Growing pains: Klaus Nyengaard
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Just-Eat recently announced a third venture capital round, taking total funds raised to £80 million. CEO Klaus Nyengaard reveals lessons he’s learned at the online takeaway business, and in previous ventures.
I started my professional life as an associate at a business consultancy, but I realised that I didn’t want to be in a corporate, I wanted to be an entrepreneur.
My first real entrepreneurial role was in 1997 at website Scandinavia Online, which was majority owned by [Norwegian publishing company] Schibsted. They were very untraditional there, and understood that they couldn’t innovate enough within their structure, so they were all about setting up new companies. This gave staff the chance to run a business in an entrepreneurial way.
I set up the Denmark arm of Scandinavia Online with a Norwegian guy, with whom I invested my own money. Back in those days no-one knew what the winning internet model was. We did list services, a portal, e-commercial this and that. We were all over the place.
Ultimately we realised we didn’t have the scale to become a success, it needed quite a lot of capital and some critical scale on the organisational side to compete in the portal space. We decided to see if we could merge with other firms to create a bigger entity which we could then list on the stock market.
We did manage to merge with some other companies but I realised that it didn’t work having two big telcos as shareholders; it was stopping us being agile and flexible. You need to make sure you have the right owners who understand the bigger picture.
I left the company and started again in mobile software publishing. We launched in 2000 and raised a Series A round of about $2 million, but a few months later, venture capital funds started to go into meltdown. If you look at the stats for money invested by VCs in the fourth quarter of 2000 and first of 2001 it was one of the lowest amounts ever.
We didn’t raise enough money in the series A round. We were offered a lot more but we said no because we were afraid of dilution. At the time we thought we could fund ourselves for just another six or seven months and raise a new round when our website was launched and we had the first products ready, but it was too risky a strategy – you have to take the money and run with it.
Another mistake I made with that company was believing too much in technological forecasts. We were hearing about how 3G mobile connectivity and handsets would explode within three years, but that was not the case. It didn’t explode until the iPhone, a full five years later than everyone expected.
Hire and higher
I took a lot of lessons into Just-Eat. Hiring people has been a challenge and we’ve made a few mistakes. In a high-growth company like ours where you’re so dependent on people, every time you hire the wrong senior guy it’s painful. It’s not just about employees though, working with the best possible people extends to picking the right partners and the right investors.
I have to be careful about working in big corporations. If I do, it has to be when I am a significant decision maker because I can shape things myself, but if I don’t have that power I would likely disagree with how it’s run. It’s important to find the right mix of professionalism and creativity – that’s the key balance for any company.