Last week, we kicked off the Hubble Scaleup Series with an exclusive interview with Tom Watson, CTO and Co-Founder of Hubble. Tom spoke about his experience scaling the tech team and shared advice on how to find the right investors, how to maintain a good relationship between co-founders and more.
This week, we are speaking to Tushar Agarwal, Co-Founder and CEO of Hubble, to find out about the challenges and roadblocks he faced as a CEO at different stages of the scaleup journey and how he overcame them. In this interview, Tushar speaks openly about the different types of stress CEOs face and how to cope with the demands of the role. He also talks candidly about the Hubble values and how to establish a culture for scaling:
Prefer to read rather than watch? No problem – here’s all you need to know:
How was the idea of Hubble born?
Tushar: The idea of Hubble was born during my days as an investment banker. I spent a lot of my time advising companies of all sizes, from really large corporates, all the way down to small startups. One of the key trends that I kept seeing over and over again was that the larger corporates had a problem with how much real estate and real estate liabilities they had. One of the biggest retailers in the UK was trying to figure out how to invest money in their digital experience. The main thing that was stopping them from doing that was how expensive all of their stores were. I remember approaching my boss at that time and saying, if they could release some of their stores or sublet some of their space then maybe they could find the money to reinvest online and complete their transformation to a new age company.
I spent about two weeks putting an amazing plan together and I brought it to my boss who looked at me with such disdain and said, “I can’t believe you spent two weeks putting this plan together, this is ridiculous, there’s no way we can present this plan to the board”. But it got me thinking about the way the world is moving and advancing; lots of large companies are increasingly using technology and consequently using less space, or utilising space in different ways. They no longer need to lease an office or a shop for 25 years, and actually, they can’t afford to commit to that. And at the same time, there are loads of new businesses starting up and they struggle with growing their business because accessing real estate is really expensive and difficult for them. So an idea came into my head: if these larger companies are wanting to use less space and be more flexible, and if smaller businesses can’t access space because it’s not flexible enough, then maybe there’s something here.
We started exploring what the world will look like in 20-30 years time. The thesis we built was that SMEs would become the heart of the economy, because people can now start a business with just a laptop and a lot of these businesses will become like the tech giants we see today. Uber is one of the largest companies in the world, but it doesn’t employ drivers, Airbnb is one of the largest hotel companies in the world without owning any hotels. How these companies use real estate is fundamentally changing.
The big problem was that there was no one matching supply that no one wanted with a demand that everyone wanted, and that’s why we created Hubble. We wanted to create a really easy way for SMEs to access space and a lot of these larger businesses to become leaner as well.
What challenges and roadblocks did you face at the beginning of the journey and how did you overcome them?
Tushar: We face challenges and roadblocks every single day and we have been running the business for over five years now. The challenges and roadblocks depend on the stage the business is at, but right at the beginning, the main challenge we faced was that we were trying to build a real estate company where neither of the founders had any real estate experience. Trying to get taken seriously in an industry where experience counts for a lot, your background counts for a lot and the company you work for counts for a lot, we found it hard to be taken seriously as an ex-banker and a computer scientist.
The only way we could be taken seriously was to prove that what we were building was really valuable for customers. So we quickly gave up on trying to prove to the industry that what we were doing was amazing and instead we tried to find customers who wanted our service and product. And over time we built up evidence that what we were building was really valuable, really new, pretty disruptive and innovative to the property sector. And we said it’s about time you (property giants) started paying attention.
That was the key challenge at the start and I think the other thing big challenge was that we were first time entrepreneurs, so we were trying to figure it out as we went along. When I look back in hindsight, I think we could have done certain things much better, but it’s all part of the experience.
The challenges you face when you’re five years in, and you now have a team of 55 people, are very different. Now we have challenges around the fact that we’re an established brand, people respect us and we have big investors. The ultimate challenge is: can we fulfil the potential? We believe that this could be a large and important business in the world and actually getting there from starting up to scaling up is exceptionally hard, and very few businesses in the world manage to get to be incredibly important and valuable.
What are the key differences between running a business at idea, pre-seed, seed and Series A stage?
Tushar: A business at an idea stage is basically like having an idea for a science experiment that you think will change the world, at that point in time you’re almost like a university or PhD student applying for grant funding to explore your ideas. You’re saying, “this is what I believe, this is what is going to happen, but currently I don’t have the resources to test whether that is going to happen or not. However, if what I believe is true then it’s going to have a really big impact on the world.” You’re trying to get to this amazing scientific discovery that no one has ever gotten to before.
At the idea stage, we received a lot of feedback from the market saying ‘we want to see a business plan, 5 years of financials, P&Ls etc. And whilst that typically works fine if you’re developing an established business model (like a restaurant), it doesn’t work if you’re trying to create something that’s new in the world that no one has ever seen before. In this case, you need to push back and say, “this is just an idea, a science experiment, and you’re funding us to conduct that science experiment. If that works then the world is amazing for all of us, but if it doesn’t then we will keep trying until we find something that works.” I think at an idea stage, you should really be approaching it in that way, and if you’re looking for external funding then you should look for investors who are willing to support that method of working rather than someone who wants an established business plan.
And then the difference between the idea and seed stage is that at the seed stage you’ve got money to play with. So now you’re trying to validate/invalidate your idea. If you invalidate it, then you have about 12 to 18 months to try a new idea or develop the initial idea and the key is to do that as quickly as possible. Essentially what you’re trying to do before you get to series A level is to prove that you have a business and not a science experiment. You’re trying to prove that you’ve done the science experiment, you’ve carried out all the relevant research and you’ve found out that this can be a business. You’ve also figured out key business fundamentals such as what the product looks like, how to enter the market, what the marketing and sales look like, and who you need to hire. You’ve solved that equation and believe that you can build this idea into a real business. So seed stage is all about proving that business is not just an idea, it’s a real business.
Now the difference between seed and Series A is really from startup to scaleup. A lot of people tend to put a lot of emphasis on how good your idea is, and tend to underestimate how hard it is to actually grow the idea.
There’s a book called ‘The Innovator’s Dilemma” by Clayton Christensen, where he splits the customer segments into a curve. You start off with the early adopters – people who are so passionate about what you’re building that they’re going to buy anything you make and they will give you lots of feedback. But the vast majority of the population are pretty sceptical about new ideas, they want something that’s trusted and mainstream. So, at seed stage, your main customer base is likely to be the early adopters – they will buy from you and give you lots of feedback to develop that product, and then what you need to prove is that not only will your product work with the early adopters, which is typically a small portion of the market, but actually it will work with the mainstream adopters as well.
And at Series A what you’re really doing is you’re saying, “we’re going to use this money to go mainstream.” If you think about a business as an artist or a singer, what you’ve done is you’ve gone from someone saying “hey I could be a singer”, to “maybe I could develop into a singer-songwriter” and then “hey now I’m playing at a bunch of pubs and clubs around Camden and I’ve got this amazing fanbase” and that’s your seed-stage with your early adopters. Then the next stage is “can I get signed onto Sony and be a massive global artist?” and that’s what you’re trying to prove to investors at Series A stage: not only am I a cult hero but I can be a mainstream, platinum-selling global artist. And then the next stages after that are around fulfilling that destiny and scaling up.
What did you do to establish a culture for scaling?
Tushar: Culture is a hugely important part of every business, I think in some businesses it gets talked about a lot and in some businesses it hardly gets talked about at all. I’m happy to admit that in our business it probably hasn’t been talked about enough, and one of the reasons for that is quite bizarre: we’ve never really had to.
We’ve managed to hire really good people who actually fit the culture, which, as of yet is relatively undefined. And we’ve almost been quite fortunate in that we haven’t explicitly written down what that culture and what those values are, we’ve kind of known. I think you can do that when you’re a small company but as soon as you start getting to our size, then that gets really hard and as soon as you get any larger than that, you really need to make it clear. I think in the early days it was a combination of let’s hope that me and Tom the co-founders, are good people and we will hire other good people and they will hire other good people. But now the company is at a size where we need to put some more stuff in place.
We’ve actively started working with a values and culture coach. He’s working with everyone in the company to establish and write down what makes the culture really good at the moment, but also figure out what do we want the culture to be? What are we not doing at the moment that we really want to do? It’s analysing the current culture but also thinking about the aspirational culture. And we’re spending the next twelve months as a business, diving deep into this and the reason why I think it’s really important now is because it affects how people make decisions. When you’re at a crossroads and you’re trying to decide whether to do one thing or another and you don’t have a framework or a moral framework on how to make that decision, then you get stuck. And if you have 50 people getting stuck 50 times a day, then that really slows you down and it increases the chances of poor decisions.
If you empower people with a framework of how they should be making decisions, it then empowers them to say “I’m really confident that this is the right decision and it sits in the cultures and values of the company”. It allows everyone to move faster, be happier, build a better company and in turn, that improves the customer’s experience. I’ve always been a true believer of if you want to improve how we deal with customers or anything that’s external-facing to the company, then you have to improve what’s going on at home first.
How do you manage your time and stress levels as a CEO?
Tushar: Managing time and stress levels is probably the most impactful thing you can do as a CEO, especially as the company gets larger and larger. Stress can kind of debilitate you and reduce your ability to make good decisions. If you’re stressed out and your body is in fight or flight mode then you’re almost primitive, and it’s really difficult to be thoughtful. So I think managing stress levels is really important. There are three types of stress you experience as a CEO.
The first type of stress is firefighting — when you’re running a business there’s a lot of stuff that goes wrong behind the scenes that no one really knows about, and it goes from being something you haven’t even thought of to something that needs to be solved straight away. And if it isn’t solved, then everything goes wrong.
When I first started as a CEO, I’d been to university, I’d worked in a pretty structured work environment, I wasn’t used to so many curveballs, and I think the only way you can deal with it is to condition yourself over time. You can’t read a book to figure it out, you can’t go to business school, they won’t teach you that there, you kind of need to put yourself in an environment where you get thrown curveballs all the time and you need to be able to figure it out. The way I always imagine myself is like a tennis player who is training with a tennis ball machine on the other side of the court, and you’re batting away balls here and there, but if you miss one shot, then you kind of lose your flow and you get hit by tennis balls and you can’t stop it, and that’s kind of the state I feel like I’m in a lot of the time. There are tennis balls coming at me the entire time and I’m just doing my best to bat them back and forth, back and forth.
So, I think that’s the first thing, stuff that’s unexpected that you need to deal with. I think the second thing is the ongoing expectations. We work in high growth technology businesses where the expectations on growth are pretty crazy; you’re trying to build companies like Uber which went from being a 0 to a 40 billion-dollar company in about 10 years and created an entirely new industry on a global basis. Previously it has taken people hundreds of years to build companies that are worth 40 billion dollars. So, the expectations on growth, on achieving the next milestone, on making sure the company is achieving its potential, that’s an ongoing stress that you have where you feel like – yes whilst these things are going well, under the water of the iceberg there’s an enormous amount of stuff that could go wrong. I think one of the best analogies I’ve ever heard about what a startup feels like is by Reid Hoffman who is the Founder of LinkedIn. He said that running a startup is basically like throwing yourself off a cliff and trying to construct a plane on the way down, you have all the components and all the parts but you’re falling down that cliff so quickly that you’re basically trying to survive and that is a pretty stressful situation until that plane is flying.
The third aspect is how it takes its toll on your personal life, on your social life and I think family and friends of startup founders don’t get enough credit for actually how much they do behind the scenes for those people – and I think having a good partner or family that supports you when stuff is going wrong, and not having someone nagging you or having expectations that you should bring a certain amount of money home. That can help to alleviate a lot of that stress. But if you don’t have that, if you’re struggling to pay the bills every month, if you have a partner who’s not very supportive if you have a family in a different country, those things take a real toll and they can start affecting your work, so I’d say there is a lot of stress there, and almost the ability to deal with that will determine whether you’re successful or not.