Numan Founder: One exit, one failure and one tbc - Sokratis Papafloratos

0:04That made me kind of no matter what I did, especially that kind of period between 18 and 30, I really feel that I could take any risk that I could. And that's, I think, the biggest factor, the biggest, if you like, driver in becoming an entrepreneur. The ability to know that you can fail and it's going to be okay. Hey, mate. How are you? I'm doing well, dude. How are you? I'm pretty good. I'm pretty good. I'm like, you know, a little gravelly and stuff, but I'm surviving. Same, same. Okay, well, we're going to get into it then. Let's start a little bit with your background then. Where are you from?

0:39Where did you grow up? What was your childhood like? I guess more importantly, why do you think you're an entrepreneur? So I grew up in Thessaloniki, Greece. I spent my first 18 years there. I had a great childhood, went to school across the street from where we lived, very kind of close, dense network of family, friends, and kind of community. I was lucky enough to spend time in the city, but also outside. That period gave me like a really great grounding and also gave me that confidence and that safety net, right? So I didn't come from a rich or wealthy family. It was a normal middle class family, but it gave me that understanding and that background and that place that no matter what happened, I could always go back to.

1:29And it also made me appreciate the things in life that you come to appreciate a little bit later on that are free. They're kind of being out there building things, then making things with your hands, then being close to the people that matter to you, right? And that made me kind of, no matter what I did, especially that kind of period between 18 and 30, really feel that I could take any risk that I, you know, I could. And that's, I think, the biggest factor, the biggest, if you like, driver in becoming an entrepreneur, the ability to know that you can fail and it's going to be OK. It's also, I do recognize, a very privileged position to be in.

2:08So that's how I started. I never was entrepreneurial growing up, but I was curious always. I was very, very interested in how things worked commercially, technically, socially from a very young age. I wanted to be an inventor, not an entrepreneur. I didn't really know what an entrepreneur was. I figured that out a little bit later on. But I was very, very clear that that's what I was going to do. What did you do when you came to the UK? How did you follow your inventor ambition, if you will? So I hatched the plan when I was 14 or 15. And I know it sounds a little bit incredible, but I was going to first study.

2:48I was going to get into engineering or telecoms. a big influence when I was growing up was my uncle that lived in Germany. And he gave me a copy of a magazine that was talking about how mobile phones would reach about 80 million users by 2000, 80 million. And I was like, wow, this is really interesting. And he kind of, he was the first one that exposed me to this idea of the internet and the web and how things were becoming connected. So when I was 15, my plan was to do engineering or computer science, to learn a few things that you learn in big companies and then start my own business and then kind of grow that business, sell it, make a lot of money and then figure out what I'm going to do next.

3:27That's more or less what I did. I did come to the UK, to York. I did do engineering. I came to London for a failed attempt to do a master's in information processing and neural networks. I got a job at Vodafone.

3:45I I made the smart decision. I quit and I joined this company that had just opened an office here in the UK and they had raised a bunch of money from this entity called Sequoia. I stayed for about a year and then in 2006, I quit and I started my first business, which was Trusted Places, which was a local classified business powered by user-generated content. I ran that, grew it, took it profitability. And then we were acquired by Yale Group, the Yellow Pages company, 2010. So unusually, you're someone who very clearly came up with a plan and seemed to quite rigidly followed it. And it sounds like the only thing that you sort of backed out of almost or changed within the plan was the masters, which, if I'm not mistaken, wasn't necessarily part of the plan anyway.

4:35So it's kind of the reason why you dropped out of that, because it didn't necessarily seem to be a core part of that jigsaw puzzle? That's not entirely true. I actually didn't drop out. I couldn't do it. I couldn't finish it. I was really interested in artificial intelligence. This is now a long time ago, right? This is now... You wanted to be really rich, Sock, so you should have just held on to that idea. You'd have been just fine. I was about 20 years too early, but also I found that limit between capability and motivation. So I was really interested in the practical applications of artificial intelligence.

5:11I was interested from a kind of philosophy of mind, human evolution, how artificial intelligence really is kind of interconnected to who we are as a species. And I could really see that machine learning and artificial intelligence would transform. There was no doubt as to how it would, that it would. The question was how long it would take and in what kind of forms that transformation would take place. So when I finished my engineering degree, I applied to the AIMSE at Edinburgh, but I really wasn't, you know, software engineering wasn't my strongest sense. So I got accepted at the Department of Mathematics here at King's College to do information processing and neural networks.

5:55And I got a scholarship to do that as well. Up until that point, I thought that I could do whatever it is that I chose to do. you know if you applied enough time effort and persistence you would come through the other side it didn't really work out that way i was just not at all interested in that and i i couldn't finish it i couldn't tell whether you were still talking about your uh masters or you were talking about newman that with enough effort energy persistence you come through the other side but we potentially we'll get on to a rectal metaphors shortly. So just, just, just to come back to this.

6:31So trusted places, you have your first swing at the bat as an entrepreneur and you have an exit that must have you in God mode, ego level. You must be thinking everything you put your mind to whatever you touch turns to gold. You must have that kind of belief because you've manifested a path and it's all gone right yeah yeah you know it's it's exactly that but also completely the opposite so you you do you have a few things of course yes you look back and it is a great achievement right i was completely burned out by the time i got there i was also all of a sudden And I had learned a lot more that I knew when I was starting.

7:20So I wasn't playing anymore from a position of when I started my first business, it was like, OK, I had saved a bunch of money. I had sold a bunch of Google stock I had bought at the time. I don't know financially what would have been a better decision. but I was walking in with a complete ignorance and total lack of fear of failure and also complete lack of really basic things like I had to really ask and learn how do you build a website how do you how do you start a company I really knew absolutely zero I found the other day the original pitch deck that we had done to raise our seed round. And it is, I mean, you would absolutely laugh at how basic it was, right?

8:10Now, fast forward four years in, when you've grown a business, you've hired employees, you've pivoted to a kind of B2C to B2B model, you've sold to enterprise, you've raised money, you have a board, you go through the process of getting an exit, you've hired people, you've fired people, you've just like the learning curve was just exponential. and then all of a sudden you have a much better filter in ideas what's going to work what is not going to work you've also been burned out and you decided to kind of take some time off you now have you have money that you just didn't have before and it just becomes a lot harder to find your your your your fit your authentic motivation about what it is that you really want to do and also decide to start something.

9:00And you go from that honeymoon phase where you are at the top of the world and the longer you leave that, you know that you're going to do something again because what are you going to do? Go get a job. That ship has sailed for you right now, which is, that's by the way, total bullshit. It's of course, that's not true at all, right? But you think that. But it's true for you, right? As in that's what's important. You're not speaking for everyone, but at that time it's true for you. Exactly. And yeah, like I say, you are at that point when you're like, cool, I just thought of that. I did it. Obviously from here on, I can do absolutely anything I want to do.

9:36But I was just going to say, let's, let's not forget, you know, speaking of LLMs and neural networks and stuff, Sam Altman was very almost a Microsoft employee. So the ship has never sailed for everyone at all times. It was almost the world's most famous employee, but yeah. Okay, so back to you. So yeah, it was fantastic. It was great. It was an amazing kind of period of time going through that. But it was also, looking back, it was a very, very hard grind, like it always is. And I underestimated kind of the recovery time. And I also underestimated that just because you did it once, it doesn't mean that you can just as easily do it twice.

10:19Why do you think it succeeded? Like, what is it about trusted places that actually made it work? It was the, you know, that grind that I just mentioned. We just, I didn't let the company fail. We were so backs against the wall so much, you know, we had so much pressure. We did have limited resources, but we just did not give up. We found a way through it. We built a revenue model on the fly. We used the technology and we licensed it and we built a white label version and we sold corporates. We cut costs. We just did anything. I knew at the time that... So we went to raise our Series A in September 2008.

11:07Not a very good time to go raise money as Lehman Brothers was collapsing. And at the time that we went out to raise, just before this US company raised$100 million, that company was Yelp. And you could really see where the market was going to go at that point. But also that gave us a lot of clarity of what we needed to do. And also it created exit paths that just would not have been available had we raised that kind of money. So we doubled down on profitability. We kept the business sensible. We doubled down on the things that worked. And then from a position of strength, when the time was right, we also were open to having conversations that led to the outcome that we had, which was a successful outcome for me, for investors and for everybody involved.

11:58How much of that at that time, how much of that success, getting an exit, which is a milestone, right? It is something that entrepreneurs do not just want to achieve, but in a sense feel they need to achieve to have that sort of validation tick mark. So how much of your experience with Trusted Places was about also raising the right amount and having the right plan and having the right timing? It was very much that, right? And it was okay. This is now applying hindsight to it and it all kind of fits in perfectly. clear, but you could see it at the time that it did make better sense. An exit is, it's not an end on its own, right?

12:42But at the same time, I was a bit naive when I was starting that business that I felt a bit embarrassed to be thinking about an exit or talking about an exit. It was just immaturity. but when I was also though clear-headed enough to see that the market was going to sustain one or two players at the top and also you could see that Google at that point was just moving towards taking a lot more of that volume to properties that they were building themselves so you could see that you know if you fast forward a few years you would either be part of something bigger or you would need to find something else to do and when you have that clarity you better kind of set a plan in motion that gets you to that point.

13:27Otherwise, you are wasting your investors' money, but more importantly, you're wasting your team's time and your own time. And that is the most precious of resources that you have. Okay, so what did you do when you sold? Did you buy yourself anything fancy? Did you find your ego knocking up a notch or two? Did you start to think that you were better than other people? Like reflect back on a slightly younger socks, like what happened to you? What happened to the circumstances around you? The thing that I really wanted to do is my family and kind of, you know, that place that I mentioned outside of the city, we have this house there that it's ours and the two, you know, my father's brothers.

14:12And we always had like a space that had an outdoor basketball court that was kind of dirt. It had an old hoop. And the thing that I really wanted to do was to go and kind of take over. It's like imagine 200 square meters of like outdoor space and build a proper basketball court. And I spent my whole summer doing that pretty much single-handedly. I really wanted to do something physical that I could just spend full focus doing. So that's the thing I did most. I did a few other things, the mountains and the sea. and the most important thing is i spent a few months in san francisco and i invested in calm.com and secret escapes that was a really productive six months but yeah and one of the best things yeah definitely better than buying i don't know what you would buy after your first exit but buying calm stock was yeah a good purchase a very smooth choice from you okay so how long between this period of exited successful founder to basketball laying court physical workman to prolific San Francisco angel investor with excellent, exquisite taste.

15:32Which of these identities did you sort of feel like was most alluring to continue with? And what made you want to get back in the saddle, so to speak, and actually focus again on a new startup? Look, I always knew that that was going to be a transition period, right? You just need to take some time off, recover, recharge, get inspired. And that's why I spent some time in San Francisco. But I knew I wanted to build something again. And this is when the genesis for what I'm doing now came about. So in 2000, this is now 2011. So I spent about a year doing things that just did not involve me. I gave myself a year to enjoy and I had a fantastic time doing that.

16:18And, you know, people say that some people, I guess, cannot spend a couple of weeks or a month not being actively involved in something. I'm not like that. But I think you can easily find things to enjoy and motivate yourself that don't involve necessarily doing what we do. But I think after a time, you need to be committed to something. For me, that is important, right? so after a year I was looking what I was going to do next and I wanted to do something I could be building for a long time I was personally passionate about and that's when I started looking into health and well-being crucially what's what I could do with technology and with product and with design that would really have an impact on your health it would really have an impact on your vitality would really have an impact on you making the most of your of your time here and I started looking into performance, human optimization, longevity, health span expansion and in 2012 I couldn't really wrap my head around the go-to-market and how to start a business like that.

17:23It was too broad, legislation wasn't really there, technology wasn't quite there but also consumer behavior wasn't there at the time and what does zero do? It's almost like another neural networks moment, right? Where you have the interest, but do you going to sustain the motivation over the period of time? It's too far away at that point. It's too much of a early idea. It was too early. And it was precisely too broad. So I zeroed in on kind of human connection. And sharing moments with the people closest to you was something that I felt, you know, I was missing having spent most of my life away from immediate family.

18:00And that's why I decided on focusing on together, which is what I did next with my co-founder at the time, Matthew, which is when we first met as well. That was when we first connected. And I remember the crowdfunding. I think it might have been the first ever crowdfunding deal that I invested in. And I remember being just so excited having met you. Early on, we met in co-working space. I think we met in Runway East when that was just taking off in in the UK as in coworking startups, the whole thing was just starting up and we met in this space. And I was so excited to hear about your experience and the fact that you guys were going on crowdfunding and that, you know, someone like me who was brand new to startups could invest in another founder and their dreams in such an easy way.

18:50It was also exciting. I'd love you to tell me a little bit about that moment in time in your life, like building together. And also, obviously that company failed. So what it was like to your sense of self-worth and understanding of who you are as an entrepreneur back then to have had the rare, the rare window of the first one succeeding and the second one failing. It's usually the other way around. First of all, I'm sorry about your your investment it was uh crowdfunding was uh i'm expecting i'm expecting beers at some point yeah we will have to make it you know make you whole on that my beer obviously of course of course you know it was it did that one hurt it hurt a lot because crowdfunding was a factor you know we had raised money from friends from family we really gave it a really good go We were just convinced that we were onto something.

19:52We built great product features. We built great technology. We had a community that loved product, but we just couldn't make it work. And we gave it longer than we should have. We should have stopped and look ahead and see that it was not going to work. And that did knock me back big time. It was a big realization. And it wasn't the fact that we so much that we failed. That was the knockback. It was imagine, you know, we worked on that business for three years. And looking back, you could have probably decided that that was not going to work in the first three months if you were genuinely honest with yourself.

20:36And the thing that hit me the hardest was just accepting the denial that we lived through for those three years. And that had an impact. Again, it took time to go back, recharge, recover, find confidence again. Confidence is the thing that you need, not as a founder, but in most things, believing that you can do something is a highly correlated determinant whether you can do it or not. And the moment you lose that, what are you going to do? so you just need to go back and step and dig a little bit deep and rediscover that and accept it be a little bit gentle on yourself as well i was very very hard on myself and you just need to accept that these things do happen that you you just made a mistake and just learn from it and move on and just in terms of what so listeners understand like what was together like what was your vision for it how close did you get to realizing the vision so it was together was a private network for you your family and your closest groups so it was a mobile app that had different groups where you could share photos videos and messages it was designed to be 100 private it was designed to be cross-platform to be super simple so that you could use it with people that were necessarily not very tech savvy.

22:05And you could do that in a way without advertising getting in the way. And the plan behind that was we were right in identifying Facebook as the enemy at that time, because the experience sucked because privacy was becoming a concern. And because it just wasn't something that you wanted to share intimately with the people that really mattered to you. What we failed to appreciate was what was happening with messaging. and WhatsApp. And that was a really painful lesson in the power of viral growth. When we started, I think we realized that WhatsApp was a threat and WhatsApp, I think had 50 or 80 million users at the time.

22:49So, you know, well, you know, 50 million users, billions of families across the world, plenty of space for both. But I think WhatsApp within about 18 months or something like that had 800 million users and you could just hear it when you're speaking to users time and time again well you know if i'm gonna onboard my mother my grandmother i'm gonna do it with one app and that app is gonna be whatsapp because that's my utility so no matter what we did at that point we just didn't really have a chance of building the company we wanted to build Now, at that point, you had a decision to make. You could build a business that was a bit of a, call it a side hustle, where you could monetize with albums.

23:34You can make a premium product. You could just keep your burn minimal. You could scale that. You could grow that. We just didn't want to do that. We didn't want to do that because we didn't believe you could just do this on the side because you were dealing with people's really private content, private moments. You needed to keep attention. You need to keep investing. You need to be growing. And that would take time and that would take focus. And we just were not prepared to give it that time and focus. So we did the most graceful shutdown, I think, of any startup that I've encountered. We used the last three months of time that we had and money to build tools to let people pull their content out of the app.

24:17We gave everybody notice that this was happening. We left no invoice unpaid. We wrapped everything in a bow and we just shut it down. We gave people their EIS relief. So I believe we did that right. There's another school of thought that you should use every last drop of fuel you have until you just crash on that wall, fly off that cliff, whatever analogy you want to use. We just did not want to do that because we're dealing with people's content and we just didn't want to let them down. So that's what we did. How do you reflect on that choice? Because of course, you're right. The reason why people are told to just fly off the cliff is because you, at any point in a startup, you could have your eureka moment.

25:06And not just in secret leaders, but in all kinds of startup law, right? The last throw of the dice, the last crazy idea does get you to that random insight, that inflection point, that moment. How do you reflect on that? Do you think you made the right calls? Obviously hard to say, but... Do you know, if somebody was asking me for advice and they were in a similar situation, I would ask them just personally how they felt, how much they had it in them to continue, and what it is they wanted to do, the relationships that they had. I would advise them to just use that last drop of oxygen as long as you can and see what you can figure out.

25:43You have a good idea of what I'm talking about. But in our case, we didn't have any great ideas left that were related to what we're doing. We didn't believe that in the time that we had, we could come up with something radically different. And again, because we were dealing with people had put a huge amount of trust in us, we just couldn't do anything different. So it was the right thing to do. All of the investors that I spoke to, by the way, a lot of them were personal friends. And that was, again, a massive for me. It was a painful experience. Everybody was just completely, don't worry about it.

26:28We do this with our eyes closed. It's a startup. Don't even think about it for a second. So our investors, nobody was, everybody, of course, was upset. But nobody was upset in a way that wasn't anything other than gracious and supportive. but we just didn't want to do that to our users so if I had to do it again I would do it that way and then step back and see outside of that if you which is what we did actually the team stayed together and we spent six months on something completely different we had a term sheet on the table for that idea and it was 1.2 million pounds for like a pre-seed round which was fantastic and at the time we decided that we're just not going to take the money because the idea wasn't good enough and we walked away from it money is a really interesting trap it's an interesting trap in people's careers you know look how many people stay in big big jobs they don't like because the money is just too good to walk away and you and i will both know those people because we've been trying to hire them out of companies forever money is also a huge trap for entrepreneurs because you believe that the money will solve the problem.

27:38And actually one of the problems, of course, is getting the money to execute on an idea. But when someone dangles money in front of you and says, here's free money, it's really hard not to think, well, I could make anything work. And I think that there's like probably this arc that you sort of go on through an entrepreneur's journey, which is, I mean, back to your previous point, discipline and motivation, right? So So there's obviously the discipline to turn up every day and want to do the job you're doing, but then the motivation to actually care enough about the problem. That's a very different thing.

28:11And in the situation you're sharing just there, someone offering money to do a different idea that's not something you care about, you could see that even if the money's there and you could make a success of it, it wouldn't necessarily be something that you wanted to spend your time on earth doing. Yeah, when we had our situation at the end of Gravel, We had money left in the bank. We had all these different options of things that we could do. We basically offered to give it all back to investors. And the investors said, well, hold on a second. You know, what, like, what would you do with this money?

28:41Here's three months. Go away and come back with a new idea. And if it sounds like something we want to back, then why don't you use that as your pre-seed money? So similarly to you, you know, we had about a million pounds and we spent about 300 ,000 pounds of that paying off everyone, doing all the stuff right. And when it came to the investors offering them their money back and them choosing not to take it and choosing to back something else, that's on them. But as long as your employees and, you know, your building providers and all of the bills that you have are cleared debts, then you can go again.

29:13And at that point we had 700 ,000 pounds. So we sort of looked at that point of saying like, you know, 700 ,000 pounds, actually a very decent seed round as well. And it's a decent seed round if it's your seed round or pre-seed round even to build the thing you want to build. And that's sort of where we were very uniquely lucky. We sort of got to straddle almost both of your stories, right? We got to say, here's paying off everyone and doing absolutely the right thing to shut down a company in the gold standard way that you possibly would, which by the way, for anyone listening that ever has to do that, that in itself is like a two to three month process.

29:45That's a lot of headspace. And the one problem that we had starting our new company was like between Joel and I, my business partner, how, who today is working on the shit you don't want to have to do, which is winding down the company, and who today is getting to think about the fun stuff. And it's very hard to do both those things at the same time. We did it, but I think there's a lot that goes into winding down a company properly and professionally, and doing it so that you can hold your head high. I'm glad we did it the right way. I'm glad for you that you did it the right way. It's not the most important thing for everyone, but it sounds like for us that really was.