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"HEY, DO YOU WANT TO START A BUSINESS?" - RED GATE'S NEIL DAVIDSON TELLS HIS STARTUP STORY
Published: 25th May 2011.
Together with school buddy, Simon Galbraith, Neil Davidson founded the company in 1999 and shares with Simon the little seen title of joint-CEO.
Davidson is also a big champion of entrepreneurism and launched the UK's answer to Y Combinator, Springboard, which is currently coaching a new group of startups at Ideaspace on the other side of Cambridge.
"We wanted to build a great software company, one of the world's great software companies.
We had an idea to develop an online bug tracking system, but it wasn't so much that we were pulled by a particular idea, it was more that we were pushed out of our current jobs and we wanted to build something together, so it was much more about working with Simon than it was about building any particular product.
"I was at a company, I was fairly frustrated and fed up with how things were going and I decided that I wanted to set a company up and the right person to set it up with was Simon.
Simon and I had known each other at school and we'd always wanted to work together. I gave him a call and said: "Hey, do you want to start a business?" He said yes so we set it up.
"The hardest part of getting off the ground was getting off the ground, making the decision to do it. At the time it seemed like a very very scary thing.
If you're in a sustainable job and you're earning a decent salary it's quite hard to pack that in and start off and do something unknown. It's a psychological thing rather than a physical thing.
But I think once you're started it's just hard work, it's sustained effort over a long time combined with plenty of luck.
"I put in some money, Simon put in some money and two of my friends from university put in some money, £40k into a pot that we never actually spent and that was kind of a cushion that we used to fund it.
We started getting money in from customers from the very beginning, starting contract work for the first few months until we had a product.
Having the constraint of no or little money is good because it forces you to get customers and that's an amazing discipline.
If you'd given us a million pounds that would have been completely irresponsible, we would have spent it on stuff that didn't matter, we would have pissed it entirely up the wall.
If you don't know what you're doing and you're just learning then you want to play in the sandpit where you can't hurt people and a good way of doing that is not to have lots of money.
The fact that we didn't have that freedom was very very liberating, which I guess is kind of a contradiction but that's the way it works.
"Taking the plunge and hiring your first employees is difficult if you're bootstrapped. In the early days we had a lot of self-doubt about whether we should hire people because we weren't sure if we could afford to pay them.
There comes a point where you're totally stretched and you know that if you could hire someone that would free more of your time to do more valuable stuff, which means that you can pay for the person you just hired.
It's almost a Catch 22, because if you don't have the money you can't hire, but if you don't hire, then you won't get more money.
We decided to hire.
"If you start hiring the wrong people or if you start compromising on people then that's the beginning of the end because if you get people in the team who aren't performing, the rest have to carry them and that's enormously destructive on the people you've currently got.
When you're a small company the first few hires are crucial. When you hire that third, fourth, fifth person you absolutely have to get it right and if you get it wrong you have to correct your mistake very very quickly.
"I'm fairly risk adverse, I'm a big believer in minimising the downside so never do anything which if it went wrong could bust you.
People have got this vision of entrepreneurs as people that take enormous amounts of risk and they'll bet the farm or put all the money on black, whatever your favourite metaphor is.
But actually, I think Richard Branson said back the upside, sure, but minimise the downside."