partnerships

How to Spot a Startup Tourist

Applications for StartupYard’s second round of acceleration in 2016 have closed. Now, we dig into applications, looking at ideas, founders, and how founders talk about and express their ideas.

What we find is always enlightening, but also always an evolving challenge to parse and process.

The Idea vs. The Team

As I’ve written about before, it’s very hard to tell a lot about the scope and clarity of an idea from a narrowly focused written application. An idea that seems obvious might not be; an idea that seems obscure might in fact be a game changer. On the other hand, it can be easy to tell a few specific things about a person.

The way people talk about their ideas can reveal things about them as people. Is the person funny? Are they self-aware? Do they project confidence? Do they display arrogance? These qualities can be recognized in the way a person writes, and in what they choose to say.

But ideas are different. They are open-ended. They bring up questions rather than answering them. Great ideas are not always obvious at first glance, but can become “obvious” over time, after deep reflection and interaction. There is always a danger that a mentor projects their own hopes onto startup founders; thinking they can shape the team around their enthusiasm for an idea. That can create a disconnect between the motivation of the mentor, and the motivation of the team itself. Success and successful mentorship really ends up being about the quality and (forgive the cliché), passion of the team.

Startup Tourism

So what is a Startup Tourist? Put simply, it’s a person who wants to have a startup more than they want to actually do whatever it is that startup does. Startups, if successful, grow into regular companies, with all the responsibilities and daily obligations that come with them. Tourists aren’t interested in that type of success. They’re more interested in the status that running a startup confers on them– the appearance of success, more than the substance behind it.

Experience has shown us that some amazing startups don’t seem that amazing on paper. The passion may be obvious, but the idea itself may not be. Having difficulty expressing what you do, doesn’t mean you don’t know what you’re doing, though. And a big part of our job is to help square that circle, and make startup founders good at talking about their work. We always have to keep that in our minds when reading applications: lack of clarity is not a killer, but lack of passion and sincerity are.

Tourists Can Be Great Communicators

We’ve reviewed, collectively, around 800 applications for StartupYard within the last 3 years. The vast majority of those are clearly not a match for us. Most are poorly presented, and probably also not very well developed ideas.

That’s ok though. We accept around 3% of all applicants, so we expect most not to qualify. And the only way a startup founder can learn is by trying, so we laud those who do apply, no matter the outcome.

What we worry about most are the “tweeners:” the ones who appear to offer a lot of promise, because they are usually very good at talking about their ideas. They have the ability to project passion, but just enough self-awareness to avoid being seen as arrogant or full of bluster. These applications are more polish than substance, but they hide their lack of substance extremely well.

As Paul Graham of Y-Combinator famously said: these are the founders who live by “the rules.” They learn the system (such as it is), and how to talk and act, in order to appear to be what they wish they were- promising startup founders. These founders often know the “rules” better than we do, and well enough to convince almost anyone at first glance that they belong, even if they don’t actually have the passion they need to build a successful business.

And that works for a few meetings. Maybe a few weeks. But eventually, the results don’t match the apparent promise, and the Tourist becomes more obvious.

One of my favorite movie scenes is from a Martin Scorcese film called The Departed (Spoilers ahead).

In the film, a police Captain (played by Martin Sheen), asks a young police Cadet and misfit (played by Leonardo DiCaprio): “Do you wanna be a cop? Or do you wanna appear to be a cop?” This is a question I would love to ask many startup founders I meet. Of course, the irony in the film is that the Captain had, moments before, congratulated a new sergeant on his promotion in the department- and that sergeant (played by Matt Damon), is a mole working for organized crime. The best of us can always be fooled, especially when we are shown what we want to see.

The dream is of course to find a founder who is really good at communicating *and* has a lot of genuine passion for their ideas. The genuine article, in other words. That’s the stuff unicorns are made of, but it is rare stuff indeed. The ugly stepchild of the unicorn founder is the Tourist- the applicant who knows how to play the game, but doesn’t know how to win it.

Spotting A Tourist

Startup Tourist

There are certain things that tourists do to tip their hand, and reveal that their motivations are more complicated than a simple passion to be great at something nobody else can or has done before.

So, here’s my (totally unscientific), list of signs of Startup Tourism. In no particular order:

  • Knows the Lingo… a little too well

Startup Founders learn about seed funds, VCs, valuation, down rounds, convertible notes, equity dilution, and the rest of it as they go along. They have to. These are things you have to become familiar with if you want to succeed as a high growth startup, but it isn’t necessarily something you need to know much about before you actually start. At the beginning, an idea and a team that cares a lot about that idea can get a startup pretty far with minimal wisdom about the intricacies of fundraising and corporate structure.

Moreover, a team that isn’t focused on these “status metrics” is more likely to be focused on what’s really important- which is building enormous value for their customers.

Tourists tend to know the startup lingo a little too well for their own good. This can reveal a focus on the trappings of success, rather than the work involved in achieving it. That’s not always true, but sometimes it is. Good startup founders can always become good at this stuff because they have to. It’s a means to an end.

A Tourist is more likely to ask a lot of intricate questions about funding and corporate structure, but to do so well ahead of the time when knowing these things is particularly relevant. The tourist is fixated on valuation, instead of value. On “benchmarks” instead of forward progress. So focused on appearing to be in control, a Tourist reveals that they are not focused on doing what their startup actually promises to do.

  • Asks “How?” Instead of “Why?”

Mentoring startups often involves throwing a lot of things against the wall, and seeing what sticks. It’s the startup founder’s job to talk to mentors, and to then try and process what they’ve heard, and find out what’s really relevant for them. That means listening to people you might not completely agree with, and then checking what you’ve heard with others, to see what they have to say. It also means listening to people you agree with, and then digging into your own reasons for agreeing with them. It’s about jumping into a swamp of conflicting opinions, and trying to make sense of it all. It’s messy work. It’s frustrating, and it needs to be.

Mentorship is more valuable when the startup founders are asking searching questions. “Why do you think we should do this? Where can I learn more about that? Who should I ask about this?” These questions produce more work for the founders, who have to follow up on what they’ve heard.

When a founder more often asks: “how can I do that?” or “How would you do this?” These are not searching questions, but rather invitations to do the founder’s work for them. They don’t open up new avenues of thinking, and are not so open-ended. It’s like the student in university who asks the professor how many pages the term paper has to be. That’s not information that helps the student perform better and be creative, rather it’s information that helps the student do what is expected. It helps you get a grade, but it will not help you actually learn anything.

A favorite professor of mine once answered by saying: “as many as is necessary.” I took that to mean that the professor would know very well whether the actual ideas a paper contained were worth the number of pages actually consumed.

Searching my memory, I cannot recall a single instance in which a founder who has gone on from StartupYard to successfully raise seed financing and build a growing business asked me how to do anything. But I can recall many instances in which those same founders asked me why they should do one thing, or another. And many more instances when they asked for my feedback on something concrete. Opinions and feedback are generative. Building on ideas and being creative are what matter. There are no gold stars, and no grades in real life.

Figuring out how to do something can be easier than figuring out whether or not you should actually do it. Founders who ask why, are much more likely to get useful answers than the ones who ask how.

  • Talks about Opportunities Instead of Challenges

A few weeks ago, I heard a very funny story about one of our investors. He was a jury member at a startup competition, which is something startup investors end up doing a fair bit. A startup had stated something like: “the market is worth an estimated $100Bn, we aim to capture 5% of that, and if we do, we will be worth over 5Bn in recurring revenues.”

That’s a pretty prototypical tourist point of view. The investor in question had his own brilliant response: “why 5%? Why not 8%? Why not 15%” The implication should be clear enough- the size of the market can be impressive as hell, but the actual dirty work of building a business is not as sexy as talking about money. If you’re focused on getting a slice of the pie, then you’re probably not thinking about building a whole new market. You’re probably not interested in changing the way things work, but rather making the way things work, work for you.

And if the thing that matters most is the market opportunity, then what are you really passionate about? If you’re smart and you work hard, you can make money at a lot of things. You don’t have to found a startup to do that.

The founder that is fixated on market opportunity is less likely to be laser focused on creating value for the people who will actually pay for whatever they provide. That focus on creating inimitable value is everything to a successful and disruptive startup. It’s not about trying to grab a piece of an existing market, but about creating a new market nobody else is aware of yet.

Much more interesting are challenges. What does the market not yet provide, and why is that badly needed? Why couldn’t the market provide it before now? What problem is just waiting to be solved? Disruptive startups tackle the status quo, and change the way people and businesses and the world around them works on a more basic level. They make things that are not just faster and cheaper and prettier, but actually different.

I see this problem as one in which the startup founder is too focused on what they think investors want to hear. They will say their market is growing, and hope that the mere implication of opportunity is justification enough to get funding for themselves, regardless of what they’re actually doing.

When making a case for itself, a startup can be much better served by talking about what hasn’t been possible before, than about what has already been accomplished by others, or things that would happen whether the startup existed or not. Yes, for example, the mobile gaming market may grow by 40% in the next two years, but that’s an argument in favor of investing in that market, not necessarily for entering that market with a specific product. The product itself needs to make sense, and the fact that it’s an expanding market is, perhaps, a bonus. 

Yet I hear this justification thrown out at virtually every pitching event I attend, over and over again. “The market is huge, and we’ll be a part of that huge market.” Yes, and?

  • Puts Their Fate in the Hands of Others

It can be as simple as this- a Tourist is a startup founder who is waiting for something. Waiting to get into an accelerator. Waiting to attract a VC. Waiting to quit their job. Waiting to be noticed. Waiting for the magic bullet.

This is part of what makes selecting startups so hard for an accelerator. We want people who are ready, but not people who are waiting. We ask startups when we first interview them: “What will you do if you aren’t accepted here?” The Tourist will answer: “I’ll try again,” or “I’ll apply to another accelerator,” or,  “I’ll stay at my job for now.”

A startup founder who is passionate about what their doing, and really believes in it, is more likely to say: “I’ll just keep going,” or “I’ll think about why I didn’t make it, and decide what to do next.” The genuine founder is already thinking ahead of the next failure, looking for the next challenge, and not waiting for success to strike them.

Soldigo, StartupYard

Meet Soldigo: An SY 2015 Alum with a New Brand

This week, on our trip to Romania, I caught up with one of our favorite StartupYard Alumni, Mathe Zsolt-Lazlo, known to us as Zsolt, founder and CEO of StartupYard alum Soldigo– formerly known as Shoptsie.

Soldigo has changed their name, but they’re still the amazing team they were when they joined us at StartupYard. I talked with Zsolt about what’s been going on at Soldigo since they left StartupYard last year:

StartupYard, Soldigo

Hi Zsolt, first let’s address the big question: your company has a new name: Soldigo. How did you pick the name, and why did you decide to rebrand?

Hi Lloyd. Indeed, we went through a rebranding so Shoptsie is now Soldigo. We got so many contradictory suggestions, many people told us we should change it and just as many said they loved the old name, but in the end we decided to change it after all.

As a result of many long brainstorming sessions we came up with nearly 100 new names. We did some research and because there is a lack in terms of .com domain name availability, we gradually reduced this number and arrived at Soldigo. We chose this name because it is short and sweet, in tune with the trend and somewhat catchy. Soldigo stands for “go with the e-selling flow”. It is intelligible in multiple languages and evokes optimism and fun.

What have been some of your biggest milestones since leaving StartupYard?  

Soldigo, StartupYard

Zsolt pitching Soldigo at StartupYard’s 2015 Demo Day

I believe our biggest milestones since leaving StartupYard were finding the right teammates and creating the new version of Soldigo. In our industry, technology and business development are often inseparable from one another and this is why we decided to change the platform to an improved version of itself. The new version of Soldigo is more intuitive, easy to use and fully supports the needs of small and medium businesses.

What about your biggest challenges?

Our biggest challenge and joy is to meet the needs of our existing and potential customers who are just as eager to perfect their online stores as we are to improve our service that allows them to do just that. We plan on introducing social selling and create a new plan called Marketing that will offer great marketing solutions for optimized selling.

Tell us what’s new in Soldigo. What are some of your newest features, and what have been some of the biggest changes to the product?

To meet all of our customers’ needs and requests, we added the following amazing new features and updates:

– we improved the product upload as well as the image upload features

– we enabled the possibility to add subcategories

– connecting the store with blogs is also possible now

– we re-thought the Designer and therefore the store owner will have more freedom with it, more customization options (possibility to add background images, more control over coloring the store, possibility to change font types and sizes, so an overall bigger freedom to be creative when it comes to the store’s look and feel)

– new server makes it all work faster and better

You’ve recently expanded your team. Tell us a bit about that process, and about the current state of the team.

The process of recruiting new team members was quite long since we had to make sure that the person joining us represented the same values and had the same goals and was enthusiastic enough to step out of the “8-hours-of-work-a-day” frame of mind.

We created a friendly work environment that is not about long hours but rather about focusing on work when needed and make it efficient. So we looked for people who fit into Soldigo’s team spirit and drive. While developing the new version of Soldigo, we expanded the team with a senior developer and a sysadmin. At the moment the Soldigo team is made up of 5 people.

Looking back, what has been one of the most important lessons for you and the Soldigo team coming out of StartupYard?

The most important lesson after coming out of StartupYard was to “get out of the building”, to engage with our customers and to allow their needs to shape the direction of Soldigo. We are constantly attending as many handcrafters’ fairs and exhibitions as possible and we aim at maintaining a constant contact with our existing customers.

You’re currently focusing on growing your userbase. What are some of the main challenges in doing that, and where do you hope to be in the next year or two?

That is correct. Since we finished the development of the new version of Soldigo, we are focusing on growing our user base. The main challenge of doing this our lack of experience in the marketing field.

Over 6000 customers are using Soldigo currently, of which 12% are generating an average 20-25 sales per day. To grow the number of our customers, we created a marketing strategy, both online and offline, but since we are not experts, we saw that we need help in this area. At the moment we are working with two really good marketing agencies and we got a lot of help from the StartupYard mentors.

The next two years are crucial for us. We want to put Soldigo on the map of the e-commerce world with hopes of it becoming one of the best solutions in helping small and medium size companies to succeed with their online businesses.

How have your ambitions for the company changed since you left StartupYard? Have you revised your vision in a significant way

When we arrived at StartupYard we wanted to reinvent the wheel and we felt that Soldigo was meant for everyone. We were really clueless in how to channel our ambition to get results.

What we learned there is that targeting everyone at the same time is really impossible, and so we chose a niche that would focus our energy in a more targeted way. Our vision became clearer and Soldigo became more consistent, in brand image as well as brand strategy.

We have an open call for Startups closing on September 30th. What would you say to a startup that’s thinking about applying to StartupYard?

I would say that applying to StartupYard was hands down one of the best things we did as Soldigo. It has taught us everything we know today and, most importantly, that you can achieve many things if you have a good team.

It gave us an immense perspective on where we were and also gave us a direction for the future. It was an amazing learning experience that truly defines us to this day and we felt really honored to be mentored by such incredible mentors.

I believe that StartupYard is an amazing platform for startups to grow and to learn and to find their true calling, so startups, do yourselves a favour and apply, asap!