Hiroki Takeuchi

Now on to the next speaker this afternoon. Heroi is a co-founder and CEO of GoCardless, which is the UK's leading direct debit provider. They now serve more businesses than any other direct debit provider, and they're also expanding to serve Europe. Heroi and his co-founder Matt started GoCardless in 2010, so they've got a fun story to be telling you about their history. Thank you!

Wow, it's really bright up here, and I think that's a good thing. I can kind of barely see the back, so I can't really see how many people are in the room right now. So, hi! I'm Heroi, and I started GoCardless actually in the beginning of 2011 with my co-founders Matt and Tom. For those of you that don't know about what we do, basically, we make it really easy for businesses to accept recurring payments via direct debit.

When Cat asked me to talk at Startup School, she asked me to talk about the earliest stages of GoCardless and tell our story. So when I was thinking through our story, I was trying to figure out, "Okay, what should I talk about?" I realized that actually, for me, the lessons I've learned didn't come from just, you know, specific events or one story here or there. They're lessons that I learned over time.

Rather than telling you a straight story, I thought I'd share four lessons that I've learned along the way and then give you some anecdotes as well. Let's see if this clicker works. Okay, so our first story is about when your journey starts. Actually, your journey starts way earlier than you think.

When I sat down to really think about this talk and start thinking about what's the story of GoCardless and where did it begin, it actually turned out to be a pretty non-trivial question. Was it when we wrote our first line of code? Or was it when Matt, Tom, and myself agreed to start a business together? Perhaps it was when Matt and I met for the first time, and we shared our dreams of starting a business one day.

But then I realized that for me, my story began way earlier than that. My story began in the first week of university. I'd got to university and, you know, like most people, you meet lots of new friends. You try out new activities and take up new hobbies. It was during then that I met a guy called Carol. He was in the year above me, and he did Maths too. He kind of took me under his wing.

In one of those first weeks, he took me to this meetup for this society called Oxford Entrepreneurs. Basically, it was a student society that was there to promote entrepreneurship. I remember my eyes being opened for the first time to this world of startups and business. Before that, I had no idea what it was about. I thought business was like Lex Luthor and Mr. Burns.

So, I remember going to this event and meeting all these real cool people that were interested in taking this other path. It was there that I met K and Haj. They're going to kill me when they see this picture because it's an awful picture of them. But they were the first people that I met that had started a business.

Now, you've got to remember that back in the 2005-2006 when they started their business, no one was doing that in London. Everyone was going to banking or law, and these guys decided to quit their jobs and start a business together and pursue their dreams. I found that fascinating.

So when they decided to move out to San Francisco, I knew that I needed to persuade them to give me an internship in the summer of 2007. Those guys finally relented and said, "Okay, cool, come and join us for the summer." When I got there, it turns out that they'd actually teamed up with a guy called Patrick, who's actually on stage earlier, and they started Automatic together.

It was basically an inventory management tool for eBay power sellers. That's them at a conference with their "I like being on top" t-shirts. It was on top of auctions, that is. I got to see firsthand what it was like to be in the earliest stages of being in a startup. I remember getting there, and we spent two months living and working out of this tiny apartment in San Francisco.

It was a two-bedroom place, and there were six of us. We had three air mattresses between us, and we had to sleep in shifts so that we wouldn't knock into each other in the night. That summer, I spent my time just doing customer interviews, testing out the product by selling lasers that we imported from China. They were so powerful that you could hit an airplane out in the sky with them.

I remember this one time we did it, and we thought we were going to get caught by the police. I was also surrounded by all of these developers and learned about what coding was. Before that, I'd never really been exposed to it, and I also got a chance to go to Y Combinator and see what those dinners were like. I heard some of the stories from founders back then.

So when it came to starting my business, I realized that I learned so much from my experiences at Automatic. When I first met Matt, would we have had the debate about the pros and cons of co-founders versus starting your business on your own? Or when it came to starting and building out our first product, would I have learned the value of coding? Would I have even applied for Y Combinator had it not been for the experiences that I had then?

I'm not sure we would have. So remember that your journey starts way before you think it does, and if you want to start a business one day, then think about what you can be doing right now to learn about what you'll be doing in the future because you never know what's going to be useful.

So my second story and lesson is about being careful of whiteboard ideas. I'll explain what I mean by that in a bit. When I met Matt for the first time, it was when we first started. It was our first jobs out of university, and we were working as management consultants, for our sins. We quickly realized that we had this shared interest in starting a business and, you know, that maybe one day we'd want to start a business together.

I remember we used to spend hours in between projects and on the weekends just toying with ideas, bouncing around on whiteboards, concocting plans of what we might be able to start one day. I also remember that we had this really terrible pattern where every time we came up with an idea, we'd then spend the next week or few days just tearing it apart and realizing how terrible an idea it was. This was all done on a whiteboard.

So when it came to leaving our jobs, and we decided that we were going to take the plunge and start a business, we still didn't actually have an idea of what we wanted to do. We hadn't settled on something we were excited about.

Now, it turns out that doing that and telling your friends that you're starting a business but you don't know what it is yet is a really great forcing mechanism. We quickly joined forces with Tom and decided to start something called Groupe. This was one of my early designs, and the idea was this: if you are a football captain of your local team or you're going on holiday with your friends, then collecting money for those informal situations is a real pain. So we wanted to start something to fix that.

I'm going to fast forward a little bit now in the story, and we—this was six months later—we were out in Silicon Valley and we were working out of an apartment in the mission. We were on Y Combinator and we had the prototype of this product that, you know, we were trying to get anyone and everyone to use.

We were quickly approaching demo day, which is the culmination of the Y Combinator program. It's when all of the founders of Y Combinator get into a room and present this to a room full of the who's who of investors in Silicon Valley. But we had a little bit of a problem because we looked like this.

In a last ditch attempt to really try and drum up business, we decided to move the whole company, engineers and all—there were four of us at the time—onto sales. Now, it turned out that all of our customers were in the UK, so what that meant was waking up really early in the morning every day to cold call into the UK a list of local football team managers that we'd found on the internet.

I used to remember when Matt used to come into my room at 5:00 in the morning every morning to start the day's calling. It turns out that 5:00 a.m. San Francisco time is the perfect time to catch a football manager going into the pub. It also turns out that the only thing that they had in common was that they had no idea how we got their numbers. Needless to say, we didn't have much success.

So in a last ditch attempt to salvage something from the situation, we decided to pivot the business and become GoCardless. Now, we got lucky because a lot of the work that we had done for Groupe turned out to be exactly what you would do to start GoCardless. We had learned about payments, we'd gone and got a banking deal, and we were applying for our regulatory approval.

But what if we hadn't started GoCardless? What if we'd wanted to do something else? I often think what went wrong in those days in Groupe, and it's really easy to come up with various reasons why it didn't work out. But if I'm going to be honest, I think the reason it didn't work was because we weren't really building something for ourselves. We weren't even building something for our friends and family.

We'd come up with this idea on a whiteboard, and we thought how theoretically great it could be, and we were building a solution for that instead. So when it comes to starting your business, beware of those ideas—those ideas that seem theoretically really interesting or the ones that are in really big markets.

Really ask yourself the question: is this something that I'd want to use myself?

So my third lesson is about focusing on momentum. Now, when I first started GoCardless, I thought that progress would be a fairly linear thing. I thought that we'd get from the start to success something like this. But when I think about the story that we've had with GoCardless, it couldn't be further from the truth.

Our story looks something more like this. Now in the early days of GoCardless, we used to spend ages just debating the smallest things. We would just spend hours discussing the smallest of product changes, or we would agonize over the strategy that we were going to use for, you know, capturing this huge vision.

We had limited time and limited resources, and so we thought we can't afford to make mistakes; we need to make sure that we get it right the first time round. But actually, what turned out was that rather than just, you know, going in a straight line from start to success, we just spent ages going from A to B and then realizing it was wrong in the end anyway.

So our path just ended up looking like a zigzag, but just a much slower one. This has happened so many times. I actually struggle to come up with even a specific instance. It's like asking what you had for breakfast yesterday—you do it so often that you can't even remember what you ate yesterday. Over time, I've realized that these mistakes are bound to happen; you should try and embrace them instead.

Instead of agonizing over each and every decision that you make and making sure that you do exactly the right thing, it's better to get your head down and just run with it and then course correct afterwards instead. It's through that cycle of just constantly course correcting that you just run really fast and wiggle your way to success.

In the early days, especially momentum is the hardest thing to come by. It's way harder than deciding on what idea to pursue or whether something's the right thing or the wrong thing. It's actually just getting from a standstill to something at all. So I'd say it's better to start doing the wrong thing than to not start at all.

My last lesson is about being an emotional cockroach. When I told people about this, they said, "What does that mean?" So I'll explain first; otherwise, I'll just confuse you all. A cockroach is well known for being able to withstand a nuclear attack, and that's what I mean. You need to have emotions that can withstand the biggest of ups and the biggest of downs.

I remember when we were doing Y Combinator, Brian and Nate from Airbnb came and gave a talk. They told us about the first thousand days of starting their business, and I remember walking away from that talk and thinking, "Wow! They came so close to financial ruin, and it took them so long to see any success. How did they have the courage to do that?"

We hit our financial low a little bit earlier in the summer. That's my co-founder Tom in his comfortable abode in San Francisco. We had just moved out there and didn't have anything. So, Tom and I took a trip to Ikea to buy the essentials. We were really poor by that point, and so we had to be really careful. We had rations for ourselves. We got there, and we had one flimsy mattress each, one knife, one fork, a plate, and then a choice between a mug and a bowl.

When it came to the checkout, the only way we were able to settle the bill was by splitting it across my debit card, the remains of my overdraft, and the absolute dregs of my credit limit. But we had just gotten into Y Combinator, so things were looking up. Later that summer, we had just been pitching at demo day, and we were starting to think about investment.

Now, for the last nine months, you've got to realize that all of my friends thought I was broke and unemployed. So we set ourselves a target: we said we will raise a million dollars, and if we raise a million dollars, then, you know, no one can joke about that, right? I remember talking to a room full of investors after the demo day pitches and getting really excited.

Everyone seemed to be really interested in what we were doing, and everyone wanted to find out more. We'd heard all these stories about YC companies that closed their rounds in weeks, if not days, and I thought, "How hard could it be? We're going to close this, no problem!" And we were so excited.

But then, over the coming weeks, the initial eagerness turned into hesitant maybes, and eventually, definite noes. A month and a half later, we had raised less than a quarter of what we wanted to, and we'd been rejected at least 60 times on separate occasions.

I remember driving to Sand Hill Road. We drove there, Matt and I, and we had a meeting with an investor there. I won't name names, but we didn't even need to get to the end of the meeting to know that there was, "This ain't never going to happen," in the air; sure, let's keep in touch.

I remember driving back to San Francisco, and it felt like one of the lowest points yet. We had to go back to London soon, and we were going to go back failures. I remember turning to Matt and saying to him, "Hey, how would you feel if I just crashed into this side barrier here right now?" Luckily, we both just laughed.

But then, a few weeks later, it all just seemed to click into place. We were back in London, and Tom had been speaking to the guys at AEL, and we'd also just been introduced to another fund called Passion Capital. We had our final meeting with the partners at AEL, and I remember getting the call. We all huddled around, and Adam from AEL told us that they wanted to put in 600K.

The next day, Passion told us they wanted to put in 400K too, and all of a sudden, almost overnight, we'd gone from abject failure to smashing our targets and closing a round of $1.5 million. I'd like to be able to say that from that point on, it's just been smooth sailing, but that would be just a lie.

Every single time you think that you're going to get to a certain milestone or achieve the next thing or get to the next level, and it will all be okay—that, you know, everything will be great—no matter what, there's always the next challenge. These peaks and troughs are never-ending.

I never appreciated how hard it would be to start a business. I've had some of the best times of my life working with the guys at GoCardless, but I'm also about five times grayer than when I started. If it wasn't for my co-founders, some of the early team, my girlfriend, and the friends that had supported me, I don't think I would have made it this far.

I remember Sam Altman giving us one of the best pieces of advice that we ever received. He said that starting a business is like riding a wave between life and death. If you can hang on long enough, you're bound to succeed. It turns out that holding on to that wave is one of the hardest things you'll ever do, but if you're an emotional cockroach, you can do it. It will be one of the best journeys you ever take in your life. Thank you!