrokers. And we think we're never going to replace them completely. But we can help with all of the boring stuff, which is where they're spending 95% of their time at the
Victor 17:12
With some of our, you know, a genie, we do some forecasting for cash flows and things like that. And, you know, oftentimes, the founder may not agree with the outcome of an algorithm. And so we always give them the choice to modify it, right. But it really comes down to explain ability, I would probably 90% trust the algorithm more than gut instinct. But you know, markets are strange. And, you know, I guess that's probably one of the lessons that you learned over the years. You know, I mean, as you're building your company, what were the biggest trials and struggles that you had, one of the biggest learnings that you had, through the whole process?
James Kellett 17:53
So I think one of the big things for us is this idea that a platform or a technological product is never really done. I think in the first year, we thought, okay, we've just got to get it to this point. And then it's done. And we don't need to build anything else. And it's, it's fine. We've actually found it's very much a living thing. And we need to be constantly talking to customers, constantly refining, I think in terms of how that's changing. It was slightly now moving from these are, I think the things our customer absolutely needs to do are how we can delight a customer? How can we get away from that feedback, but the type of feedback Ford has, what do you want? We want faster horses and extrapolate from that, that actually, we can give them a car.
Victor 18:41
Make sense? And how do you get that feedback? I know sometimes I talk to customers, and they don't always know what they want. Or they say they want something but actually, maybe they're just trying to say something profound to the moment or make me feel good about, you know, myself in the interview, like how do you learn about that in the product development process?
James Kellett 19:02
Sorry, originally, it was Healy reading. So absolutely. The type of thing you're talking about just having these conversations and trying to extrapolate from what they're saying, which may or may not be what their meaning into something that we think now we've grown our development team, we're at five full time developers, we can be much more scientific about it, we can knock up a kind of the MVP is of MVPs of new features and stick it in their hands and say, Okay, what do you think? And we have clients who have been with us now for, you know, more than seven, eight months paying and they will tell us pretty quickly, this is useless, or we love it, but it's missing a decimal point. That was the most recent thing and then we can actually work out. Do they really love it or just is it quite a nice to have based on how they interact with it?
Henry Waterfield 19:58
Yeah, I'd say something similar. So the first platform was based on my experience and also the experience of someone that's now joined our sales team who's done about 10 years in the industry themselves. And it was based on what you currently use, what would you prefer to see as the ultimate solution? And then what kind of can we do along that value chain to kind of replicate or kind of gets us towards that final step of the perfect customer experience? And that's, that's something that I kind of took from Amazon, which is not what do we think would be good? But how do we see the customer interacting with this thing in the final stage? What does perfect look like? And then you think, Okay, right. Well, how do we, how do we build this? How do we replicate that? What does this look like? So the first instance was, for example, a junior broker spends three, four, maybe even five hours a day, uploading data into an Excel spreadsheet, what does perfect look like? Perfect looks like not doing that at all. So we've invented something that can replicate that in a matter of seconds. So you suddenly get five hours of your day back? That's what perfect looks like. Is that a good use case? Absolutely. And then there are other things like well, actually, how do they want to see this data? And that's where it's more kind of, let's show them some things. If they don't like it, we can change it. If they don't like it, we can change it. If they don't like it, we can change it. So it's a mixture of that kind of lean startup, iterative development, and also saying, my gut feel is you don't like adding data to Excel. Maybe we can just take that away completely from you.
Victor 21:42
Yeah, yeah. I mean, I think that's what a lot of people want. And, and that's the challenge for a lot of businesses. There. Just to jump back to, you know, when you guys started the company, I just wanted to ask how old is or how new is sponsorship,
James Kellett 21:57
first entered, Henry's had maybe 2016 2017. And didn't really go beyond an idea that was talked about at dinner parties until 2019, a very early 2019, when we both got working on it together. And the kind of foundation stages was when both Henry and I sat outside a pub, that was the closest pub to three different ship brokerages, grabbing ship brokers on their way, basically, when they were two to three beers in when we thought they'd be honest, and also open to talking to us. And that continued for about a month before we felt we had the bones of this is something they really want.
Victor 22:41
And so after that month, and after you really started to understand the problem. You know, Henry, like, what were the first steps that you have had to consider on the journey? Yeah, absolutely.
Henry Waterfield 22:51
So we had a number of issues as a founding team, the first one being that neither James nor myself are our programmers. So we know very little about computer programming . A tiny bit of my dissertation at university touched on Linux, but, you know, that was a long time, that was a longer time ago than I care to admit. So our biggest issue really was not having a technical co-founder. So our problem was, you know, we have a business case, we have a concept. We haven't gotten any tech, we haven't gotten any money less, you know, so I actually ended up selling selling my house to get some get some funds in, but it's, you know, we can't convince anyone to give us any money on to people that have never exited before, or never founded a company previously saying, Hey, guys, we've got an idea. So our biggest issue was how can we make that work? How can we either get convinced someone to build some tech for zero money plus a bit of equity or something along those lines? We solved that problem by we found a very forward thinking, UK based tech company that said, Okay, we believe in your business case, we will build your tech for you your MVP for a small amount of equity and, and debt that isn't written off against your James, it's written off against your company. So if the business case fails, you lose nothing, which at the time seemed like a ludicrously Good deal. And I still say it is a really good deal. But some of our later investors have turned around and said, this is crazy. You gave these people way more than way more than you should have done. And we're like, hey, we had absolutely nothing. So you know, it was worth a punt. And I'd you know, I'd take that punt every single time now. So that's how we solve that problem of not having a technical co-founder, we found an external team that could build our MVP. And actually, once we had that in place, suddenly you're approaching people and saying, here's our business case, this is what we're offering you. And here is it working? And so people are actually actually able to say okay, fine, now I can get this in hands now I can play around with it. Yeah, I totally agree with this, this looks like something that's reasonable, either, yes, we'll we'll trial this software, and we'll give you feedback on it. And then you can iteratively develop or, or in the case of investors, here's, here's some money. And so off the back of the MVP, we were able to raise our first our first round, which in the UK, they've got some really interesting ways of raising money that are very useful to founders. So anyone in the UK that doesn't know about it, it's called seis and EIS, which are like hyper tax efficient ways of raising money. So we raised our first and our subsequent rounds, using those to raise money that way that was able to bring in our first couple of employees, or they were then able to take over the running of the system, do some iterative development. And then James and I kind of took the more strategic role I was looking at, can I get this into the hands of brokers and start doing the sales process. And then and then James is saying, Okay, what partnerships can do, etc, etc. A slight issue with a pandemic happening in early 2020. And then continuing till still today, which was a little bit of friction that we hadn't seen, that wasn't in our that wasn't in our plan, and we didn't have a plan for a pandemic. I wouldn't recommend any, exactly, I wouldn't recommend any startups to bother thinking about these kinds of things. If these meteorites hit, like, you know, just just work with what you have it from my perspective, it was actually a benefit to us, because it means we've been able to work remotely throughout. And people are now willing to join a team that is remote working. And so the cost of office space is something that we don't have to we don't yet have to spend any money on. And actually yesterday, we had a team away day in London, we were able to get hold of a free office through through one of our previously we've done it through our investors who who have have offices they have in London, this time, it was the one of the law firms we use, they were willing to give us one of their offices for the day. So we're very good at running a very, very, very lean startup. So those are the kinds of orig original issues and how we and how we solve them.
Victor 27:16
That's what's interesting. You know, you mentioned the very tax efficient investment structures in the UK, the EIS. I love to hear a little bit more about that. I've never heard of them not being in the UK.
James Kellett 27:29
Yeah, it's, I just want to make sure we get this one right. So it is essentially for the first 150,000 You raise of UK taxpayers. They get half their money back immediately from the UK Government. And then they get loss relief against the rest of it. So their actual exposure is around about 25 P in the pound, which is sensational. So you get all these high earning finance people and partners in bain BCG McKinsey, are looking around London with a laser focus for startups that they like. And they also have a home bias for startups that are run by people that they can empathise with. So those guys are actually far more than VCs. They would prefer business founders and a tech founder is a nice to have rather than the other way round, which is you know, as Henry said earlier, we ended up getting an outsource team to build the kind of prototype I think we thought was an MVP turned out to be a prototype. EIS is the next scheme along so while seis, you're left limited to 150k seis, I think over the life of the company, you can do 5 million, you get about 30% back against tax upfront and some loss relief. So your exposure to the company is somewhere between 30 and 40 P on the pound. Interestingly, funds have actually managed to build structures where they can give pass throughs of those to investors. So a lot of the super early stage funds in London are actually seis and seis, EIS and seis funds. And if you haven't got the pre authorization from the government before you start, those funds won't be able to look at you. So I'd say any foundry in the UK the first thing I would always do is get authorised on seis. It's called advanced assurance, seis and EIS.
Victor 29:31
It's amazing. I mean, that sounds amazing. I don't know what other words to describe that as. But as your business has grown, you've taken advantage of government grants, how has your fundraising needs and fundraising like kind of journey as has how has it changed? You know, are you looking at different kinds of investors? Are you looking at different kinds of instruments like how that evolved with your company?
James Kellett 29:55
Okay, yeah, so I would say that the very start of all A journey we won. We won a prize in the NCAA adventure competition. So which is the equivalent of the Harvard Business School Business Plan Competition, which gets you on the radar of numerous angel investors connected with the business school. So that summer of 2020 was a small amount of money that we won, but a big amount of publicity. So we then started doing INSEAD pitch events. We connected to a lot of the kind of high earning business people who've come out of INSEAD. And that was round one. And we found we had a lot better interaction with angels than we did with VCs at that stage. Round two. We actually really liked angels, we found the conversations we were having with angels were largely more interesting than the conversations we were having with early stage VCs. So we continued doing what we were good at, we actually had a VC offer fall through on us because they failed to raise their own money. So it was a VC being launched by one of our angels who really liked us and said, Please be our first deal. And we said, that's, that sounds great. We'd love that, you know, we really liked working with you. And then a month passed, another month passed. And eventually they told us we haven't been able to raise the money. So at that point, a group of angels from JP Morgan stepped in and actually priced the round 10% higher than the VC was going to price it out. And then we were off to the races. And I think after the kind of initial flashbang of that round, we featured in sifted as hottest European raises. And then we had family offices find us code very, very quickly. So a big shipping family office was our biggest investor in the round, who that son had been looking to build sponsorship, basically. And then when he heard we existed, he thought, even with 10 to 100 million of family money, he couldn't catch up with us. So that was both a kind of big tech box. And okay, we're building something great, and very helpful. And the VCs actually came towards the end of that round. So we had angels making introductions directly to partners. And those are the conversations we like with bigger funds. I think that long drawn out process of going through the gatekeeper stages of smaller funds, were a niche business, we're hard to understand those conversations after a while, you just think I'd much rather talk to, you know, an entrepreneur who's excited a business who we're gonna have a great conversation, even if we don't raise money rather than somebody who has that attack list to work through.
Victor 32:42
It's interesting how you mentioned that you had a shipping family and you know, the sun invested in your business? How do your interactions differ when you're talking like a strategic investor is someone who has made a strategic interest in your business, but also compared to a VC or a general distant vendor investor.
James Kellett 33:02
So I would say they are much sharper on the product. So they will bring people who are either shipbrokers that work for them or people within the family office to actually use the product and check it. It does what it says it does. So I would say that part is more stressful. But you skip out on all the VC Product Market Fit market sizing, how's the team tight, vague, fluffy questions that I think depends how well it goes on the day. It's also a lot quicker. So I would say for the, for one of the VCs we had on board, the due diligence process felt like six or seven meetings, and maybe 100 emails, whereas with the family office, I think it was four emails and two meetings. So I really liked strategy. We've also had two C suite members of a listed shipping company. The other nice thing is they understand shipping and trying to explain to people actually how bulk shipping works is more difficult really than explaining how sponsorship is going to make money. So I really like speaking to strategics. What we have done is we've been clear so far, we don't want to strategically take 20 to 30% of the business. So when you look at sponsorship, we are wondering about the future of the shipping industry. And that means the industry needs to trust us. So we need to be impartial. A little bit like Visa has a shareholder list of all the big banks, all the users. We really like the idea of being owned by the shipping industry as a whole. So they feel they can trust us with their data. They can trust us with the stewardship of the industry.
Victor 34:53
Looking at your company. You guys have put so much into it right so much of your own sweat In your heart into it, how do you go about translating your personal values and your visions and your expectations into a functioning business? And on that note, like, how important is a company's culture? And how did you guys establish it as a sponsorship? Henry?
Henry Waterfield 35:17
Yeah, absolutely. So we put a lot of thought into the company values. And actually, we discussed our company values on all our away days. And so we had a value session yesterday. So I look at what I think is very important for a company to succeed based on my experience, in the military, in broking. And then and then what works with Amazon. So essentially, taking the best bits of different industries and bringing them into the business. From my perspective, there are two. So we have six values, there are two for me that are super important. So customer obsession is an absolute given, there's no point in building anything that customers don't want. And if you build something that makes a customer a superstar, you will be able to sell them that every single time. And so that's why that's our I'd say that's our most important value. And I took that straight from Amazon. And that's the reason they've succeeded in the way that they have. The one I took from the military is a weird one. And I've not seen any companies that have this as a value, but it's called Move being manoeuvre wrist. And this is a concept that essentially says the person's decision making should be taken at the lowest possible level. If you are the person there, that knows what they're doing, that's what they're actually doing day to day, you should be the person that makes the decision. Don't waste time sending an email to someone up the chain, don't waste time looking for someone to say yeah, okay, fine. I think that's acceptable. Because you know more about what you're doing right now than someone in the case of the military 20 miles behind, you're listening to a radio, or in the case of Scott ship, you know, for example, one of my programmers knows more about back end programming than I do. So why are you asking me what my decision should be about a database? That's, I implore you to know about databases, you make those decisions. And that, and that works really well, with regards to the iterative development, they see problems, they solve problems, they come back to us, and they say, here is a problem, I found, this is how I solved it. And so rather than a very long process of lots of communications, lots of emails, lots of meetings, that could just be emails, and then a decision gets made and something happens, people just act very quickly. And it's, it's what makes a company succeed is the ability to, to overcome problems to move faster than everyone else in the market. And also, just to trust the people that work in your company. Sometimes people make mistakes, but more often than not, that the person making that decision won't make a mistake, because they know what they're doing. And if they told me what was going on and, and asked me to make the decision, I would have made that mistake anyway. So so you're you, you get to where you need to be twice as fast as you otherwise would do. And so from my perspective, those are the two really important values that I that I brought into the company
James Kellett 38:23
Manoeuvre is very interesting because it means sponsorship is not for everyone. Some people absolutely love it, saying, Okay, you are your expert, data scientists, we trust you. We're happy to talk anything through. But that is really quite stressful. So the people who like working at sponsorship are the people who like freedom, decision making responsibility. And I know those are things that a lot of employees would say they would like, in truth, for a lot of people that is horrible. They just want to live a comfortable life. And those people would have a really horrible time at sponsorship, and we wouldn't have a great time with them. I definitely think that as you grow, we would love to maintain that. But that's the biggest one in hiring where we screen people out who don't like the idea of working like that.
Victor 39:15
And how do you go about screening people out on that criteria? Is it on a conversation basis, you have like a test. I've seen some startups not doing personality tests. I don't know if they work or not. But how do you guys do it?
Henry Waterfield 39:29
So we do it with conversations. So we'll you know, they'll get through to a stage by being good enough to do the job we need them to do. And then it's just a case of is there a fit and what is our feel for the individual. And that will come out with an interview with myself and an interview with James. And then also we've got a couple of people in the team that we make sure they will also interview everyone that we bring into the company. And then it's based on everyone coming together and saying This is how we feel about this person. Yes, yes, yes, yes, yes. Everyone says yes. Okay, let's hire them. And if someone, if someone puts a flag up and says, I think this, then we'll have a serious conversation about whether this is someone that we should be thinking about hiring. So it's, it's not a test, it's not really something you can, you can absolutely guarantee you'll get right every time. But so far, we seem to have done pretty well, just based on the gut feel of everyone in the team cray cray,
Victor 40:27
For you guys, as founders, it must be incredibly stressful. And I mean, mental health is a much talked about topic these days. What does it mean for you guys to have strong mental health? especially as it pertains to the company? And how do you guys take care of yourselves?
James Kellett 40:46
I, I would say you're completely right, it is even compared to, to investment, it is much more stressful, because you've got your whole self as part of the business. And I would say, I am constantly on duty when I'm, when I'm outside of the house, I'm representing sponsorship, and that that does wear on you. And I would say by the end of last year, my mental and physical health was at an all time low. So I basically promised to try and sort it out. And the first thing I did is based on conversations with employees about what was stressing them out, we brought health insurance to, to our global staff, because that was something that there were people who were worried about their health, and we looked at it and the company could do that far more cheaply than individuals, it didn't break the bank, and it made people relaxed about their physical health. And we were also able to get as part of that anonymous counselling that they can access build to the company at any point. So we felt that was important. The other thing I tried to do is take walks during the day. And my girlfriend actually forces me to go down and spend a weekend at my parents house and not see or talk to anybody else, once every two months for decompression. And I think that is super important. Because otherwise you're just constantly talking about the company and you never get a chance to recover.
Henry Waterfield 42:20
So I've got a number of ways. So I actually got into Ultra running shortly after shortly after I left the army. And actually it's, it's a great opportunity. So you don't take, you don't take music, you don't take podcasts, you just you just take a few bottles of water. And you just run for a very, very, very, very, very long time. And it gives you a lot of time to mull over things. And it keeps you in the now. I think one of the reasons that mental health is such an issue with startup startups and founders is you're constantly thinking about the future, the what next, what am I doing next, and you're not living in the now. And it's something that really helps me. You know, just focus on what I am doing next, put my left foot in front of the right foot and just keep going, when's the next mile marker, where's the finish line. And so I try to sign up for a couple of long distance runs every year. I just need to make sure that I don't have too much walking planned for a few weeks afterwards. I had one in April earlier this year that was about 54 miles. And that was I think about 13 hours of running. And trust me after the first few miles, you're not really thinking about much else other than how your legs feel and, and how hydrated you are. So that's a really good way of just taking your mind off. Taking your mind off the company, not worrying about, you know what your account balances, how many sales you've got going on this kind of stuff, it's giving yourself the opportunity to focus on something else. And so what I'd recommend to everyone is not necessarily running, but find something that you can just focus on that brings you into the now and stops you thinking about the future, even if it's just for a couple of hours or a day or something along those lines. And so that's what I do and I've tried to start learning guitar but that's not a particularly successful project at the moment. Yeah, my
Victor 44:27
My wife forces me to get massages now. So you know, it's almost the same thing, you know, like, once a week, get a massage and then I can count that as like I because you like you forget about everything. And ideally I pass out so but yeah, I mean, sorry, James, you're about to say something
James Kellett 44:45
I was gonna say I think more generally, as founders, Henry and I both quite like stress. And I think we're, if I looked at the things that we were really good at both separately, it is dealing with stress. We'd been exposed to a lot of it over the years, Henry in a much more physical way, and men have a more mental way. And I would say, with no stress at all, both of us are kind of not performing at our best. So we have that. And I would say, if you really don't like stress, I might say reconsider being a founder. If you really like stress and you feel unfulfilled in your current job, it's a great thing to do. But we try and also use that to help the team because we view Part of our role as being stress sinks and creating that growth environment rather than a super stressful environment, even though performance remains high. So one thing we do in sponsorship, which I think is really weird that I haven't heard many other teams doing, is that everyone in the team gets a weekly half hour session with me one week, and then Henry the next week, and it alternates forever. And that's almost like a therapy session. It's in no way an assessment, the main question is, what can we do to make your life at Spot ship better? Is there anything at all we can help with, and people when they join, find it odd and uncomfortable. And after two to three months, everyone I'm talking to, and I'm assuming they're comfortable, and they're honest, says they love it. And it's an opportunity for people just to say, I'm loving most of my work, but I really dislike this or this person is stressing me. And it allows us to, to make changes, we keep those things confidential, unless we ask for permission. You know, I would like to do this. Do you mind if I share how you're feeling with somebody else? And one of our other values is transparency? And most people will say yes, if you say, No, we respect it. And I would say, that has led to us making a lot of the changes that make it a great place to work. So we're proud of that one.
Victor 46:49
That's great. That's great. And I want to be respectful of your time. We've gone a little bit over. But I have one final question for both of you, you know, what advice would you give someone who's trying to become an entrepreneur who's trying to start a company? Like Henry, what would you say? That's
Henry Waterfield 47:04
a? That's a very good question. My advice would be, have a big thing and look at what the potential upsides and to the potential risks and then make the decision. Am I willing to take this risk? So if it comes to nothing, what am I going to lose? And when you think about it, the potential downsides of starting a company are not actually that great. So for example, if you have an idea, if you have a little bit of funding, at what stage you're going to know whether that's succeeded or not. And yes, you'll lose, let's say 18 months, two years salary, you might lose a bit of investment. But what's that going to do to your CV? What's that potentially going to do to your future life if it does fail, and so you can look at it and you can say, well, the upside is absolutely enormous. I've succeeded in a company, I've built something, I've got my own thing that I really love. I've built a team, I've exited, I've whatever I've retired at, you know, sub 40 Perfect. If you failed, well, actually, I built a great CV, I've got huge amounts of experience, I know how to build a team, I know how to raise money, I know how to do X, Y, Zed. And so I've so I've, I've grown as a person, and now two years on, I'm in a much better place than I was. So my advice would be one, understand the potential risks, but also the benefits of those risks. And to constantly look back at where you were 2341 year ago, 18 months, whatever it is, and look how much further you are now. So every time people are tearing their hair out, saying, for example, are the tech like the tech, the tech, the tech, this isn't working, or the sales, the sales, the sales, you go, guys, look where we were six months ago, this is sensational. If we were in this position, even in January, now it's you know, we'd be seriously happy. So constantly check in constantly to see where you are, but also just be aware of one of the downsides, but actually to the upsides of even if it happens to fail, because there are opportunities in everything you look at. And ultimately founders or founders because they're opportunists. They see an opportunity and they seize it.
Victor 49:22
And you want to be you because your founders have high expectations, but they also need to acknowledge their successes as well. You Yeah, yeah. And James, how about you what is some a piece of advice that you'd give someone who's trying to be an entrepreneur,
James Kellett 49:38
I would say the most important thing. And maybe this goes more to business founders than tech founders, I'd say just for business founders, for tech founders without a business founder. It's a different one. But for business founders. If you've decided that you're going to go with the idea. Just do it. Just to start I've seen So much analysis paralysis, people doing endless turns of their deck, somebody told me that he needed three months to work on his business plan. Whereas, you know, normally you can create, there are so many tools now for no code or low code MVPs. Often your MVP can be just an email, or it can be a spreadsheet that you update, go out and sell something, get it going, because you don't need that much initial traction, to start to raise investment. And I think a lot of entrepreneurs just get stuck in that beautiful long business plan and beautiful deck of slides created over a year and a half while they slowly lose the will to live, as opposed to saying, Okay, I've got five paying customers, I know this is a goer. Time to raise some money in a couple of weeks and hire some engineers. So that's, you don't need a technical co founder to start. Absolutely not everyone who tells you you do is just being tough on you. Don't they can be a real nice to have to technical founders. I've actually invested in an old technical co-founder team as an angel. I think technical co-founders need to be more cognizant that if you create a $100 million business that survives and delights customers, that's a huge success. You haven't failed to be a unicorn, your point 1.1% who've done something amazing. So, you know, I would say don't, don't beat yourself up. If you've found something that is clearly a market niche and will survive, grow, even if it's going to reach a limit. Keep working on that. And afterwards, you'll probably see customers will ask you to solve another problem. And in the worst case scenario you've built something great and people have done well.
Victor 51:48
That's fantastic advice. Henry Waterfield and James Kellet thank you for coming on the show and all the best to you and, and sponsorship as well. It was amazing to speak with Henry and James of sponsorship and to learn about their own journey. Thanks so much for being on the show.
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