For Christian Nicolai Thiesen, founder of Denmark-based startup builder Cuttles, tackling the pervasive problem of gender and racial inequality in business is important. By introducing a diversity pricing plan for startups, Cuttles has set out to achieve a more equitable world by using its product to encourage diversity in the startup ecosystem.
“We started learning a lot of the facts around how little of the funding actually goes to women-led entrepreneurs and we felt like we had to do something about this,” he said. “Only 3% of Black and Latinx founders get funding, and the same goes for women founded startups, only 3%. But actually 38% of all startups made each year are started by women.”
In Q1 2019, 83% of venture capital went to all-male founders, despite data from VC firms showing diverse businesses outperformed all-male teams, he said.
For Thiesen, the figures made no sense given the buying power of women and people of color and he thought, “okay, we can do something here.”
Increasing diversity isn’t just the right decision ethically, but is also a smart business move, with research increasingly showing how diverse teams lead to greater innovation, inclusive products that reach more customers and higher profitability.
Cuttles operates as an SaaS platform that helps entrepreneurs develop ideas and build startups for a membership fee. When Thiesen weighed what he could to meaningfully increase diversity in the startup world, he saw his best option as adjusting his pricing model.
“The only reason Cuttles exists is to empower dreamers and entrepreneurs worldwide to build businesses that solve the very real problems the world faces,” he said. “As a privileged white man and founder, I myself am one of the lucky ones. While I don’t consider it easy to get funding to build and scale Cuttles, I’ve never considered it not an option. But for minority founders, it pretty much is.”
In turn, Cuttles introduced diversity pricing that gives founders who identify as people of color, women or LGBTQ+ a year's subscription for the price of one month (a 92% discount) with the hope of supporting more founders through the first, crucial years of venture building.
Thiesen acknowledged the company was running a risk with the model as a new business that wasn’t looking at profitability for at least another year, but said it was the right thing to do, “there’s no doubt in my mind about that.”
“Companies should do something where they are obviously differentiating between people who are in the minority, and, in terms of pricing, give them better offers and discounts.”
Since the age of 14, Thiesen knew he wanted to have his own business. After studying in the United States and England, he returned to Denmark with an MBA and started working at Copenhagen Airports. There, his digital skills, which he’d honed building websites for friends, shone through and he took over the airport's digital projects.
But in his spare time, he dreamt up different business ideas with friends and eventually launched Byrd with his best mate and his brother. The app, which has more than 100,000 users in Scandinavia, connects amateur and professional photographers with news agencies who need photos.
There he did all the development including the verification system and machine learning, “everything we had, I really became a hardcore developer in that position,” he said.
After leaving Byrd, he knew he wanted to continue building something and, on thinking how difficult it was to know what investors wanted when his team first built the app, settled on a digital startup incubator. The aim was to give all the answers to building a startup from scratch, because although the information was scattered around the internet, every piece said a different thing and in heavy business speak.
Launched in March, Cuttles is a place for learning about entrepreneurship, doing business planning and financial forecasts, and preparing investor pitches, and it also offers individual support through online Startup Success Managers. The name comes from the cuttlefish, which has the ability to morph into different shapes and colors using its multiple arms – a flexibility he wants his company to have for the startups it serves. Already the platform has 12,000 startups and 650 paying customers, far more than the 100 expected in the first year.
“We’ve also had big companies contacting us because they wanted to be more in touch with all these startups, it’s been really great," Thiesen said.
Although the model the team has in place right now -- “bootstrapping” with pre-seed funding and natural growth -- is working well for now, Thiesen is on the lookout for a serious venture capitalist that wants to take Cuttles to the next level. With some Series A investment the team would bring in more developers.
Cuttles launched the diversity pricing model on Monday and will be testing its results over the next year, and Thiesen said no matter the financials, the model would stay in effect.
Increasing diversity in the startup world would stay a fundamental part of Cuttles on its mission to empower entrepreneurs, he said. And as a young startup, Cuttles has the ability to build a business model on its desire to create real, lasting change. Thiesen also saw the task as a responsibility, given his own privilege, saying it was on everyone to make change happen.
“We’re just a small fish in a huge sea, so I would really like to challenge more startups and corporates to try out stuff like this too,” he said. “I know that Cuttles can empower minority founders to plan and present businesses that will demand the attention they deserve from VCs, consumers and the world, but if the big players don’t want to play along, what we do won’t make much of a difference.”
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