Coffee with Tom Charman, Kompas Co-Founder and CEO

I got the chance to interview Tom Charman, co-founder and CEO of the award-winning Kompas app. He has been a speaker at TEDx, a mentor for both Stanford University and Startup Weekend and has a host of other accolades to his name. Check out Tom’s own website which has a tonne of useful resources and posts here.

We had a chat about a broad range of topics including how Kompas started out and evolved from an idea to a business, the expansion of the Kompas team, applying to accelerators, funding and general advice for those starting out.

In a nutshell, Kompas personalises places to visit to your interests using its algorithms, meaning you can escape from the typical tourist destinations that you typically face when looking for where to go in a new city. Check it out here.

Origins and starting up

RB: How did Kompas start and how did you grow it from what was initially a very small idea to what it is now?

TC: Kompas wasn’t my first time starting a business. I started my first business at 16, making and selling soap online (so dodgy!) before going to university and building a couple of tech companies there. One did quite well, the other one quite miserably.

I was living in Munich and wanted to explore the city but couldn’t do it, there wasn’t anything there that was good enough to help find new spots. There are some resources and blogs but you spend so much time searching for what’s there that you don’t come up with a solution. When you do find something, it’s never personalised to your interests and reviews are 9 out of 10 times fake. It’s frustrating.

Instead of jumping straight in, we decided to see if there was demand for a service that solved this issue first so we built a blog which gained about 20,000 users in around 6 months. To us, this meant we weren’t the only ones who faced this problem and there would likely be demand in other cities outside of Munich. We then brought on a couple of co-founders to build a mobile app, first on iOS, and built it up very basically before moving onto Android. We launched and got the first 1,000 users organically before growing our team and gaining additional funding to further grow the user base.

RB: Is the current Kompas App what you had initially envisaged or have you pivoted at all?

TC: It’s a similar kind of product but a different business model. We initially thought our model would be focused on ad revenue but we realised this wasn’t necessarily sustainable until we had a significant number of users on the app. We decided to move to commercial partnerships so our partners could focus on providing a better customer experience. Design wise it changes all the time, but the core concept is still exactly the same.

RB: How did you go about scaling Kompas outside the initial city and ensure success in each new location?

TC: Most of our team is here (in London), but we have our Head of Community, Julia, in Munich. You don’t necessarily need someone on the ground but you need to have the support.

We focused on social to build up that initial leverage so we made sure people are actively engaged on the app and not just buying users. Once you’ve got those people on-board, you can ask them for feedback and keep them engaged. As long as the app is alright, you can retain those users and they’ll tell their friends.

For us, it also comes down to the cities that we launch in. We look for the cross-fertility between people and the likelihood of them going to one city vs. the other which helps us decide where to launch next city-wise.

RB: How do you look at the traffic between those places?

TC: We have a couple of commercial partnerships, one with a train company and then some open data. It’s about understanding commuter routes, footfall, number of travellers and using this data to come to a solution launch-wise instead of pie-in-the-sky guessing as to where to launch next.

RB: What stage post-launching do you go to the next city?

TC: We try to launch a new city once every 2 months at the moment. We’re aiming to be in 13-14 cities by the end of this year across Europe, largely in the UK and Germany. Once we’ve launched in a city and we can see it can grow sustainably largely by itself, that’s when we start thinking about going to the next city. We could do it much quicker but we don’t want to launch until we have enough data and users to warrant that expansion.

RB: Did you test the initial MVP with a small group of people out first?

TC: We beta tested a few hundred people and got their feedback and realised the things they did and didn’t like. We also have a group on Facebook who come on and give us feedback on new features before they launch, so it means we can work with these users and make sure they’re happy. If we have a resounding problem with this group, it means that the mass users will also probably not like it.

 Tips on starting out

RB: What’s your perception of going to a Startup Weekend, incubator or accelerator? (I would also recommend one of Tom’s own articles on this general topic here)

TC: I think going to a Startup Weekend is a great start as it allows you to spend 48 hours entirely focused on your idea.

We’ve just come out of an accelerator which went really well for us and allowed us to secure a commercial partnership, expand growth in Birmingham and potentially bring on some investment. There’s the opportunity there, there’s the leverage, branding as well as the publicity of you being on it which helps in the short-term for growth.

It has to fit your business. A lot of start-ups apply to everything whereas if you spend more time focusing on 4-5 accelerators you really want to go, you’re much more likely to get into one of those 5 than one of those 20. It allows you to actually spend the time actually researching them and working out if it’s a good fit.

The amount of mentoring and pivoting you do whilst you’re in an accelerator is worth it. We brought on advisors into the company who make up our advisory board and non-execs. If there’s ever a problem, we now have these people on-hand to go to.

RB: A lot of startups have a lot of legal and accounting issues they need help on. How did you get this advice without spending a huge amount of money?

TC: The biggest mistake a lot of start-ups make is not putting together the right documentation on the equity front. A lot of the time, Co-Founders can be friends, but who knows what the situation will be down the line. If you don’t have the right documents in place and a Co-Founder decides to leave, it can bring your company to its knees which happens so often.

We brought on a lawyer pro-bono to make sure it was in place. Even if you can’t afford a lawyer, just put together a basic vested equity structure on paper and you can refer to it later on, if needed.

We also brought on an accounting firm pro-bono until we raised our first round of funding. They took a risk in us by doing the work for free in the hope that we’d stay with them and we have. I’d definitely say to other startups to get this stuff in place. If they can’t do it pro-bono, try to get them to reduce the fees as much as possible, even if it means signing an agreement that you’ll keep them on. post-funding.

RB: Whilst asking for pro-bono work or a discount might seem like an unlikely way to save some money on these topics, there’s no harm in asking. This practice reminds me of the Coffee Challenge, as promoted by Noah Kagan, founder of SumoMe. The challenge essentially involves you asking for a 10% reduction in your cup of coffee from a coffee shop, more details here.

RB: How did you go about splitting the equity in Kompas, should it be equal or weighted to your time in the company or particular skills?

TC: I think every founder is of equal importance. The technical person it is building the technology, the product person is doing the designs and implementing the front-end of the product, operations is doing all the stuff like the finances and keeping the company going. Then you’ve got the CEO who’s focusing on strategy and investment. If you take out one of those people, it would cripple the company, everyone is equally important.

We split the equity on time. The more time you had in the company, the more equity you got in the company.

RB: How soon after you started did you get office space?

TC: For us, we worked out of Google Campus and we then won a competition which gave us 6 month’s worth of free co-working space. We then got funding and moved into our own offices. I think it’s important to have office space and not work from home, so you can split your working / personal lives.

On the Kompas team

RB: How did you go about finding Co-Founders and a CTO? 

In my first business, one of my co-founders did the first designs when I was 16 and we’ve stayed in touch since. He went away and gained some entrepreneurial experience before coming together with myself and Olivia (who I met in Germany).

As for our CTO, it’s a funny story. I was staying in an AirBnB in Europe for the first time ever for a competition I was attending and it turned out I was staying at Doug’s (now Kompas’s CTO) sister’s flat! He was visiting and we got on really well. Serendipity, I guess, a great story for a travel company!

Finding a CTO is difficult as potential technical co-founders have their own ideas as well. We had to pitch to a group of software engineers when we were expanding the technical side of the team, and had to pitch to them as to why they would want to work for us! It made me realise you have got to be a company people want to work for.

RB: Prior to our coffee, Tom had come from a company BBQ where he was the grill man, which is a great example of fostering the company culture to make it somewhere people want to spend time at. 

RB: At what stage was it necessary to bring more people on in various functions?

TC: We needed them the whole time but couldn’t afford it. When we closed off our first round of funding we brought on a couple of people but stayed as lean as possible for as long as possible. As more work came in we needed to scale.

RB: When you decided to grow your team, how did you prioritise the various functions in terms of growing them?

TC: We brought on a Head of Growth at the same time that we brought on engineers. We then brought on marketing guys who would work on the growth side. We are now looking for account managers to work on business development and the partnerships we’ve established.


On funding

RB: When you first went out for funding, how did you get people to buy into your story? Did you have some early stage wireframes or an early version of the app?

TC: We had an app working. We had built an MVP and had users that were retentive. We had also won awards putting us into the media so we were quite a bit ahead than most because we had bootstrapped for quite a while. It was about selling the story, selling the team and selling the vision just as much as it was about selling the product.

A lot of people say shall I go for a pre-seed before I’ve got a product. In the US, you can but it’s more rare here. Otherwise what are the investors investing in? It’s just the team. Those that have raised money for simply an idea are the people who have worked in Google for a number of years to have that privilege. If you don’t have that privilege, build an MVP, test it and make sure it’s a product people actually want and then go out and raise some money.

RB: Did you have guidelines or rules in place for when you would go to investors for funding (such as a certain number of users)?

We had it in the back of our head. You’ve got to make sure people understand where you’re moving and how you got there. We can say we’ve won 4 awards, we’ve been in this much press, we’ve got this many users, we’ve got an app and got a product and achieved it all with no money, imagine what we can do with money.

On general advice

RB: You’ve done your TEDx talks and are very entwined in the start-up scene in London with this venture as well as the other stuff you’ve done. How do you advise people new to the start-up scene to build up their network?

I’m constantly reading and really into AI and machine learning. For me, it’s about doing a PhD in machine learning and taking that forward. It’s about developing my understanding of the technology that continues to grow and becoming a thought leader in it.

You need to build up your own profile because then you can leverage your own profile. You’ve got to focus on your own company but at the same time go out and do talks, integrate with other people and learn from other people.

When I did my TEDx talk I was by far the youngest person in the room, but the amount I learnt from another speaker from IBM was tremendous.

Your five closest friends make up who you are. So, if you surround yourself with people who are doing revolutionary things, the chances are you will as well.

I joined Kairos Society which is for 18-25 year olds who are young, potential world leaders of the future. I had the opportunity to meet all of these people who are doing absolutely incredible things. I also recently joined Founders of the Future. Again, I got to sit around the table with people who are building companies and working for huge companies and are fairly young as well. Constantly involving yourself around those people helps and by building up your profile you get invited to join things like that. People see you’re not just building a company, you’re building a vision.

What’s the one thing Bill Gates will always say? He’s always learning. Never stop learning.