Sunday, May 19, 2024

Chris Wang – Scarlet International – On Top 5 Mistakes When Starting A New Business

Leaders Perception Magazine is currently running an interview series called – What Are The Top 5 Mistakes People Make When Starting A New Business?

Today, we had the opportunity to interview Chris Wang who is a Co-Founder / COO at Scarlet International.

Interviewee Name: Chris Wang

Company: Scarlet International

Chris Wang’s favourite quote: “I have no special talents. I am only passionately curious.” – Albert Einstein

The Interview

Thank you so much for joining us today! Tell us a little bit about yourself. What is your backstory?

Chris Wang : Hello, my name is Chris and I am the co-founder and COO of Scarlet International, a MarTech startup based in Taiwan. During my college years, I had a brief foray into SEO and digital marketing, and ever since, I have had a deep love for the industry. Fast forward to today, our company helps KOLs and corporations with their marketing campaigns, both online and offline. Our company started in Q1 of 2021, and since then, we have grossed over $2M USD in revenue – and our clients, over $10M USD.

In your opinion, what makes your company stand out? Any examples?

Chris Wang : Our company stands out from other marketing companies because we have really invested in the “tech” portion of a MarTech company. With our proprietary tools, we can observe data beyond what is simply listed on Google Analytics. In fact, we have devised a system of understanding consumer behavior; allowing KOLs and corporations better engage with their target audience and grow new niches. Also, our buisness model is a win-win scenario for both KOLs and corporations; as we create new business opportunities for KOLs where they rightfully earn the lion’s share, while corporations with limited budgets still have an opportunity to directly work these KOLs.

What are the TOP 5 mistakes people make when starting a new business? Please share advice/examples for all of them.

Chris Wang : 1. Do not be discouraged. For new founders, founders often must pitch their solution / company many times prior to securing any funding. However, it is important to note that if you are disrupting an industry, most of your pitches or ideas may be rejected immediately. Don’t forget, if you are able to come up with something new for an industry, most likely this was not thought of by current incumbents. They will be quick to reject your ideas. Meanwhile, at the same time, it is just as likely for other people to view your solution as a creative alternative to what is available on the market. The key to success is constantly believing in your idea and your solution. Any lack of faith at this stage will be crippling, and your idea may never get off the ground

For our company, we pitched our business and how we wanted to work with SaaS models to potential investors. Many laughed us out of the room or thought our business model was not sustainable. But that’s the key. Without being discouraged, we were in fact more motivated to prove them wrong, as we had done many simulations and POCs that indicated we were onto something extraordinary. It is not as though founders shouldn’t take advice from potential investors, but it becomes so much more important to identify what kind of “response” you want to heed.

2. Don’t create a solution because you can, but because there really is a market demand. Looking at startups that I have been involved in, I saw many CEOs and CTOs exorbitantly spending on tech developments that was purely a demonstration because they “can do it”, not because the end-product is something that adds inherent value to clients or the company. This creates a conundrum whereas the company is finding it difficult to secure product market fit, after spending copious amounts of investor money into developing a product. Then, the burden switches to the marketing team, and that in itself is yet another financial burden. Therefore, it is critical that founders understand a problem and then devise a solution; prior to any product development.

An example of this would be a company I was involved with, and they were adamant on developing a biomedical product. Hundreds of thousands of dollars were spent on the venture, yet when the product was ready to launch, we were unable to find customers who thought our product was valuable or a necessary addition to their daily use. As a result, we spent another crazy amount of cash on marketing, and even going back to revamp the product to then fully meet customer requirements. All in all, a lot of capital could have been saved, should the C-level executives have actually looked at what the product was trying to solve.

3. Don’t over-market. A lot of startup founders are often excited to join accelerators, kick-off their PR, and post constantly about what their company is up to. While seeking network connections is not necessarily a bad aspect, it’s important to not over-market your company or yourselves. As many startups inevitably crash-and-burn, this creates a sense that the founder is someone who only peddles snake oil. Be careful about how your company is seen in the public light.

One example is another startup that I held an advisory role. The founders constantly went to networking events to talk up the product. Nothing was wrong with that concept, but the product was not even at the MVP stage. To add insult to injury, the product was heavily regulated against (we were in the insurance industry), and after a year of operation, this became apparent that we could not launch the product; no matter how good the product is. In the end, the founders took a hit to their reputation, as the product was jointly invested in by large corporations.

4. Don’t be afraid to hire people and fire people. A lot of startups and relevant VCs view staff count as an indicator of company growth. While it is incredibly important to hire more people to fulfill roles within the company, it is also important to look at downsizing. Downsizing streamlines your operation by decreasing financial load and forcing the startup to focus on the most important tasks. In startups, founders are often unable to hire the best and brightest, and with that in mind, certain hires need to be groomed for more important tasks, yet certain individuals need to be “let-go” to clear up capital space.

With my current company, we grew to 30 employees in less than a year. We thought it was an astonishing achievement, but when the industry goes through ups & downs, we looked at our company under the lens, and found out we could have saved 20% of our staff salaries, yet still maintain 100% efficiency. It was only then, we realized we were needlessly spending money and were not as “hungry”. Today, our company still maintains 30 employees, but as opposed to 20 account managers, we were able to reduce this number to 10, while recruiting 5 more tech devs and 5 additional in-house marketing specialists.

5. Building up barriers-to-entry. For any company that is “onto something new”, if it’s successful, there will always be copycats. These copycats may only understand and copy your company’s business model at its surface, so the impact may not be high. However, this will still hurt your business if you cannot establish dominance or a truly unique aspect about your company. Therefore, creating barriers to entry is vital from Day 1. Of course, profitability should always be in the founder’s mind, but without strong barriers to entry, the company will not be profitable for long.

Our company, despite being in stealth mode since founding, has been copied due to our rapid success. From day 1, we knew our business models and concepts being leaked was inevitable. Therefore, as soon as we were bootstrapped and cash-positive (2 months since founding), we created strong tech barriers not only define us today but provided us with tools to streamline our business. And when things took a turn for the worse in the industry (June of 2022), we were able to hold our ground and solve the issues, while our direct competitors died out. Even today, there are still copycats that pop up left and right, but at this point in the race, while we are still building up our “special sauce”, they will inevitably succumb to our superior strategy.

Leaders Perception magaizne would like to thank Chris Wang for the time dedicated to completing this interview and sharing their valuable insights with our readers!

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