This week we had a conversation with Jonathan Pfahl, Managing Director of Rockstar Mentoring Group, the UK’s largest entrepreneur mentoring firm. Following studies in Applied Economics at the University of Sydney, Jonathan joined American multinational investment banking firm Goldman Sachs as an investment advisor. He then moved to London where he legendarily invested £7,500 in a real estate mentor and over the course of 3 months had bought six properties in London and become a mentor himself.
Cherishing the value of mentoring from his experience in Goldman Sachs and London’s property market, Jonathan came up with the idea of Rockstar, a one-stop shop where entrepreneurs can access successful mentors most relevant to their fields of interest. Since establishment of the first Rockstar group company in 2007, Rockstar has become by far the largest mentoring company for entrepreneurs in the UK. The Rockstar Mentoring Group now includes Rockstar Hubs – which is a dynamic co-working space with in-house mentors for business owners of all sizes and sectors. It is soon to launch its first international mentoring App, has expanded its operations to China, Australia and shortly the U.S, is providing the National mentoring program for the British Governments Innovate UK program, and has just launched its own investment fund inside the Rockstar Hub.
Jonathan left a promising career at Goldman Sachs and moved to London to search for better opportunities in investment banking. It wasn’t at all an easy move and we were curious to know why Jonathan dove into an uncomfortable situation from a comfortable one so far from home.
Jonathan: I came to London because I was encouraged by my father to do so. I followed in my father’s footsteps. I was born in Hong Kong where he was running one of the largest business trading firms there. When I was young he said to me: “If you’re serious about making a career in investment banking or finance you need to be in one of the major cities, Hong Kong, London or New York”. It was great advice. I tried to get an internal transfer for over four months. I got tired of waiting, took the plunge, resigned and came over here looking for a new role within investment banking.
In 2005 when I arrived here I was really struggling to get the job that I was looking for. There’s an old saying: It’s not what you know, it’s who you know — and I didn’t know anyone in London.
I ended up going to a property event where a company was offering access to very successful property investors who had all built multi-million pound portfolios and they were charging us to have them mentor us in building portfolios in London. At Goldman I had a fantastic mentor, I’ve always believed in mentoring and so I paid for my 3 months with that company as well.
It was a fantastic experience. Between 2005 and 2007 I was building up my own portfolio in London and then I became a mentor for that organization. And it was there where I started to understand and learn how to build a mentoring model.
The vision of Rockstar came when I realized there was a large demand for mentoring but nobody was providing it in general business. The vision was to build up a great pool of fantastic and successful entrepreneurs and they were going to be my assets and of course use their market, experience, expertise, contacts, investment pots to support businesses – that’s how Rockstar started. I came to London to be in finance but that didn’t work out so I saw an opportunity and built my first company from there.
£7,500 is no small amount for a budding entrepreneur to throw into a mentoring opportunity. Several startups use that kind of cash to get off the ground. You may be wondering what Jonathan was thinking when he decided to invest in his mentor. What was the logic behind this move: was it simply paying for a little coaching that Jonathan thought would pay off later but that turned out lucky? Was it a leap of faith? Or, was there something more rational and calculated towards Jonathan’s successful mentoring experience?
Jonathan: Yes it was a leap of faith but I understood property, I saw how the market was going. You as the mentee, you have to realize that while you’re going to receive guidance, fasttrack advice, and you can leverage their contacts, you of course have to put the work in otherwise it won’t work. So I invested £7.5 thousand before I saw him but from day one he gave me a number of different things that I had to get done. He told me what he expected of me and I took his advice because I knew what he had achieved. It was a calculated leap of faith but I knew full well that if I was going to make it work I had to be invested in it as well. So I did, and it worked.
For the record, by the end of Jonathan’s mentoring experience he had made a turnover of £45k. Moreover, he had grown to appreciate the mentoring model deeply and learned from the inside how the structure worked. The rest is Rockstar history, but of course there are always big challenges even for great solutions. In the case of Rockstar, one of the challenges lies in the minds of entrepreneurs themselves.
Jonathan: The government did some research about 2 years ago and confirmed that 7 out of 10 established companies have the mentality of, “What is somebody going to teach me about my job that I don’t already know myself?” That’s a challenge because effectively 70% of the SME market don’t believe in mentoring. Fortunately, with a number of government initiatives that we’re involved in, that is starting to shift. Statistics are clearly showing those SMEs that if you do seek that external advice, then you have a 70% chance of growing your business faster.
The other challenge is that all the startups believe in mentoring and want mentoring a lot more than the SMEs but of course there’s initially less affordability. Over the years what we’ve done is that we’ve continued to add various Rockstar products that cater for the different areas inside of the market. Our typical client is someone who is in their second or third year, their team is between two and five people, they’ve hit their glass ceiling, and they really value and want that advice and support to grow their business faster. The investment that we now do as well allows us to attract some great businesses and we incorporate the mentoring into the investment. There are challenges, but we’ve been able to adapt and add new products and services to cater to the different areas of the market.
Jonathan has adopted an approach for Rockstar called REAL mentoring which sets financial goals to be achieved over a six-month period. Because we know that several entrepreneurs would still be skeptical about how much traction and financial growth you can achieve in six months, we asked Jonathan what the secret to big and fast sales is even for fledgling companies.
Jonathan: There are two things you can sell in life: a product or a service. Products are a lot easier to sell because they are tangible. When you’re selling a service, what our model is all about is to try as best we can to show the client that they’re getting something tangible.
In our case, what we set is the goal that they financially need to achieve with us over a six-month period. It has to be at least double what it is that they paid for the mentoring. At the end of it they can see that they’ve made a return on investment. That’s a very important thing for anyone who sells a service. The average client for us pays £3,000 over a six-month period. If we can’t add at least £6,000 to their bottom line then we shouldn’t be mentoring them. We once had a guy generate £150,000 return as a result of just three new contract introductions through the mentors.
The philosophy that Jonathan manages Rockstar with is one of achieving success by surrounding yourself with success. By surrounding yourself with successful entrepreneurs, you can plug into their resources and attain success yourself. This is what Rockstar offers businesses and the measurement scale is based on the bottom line of enterprise: finance. When we come across great initiatives like Rockstar Mentoring Group, we have to ask what curbs the success rate from within. What is stopping even more entrepreneurs from taking full benefit or being successful? What is the most frustrating thing holding entrepreneurs back?
Jonathan: From a funding perspective, it needs to show a proof of concept. It does frustrate me often when I have people who pitch for investment when they haven’t done one key thing: if they haven’t invested in anything themselves which would have led them to achieve proof of concept.
If a business wants to raise 7-figure investment based on an idea, I find it frustrating and I’m sure other investors do too. What we like to see is a business that can very simply prove that with only £10,000 (for example) this is what we’ve been able to achieve so far. If you invest that £200,000 in this company, this is exactly how we’re going to use it to replicate what we’ve already done but on a much higher level. If you can put a presentation like that then you are almost certainly going to find the investor to back you.
Entrepreneurship is hard work and it’s important to learn from the best that you can find. Rockstar has established a brilliant and intuitive model based on accessing the best so that businesses can “stand on the shoulders of giants”, avoid making mistakes and grow more rapidly. Do any of you have successful experiences with mentoring? We’d love to hear what you think the pros and cons are.
Join us and Rockstar Mentoring Group at Business Funding Show ’16 and get ready for your entrepreneurial journey to be transformed by access to the best! We look forward to seeing you there — but don’t waste anytime, get your tickets while they’re available.