Open-Sourcing StartupYard

Last Thursday during our Open-House event, the first StartupYard event of the new season, I announced my intention to “Open-Source StartupYard”. Today I would like to come back to this and share with you more about the logic behind this new initiative.

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Cedric announces the “Open Sourcing” of StartupYard, to include free, publicly available resources, events, and mentorship for local startups.

 

Schroedinger’s Startup

StartupYard is a great resource for the founders who are selected to join the program. They come in and during these 3 full-time months they will learn a lot. I had the pleasure and pride to see the progress of each team and there is nothing more rewarding for me to see them thrive and impress their customers, partners or potential investors.

Still, StartupYard is like a black box. A proprietary solution accessible only to a lucky few. Unless you are accepted to the program, you don’t really know what’s going on inside (even though we do share a lot of this information on our blog). But most importantly, only accepted teams really benefit, hands on, from what we do.

 

Our Mission Goes Beyond our Own Teams

If our mission is to make our region, and our city a place where risks are worth taking, and innovation is not only possible, but required, then we have a responsibility to more than just our own teams.

I want to change this. I strongly believe that if we can help the community at large, it can only benefit the economy and the lives of more people. If our mission is to make our region, and our city a place where risks are worth taking, and innovation is not only possible, but required, then we have a responsibility to more than just our own teams. Being an entrepreneur is one of the most difficult and stressful jobs out there, and you will need all the help you can in order to succeed. It’s not because you have the ability to automate a workflow or a service that people will rush to it to use it, or investors will throw money at you like it’s 1999. You will have to learn how to present it, how to manage it, how to plan it etc. And if you can do that, your ideas can really change the world. Without that, even the best ideas will never get anywhere.

For this reason, I have decided to make some of the knowledge we share and impart during the program available to a larger audience. I used the analogy of the open-source movement because, first I’m a strong believer in this model, having relied on and contributed myself to the open-source movement, and second because this is something StartupYard will do absolutely free of charge. Free as in Free Beer!

 

How Will This Work?

We are going to select a few specific domains in which we think first-time entrepreneurs could benefit from more knowledge and experience. Pitching, for example. Once you have an idea, the first thing you are most likely to have to do is to convince people it’s a good idea, i.e. you’re going to have to pitch. Pitching is not easy, and StartupYard Community Manager Lloyd Waldo and I have already written extensively on this topic, on this very blog.

Last week, during the Open-House event, the audience sat through 8 ninety-seconds pitches, and it was clear that the majority of the presenters could do with more training on how to grab the attention of a live audience and deliver a compelling story. It’s not that hard, and there are a lot of resources out there, but nothing can beat a one-to-one coaching session. Unfortunately, those are not that easily available locally. This is typically the kind of topic we work hard on during the StartupYard program, putting teams through extensive feedback from mentors and the StartupYard team, and this is the kind of resource we are going to make available.

In no particular order, we will run free workshops for tech entrepreneurs on:

  • How to pitch efficiently
  • How to write a Press Release
  • How to use best practices in copywriting
  • How to make user projections
  • How to plan a launch
  • How to make financial projections

 

The final list is not finalised yet but the goal is clear: the more founders we can train on these topics, the more likely they will be to succeed. For me, this is a strong motivator and goal, and we plan to help as many entrepreneurs as possible outside of our regular acceleration program. These sessions will be one-to-one, personalised and free. That being said, our time remains a limited resource, and you will still have to apply for available spaces, but we will do our best to accommodate as many of those interested as we possibly can.

The sessions will start in January. We will post the registration form and the program then. Stay tuned, and I look forward to helping as many entrepreneurs as possible to grow their skills, and discover the ones they didn’t know they had.

 

 

Education Content Platform and StartupYard Alum Educasoft Secures Funding

Educasoft, creator of Hrave.cz and MyPrepApp, content systems for secondary school test preparation, have announced this week that they have secured a 5 figure investment from an unnamed private investor, to focus on the Czech test preparation market. We caught up with StartupYard Alum Vaclav Formanek to talk about Educasoft, MyPrepApp, and the investment process. 

So Vaclav, tell us about Educasoft since you left StartupYard.

Well, as you know, we were one of the few teams who entered StartupYard in the last round with a functioning product, and even some customers. We had been working on Hrave.cz for some time, but we were at the accelerator to build a more “global,” education product, MyPrepApp.

At the end of acceleration, we really just had a prototype, and a good sense of where we were heading next. In the first 6 weeks after StartupYard, we really had to keep working on the product, and prepare our marketing channels, Facebook registration for users (so they could sign up for MyPrepApp through Facebook), and other things that we needed to really launch a paid product. It went from an experiment to a real business in that time.

What I see as the biggest step in development since then was that we opened our CMS to partners. We want to be more than an application, but rather a platform for content creators. We aren’t the primary content creators, so we want to attract content creators by being an easy, effective platform for great educational content, that allows that content to be used by students in an effective, fun, and focused way.

We have developed some potential content partners as well, ranging from regional content developers, to one content creator who is focused on a single university. I really enjoy seeing how the product scales so well to these very different uses.  The content partners we have attracted really know good content, and they are interested in piloting the use of Hrave/MyPrepApp to publish content on their markets. These early partnerships are really important for us in validating this business model.

 

What are some of the difficulties you’ve encountered in repositioning Hrave.cz as a more global product?

Vaclav Formanek talking MyPrepApp at StartupYard Demo Day 2014

Vaclav Formanek talking MyPrepApp and Educasoft at StartupYard Demo Day 2014

Well, Hrave is essentially the Czech local version of MyPrepApp, the global product. It has acted as our laboratory, in a market we know best and can easily test in. The goal for the next 6 months for us is really to learn how to do business in the Czech Republic.

We left StartupYard thinking that MyPrepApp would be a more global product, much sooner. But we’ve learned that we need to spend more time on the local market before scaling globally. We don’t see this is a failure, but to be honest, it was difficult to convince investors that we already had a winning strategy for a more global product, and they had good points. We needed a stronger testbed for the product, to allow it to mature over a longer period. So we’re growing more slowly than we thought we could be, but this change of direction was, I think, still the right thing.

 

Was that a disappointing outcome for Educasoft?

I am a bit disappointed by this, but I chalk it up to experience. It wasn’t catastrophic for us, at all. Our future doesn’t depend on being a global product overnight. We still got to take advantage of the exam season in Czech Republic, and we are still growing. We also got to slow down and build our team more slowly, which allowed us to make some smart hiring decisions. We have recruited some great developers and business managers who we might not have found otherwise.

We got very deep into discussions with a few investors. This process really reshaped the business, and talks with investors did give us good ideas. But it took a lot of time and energy, and we weren’t able to arrive at terms. That was hard, but I’m glad we went through it.

 

Why is innovation so important in the Education field? What are you doing that major publishers like Pearson can’t? 

What I see as most important is that education has to somehow follow the trends in students’ lives. Modern students consume and interact with content in very modern ways. If the  educational process wants to be successful, it needs to be tailored to the way that people interact with the world today. That is not really the way education currently works.

Educasoft is about providing the best educational content possible to each individual student. Not all students are lucky enough to have great teachers, and we hope that technology will fill that talent gap- making good teaching available to every single student. Some teachers are fun and interesting, but some aren’t. We want to bring fun and interesting ways of learning to every student. So our goal isn’t just to reform the education system from above, but to reach students on an individual level, and then do that as many times as we can.

I think when it comes to major publishers, the difference is that they don’t see being fun and enjoyable as an important goal. They only see outcomes: students are statistics to them by necessity, but we think about our products on a much more human level. We are motivated to be engaging and fun, and we are closer to the students, making that possible for us in a way that it isn’t possible for major publishers. Agility is a huge advantage when it comes to innovating in education. We’ve done questionnaires, and they get huge response rates- 10% of our users respond. And the thing that comes out of these is that students want customized study plans, which really stears our development in a very flexible way.

The way we will find success and survive is to be accountable to the students first- not to the system that they inhabit. That is fundamentally different from how major content publishers work. It’s not just about persuading a huge district or a school to buy our content, but about appealing to each student with content that speaks to them. We can communicate also with individual teachers, and actualize their feedback in a much shorter time. So I feel that we are living closer to our students’ real needs of today. That’s not something a major publisher can do, or even has a reason to do.

Vaclav Formanek, getting passionate about education.

Vaclav Formanek, getting passionate about education.

 

Let’s talk numbers! What kind of traction does MyPrepApp/Hrave have? 

August was the first month from which we have real data. 1,100 registered users, which is 6% of the target group for Hrave.cz. 20,000 students retake maturita exams in September, and we got 6% of them, with a 2.5% conversion rate. We were hoping for better, but we learned a lot from that first push.

Now the new school season has started, and Hrave has 10-15 new users every day, about a thousand since September. The numbers are still pretty small, but we’re improving our conversion rate between visitors and registered users. We’ve been able to track our website changes and leverage them to significant increases in the conversion rate. We’ve also established a really good track record for technical issues- we haven’t missed any sales due to technical issues at all.

Visit time averages for all users was over 16 minutes since September, and we have a 40% returning user rate, which we are really happy with. What I also see as a good thing is that we’ve started learning how to study user behavior, and increase our conversion rate. We’ve established some gamification elements to sell licenses, and we’ll keep perfecting that.

We’ve also learned a lot about A/B testing for email marketing, and we’re in a much better position now. This is how lean startup methodology works- we meet every week, and we always start with 10 key metrics. Everyone in the team has to see how they “move the needle,” and influence the metrics in a positive way. It’s very motivating.

 

You recently closed an investment. What has been the hardest objection to answer with your investors? How have you solved it?

Our first investor was interested in how we were planning to succeed on the US market. That was a hard thing to tackle for us, and it led to us taking this different approach.

Our current investment is mid-five figures, and the terms were much better than with previous investors that we talked to. He really believes in us, and that has made this process relatively easy. Maybe that also means that our current plan makes a bit more sense, or is a bit more realistic when it comes to a real chance of achieving our goals.

 

Where do you see yourselves in 6 months with Educasoft?

There are 3 big goals for us in the short term. First, we are developing a “multi-player arena.” Imagine Mortal Kombat, but with a study prep angle. We think that will have great viral potential, and it’s something we are exciting to test.

Second, we want to leverage the content we already have for content marketing, to generate more traffic for our paid product. Good interactive content glossaries that are focused on explaining of key terms any student need to know to pass a particular exam are lacking in the Czech market.

Third, the tailored study plan we mentioned early. This is, I think, going to be a really killer feature. We’ll be able to convert many more paid customers if we can create an easy-to-use, intelligent test prep plan, based on actual student needs.

We also want to broaden our content base with new courses and content, including grammar school admission tests for younger kids. We are also working on a pilot program for the Polish market, because of the similarity of the test prep system there. To help us grow, we are testing affiliate marketing and content marketing strategies.

We are looking to get mid-five figure revenues within 6 months, and we have an ambitious goal in that regard. We want to nail down the Czech market fully during that time, and be in a great position to scale to nearby markets.

Ondrej and Vasek taking a break on the TechSquare swing set.

Ondrej and Vasek taking a break on the TechSquare swing set.

 

How did your time at StartupYard have a positive impact on your direction as a company?

We came to StartupYard with just a prototype and dreams. During the program and mentor sessions, we learned a lot about how to shape our dreams into achievable plans, and how to present these plans to other people in a way that makes them both attractive and realistic.

StartupYard had a very inspiring atmosphere. The fact that you’re there every day meeting mentors, who “made it” and you are surrounded by other teams who are just “making it” makes you believe that you will succeed in the same way.

 

Which of the StartupYard Mentors has been most helpful to Educasoft, post acceleration, and why?

We have been in contact with a bunch of StartupYard mentors who have been helping us with fundraising. Director Nikola Rafaj is one person who was extremely helpful and supportive for us during the investment negotiation. In the last weeks we have been consulting about investment terms on almost daily basis and I am sure It would have been much more difficult for us without him. Thank you, Nikola!

StartupYard Mentor Philip Staehelin: “Rapid Change Creates Opportunity.”

Philip Staehelin is one of StartupYard’s most popular mentors, and a very long-time Prague based expat, with experience in a diverse range of businesses. We caught up with him recently to get his take on mentoring with StartupYard, in advance of our Accelerator Open House, taking place on Thursday, Dec. 4.

Philip, you’ve got an amazingly varied background and career. Swiss-American, born in New Zealand, educated in France and the US, and based now in Prague, you’ve been at A.T. Kearney, T-Mobile and UniCredit, and you’ve invested in startups and real estate. What inspires you to stay in The Czech Republic?

I’ve been based in Prague for the past 20 years. My wife likes to think I stayed because of her (she’s Czech), and while I don’t reject that view (openly), the more well-rounded answer is that the Czech Republic is a dynamic place with a very high standard of living. Obviously, things have changed tremendously since 1994 when I arrived, but that’s been part of the fun. Rapid change creates opportunity – and with a strong drive and lots of hard work (and throw in a dash or two of creativity) – I was able to capitalize on the opportunities that came my way. It’s been a fantastic 20 years.
Tell us a bit about your entrepreneurial ventures. What have been your biggest successes and failures in that arena?

A: I founded my first startup while I was studying at INSEAD in 1999. Four fellow MBAs joined my team, as well as the CEO of the investment bank where I used to work. I thought we had a killer team with the perfect concept. We raised some angel financing so we could launch the mixed offline/online, PC-based, ad-serving product… when the internet bubble burst. The business model became rather toxic from one day to the next, making further progress nearly impossible. I shut it down, returned 70% of the money to the investors, and eventually sold the IP a few year later – more for closure than for money. The bubble bursting certainly wasn’t the only reason we failed, but it’s a nice excuse. I learned a lot of valuable lessons in that first venture, even if it didn’t make it too far.

In terms of biggest successes – I would briefly mention two. #1: I bought a house in 2000. After fixing it up and living there for a few years, I ended up tearing it down and built 4 terrace apartments on the lot. The house won the Gran Prix of Architecture award for 2008, and the project ROI was fantastic. #2: A more traditional startup entrepreneurial success is Video Recruit (www.video-recruit.com). I founded the company with a partner nearly 4 years ago after coming up with an idea on how to revolutionize the recruiting space. The real coup was finding the right partner (now the CEO), and together we put together a solid core team, raised the early stage financing and developed a solid rollout and expansion strategy. The company has gradually built a global presence, and in November 2014, the company secured EUR 1.5m in new financing to help scale up globally. It’s a work-in-progress, but it’s an amazing company with huge upside potential. I believe it can become one of the true Czech startup success stories.

What do you get out of mentoring at StartupYard?

A: Mentoring at StartupYard is really fun for me. I love interacting with the teams, hearing the ideas, critiquing the strategies and business cases, and feeling the energy of people with creativity and passion. I also like to see how the teams engage with my ideas and challenges. And finally, in the cases where all the stars align, I invest in a team – the most recent being Gjirafa, the Albanian search engine.

What value do you feel your mentoring provided to the teams you’ve worked with?

I’ve worked in many different industries in many different roles, so I can bring a big picture perspective when necessary or dive deep and challenge the business model, business cases, or commercialization strategies. Some teams need guidance in defining a real sales channel strategy, whereas others need help with building a solid business case that will speak to investors. In some cases, I’ve pushed teams to completely rethink their value proposition – using what they’ve created but coming at it from an entirely new direction. I make what I hope are helpful suggestions, supported by logic, experience and intuition… and of course, teams are welcome to challenge me back or ignore the advice altogether. At the very least, I hope to prepare them for the hard questions potential investors will ask in the future. Overall – I must say I’ve had a warm reception from every team, every time.

PhilipStaehelin,generálníředitelCCSaTomášZahajský,manažerprovelkézákazníkyrtxt13368

What skills or tools do you feel the teams you’ve mentored have lacked most? What do they need to learn?

To generalize, most teams are very small and by definition they lack some skills or tools as they get started. But if we go beyond this obvious statement, I think that teams don’t necessarily lack skills or tools per se, but rather they simply lack business experience.

For instance, I’ve seen a lot of teams that lack a clear sales strategy or lack an understanding of how difficult and expensive the sales process will be – especially in B2B concepts that are too complex for online sales or telesales. The ideas can be great, the management team can be strong, the technology solid… but some concepts will require a door-to-door sales force, with long sales cycles, and sales teams that will need to be properly managed and incentivized. This is often a step that has not been properly developed, but it’s a key step when developing a business case.

I’ve also seen a lot of teams that have a very difficult time putting together an investor pitch. Getting them to boil down their concept and value proposition to a few, easily digestible but stimulating slides is extremely challenging. That’s often hard for seasoned professionals to be honest, so helping a team to think more from an investor’s perspective can be a good starting point. Startups simply need to learn to summarize their amazing ideas properly – not providing too many unimportant details and making sure the key value is clearly visible.

Have you stayed in contact with any of the teams from previous cohorts? If so, what prompted you to go the extra distance?

I usually follow up with a handful of the teams after my official mentoring engagement is over. I’m usually curious how they’re developing, I want to know if I can be of any more help, and I also may want to know if there’s the potential for an investment.

Accelerators are a really recent development. If you were yourself at 25 and had a project, would you apply for an accelerator? Do you wish now that a StartupYard had existed when you founded your first company?

I think the concept of accelerators is fantastic – and I absolutely wish they’d existed when I launched my first company. Of course, there will always be startups that don’t need an accelerator – especially those startups with more experienced teams. But for the majority of startups with young, highly motivated, inexperienced teams, the value that an accelerator can add at the early stage of a company’s existence (or pre-existence) can be critical. The accelerator can provide that extra impetus to a team that will give them the confidence and the tools necessary to have a real chance at creating a successful company.

What is the one piece of advice that you seem to give the most often to young entrepreneurs, and why? 

Although I always tailor my advice to the specific challenges the entrepreneurs face (and I definitely want to avoid sounding like a broken record), I guess the one piece of advice that does surface more often than not regards the definition of the core value proposition. I referred to this earlier, but to put it succinctly, many teams have a hard time developing a conceptual elevator pitch. Spending the time on this exercise at an early stage is always time well-spent in my opinion, not only because you might get the chance to pitch the concept to an investor or strategic partner at a chance meeting, but even more because it helps to crystallize the essence of what the team is developing, so that the team itself will be able to understand where it needs to focus. This can be hard – especially for technology focused teams where there can be a disconnect between having a cool platform and serving a real need (or “scratching a real itch” as I like to put it, which leaves more room for meeting unrealized needs). When the teams find themselves under stress and worry about resource and time constraints, they can refer back to the elevator pitch (in essence, the blueprint of their business) to make sure they’re going in the right direction and not on a tangent. I’m not saying teams shouldn’t pivot – many teams should pivot – but that decision needs to be explicit, and not just an accidental drift into a new strategy. So the bottom line is: “Know where you’re going, and know why you’re going there”. 

Meet the 2014 Founders: MyPrepApp. Motivation, Not Information.

As we continue to introduce the Founders from StartupYard 2014 and their products, we bring you Vaclav Formánek, Founder and CEO of Educasoft, maker of MyPrepApp, a motivational planning device for exam preparation. 
Vaclav Formanek, getting passionate about education.

Vaclav Formanek, getting passionate about education.

Vasek, tell us about MyPrepApp, and Educasoft.

MyPrepApp is a mobile and web application that helps students to achieve on their important exams. It’s a way for students to avoid the stress of major exams without avoiding the actual studying: it gives you a reason to study, and it makes the process fun, and, we hope, a lot less painful.

Did you have trouble studying as a kid?

I was a kind of nerd as a kid. I started to have some problems with studying at high school and university, as I found there were much more interesting things to do than studying.

I started this project with my best friend Ondřej Menčel (Ondřej is CTO of Educasoft) more than two years ago. We loved playing games and we were fascinated with their motivational power. We were asking ourselves a question: if games are so cool that they motivate us to spend hours and hours solving problems in a virtual world, couldn’t we use some of their power to motivate ourselves to do real things, such as studying?

I was never a good studier. I guess that’s the typical experience, but it creates a lot of stress. I couldn’t ever decided what the important stuff was, and how to prioritize when I was studying. So I would procrastinate, and end up cramming for the exam at the last second out of panic. Everybody’s had that experience right? Studying was boring and nothing motivated me to start early. Have you ever had that dream where you show up for a test, but you aren’t prepared, and you don’t know what to do? That’s our inspiration.

MyPrepApp is molded out of our personal experiences. It creates a tailored study plan for exam preparation, and uses game rewards and support of friends to enhance students´ motivation to follow the plan and reach their study goals.

When I am saying “we” I am talking about our company Educasoft. Educasoft is a team of people who want to provide students a better way to prepare for exams.

Ondrej and Vasek taking a break on the TechSquare swing set.

Ondrej and Vasek taking a break on the TechSquare swing set.

Your team has already launched and generated revenue with a similar service in the Czech Republic: Hrave.cz. How did Hrave become MyPrepApp?

Well, we launched “Maturita hravě,” our first product, in preparation for the Czech exit examination, just a few days before the exam actually took place. So it was really a baptism by fire. It was just a last minute thing, so you can see a pattern here!

But, we were really surprised by the results. Within the first week, more than 5000 students tried out Hrave, and feedback was mostly very positive. When we were thinking what to do next, we decided to focus on what was crucial for passing the exam, and what’s really missing from existing products for exam preparation: tailored study plans and enhanced motivation to study. User feedback showed that the main problem with studying wasn’t informational, but motivational. This became the basis of the MyPrepApp model.

 

The education technology field is crowded. What makes MyPrepApp a potential stand-out in your thinking?

We take a different approach towards studying for exams. We see achieving on exams as the same type of goal as, for example, being able to run a marathon or losing 10 kilos, and we think we can use similar methods to help people achieve these goals. That´s why we are inspired by successful fitness and running apps such as Endomondo.

gamifikace plan

We are focused on students with low self-motivation. Students who need a study plan and who need to be intensively pushed to follow it. We think that this group of students has been ignored by existing exam preparation products. Most of these, like Kaplan Test Prep, Magoosh, or BenchPrep just assume the student is motivated from the outset… but we know that isn’t the case.

Our goal is to be the best preparation app for those students – the ones who need someone to tell them what to study and motivate them to do so.

What are the technical and business challenges you think you’re going to face in the next year or so?

The big technical challenge for us is creation of the study plan. We take it very seriously, as by recommending what students should study, we become partly responsible for them and their results. To be able to create a good study plan, we need to combine knowledge from many different areas – from the perfect knowledge of tests to the psychology of learning.

As for business challenges the biggest one will be to entry the US market. I think we will need a business partner to do it in the most effective way.

What strategy are you pursuing for bringing the platform to a global market? How will you secure and grow a strong content network?

Tom2

We have been developing the platform itself to be content independent, so it can be used for most of standardized exams, no matter which system they are for, in Czech republic, Poland or the US. While the exam systems are very different between different countries, our approach can remain constant.

As it is quite easy for content creators to use our platform, we can choose the best strategy for getting the relevant educational content for different countries and exams. Similarly, we can choose the best strategy to market MyPrepApp in different countries. We are now in the process of deciding for which countries to find strategic partners, and in which we can branch out on our own.

Which of the mentors at StartupYard have had the most profound impact on Educasoft during the past few months? How has the accelerator been for your team?

Generally the mentor sessions have helped us a lot to make our plans more precise, and prioritize the next steps. Roman Smola (Founder of Glogster EDU) had amazing knowledge about how to be successful in the US market with educational products. Vit Horky (CEO of Brand Embassy) has a really interesting approach to business development, that we learned a lot from.

Unfortunately I was the only team member who could atend most of the program during the first month of the accelerator as the rest of the team had to stay home working on the app so we could launch it as soon as possible. Though we find the accelerator very useful.

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Meet the 2014 Founders: Gjirafa, Albania/Kosovo’s answer to Google

In our continuing series, we are introducing the StartupYard 2014 teams in individual interviews with their founders and key members at the accelerator. Here we introduce Gjirafa, in the words of CEO and Founder Mergim Cahani, of Kosovo. 

 

Mergim, how would you describe Gjirafa in a few words?

It’s an awesome animal with a long neck :laughs:.

Gjirafa is a full-text web search engine and a news aggregator specialized in the Albanian language. Gjirafa will bring relevant information that will be easy accessible to over 12 million Albanian speaking people worldwide.

So it’s Google For Albanian Speakers. Isn’t That Job Already Taken (by Google)?

You could say the same thing about Seznam or Yandex (the Russian search giant), but they’ve thrived in competition with Google. That’s a great model for us moving forward.  Competition between Seznam and Google have brought better results for consumers in the Czech Republic. Google doesn’t own the internet, and it shouldn’t.

And no, we aren’t Google. We have something that Google does not have. Gjirafa has access to local data, understands the market, and has been developing technology for full-text search in Albanian language. That’s something no one else has ever done, including Google.

Albanian stands alone as a language with no relatives.

Albanian stands alone as a language with no relatives.

Gjirafa is turning quite a few heads with our mentors at StartupYard. Why do you think that is?

Our team is built to impress, with a very strong business and academic background. Three founders have a combined 30+ years of experience, one previous successful startup, four masters degrees and one PhD. The advisory board features prominent figures in web search and management, Prof. Torsten Suel and Prof. Jay Nathan respectively.

We are very happy to be getting so much positive attention, but important to note is that mentors’ inputs and constructive feedback is shaping our product and company further. From day one at StartupYard our value proposition started to get better and better thanks to mentors’ feedback. The reason why most mentors and investors are interested, we think, is that our project has the prerequisites to make it promising: a strong team, an excellent market potential, and the technology – specifically our differentiating product features.

Mergim Cahani: Founder and CEO of Gjirafa

Mergim Cahani: Founder and CEO of Gjirafa

What brought you to StartupYard? What have been the benefits for you, so far?

I am certain that StartupYard is de facto the best accelerator that our team and project could have picked. In fact it is the only accelerator that we wanted to be part of (within the context of this project). It has just about all the ingredients of other accelerators, including the ones from Silicon Valley, and then some – that directly gives us better opportunities and increases our chances of success.

Mentors, investors, angels and VC’s, involved with StartupYard can more easily comprehend the potential of our project at our targeted market than other investors from other geographic areas. There are great similar success stories in the Czech Republic, and some of these investors are involved directly in those projects (www.seznam.cz is one example). They understand our product, they recognize its potential, and have a clear idea what it takes to reach our goal. This way, they can provide feedback that is so vital to company success, and some have already shown interest to be part of this journey.

Where to start with benefits of StartupYard :laughs: We love Prague, StartupYard at TechSquare has an amazing working environment, great people, a lot of events, and, can’t forget,  great Czech beer. As far as accelerating our project growth, we have meet some industry leaders, Chairpersons, CEOs, and investors from world leading corporations, who really helped shape our product and increase our value proposition immensely. Also there are a lot of perks, to mentioned one: we are en route to becoming a BizSpark plus company (that is around $60,000 in azure credit that we were planning to spend). Last but not least, people who run StartupYard know their business- they have a proven track record and experience that was evident from day one.

left: Cedric Maloux, Director Startup Yard. Right: Mergim Cahani, Founder CEO, Gjirafa

left: Cedric Maloux, Director Startup Yard. Right: Mergim Cahani, Founder CEO, Gjirafa

What are your near-term goals for Gjirafa? What products and services will be part of the ecosystem at launch?

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Our near-term goal is to launch within two months. We are planning to include a few “elect” services at the beginning. That means a full text search, news aggregation, a transport scheduler for Kosovo, Albania and Macedonia, weather widget, and Albanian web facts. All these services are one of a kind, as they currently do not exist anywhere. The obvious exception is text search, where Google is a player, but we think we can do a better job, as we are focused only on one language and one specific segment of the web. That’s worked for Seznam, and we think they’ve shown us the way to success against the Google Goliath.

How about your long term goals?

Our long term goal is to become the front page of the Albanian speaking web. To be synonymous with “Internet” in the Albanian mind. If you speak Albanian, when you open a browser, it will open on www.gjirafa.com. We will provide highly relevant services and ease of access to information that is geographically localized and based on the Albanian language. Gjirafa will be more than just a useful search engine, it will be everywhere for everything. I will not speak to specific services that we plan, but I can tell you that there is a full list on queue that we are prioritizing; each one of them more valuable than the next.

As a sneak peak, enabling e-commerce in Albania and Kosovo, at this moment, tops the list of our long-term goals. Replicating the platform to other Balkan peninsula countries, is also a viable option.

You’ve mentioned developing a unique search engine for the Albanian language. Can you tell us about the development process?

It was fun! :laughs: That may sound extremely nerdy, but I don’t mind. It was really fun.

Working on this from Kosovo was a different experience than the time I spent in the United States; where in my last job I worked in a typical corporate environment. Previous to that I was in Academia, and being able to work full time on a project that I loved, what can I say? It was thrilling.

I turned one bedroom of the house into an office (this startup was luxurious; no office garage)! I used a bit of my prior experience with developing large-scale full search engines, from my Masters program at NYU Poly School of Engineering, and the very valuable help of my mentor Prof. Torsten Suel, to create all the pieces needed for the Gjirafa engine; multi-threaded crawler, indexer, query processor, and a few things in between. I developed a prototype that was not the best out there, but it was good enough and I was happy with the outcome.

The biggest limitations at the beginning were hardware and bandwidth, plus latency, and occasionally an algorithmic problem that kept me up at night. Later, two friends joined me as co-founders, and now we are working on making the engine even bigger and better. One co-founder Ercan Canhasi, PhD, is working on the search engine, while the other co-founder, Diogjen Elshani, MS, is working on the business development side.

Why do you think competitors like Google haven’t focused on Albanian speakers,

Google hasn’t ignored the market completely. I think they’ll regret their absence.

The scalability of Google allows it to fit almost any market given enough data. But there are two problems here (1) currently there is not enough data for the Albanian language on the web, and (2) the Albanian language is one of the most lexically unique language in the world. Google can’t search something it doesn’t have; it can’t index information that currently does not exists on the web. As far as the language goes, Albanian is one of the a few languages that does not derive from another language; it is a branch on its own. Processing a language (intelligently), means some knowledge is needed for that language. Linguistic research in English, and for a lot of other languages, exists. There is almost no linguistic research for Albanian that applies in this context. We are currently researching and developing Albanian grammar and syntax for NLP.  We have done the groundbreaking work that will tie Albanian speakers together online, through their language.

Kosovo’s political situation has undoubtedly held back business development in the region. Do you see the situation as improved enough for the region to compete on a level with the rest of Europe?

It is true that the political situation in the region has set back development. But things have started to take a turn, and Kosovo and Albania are becoming emerging markets especially in technology development. Based on our web mining data, the Albanian web is still in the early stages of development, but it has doubled in the past year and it is continuing its growth rapidly. That might sound like not much, considering that the whole size of the web increases at the same rate, but the difference is that the Albanian web has been expanding its core economic value at a much greater rate than the average. It is developing, and that means there are enormous positive gains to be made across a huge range. The rest of Europe will not see its web experience improves by 200% in the next 2 years. Albania and Kosovo will see that kind of improvement.  This web infancy is one of the reasons why the market is not penetrated by global companies, which makes it a logical reason why our project represents a great opportunity right now.

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What’s your general strategy for marketing Gjirafa? Google has name recognition in search all over Europe. How can you compete with that position?

Our position is with the unique services that we provide for users that Google, and other competition, do not. People need information, and currently can not get it online, and we feel that this market has been left behind – but they will be able to find it on www.gjirafa.com. Also, we will provide a targeted platform for merchants that will enable them to reach their customers. That aspect of the online economy is completely absent in Albania/Kosovo. Can you imagine that? It’s 1999 in online advertising there. Imagine what that means for the future. Our marketing strategy is diverse and a combination of several channels. Without going into specifics, we have a few marketing strategies planned for direct and indirect marketing.

 

Gjirafa is planning to launch its full text search engine in July of this year. 
You can connect with Mergim via Linkedin. 
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Irena Zatloukalova: Keep It Simple (For The Media)

StartupYard Mentor Irena Zatloukalova

StartupYard Mentor Irena Zatloukalova

Wednesday, startup teams from StartupYard spent the morning and most of the afternoon in PR training. PR and internal communications manager Irena Zatloukova,  of Seznam, grilled each of the teams for several hours, walking them through the experience of having to pitch their companies, answering uncomfortable or difficult media questions, and crafting and selling a narrative to the media. Here were some of the takeaways from the session:

Journalists are People Too

Irena Zatloukalova should know something about journalists. As head of PR for Seznam, she deals with all of kinds. The most important highlight of all of her experiences was this: journalists are people too. People know when they’re being treated fairly. They generally know when you’re lying, or when you’re not being completely honest. They know when they’re being used, and they resent it the same as anyone would. They also respond to positive inputs in all of the same ways that other people would: praise, trust, caring, and interest inspire journalists just as they inspire others.

Understanding Conflicting Motivations

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Irena and Cedric kicking off the workshop

Zatloukalova pegged the sometimes tense relations with journalists, especially among entrepreneurs, on the conflicting motivations that publications and their editors, and entrepreneurs have. As an entrepreneur or as a company, there’s a tendency to want to carefully craft a journalist’s take on your activities, and push a specific, self-serving narrative. At the same time, reporters have to justify, to their bosses and their readers, writing about a given company, or a given product. Often the interests of a journalist and a business are not perfectly aligned, and tension arises when a PR manager or a CEO is not able to accept those differences amicably- when the representatives of a company can’t respect the position a reporter is in. PR reps can form the destructive habit of “blacklisting” or cutting off disfavored reporters and publications for not toeing the company line, and they may also be tempted to distort the truth, or to lead journalists on with misleading intimations or false facts. This is a symptom of expectations that would be impossible to meet: that reporters be an apparatus of marketing, rather than a medium and means of communication.

Building a Story

 

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Team Evolso gives a mini press-conference

And to avoid these traps of poorly managed expectations and conflict, Zatloukalova talked about “building a story.” Story building is a way of approaching communication with media, that keeps in mind that media will always form its own conclusions based on the information provided, and the impressions of the journalists themselves. Thus, 3 elements are key to getting media to do what you need it to do, and Zatloukalova suggested that startupers ask themselves these three questions:

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Team Girafa in particular wants some of Seznam’s secret sauce

Is it News?

Is the story actually of interest? Is it something unique? Does it have import for the readers? Just because you want the media to talk about you, doesn’t mean they will. Many young companies can be tempted to see any information they give to the media as an enticing gift, when in fact they offer little of real substance or interest. It has to be news.

What are the Details?

This part is about curiosity. Facts make the story real, and they are the juiciest part of the story. Providing the media with facts makes the story real for them, and gives them something to present to their readers. Without statistics, exact figures, dates or percentages, your story’s context can be unclear. How important is this news to you? To your market? To the reader? To competitors? What do the numbers actually mean? The details lend credibility, and offer the media something they can use to justify their story as important, and meaningful. Without facts, there is no story.

Is This a Trend?

Finally, what does this piece of news say about something bigger than your company? Reporters love to find and tell stories that demonstrate a pattern or an emerging condition in the market, or in society in general, that has not been fully described before. If your product is beating a competitor that was thought unbeatable, this could be part of a new trend. If your users are interested in your product for a novel reason, that too could form the basis of a new and noteworthy change in the way things work. Trends can be small, restricted just to your market, or even to your own company, or they can be big; saying things about society, about your country, about the future, and about technology, art, and the economy.

Not Making Journalists Think

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Zatloukalova also stressed the “Art of the Soundbite,” or the unique framing of a particular narrative your company is pushing, which expresses itself well in just a few words. The object when addressing the media is to speak in terms that are *evocative* without being too specific or conditional. The more a journalist evaluates what you say based on its internal logic, rather than on his or her own biases and experiences, the better of you are. So make these arguments and viewpoints interesting and memorable.

She gave examples like Apple’s “The World’s Thinnest Notebook,” soundbite for the introduction of the Macbook Air, and Cedric Maloux, our director at StartupYard, added his favorite, also from Apple: “1000 Songs in Your Pocket.”

Don’t Describe, Evoke

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All the teams had an opportunity to grill and be grilled. No one was spared in this workshop.

Evocative soundbites are those that make a strong statement, which forms a clear image in the mind of the journalist, which he or she can pass on to a reader. This process is one of positioning, as well as promotion; Zatloukalova gave the example of Seznam itself: pointing out that Seznam doesn’t speak in terms of itself alone, but evokes the images that reporters are familiar with, to contextualize the company: “Seznam: the only company in Europe competing on a level with Google,” or simply “Seznam is the Google of the Czech Republic.” These sorts of statements are strong, can be backed up with facts, and are easily understood and repeated. The simpler a statement is, the greater a chance it has of finding itself repeated and used again. As an editor, Zatloukalova will often take the writing of a marketing copywriter or a fellow PR rep, and remove, to their great frustration, all of the adjectives from the piece. The point in this should be clear enough: what is important is not your opinion by itself, nor how you wish people to see things, but rather statements of fact that can be argued convincingly. You can tell someone that your app is wonderful and innovative, but why should they listen? People listen to surprising and unexpected statements- even statements they don’t necessarily agree with.

One of the CEOs at the workshop voiced a doubt about this strategy. “The Macbook Air wasn’t the thinnest notebook in the world. What happens when your claim is only arguable?” But Zatloukalova pointed out that arguments of that kind aren’t particularly bad, for an established company or for a new one. If the media is arguing over or critiquing your claims, you’re in control of the conversation at a basic level: they are already talking in terms of how you see yourself.

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What “Mentor Driven” Means To Us

What an Accelerator is For

A journalist visiting TechSquare this week asked me an intriguing question. I say “intriguing,” because as it was coming from an outsider to this business, it demanded a single answer to a question that is not often taken by itself: “what is a tech accelerator really for?” That kind of question demands an answer that applies to all parties: to the investors, to the startups, and to the general public. What do we do that adds value to the world in which we live? The answer I arrived at was this one, and I think it covers all of that: “a startup accelerator helps to manage, facilitate, and encourage intelligent risk taking.”

As Techstars has explained about their own roots, the current mold of accelerators was formed in reaction to risk aversion. Angel investors and VCs were, from about 2002 onward, inflicting far too much pain on startups to prove their worth before securing seed investments, which probably led more than a few worthy startups to stall out for lack of access to funds. The tech crash in the early 2000s had soured many investors on the market, and introduced big barriers to entry. Imagine a world in which Facebook didn’t have the money to get to its millionth user that first summer. This was a real danger at the time. But today,  a service that has added half a million users in a period of several months would be unlikely to have that particular fear. The accelerator movement has been an important part of that shift away from risk aversion, to more intelligent risk taking.

What “Mentor Driven” Means

 

 Over the past month, our teams have met with nearly 40 mentors each. That’s 40 meetings with entrepreneurs, professionals from within their areas, and CEOs of companies that have been in the position that our founders are in now. There have been so many meetings, that many of the teams have had moments of frustration with the process. One of the CEOs told me last week: “They all ask me similar questions, and I haven’t had time to do the things they’re all telling me I should be doing.”

Yes, it can be frustrating, but we also view that feeling as somewhat positive. A founder of a young company who is very aware of the potential problems he is facing is more likely to take a realistic approach to solving those problems, instead of avoiding them. He may be tired of hearing the same concerns, but he will definitely find ways of addressing them- if only so that he doesn’t have to keep hearing about them. He knows where he stands, and where he needs to be when this process is done.

Bad habits and false assumptions, when untested too long, can ossify very quickly, and poison sound decision-making. The accelerator is the antidote to that problem, forcing founders to address their toughest challenges first, rather than wasting time and money working in a market they don’t understand well enough. Constant early contact with mentors breaks up patterns of thinking and working that will lead founders wrong.

It’s About Who the Mentors Are

“Mentor driven,” means that the first steps a startup takes are in consultation with people who want them to succeed. Most of our mentors are not investors, and most will probably not end up working directly with any of our founders later on, but they are people who care about spreading knowledge, knowing their industry well, and making valuable and useful connections with each other, and with new startup founders. While basically all accelerators are concerned with helping their teams raise money at some point, at demo day, or later on, the focus at StartupYard is on giving the company the strongest possible foundation as a means to that end, and to making the company a success in general. Knowing and understanding your own industry, how people talk and behave, and how they think, are really vital elements of that kind of success.

Startups are Not in Business to Raise Money

A lot of startups quickly start thinking that they are in the business of raising money. That’s a cycle that’s easy to fall into. The second an investor wants to talk money, a founder has to completely change how he or she is thinking about the business, and fit that thinking to the way the investor thinks. If founders have conversations with investors too early in their own development, both as business people and stewards of their own companies, they can easily be taken in by the investor’s agenda, which is different, on a basic level, from their own.

A founder should be interested in his or her users, in solving problems for the people that will use their products, and in forming a company that adds value to the world in which they live. A good product or service company needs these goals above and beyond profitability in order to shape its future and give it purpose.

But an investor is only interested in realizing gains on their investments. If 1 dollar today can gain 20 tomorrow, they will invest. And likewise, if making a company stop and completely reconfigure its own priorities in order to win investment can turn 1 million dollars today into 20 million dollars next year, investors will encourage that to happen. So having a company planted on ground solid enough not to be shaken by incoming investment is very important. A founder has to have a vision of his company in 5 years. An investor doesn’t buy that vision, just the part of it that has an upside potential. We need investors to make many startups work, but that doesn’t mean investors should run startups, or tell them what they want too early in their development.

Mentoring can be a cure for that illusion. Talking to people who have taken on investments and regretted it, as well as those who have done it well and made it work, is an experience of great value to someone who has never had a conversation about money that involved more than 3 zeros.

But most importantly, mentors remind founders that their businesses have to work, not just as investment vehicles, but as *real* businesses. As I said: an accelerator is about taking intelligent risks. Putting 3, or 6 or 12 months of your time into a company is in itself a risk. So why not make it an intelligent one?

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Michal Illich: “Know your Competition.”

Michal Illich is a household name in the Czech Republic’s technology industry. Aside from developing the engine that originally powered Seznam, the king of search in the region, Illich has founded a raft of companies in the past 15 years. He’s a founder of StartupYard, as well as of Techsquare, the open tech workspace where StartupYard is based. He’s been mentoring our current startups, and we got him to weigh in on the state of the Czech Republic’s tech industry, and what it’s like to mentor new founders.
 
Michal, first things first: we hear you have a Tesla. Were you the first Tesla owner in Prague? How do you like it?

As far as I know, a few (up to 5) owners received their Tesla in the same week as I did. I might be the first because I opted for the earliest possible date. It’s a great car – beautiful, very powerful (4.2 seconds to 100 km/h) and still practical (5 seats, 2 trunks).

You’re one of the founders of TechSquare (homebase for StartupYard), and a founder and investor in StartupYard itself. What got you interested in bringing new startups to Prague?
Well, as I’m one the first generation of Czech people who made some money from their internet projects, I thought it’ll be nice to give something back.
Czech and Central European investors are known for being conservative. Do you think that’s true, and if so, what unique challenges does that present startups here?
I’m not really sure if we are conservative. Most investors I know are realistic or optimistic about Czech startups. I don’t think that the american way of throwing a lot of money into startups and hoping that 1% will became a billion dollar company would work here. We are slower but longterm results of Czech IT companies are quite solid.
You’ve been mentoring the teams at StartupYard since the beginning. What do you find difficult about mentoring at this stage in these companies’ development? What about it is rewarding for you?
As Niels Bohr said, it’s hard to make predictions, especially about the future. No one – even the best mentors – can predict the success of any particular startup. So we search and discuss it together which is interesting for the startup and for me as well.
Is there an area of preparation that the majority of accelerator teams could do better in?
Probably knowing their competitors and alternatives.
What are some projects you’ve been excited about recently? What are you working on?
Almost all the startups in the current batch are nice. We’re working on http://flowreader.com/ , http://testomato.com/ , http://kinohled.cz/ , some machine learning problems and one as yet unlaunched project.
How has the Tech Startup landscape changed in the past 10 years in the Czech Republic? What do you see coming in the future?
From the czech websites, only Seznam.cz is innovating. The other major players did nothing technologically worth mentioning for several years :(.  The global startups operated by czech people are more interesting and I think we’ll have more billion dollar companies (to accompany Seznam.cz, GoodData, AVG and Avast) in the next few years.
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The Positioning Statement: Finding a Window Into the Mind

After accepting our incoming teams to the StartupYard 2014 accelerator, we sent all of them the same assignment. We asked them to fill in a “positioning statement.” It looks a lot like this.

Product Positioning Statement:

Our Product is

For (target customers):

Who (have the following problem):

Our product is a (describe the product or solution):

That provides (cite the breakthrough capability):

Unlike (reference competition):

Our product/solution (describe the key point of competitive differentiation):

Why A Positioning Statement Is Important

The positioning statement contains the core elements not only of a product, but also of its marketing and sales strategy. And while most of our teams have worked primarily on ways of describing their ideas, a positioning statement does more than this: it also justifies the notion of that idea becoming a business. As I’ve written here in the past, it’s important for a startup to have the concepts of saleability and market differentiation baked into the essence of the product. Writing a positioning statement, like writing a SWOT analysis, can reveal basic strengths and weaknesses in a product while it is still in the “idea” phase.

Even more importantly, a positioning statement is the basis for a lot of the work that will eventually go into making and marketing a product. By identifying the target market *before* developing the product, if possible, startups can save energy and time by focusing more on fulfilling the needs of the market being targeted, and not applying their energies to areas that are of little interest to that market.

And a positioning statement, well-executed, can be transformed virtually complete into the core marketing message for a product, once it is developed. Take this copy from Nest’s webpage. Nest was acquired by Google recently for $3.2 Billion.

“Our mission is to keep people comfortable in their homes while helping them save energy, and with the next-generation Nest Learning Thermostat, we’re able to spread that comfort and savings to even more homes – and to help higher-efficiency systems perform the way they were meant to.”

Here are all the elements of a positioning statement. If the Nest founders filled in our form, it would look something like this:

Our Product is

For: Upper-middle class and wealthy people

Who: Own homes and spend a lot of money on energy costs and heating/cooling systems

Our product is a: Smart Thermostat and related products

That provides: Savings and increased comfort by improving efficiency of existing systems. Unlike: manufacturer provided systems

Our product/solution: Learns and intelligently adapts to the inhabitants to increase comfort at all times, while saving money

Young lovers on the beach looking to buy seagulls? There's an app for that.

Young lovers on the beach looking to buy seagulls? There’s an app for that.

A Positioning Statement Tells the Truth

The above “translation” of the Nest positioning statement doesn’t say exactly what their marketing copy says of course. They don’t mention wealthy clientele for one thing. But at $130 for a smoke detector, and $250 for a thermostat, that is surely the market they are targeting. Their products are priced high enough to be clearly exclusive, but low enough not to seem extravagant or make a money-wise customer feel foolish for purchasing. And anyway, that messaging is not only found in the price, but in mention of homeowners, and of “higher-efficiency systems.” These subtle cues indicate to customers that the product is made for people who value performance, and are willing to pay to get it.

These are all elements of Nest’s marketing that are informed by the market segment they have chosen to address, from the quality of the products, to the design, to the sales language and the pricing. And so the marketing message that says: “this product is for you,” when speaking to its target client, is backed up by a product that is built with that person in mind. The mission is clear: this is not a product for anyone, but for someone very specific, so that when the customer comes across the product and thinks about buying it, he or she can immediately see that it is made for them. 

Also, while the statement doesn’t appear to mention the competition at all, it does backhandedly reference the existing market by calling itself “next-generation,” and referring to “helping higher efficiency systems,” indicating that the current competition, while hardly worth mentioning, is manufacturer installed equipment- equipment that is, again, not good enough for the demands of the target market; the market served by Nest.

The main difference between a positioning statement and a full blown pitch is that the positioning statement says in plain words, what is really true about who your product is for, and what you believe its market fit to be. This will help you to stay away from visions of (and talk about) your product changing the world, even if it doesn’t really have the capacity or the capability to be a real world changing idea. Not all products have to be for everyone, and many of the best products aren’t. It will also keep you honest and focused; force you to focus on the needs of the clientele you have identified and are targeting. In short, a positioning statement is more likely to change the nature of a product, than changes to the product are likely to change the positioning statement.

Position Statement as Framework

Positioning of a product has often been described as “the organized system for finding a window in the mind.” That’s what Al Ries and Jack Trout described it in their book Positioning, a Battle for Your Mind, a groundbreaking work from 1981. The positioning statement supports these efforts: it targets the product toward a window, an opening, that the founders believe exists in the minds of consumers, and it attempts to fit the product through that window.

What our teams will discover about their windows: where they are, how big or small they may be, will be subject to change for the StartupYard 2014 teams, and so their positioning statements must also change with these new realizations. But keeping and referring back to the statements will provide an excellent guidepost for applying these changes rationally, and purposefully.

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What does it take to Launch a Start-up: A Genius, or a Businessman?

Last week, our Director Cedric Maloux wrote about the trials and travails of hiring a CTO or a developer, for startups that have neither. Can a technology business thrive, even if it doesn’t revolve around a bona-fide technologist? Cedric is not exactly enthusiastic about the idea: “It depends,” he says.

Companies that started as purely technical projects, supported by little more than the geeky-obsessive interests of people who would only later be labeled “founders,” are legion of course.

Why Business Oriented Might be Bad

http://www.flickr.com/photos/thomashawk/7050489913/in/photostream/lightbox/

Extreme devotion to your ideals can produce amazing results in time.

Larry Page and Sergey Brin saw the genesis of Google as fodder for a research project, which they co-authored, replete with fascinatingly unprescient commentaries as “We have designed Google to be scalable in the near term to a goal of 100 million web pages,” and “we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers.” and absurdly understated ones like “We are optimistic … that there is a bright future for search.”

Their technical-single mindedness, and academic backgrounds, even led them to conclude, as a result of their research into the structure of their proposed search engine (Google was then more a mathematical design concept than a business), would be best served by remaining an academic project- implying that it was too fraught with ethical complications to become a real business.

Ethical complications or no, however, Google did become a business. A rather enormous and complicated, and profit motivated business. But would it have risen above the fold of a market then defined by get-rich-quick, morally flexible business approaches that were driven almost exclusively by profit incentive, rather than product and concept integrity?

It’s not an unfamiliar trajectory for a number of highly successful web projects that grew up, and became truly influential, following the tech bubble of the late 1990s.

Mark Zuckerberg, had he been anything but what he was, which can safely be described as not business oriented, would have viewed the potential market for social networking in 2003 with a jaundiced eye. The market was dominated by Myspace, an offshoot of a firm with an ignominious reputation for developing malware and spam delivery mechanisms centered around internet pornography sites, and had been built in a matter of weeks to explicitly ape the most popular features of Friendster, a less cynical, but perhaps less aggressive competitor. Myspace was then by some measures the most popular website in the United States (this was at a time in which the US still dominated international web traffic volume). It’s hardly a surprise that few were even considering taking on Myspace in its own market. Of course, Zuckerburg’s potential business partners had their own questionable judgement to consider.

Just as Brin and Page viewed search as fundamentally broken by the prevailing advertiser model, Zuckerberg clearly saw the social networking world as fundamentally broken for most of the same reasons.  And yet his competitive nature drove him to enter the fray as an alternative that was based upon delivering desired results, with no eye to short-term profitability. This in a time in which an investor would have seen MySpace’s market dominance as a strong disincentive to enter the fray. Indeed, even when Peter Thiel did sign on as a Facebook investor, he had to wait 5 years for the company to reach profitability. It had been dominant in its market for several years before it ever became cash flow positive. That’s not a bet most investors would make, and with good reason.

Why Business Oriented Might be Good

Technical co-founders can get a little... carried away.

Technical co-founders can get a little… carried away.

The startup landscape of 2014 takes lessons from these successes, but should also pay equal attention to the drawbacks inherent in the approach that, while it worked in the long run for Brin, Page, and Zuckerberg, has sunk or failed to fuel the growth of thousands of would-be titans. For every Amazon, a company that manages, even if barely, to keep its revenues just above its costs as it continues to expand, there is a Pets.com, a company that loses more money, the faster it grows.

I caught up with Damian Brhel this week, from Brand Embassy, a startup that entered StartupYard in 2011. When asked if a business-oriented approach is an asset, even to a fledgling startup, his answer was an enthusiastic yes (lightly edited):

Can a non-technical background be an asset for a founder of a tech company?

Damien: Sure, absolutely! Most startups fail because of sales, because they simply does not understand it. Maybe you can have awesome product, but if you don’t know how to market it, you’re gonna fail. However both have to be balanced – I can not imagine a tech company without a co-founder who has tech insight. I’ve seen a few and they have no idea how to develop, or how much it will cost, and that cause huge inefficiency.  Plus, it’s not just product + sales, it’s also many other ordinary things such HR, formal bureaucracy, operations, finance management, intellectual property, law, etc – these are areas where many startups are not aware (and many tech guys don’t know them at all).

While it’s a popular trope to imagine that a technical wizard will accomplish the Zuckerbergian feat of creating a product that will somehow justify its own existence through sheer quality, mass appeal, or perfect timing, allowing the technical genius never to have to dirty his hands with business concerns, the realities of launching most products preclude that from ever being a reality.

In fact, the landscape of the technology business over the last 30 years suggests just the opposite: that the true titans had most of their greatest accomplishments thanks to brave and insightful business strategies, and thanks less to their technical accomplishments. It’s was the great triumph of Microsoft to license DOS to IBM, but they didn’t write DOS themselves. And it was the great accomplishment of Apple to push a consumer facing operating system in the 1980s, but the genesis of that idea came from the Xerox PARC, a technology that had been around for nearly a decade, with Xerox failing to grasp its potential.

A survey of the Forbes top 100, selecting only for purely tech companies, bears out the notion that the biggest tech companies are built on strong business credentials. Samsung, though it’s been around in some form since the 1930s, didn’t become a true technology company until it was consolidated by its Chairman Lee Kun-hee in 1987, an MBA from George Washington University. The story is much the same for Apple, Siemens, IBM, and others.

Exceptions in most areas are very common: Dell, Cisco Systems, Google, and Oracle were all started by prototypical computer geeks, but a common thread emerges: most of these tech-founder companies experienced their initial growth in specialized markets, and expanded into new verticals later on, while the largest companies entered the market in several verticles, more or less at once.

And the biggest growth occurs when a team is being led by someone who can make business decisions that reach beyond the level of product, and deal with the company’s place in the market- whether that CEO is a founder or not.

No One Road to Success

 

Also no explanation for this man's success.

Also no explanation for this man’s career.

Perhaps the singular key to success among these purely technical teams was excellence, combined with adaptability. As Jobs found out in the 1980s, and Zuckerberg may yet discover, the key to survival is to adapt, and making wise business decisions, inasmuch as they may compromise the vision that a singular founder has for his products and his company, is vital for continued growth.

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