In August 2022, AAIA Youth successfully held a seminar titled “Entrepreneurs Speak – Seven Entrepreneurial Insights from Seven Years of Entrepreneurship”, and AAIA Youth was honored to invite Sheldon Zhang, the co-founder of Yardly, to share his entrepreneurial journey with us! The content includes but not limited to choosing the right time to start a business, how to attract customers, financing techniques, team building, key transition, business restructuring, exit strategy, etc…!
Guest Speaker Background
Sheldon is an entrepreneur who came from an engineer background. He started Yardly in 2015 with another co-founder after seeing an opportunity to revolutionize Canada’s outdated lawn care and snow removal industry, and after growing the company into a business that serves a total of 22 cities across Canada, Sheldon successfully sold the company in 2022. Sheldon is now developing a new fintech company and helping other early stage startups through advisory services and angel investments.
1. What made you take the first step into entrepreneurship?
I didn’t really understand what a tech start-up or startup was, and I thought long and hard about what kind of business I wanted to be in. At that time, I often saw a lot of startups like Uber, and I didn’t think too much about it, so I made an app that could help people shovel snow, and I didn’t realize what it was like at that time, I thought it was just a two-year thing. It was seven years later, that I later found that my personality is more suitable for entrepreneurship. I think I have the entrepreneurial mindset which was not taught in school. This mindset contradicts with the view that one needs to be fully informed about a market before making a business decision. When I started a business, I only had 50% of the information to make a decision.
2. We all know that Edmonton has a very cold winter, did you see the opportunity as a very large market, or was there a more obvious need?
At the time when we first discovered the service, we realized that the industry was very dated and Uber was kind of the first one to move offline services to online, and there were a lot of companies trying to replicate uber’s success. We took a similar opportunity.
3. How did you and your co-founders start, grow and expand your team?
As first-time entrepreneurs, the things we did wrong could give more inspirations and experiences to newcomers. Our first mistake was that I was very good friends with our other founders and we had similar personalities and we found that out in our 5th or 6th year that the two of us were not able to provide the team with different ideas and thoughts. Because we were friends, the only benefit was the ease of communication, but we would tolerate the things that we should not have tolerated.
In terms of recruiting people, as a startup CEO or founder, there will be 30% of the time to express your vision of the company, and we set up important corporate values early on. We must not only look at the technical background, but also look at our future vision and whether their values and our corporate values are in line.
While we both have overlapping personalities and our division of labor is more like two co-CEOs, we both share the ability to conceive a corporate vision, but neither of us will do the work that makes the company happen. We created a very ambitious plan early on and attracted a lot of local employees to join. We didn’t have an ideal plan for the route of our people. You may have seen that both Apple and Facebook retained many of their initial employees, but this was so far from reality that we didn’t retain many of our older employees. I had recruited 40-60 people in 7 years, but 50% of them were not the employees we wanted. When I encounter employees who are not suitable for the business, we should dismiss them immediately.
But for very good employees, we will give them shares to motivate them. We gave two programmers living at West Coast a lot of shares, but one ought to be careful on giving shares to employees because shares will grow quickly, and value of shares may become very high.
4. Why did you choose the domestic service market? Besides seeing the market in Edmonton, how did you develop your users? Do you have any special strategy for customers?
Our goal at the time was to keep building our brand and thinking about what we needed to do to make our guests think about what makes us different from other services when they mention us. As COO, every time I engage with a client, I reflect on what makes our company special.
Everyone says a start-up should aim to get 10% of your customers to love your brand. The first time we felt this was true was when a 90-year-old madam called me one day and told me she could go to a nursing home 3 years later because of my company. It was very touching at that time, and although there were still some bad reviews during the process, they were inevitable, and I found out later that we had actually accumulated a lot of “die-hard” fans.
5. What was your initial idea and why did you make the transition?
Our idea was unsuccessful at the beginning, so we made a painful decision to transform from a technology company to a service company. We transformed twice, from a technology company, into a service company, and finally into maintaining our brand value at all costs. The first transition was so painful that we shut down our engineering team and abandoned everything we had done before. The second time was when we discovered a problem with the growability of our business model and we decided to start shrinking our market, just like many companies grow too fast, so we ended up having to abandon some cities. We made a big sacrifice at that time, we laid off a lot of people the second time, 10 out of 12 in the office. We went through a lot of different phases within seven years, and we had slowed growth before our second transition, like 20% negative earnings, but we grew a lot of earnings after we transitioned and cut people.
6. When you were expanding your team, what were you focusing on at this time?
At the time, there was a very strong connection between the characteristics of the people that were needed and the culture of the company and what the company was trying to do. When we were expanding, we needed more capable people to help us solve problems and to have innovative ideas to help us expand quickly. But when I wanted the company to move to a profitable stage, I realized that many people who were good at innovation and business expansion were not the people we needed. Of course, as a leader myself, I went through many transitions and then reinvented myself and the company.
7. What have you learned from each round of funding? What lessons can you share about dealing with Angel Investor?
I’ve had some successes and failures, and I see that people are interested in raising money. My advice to people is not to worry too much about the number of funds raised. But the number of financing may vary greatly from region to region. You can go online and search more about what each round of financing means to you. The first round of financing, for example, may be more looking for friends rather than angel investors. Money for financing is only 30% of the role, it is more about whether he can bring help. I have seen too many companies that have raised a lot of money and still failed.
8. How did you find those angel investors at that time?
We found that we needed some partners because we were making some choices, and we wanted to find some partners who could bring substantial growth to our company and find investors. We had several discussions with VCs, half of the time we came to them, and half of the time they came to us and said they wanted to invest in us. But in fact, our company did not want to accept money from investment banks because our market and their positioning were not a good match. For example, when the U.S. investment banks come to us, we say we are not currently adapted to the U.S. market. If we want to get in, we can talk again.
9. What's the difference between Angel investor and VC?
We realized at the time that our company was better off not going to venture capital. Because if a VC is going to invest in 20 companies, he/she assumes that 19 of them will fail. Then the remaining one will make all the money from the 20 companies. So when your company doesn’t meet that standard, it doesn’t make a lot of sense to recruit VCs. We also approached a very famous Canadian venture capitalist at that time since we were not completely discouraged by venture capital. He told us that he thought we were a very good company, but we were not a venture capitalist type of company. We then realized that he was actually very right, we didn’t need much growth. For angel investors, they will have more different motivations to invest in your company.
10. Give us an idea of the timing of selling a company
I think you can carefully consider your personal situation, not every company is the same. Some founders may start 1 or 2 years before they consider selling their company. I think we should focus on creating value rather than on how to sell the company. A few tips for you: people should not sell the company when they are in a hurry to sell the company. Because if you all think the company is a hot potato, few people will come to take the plate. At the time our company’s buyer offered to buy it, our company’s earnings were still growing and we could continue to grow as well. And for me, I was more suited to the early years of the business than to the long term. So it’s also important to me that the company can continue to grow if it’s sold again.
11. If you were to do it all over again, what do you think you would do differently?
There were a lot of decisions I made at the time that I think would be right if I looked back now. If I were to look at it from my perspective today, I probably would have closed the company in 2 years, I wouldn’t have spent so much time transitioning. I think people have to admit their failures when they start a business. In many cases people are not willing to admit their failures, and then they will think about breaking through the difficulties. Now I will admit my failure more quickly, and admitting failure here means realizing the mistake more quickly. It took us seven years to make two previous transitions, and I think it would only take me three to four years to do it again. Another point is that every year we feel we were stupid in the previous year, and with rapid iterations we find a lot of things we did wrong before. But as long as those mistakes don’t turn out to be real failures, they will make us stronger in the future.
Q & A
Q: Do you think the success rate of school students starting a business is lower than that of people who have some social experience?
A: I don’t think the success rate has a lot to do with age and social experience, because many successful entrepreneurs did not have a lot of experiences to start with. As a student, you must admit your failure, the first time you start a business may not be successful, but it will give you a chance to fail, if you have a strong enough mentality, every failure will make you learn more experience and give you more chance to succeed.
Q: We are a startup company of college students, we divided too many shares in the early stage of the business because we wanted to save money. Currently we live in different time zones, and we have various activities such as study and work so many of us do not give priority to building our startup company. I feel that our company has a good direction and idea, but the team is not very coordinated, I would like to ask your advice.
A: First of all, jet lag is not a problem because many companies now work remotely and now there will be many efficiency tools to help you solve the problem of jet lag. I don’t think I would have made it to where I am today if I hadn’t quit my job and started my own business. Although my work is not very busy, but entrepreneurship is a very painful thing. It’s a very common problem that people don’t prioritize entrepreneurship, and then the solution is to say that whoever cares more about the company should stay with the company, and whoever doesn’t care should quit. It’s rare that the first few people on a startup team will all stick together until the end.
Q: What are your methods of cohesion for your team?
A: It’s true that it’s relatively difficult to manage a team of people who have time differences and work remotely, so it can be a bit challenging. But I think exactly how to overcome it is that everyone must be very clear about their positions, if there is any lack of clarity, it will be difficult for everyone to succeed in the end.
Q: How do we need to improve our competitiveness now as college students starting a business without a good competitive barrier, as undergraduate students without a strong technical background?
A: I think this goes back to what we talked about before, we are not in the Bay Area or Silicon Valley instead became my advantage, I don’t think people should keep digging into technology advancement. I don’t know much about software and technology either. I also think that all this technology is always more expensive than you think and then the results are not quite what you expect. I think unless your product is completely walled off using technology, there are actually a lot of ways to help you test ideas or different ideas in the early stages. So I don’t think competitive barriers are an issue at the very beginning.
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