StotlesCarsten Schaltz | 2020-04-24
Could you give us a quick introduction to Stotles?
At Stotles, our mission is to unlock the potential of business and government working together. That’s super broad, but specifically, we are taking a huge amount of government data, standardising it, enriching it, and matching it with our users. This is in order to show them the opportunities within the government that private businesses should be chasing. We’re providing businesses that want to serve the government the intelligence that they need. So, they can hunt down contracts that are the best fit for them in the public sector.
We are just over a year old now. We’re in the middle of our seed fundraise. We have ten customers, two of which are enterprise customers, Freshworks and UiPath. That’s the super quick version of what we do and where we are.
What was your career journey prior to starting Stotles?
I originally did my undergrad in Mechanical Engineering. I always liked the problem solving and analytical side of things. I wasn’t so fussed about cars or engines or such, so leaving undergrad, I went into management consulting at BCG (Boston Consulting Group). That was an amazing learning experience. It taught me how to solve ambiguous problems, be rigorous in your analytics, and communicate those ideas. Two and a half to three years in, I decided I wanted to get a broader view of what’s out there in the business world and get a bit closer to the actual implementation of these ideas. Being a consultant, working for Fortune 500 companies, means that the actual contact and value being provided to the customer is quite distant from the work that you’re doing. That’s not to say it’s not impactful- it’s just quite removed. So, I moved from Canada to London and attended London Business School to do my MBA.
How did you come across the idea and meet your co-founders?
I met my two co-founders at LBS. At BCG, I had some experience doing procurement overhauls for some large companies. I saw how there was all this under-utilised data that these massive companies were sitting on. That was my thesis. John and Taj (my cofounders) both have their own horror stories in the public sector surrounding procurement. When we started bashing ideas together, that was the sphere that we landed in and kept coming back to.
Were there any other ideas that you were considering when you were starting out?
For sure. Like I said they all kind of had the same thesis. That there’s a huge amount of unstructured, messy, hard to reach information that’s out there, that people aren’t harnessing. And specifically, we all focussed on the B2B (business to business), B2G (business to government) space.
The other concept that we played around with most seriously was about connecting businesses with each other. As in, connecting somebody who wants to buy something and somebody who wants to sell something, in a network-based way. We observed that a huge amount of this new business is created through personal relationships. So, we thought, is there a way to do that more efficiently? We played around with it and ran into some roadblocks that we saw as, maybe not insurmountable, but pretty challenging. Then, we were looking at the government sector. The size of the opportunity, combined with the amount of data that is readily available, allowed us to climb over a bunch of hurdles that aren’t necessarily possible to climb over in the private sector.
How did your previous experience prepare you for Stotles? In what ways were you unprepared?
In terms of how I was prepared, I think the most valuable things that I learned were:
1) How to put some structure around an ambiguous problem. Getting tasked with something that doesn’t have a straightforward answer, being able to put a framework in place to think about it, and getting to a workable plan. Recognising the fact that there’s always uncertainty and there’s always a million ways to do something, but at the end of the day you have to pick one. How do you end up getting to a solution that works? I think that going in with the mindset of “we need the best idea” will get you in trouble. You’re going to start treading water and getting paralysed if you’re always searching for the best. But the good enough, or workable ideas, are often pretty darn good. I heard a saying which went like this: “A good decision now is better than a perfect decision later”.
2) Being able to take on a problem you don’t know you can solve, and being okay with that ambiguity. That’s something you will certainly face in entrepreneurship and it’s something that you have to manage. Having experiences where I was assigned to “go and convince someone of X”, not knowing if I could do it, and then finding some way to get to the other side, helped me. I realised that I can take on these challenges where I’m not a hundred percent sure of myself.
Those were the two main things where I was prepared from my previous experience. In terms of how I was unprepared:
1) Where I was least prepared was the messiness of the real world, to a certain extent. At the end of the day, nobody will tell you that what you did was the right or the wrong choice. In a larger team environment, you always have somebody that says “you did the right thing” or “no, you should have done this other thing”. On the entrepreneur’s journey, you don’t have that. You’re the final judge. So, you have to be at ease with the fact that you’re never going to know if you took the best decision.
2) The second thing is more of a sales toolkit. Almost every aspect of the business involves promoting and selling. In a lot of spaces, particularly more academic spaces, sales comes across as a dirty word. Even in my MBA it was just not something that people were drawn towards. But it’s such a core skill, even if you’re not in the sales department. When you’re hiring people, fundraising, going out to customers. you are constantly promoting your vision and what you’re building. It’s so vital and I think that people, in a lot of ways, look down on it. When people look down on it, it indicates to me that they haven’t been there; they haven’t realised how important it is.
You mentioned how BCG taught you to take on problems you didn’t know you could solve. Surely, it's completely different as an entrepreneur? If you couldn’t solve something as part of BCG, it’s unlikely that you’d lose your job.
The stakes are much, much higher from a personal risk point of view. I think that’s a huge reason why an enormous number of super-smart people don’t go into entrepreneurship. It requires a high risk tolerance. There’s a logical side to figuring out the best path to take and there’s also an emotional, personal side, that you need to be in control of as well, in order to make the best decisions.
After you had the idea, what were the next steps? How did you build out the product? Did anyone in the founding team have a Computer Science background?
I had done a coding bootcamp called Le Wagon and had an engineering background. I also had analytical experience at BCG in no-code environments that required the same type of thinking. So, I had a bit of a foundation. I was also working with Piotr. He’s now our technical lead, but he was just advising me at the time, and he’s vastly experienced. So that’s how I had the background to build out the product.
The next thing we did after we had the idea, in generic terms, is test our hypothesis. In our case, the hypothesis was that if we could collect and organise all of this information around what the government needs to be fulfilled, people would be willing to pay for this unified view. You can go out and talk to people, but this can sometimes point you in the wrong direction. People often don’t say what they’ll actually do or what they mean. Often, the best way to test is to get people to put their money where their mouth is. We wanted to do that while investing the smallest amount of time and effort building out the product. Because if your hypothesis is wrong, you want to have spent as little time as possible. The less time and effort that you put into building something, in order to validate or disprove your hypothesis, the better. That’s classic lean startup methodology. We started speaking to folks who were interested. Our first client paid us, basically, on a consulting basis. We just simulated the output we would be creating with the product. They told us what (government-related) data they were interested in finding. We went and manually trawled through all these government sites, found the data and brought it back to them.
That was super valuable because we didn’t have to build anything. We went out, sold it, and then figured out how to deliver after the fact. It very much depends on the service you are offering, but to the degree that you can, selling something first and building it second is ideal. Because if your hypothesis is wrong, you will have spent no time building it. This step gave us the evidence and conviction we needed to build our first MVP.
How did you acquire that first client?
We first got in touch with them through personal connections. As a very early stage entrepreneur, you have to use what is at your disposal. Using personal networks to find relevant folks is what we did and what I would highly recommend.
Did the idea evolve as things progressed?
The core value proposition hasn’t changed. It’s all about bringing in this information and presenting it in a way that’s useful to these companies. That has always stayed constant. It’s always been about reducing the friction that is involved in governments buying from the private sector. But the nuance has changed. When we started out, we were focussed on showing customers the tenders that the government was publishing. When we talked to customers, they said that yes, we have to keep track of tenders, but knowing about who is going to market before the government writes the tenders, is an order of magnitude more valuable. Customers can then build a relationship and actually shape the tender when it is being drafted. The chances of them winning that business is significantly higher. That’s probably the biggest evolution in the shape of the product.
Any funny or most memorable stories along the way?
We started working on Stotles while in the second year of our MBA. This was when we had this first customer, when I was building out the MVP, all that kind of stuff. As the MBA was coming to a close. we were out fundraising for a pre-seed round. The timing lined up such that our final pitch with Seedcamp, the fund that led our pre-seed, was on the exact same day as our graduation. We had to ask for a special time slot for the pitch and get all the logistics organised. We did the pitch, basically mic dropped, hopped in an uber, threw on our gowns and sprinted across the stage. That was a bit of a storybook moment. It was made better by the fact that Seedcamp has now invested. So that’s definitely a memorable day in the journey.
If you could go back and give yourself one piece of advice, what would it be?
Be less confident in what other people are saying about you and what you’re doing, and be more confident in what you are putting out into the world. The more we get out there, the more we realise that nobody has a better idea of what works and what doesn’t in the space that we inhabit.
What are your favourite books?
The runner up is The Hard Thing about Hard Things – Ben Horowitz, great story and great nuggets of wisdom in there.
East of Eden- John Steinbeck. A total classic and a standout for me.