One year ago, we set up Macro Hive. It came into existence as we sent out our first email. It contained two notes from me – one on climate change, another on the euro-area – a selection of handpicked macro blogs and academic papers, and a curation of podcasts. It felt a bit like sending your child off to school for the first time. An extension of you is venturing into the wild, and you hope for acceptance rather than rejection. A year on, Macro Hive is thriving: we’ve built a great community, developed multiple business lines and built a nice culture. And here are five lessons we’ve learned along the way:
- Trust is the best capital for a start-up
I never quite appreciated this until I started a business, but people trusting you saves a lot of time and money. What do I mean by trust? Not some higher moral character thing, but simply that people know what to expect from you when they interact with you. This comes from their past interactions with you or your reputation – what people say about their interactions with you. If people trust you, they don’t need to have contracts and lots of conversations to understand your motivation; they take you at your word. You can then get straight down to working with them (fellow workers) or for them (customers).
And having worked in numerous low-trust work environments, I can say that you save a lot of time when you’re not paranoid and questioning everyone’s motivations! A high-trust culture, then, is much more fun to work in – you can just get on the with task in hand. Having now worked with lots of people at Macro Hive over the past year, I can tell that it’s surprisingly rare to achieve a high-trust environment. So, this is something that will remain fundamental to Macro Hive.
2. Don’t get outside investors, get customers
When we first started, everyone told me to get outside investors in our business. They bring you money, contacts and experience. It’s tempting to go down this path, especially when you hear of start-up success stories where the founders and investors made millions. But we held off. It was partly because I was keen to follow the model of Jason Fried’s Basecamp. His whole ethos was self-funding, going slow, sticking to good business fundamentals and building the right culture.
Perhaps more fundamentally, speaking to other start-ups it becomes clear that outside investors’ goals are often not the same as customers’ goals. The investor, especially VC, wants a rapid increase in the start-up valuation and the ability to exit and take profit. The valuations are often a function of the marketing capabilities and charisma of the founders, the investment meme of the day, and the ability to show rapid growth in customer numbers – however defined and however loss-making. For us, it could have easily led to re-defining ourselves as fintech company with alternative data, a blockchain infrastructure, and AI. But winning the VC bingo doesn’t necessarily add value to your customers.
Instead, we focused on our customers – macro investors. Our goal was simple: harness whatever macro intelligence we had to help investors make money. So, we would need to deliver products and services that investors would pay for as they felt it would help them in their investment decisions. Simple.
3. Create an open network, not a closed shop
The whole macro research and advisory space is full of avowedly secretive organisations that apparently have some insights or connections no-one else does. And they can charge handsomely for it. You can’t test their product or see its workings as that would compromise their intellectual property. This murky space seems like a remnant from some bygone era, but it continues to this day. We decidedly did not want Macro Hive to be this way.
Today’s world is all about networks and openness. It’s about gathering insights from unconventional sources and often from outside of the establishment. For all the faults of social media, it has broken the establishment’s monopoly on the distribution of ideas. An ideas-centric company like Macro Hive, therefore, would need to be structured as a network rather than a conventional standalone company.
So, we structured the organisation in a way where it is very easy for people to join our network – whether through our WhatsApp chatroom, Slack workspaces, Zoom calls or podcasts. The technology is there, but the philosophy is key. As soon as you move your mindset away from being closed and secretive to open and sharing, the network naturally follows.
4. Hire for passion not money
This is partly related to passing on VC investors in the business. Once you create the VC mindset in your organisation, money starts to become a motivator for everyone. You therefore need to pay high salaries, dangle the prospect of capital gains and an early exit, and you end up with large negative cashflows. This then requires another round of investors and the viscous cycle continues. Your goal becomes getting investors not customers.
Without money, the only people that want to join you are ones that really have a passion for your firm. It also means you need to offer non-financial benefits – whether that is training for juniors, your network for more senior people or flexibility in work life. We’ve had many super-experienced people who are between jobs work for Macro Hive as a temporary stop on the way to another job. We get their experience for our business; they get to do something while looking for another employer. The same for juniors – many are recently graduated but jobless; they can join us for a while to receive training, and we get their support with our products. The ones who join more permanently are clear on prospects – if the business does well, the spoils will be shared fairly.
5. Don’t sell products, solve customer problems
One of the constant questions for a start-up is how you get revenue. It’s easy to think in a very traditional way: I’ll create a product and then sell it. But the longer you are in the business, the more you realise you are not selling a product but rather solving customer problems.
At Macro Hive we have three offerings, and each solve specific customer problems. Our Macro Hive Prime product tries to solve the problem of curation for macro investors. There’s too much informational noise and not enough signal. The Prime product, which is priced extremely competitively, features op-eds from leading macro thinkers, summaries of academic papers, our podcast show, curations of blogs and other podcasts, and access to our Slack space. There’s nothing quite like it in the market – you have either financial news sites that favour news over analysis, or blogs that are long on conspiracies and hatred of central banks and short on rationality and appreciation of expertise.
Our second offering is what we call Professional. This is our more high-end and focused research product with a twist. It solves the problem of getting a well-reasoned take on the world. It features all my research, opinions, models, trading views and analysis. But the twist is that we capture the insights of our various networks, synthesise the main ideas and share them with our customers. Our customers here range from hedge funds to asset managers to family offices.
Our third offering is what we call Enterprise. This is where large organisations want to create a new research-type product, outsource part of their research function or create their own hybrid research team. This is where solving a customer’s problem is most easy to see. Here we listen to the customer, understand their goals, use our network to staff a team and then deliver the service. An example here is our work with Singapore Exchange (SGX), one of the top exchanges in the world. They’ve asked us to deliver high quality research on various markets for them.
These are some of the lessons from our first year, but what about the coming year? Well, much of it will be down to our audience. What do they want to see more of from us? How can we deliver them the best insights? How can we partner with them to better your investment process? I’ll let you know how it went in a year.
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