He’s a busy man for a busy job. Andy Hamilton turns up a little late for our meeting, a bundle of controlled energy that is revealed by his never-at-a-loss-for-a-word street-smart verbal style. Asked how he got into the Icehouse job, he says, “I was unemployed.”

Actually, he had just been made redundant from running Fletcher Property’s corporate venture unit. He also had some other relevant experience to draw upon having been chairman of an incubator at Unitec. And he had also run a lawn business, called Lawn Heat & Cycle, for Masport, while he was the “prissy PA to the managing director”.

Hamilton took the Icehouse job on, in 2001, when it was a start-up itself. It was to be “for a couple of years”, but eight years on he’s still running it.

Hamilton’s sassy style probably works quite well with the type of emotional, a bit rough-round-the-edges “mongrel” types – as he calls them – who make for good entrepreneurs.

Start-up entrepreneurs are highly emotional, he says, because you have to have a passion for your idea or product, and “because they haven’t done it before”.

“It’s not a logical approach; it’s mostly an emotional approach.”

Hamilton’s, and The Icehouse’s, job is to harness that drive and bring some science to the process to ensure it’s success, and, hopefully, speed up that success, and take it overseas as well.

“We’re a wayfinder, a sounding board and an accelerator. We ask how can we short-circuit it for them. But we also say this is the path you should go on that will give you the biggest chance of success.”

And, at the bottom, it’s about market research, says Hamilton.

“The biggest thing we’ve learnt is that start-ups don’t validate their market correctly. They’ve got a concept and they start trying to turn it into a business right away, without going, ‘Hmmmm, we’ve got this concept, but how good is it? How big is the market? How would we get into that market, what would we sell it for, who would buy it, what pain does it solve?”

“They just go straight to: how many could I sell? My view is you’ve got to spend a bit of time breathing before you get to the Kool-aid.”

Hamilton’s energetic, driven personality – and his failures – is like that of many entrepreneurs, which is probably the reason he’s still enthusiastically in the job, eight years on.

He talks animatedly about Masport and Fletcher’s, and how even though he ended up unemployed, it all led to a big moment for the now 41-year-old. He not only took on the brand-new Icehouse, but he met the Australian woman who was to become his wife, all at the same time.

His own entrepreneurial experience and failures likely contribute to his success at The Icehouse, making him capable of handling the highly charged, sometimes arrogant individuals he deals with, and the tears and tantrums that he says are part and parcel of the start-up experience.

And it runs both ways. There was a company that got turned down for funding recently and we were more depressed than they were. They said, don’t worry about it; it’s not going to stop us. They had to pick us up off the floor, says Hamilton. “We kinda fall in love every day. You get seduced by the business and then the person and you want them to be successful.

We’ve dealt with tears, lots of them.”

Younger and fairer
Interestingly, the nature of his charges has changed over the eight years. The Icehouse is actually a three-in-one organisation. There are the startups, and the angel investors, with which they are linked (90 high-worth individuals), and then there’s the incubator unit that nurtures SMEs (small-to medium-sized enterprises) that need help to get to the next level.

It was the SMEs that featured more heavily in The Icehouse’s first four-to-five years. They tended to be represented by men, slightly older – in the 40 to 50 bracket. The company has run 2,500 training programmes for these owner-managers and family companies, in NZ and Australia, over the past eight years. They’re very successful, typically increasing profits by 31 percent.

“But when we started we used to say, ‘where are the entrepeneurial women?’ then we got one and were like, ‘this isn’t the right environment – 24 males and one woman’. But now every programme has five-to-seven women on it. We hate running programmes that are all males. It’s just wrong.”

The company is now on to its seventh female entrepreneur, says Hamilton. And, curiously, they’re all mothers, and they’ve all got a high degree of empathy too, he says, slightly bemused.

Mumpreneurship has obviously come to New Zealand.

The men have changed too. They’re now younger, in their 30s and 20s, and the start-ups they are involved in are now 75 percent hi-tech and mostly export-oriented.

Which is just what The Icehouse’s founders wanted.

The brainchild of Auckland University’s Business School, The Icehouse was designed to meet a dual need: upskilling SMEs; and funding and mentoring mostly hi-tech, export-oriented start-ups.

Knowing that owner-managers and entrepreneurial types don’t usually sign up for business school – the former for reasons of time, the latter because they’re often anti formal teaching – The Icehouse was designed to meet their needs in a different way.

Housed away from the university in an old warehouse, the incubator runs courses for SMEs that are effectively mini MBAs for their time-poor owner-managers, giving them the knowledge to grow their business and possibly export too.

For the start-ups, there is mentoring advice and access to the capital they all want, from “ice-angel investors”.

And the money is definitely the thing.

“All of them coming looking for money, but they won’t tell you that. They’ll tell you they want the advice and guidance, says Hamilton with just a trace of amused sarcasm.

Which begs the question: what are they like? What makes for an entrepreneur?

‘Mongrels’ and ‘corporate guys’
Describing what makes a successful entrepreneur, Hamilton refers to a recent Harvard Business Review article on “causal and effectual entrepreneurship” that describes who makes the best entrepreneurs.

“You get the flash guys and girls who can tell a story, ie, ex corporate people trying to start a business. And then you get the stubborn kind of mongrel, rough-round-the-edges type of entrepreneur. The guys who sit in the corner, and they’ve got this widget or technology or software, and they’re not that good at talking to people.

“What I’ve found is that the people who have the really strong backbone and vision, and adaptability to get through the first phase, are the ones that win. And, guess what, it’s very seldom the corporate guy.”

But this isn’t the end of the story. Once out in the market, people often find the market isn’t exactly where they thought it was, and they have to be adaptable enough to change course… and then everything changes again.

“Once you get through that, then it’s the more anal retentive, process people who succeed, because they go, ‘Right, I now know where my target is, I now know where my market is, I know who the people are to get my product to the market; now I’ve just got to knock down one after the other.

This is very different to dealing with the ambiguity and uncertainty of starting a business.”

The above comments are quite chilling – not to mention a bit rude, but they’re on the money for what The Icehouse is. The name is no mistake. It’s a metaphor for what starting a business is like, as well being an acronym for International Centre for Entrepreneurship.

GFC chills and tough love
Life inside The Icehouse – and outside – has got even chillier since the global financial crisis hit.

First, there’s the sea of empty desks at the incubator that assails you when you walk in nowadays. Hamilton confirms tenancy is down. “There were 58 heads before Christmas, we’re now at 50 percent capacity and we have lot of virtual residents who can’t afford the rent ($3,000-to-$4,000 per month, for rent and advice for a team of four)”, he says.

“We’re usually counter-cyclical. In a normal recession we do better – people use the dip in the economy to learn and reach out for help. In this recession we’ve been affected in that parts of our market are harder for start-ups, and raising money is quite challenging,” says Hamilton.

But, even in better times, The Icehouse is deliberately chilly. Physically, the space is a touch bleak. Housed in a revamped old textile warehouse, it’s quite stylish in an honest industrial-brick way, but it has a slightly uncomfortable, temporary feel about it. Completely open plan, it’s the polar opposite of cosy cubicle land. “We don’t want people to get too comfortable here… they’re not staying,” says Hamilton.

Given that a major reason for the incubator’s existence is the nurturing of hi-tech start-ups capable of surviving the high seas of international commerce, this tough love approach is appropriate. The incubator’s founders see these fledgling companies as an important part of New Zealand’s
future, but first they have to survive.

“We wanted it to be a place where only the hardiest survive; not a soft and warm place. It was to be a challenging place… that pushed their boundaries,” explains Hamilton

Icehouse success
The Icehouse has had some notable successes, including Mobile Mentor (see box); Unimarket; M-Com; Wild Bean Café; Optima; elemetry Research and PowerbyProxi, and any more. Of the 13 ventures hat ice angels have invested n over the last five years, 11 are still going. hree to five of hese look really good and could become major companies, ays Hamilton.

There’s also the 31 percent increase in EBIT on everage xperienced y the 2,500 SMEs that have gone through The Icehouse education programme - an impressive statistic.

Technology and ‘traffic lights’
Technology is at the heart of the Icehouse operation. It is heavily reliant on it to run the organisation and has a number of technology company sponsors, including Hewlett Packard, Gen-i and Microsoft. Also, an increasing number of its start-ups are, intentionally, hi-tech companies. Hamilton says that it has taken some time to get into a rhythm with technology use internally, partly because early on he felt obliged to use sponsors ‘new fruit’, plus anything else new out there. This included the problematic Vista and free new security software that came with very high walls – i.e. very little got through.

“We tried to be bleeding edge, being a showcase for our partners. We learnt that it’s one thing to play with stuff in your own time, but for the business to benefit you have to have something that’s solid, supported and scalable.”

Hamilton fesses up that he actually screwed the business up early on playing around, so now his team only let him play with new stuff on his own laptop, and, in return, he doesn’t try to force new things on them. “In the end, I realised you’ve got to get your basics right in your business – it was a good, if not entirely painless, lesson.”

However, Hamilton still sees it as important to stay ahead on technology developments and is presently experimenting with Twitter, which he loves, and other social media, as well as using Skype for international calls – to help him build an Icehouse network around the world.

“It’s really hard to be a leader in technology, but the sensible thing in any business is to be a fast follower.”

Although it’s a not-for-profit, Hamilton sees The Icehouse as a small business, but it’s one with a huge network. It has an in-house staff of 13, but is very “porous” as it also has a couple of hundred contributors and mentors. The company uses Microsoft SharePoint to enable information sharing with this large network. A MyIcehouse open environment for the network and Icehouse alumni is being launched soon.

On a basic, ground-level, HP blade servers provide the technology backbone and the incubator is in the process of upgrading to a virtualised environment, “so everything can be on one server, rather than all over the place,” says Hamilton.

Microsoft’s Navision provides enterprise accounting, while Microsoft Dynamics provides the CRM system. “And Outlook is a big productivity tool for us.”

On the mobile communications side, with the recent upgrade to Telecom’s XT network, Hamilton is finding using his Palm Treo smartphone “really good” because it syncs with the in-house customised CRM system. “We’re really a small business and we’ve learnt to take baby steps.” However, there is one really valuable, quite sophisticated application that has been developed over time that the incubator uses and that’s dashboards, for tracking start-ups’ progress, as well as “bum on seats”.

The Icehouse uses three different dashboards – for the start-up incubator; for the ice angel investors, and for the SME education programme.

“They’re Excel spreadsheets that are automatically fed by information from Navision and our CRM. It’s fantastic. Dashboards help our team run our business so much better,” says Hamilton. With them we can track customer satisfaction, gross margins, capacity – “we’ve got to get 20 people on a programme, what percentage are we at?”

And there’s a special “traffic lights” dashboard for the start ups. “If we’ve got 15 start-ups and I need to have a conversation with my board about how things are going, they don’t want to see 40 pages. So, we’ve developed this really nice dashboard that has all the companies listed and uses a simple traffic-lights system to identify, for instance, how they’re going on sales, on marketing, on product; Excel’s brilliant for this.”

He explains that not having the resources of a large corporation has meant the incubator has had to develop its own solutions – and Excel is a big part of this. “It’s like packages, you take this and that, and then you bang them together and work on them until you get a good outcome. That’s what we do, as we don’t have enough money to buy the whole thing.”

KPI ‘pipeline’
Excel is also used to track KPIs. “We have stakes in 33 start-ups (The Icehouse takes a six percent stake in every start-up “to align it with the business”) that we value every year. Excel tracks all transactions and then works out what our share is worth,” says Hamilton.

In addition, there’s a pivot table that manipulates the data to provide the ice angel investors with a full view of their investments.

We’ve got better at our key performance indicators over the years, says Hamilton. At first, like any start-up, we weren’t sure what business we were in. The dashboards are now used to track KPIs. There is a list, for example, that features customer satisfaction, capital raised, yield (how many people there actually are versus incubator capacity, or how many people are on the programmes).

With, say, customer satisfaction, we have a target of 85 percent and we average 92 percent; and, with our programmes, at 80 percent capacity we break even and at 90 percent we make money, Hamilton explains. But he’s most proud of the unusual KPI “pipeline”, which shows what the funnel of leads looks like at any one time.

“Most KPIs are about looking back, this is about looking forward.” The “funnel” shows how many leads turn into customers. Typically, it’s five to 10 percent, say, 200 leads which generate 20 customers for the SME education programme.

The Icehouse Team

For more information
> The Icehouse
www.theicehouse.co.nz


9/9/28_ex_m

By Johanna Bennett