I recently interviewed Jens Lapinski, the founder of aiHit, a London-based, VC-backed business information services company and recently one of the new members of the entrepreneur in residence at Forward Internet Group.
In our interview, he shares some of his knowledge and advices on starting a business, raising investment, bootstrapping and advices for aspiring and first-time entrepreneurs.
Hi Jens, thanks for doing this with me, I know you are very busy at the moment
Hi, thanks for having me.
Can you give us some background information about yourself, were you the entrepreneurial type growing up?
I grew up in Dusseldorf, Germany, which is a city of about 550k inhabitants close to the Dutch border. I wouldn’t say I was massively entrepreneurial in school. The only thing I did was to give maths classes to younger pupils. Mind you that was pretty well paid at 15 Marks per hour (about Euros 7.50). I became more entrepreneurial in University.
Tell me about what you do?
Until the end of 2011, I was the CEO of aiHit, a London-based tech startup, which I co-founded in 2007. I hired a new CEO who started in January 2012 and am now a non-executive director at aiHit. I am very excited to now be working as an Entrepreneur in Residence with Forward Internet Group. Forward has some 250 staff and >£100m revenue. I am working full-time with a small team that is focusing on startup up new products using lean startup techniques.
Tell me about the early days, how did the idea for aiHit came about?
I was working at Library House, a business information and research outfit based in Cambridge. In 2006, I went to Germany to watch WorldCup football with about 10 VCs. Later on, one of them, Simon Cook, the CEO of what is now called DFJ Esprit introduced me to my co-founders. They had the technology to automatically extract from the web the data Library House was generating by hand. My thought was that when somebody can automate what had previously been done by hand, this has the potential to revolutionise any industry, so that is why we started aiHit.
What would you say was the hardest part of starting the business?
Starting a business is easy. The hard part is to get to the point where you have sufficient critical traction with your idea in order to pay all the salaries.
What is aiHit? Tell me how it works?
aiHit is a provider of automated company data to business information companies, credit reference agencies, and business directories. The company uses advanced artificial intelligence and machine learning technologies to automatically create feeds of structured company data from unstructured sources on the Web. Our customers use these feeds to improve their existing products at an attractive cost point.
How has your market changed in the past few years?
Our market has accelerated in our direction. When we started selling, we had to continuously justify that data generated from web is a good idea. That has completely stopped in the last 18 months, which has been great.
What would you say has been some of the most crucial things that you’ve done to grow aiHit?
Pivot. We initially had the idea to sell business information to customers in a retail model, but that never worked for us. We then pivoted towards selling the data in a wholesale model and that was much more successful.
Coming back again to investments especially in the UK, a lot of people have talked about how difficult it has been to raise money, how have you seen this change over the few years?
I think this has remained more or less the same. The players have changed. How web savvy they are has changed. But in terms of how hard it is has remained more or less the same.
aiHit has been very successful raising money, What kind of advice could you give to startups looking to raise money, is there a special route or process that you have?
Yes, we did. It is described on my blog here: http://jenslapinski.wordpress.com/vc-fund-raising-manual/
Overall though, I think about this as follows: raising money is all about the confidence investors have in you. This means you either have a strong personal relationship with them or you have actual data from your business that proves your business is worthwhile. If you have neither, you probably won’t raise money (unless you are in a very very frothy market).
What would you like to say to an entrepreneur contemplating bootstrapping or getting investment?
The big difference between bootstrapping and getting investment is where the money comes from. When you bootstrap, it is your money. When you take investment, it is somebody elses money. In any case, just make sure you are realistic as to how long it will take and how much money it will take to get to break even. If you bootstrap, you could be both broke and in debt, so make sure you are building a bridge to somewhere where you can recoup that investment. If you take external money, the same applies. Also, when you deal with external investors, you are in fact bringing them into the company. It is like hiring. So screen your investors with the same routines you would screen employees for.
What is an average workday like for you?
That has changed totally for me! :) Since November last year, I am a father and now I work with Forward. Give me a few months and I will tell you what my new typical day looks like.
What pieces of advices could you give to aspiring entrepreneurs out there looking to start their business?
I have a list of learnings that is as long as my arm. :) My key learnings are as follows. There are three things that are important: strategy, people, and execution. What this means is as follows:
1. Strategy: When you start, really make sure that there is a market for what you do, before you do it. Read Steve Blank’s “4 Steps to the Epiphany” and Eric Ries’ “Lean Startup” before you start doing anything. Make sure there are a lot of potential customers and that this market is growing fast.
2. Team: When you build your company, make sure you have a small, dedicated, high quality full time team of people who all sit in the same little room, in the same boat, and work their asses off to get out of that small little room. Get co-founders whom you have worked with for a long time. Get mentors to help you for free (or a bit of equity over time).
3. Once you have product market fit, it is about execution, execution, execution. Hiring will be the most important aspect here, as well as building the right company structures and procedures.
What are you personally looking forward to in 2012?
Working at Forward. :)