StartupYard Presents Retino: Making Returns Great Again

Retino, another of the Czech teams in StartupYard Batch 8, is changing the game for e-commerce customer service in Europe, and maybe elsewhere as well. Retino is a fully functional “reverse logistics” platform, that can integrate seamlessly with existing e-commerce platform software to make returns management a breeze, rather than a headache.

In the past, returns were a personalized experience. You took the goods back to the shop, and got your money back (or something in exchange). But today, with more shopping than ever occurring online, returns experiences are only getting harder to manage.

Why are returns so hard in e-commerce? Because each return has the potential to be unique, and require special attention. Moreover, a return process that works can significantly improve brand image for an e-shop, while a bad returns experience can spoil a customer relationship forever. Enter Petr Boros, Founder and CEO at Retino, the Czech tech company making returns great once again.

 

Retino

I sat down with Petr recently to discuss his journey to founding Retino, and why returns are a looming problem for e-commerce players here and across the world.

 

Hi Petr, how did you get the idea for Retino? Was it based on your previous experience in building a successful e-commerce company?

It happened in February earlier this year. I was still running the e-shop we had built with my partner Daniel Kšíkal, but we were already in the process of selling the company at the time, so I knew that I would be free in a couple of months and hungry to start another company.

I didn’t want to stop challenging myself in business.

Building software for e-commerce sounded good to me. I wanted to do something related to e-commerce, because I had experience in the field. I also I wanted to go more technical, because I was trained in computer science and, technology is where my heart is.

The original idea for Retino is actually not mine. I remember we were having lunch with my friend Peter Hajduček, CEO of Footshop, one of the fastest growing e-commerce companies in the region. We were discussing many business ideas and one of them was solving low customer satisfaction in returns and claims.

So that was the initial spark. Then I thought about it for about 3 more months until we sold our previous company. After the exit, I jumped right into Retino: market research, talking with prospective customers, developing the platform, hiring people, and applying to StartupYard…

 

Why are returns and reverse-logistics becoming an even bigger problem today than they were a few years ago?

There are two drivers. First, e-commerce grows by double digits every year. Five years ago, the total revenue of Czech e-commerce was about 40 billion CZK. This year, we are well over 100 billion CZK (€4 billion). So the magnitude of the problem is bigger simply because the market is bigger.

Second, return rates inside e-commerce grow by double digits as well. Five years ago, customers were not returning as much. If you ordered a hoodie and it was too small for you, you would probably just give it to your brother. That’s not the case today. Customers feel much more entitled to great service, and the right to return things that aren’t perfect.

For instance, after the emergence of ZOOT, more and more online shoppers are accepting returning as a new standard. The Czech market is an interesting case, because Amazon and big-box e-commerce players have not really penetrated as much. Our market is smaller, but these brands have still educated the market about the ideal customer experience, and people expect the same level of service as others enjoy in the U.S. or Germany.

 

 Many e-shops don’t think about returns as a problem. But what effect does a bad return policy and system have on a retailer?

I know this from my own experience. When you run an online shop, you focus 100% on the “forward.” That is, getting the people on your website, having them purchase your products, and delivering the goods to them.

In the beginning, this makes sense. The problem is that you will not be able to acquire more and more customers with reasonable cost. Particularly if you are regionally limited. You have to retain your customers.

Making returns is a critical spot in the customer journey. Not every customer reaches this point, but when they do, it matters very much how you solve their problem. The rules of retail still apply as they always have.

A customer satisfied with the return process will spend 4x as much in the next two years at your shop. This information alone should convince the e-shops to rethink their returns.

But there’s more. For example, did you know that 66% of customers check the return policy before placing the order? Yet, the majority of e-shops still “hide” the policy and word it in legal gibberish. These e-shops are pushing their customers out the door by refusing to give them vital information. Once again, trust matters more when anyone can run an e-shop.

Also important to consider is that 5 years ago, Facebook and other social media penetration was nowhere near what it is today.  Now almost half of the Czech population uses Facebook alone – and almost one third of the whole planet does. That gives customers a lot more leverage over online retailers than they had before, because bad news (or a bad review) travels fast.

 

Are there some examples of companies that have tackled the returns problem in a creative way?

Research shows that 60% of customers keep unwanted products because returns are too hard. At first sight, this might seem like a good news for e-shops, because they don’t have to process them and offer the refunds. But guess what? That customer who failed to return the product will likely never make another purchase on that same shop again. It doesn’t even matter if it isn’t the e-shop’s fault. The experience just sours the relationship.

I was talking with a director of another large fashion store recently, and he told me that their return rates doubled shortly after ZOOT came to the market with a great returns process. Think of that – this is how fast the customer landscape can shift. What ZOOT did was to introduce a mix of online/offline retail that suited their customers much better.

They started by providing pickup points for their products, where the customer could also quickly return a product if it didn’t fit. That made shipping faster, and returns much easier, because customers never had to deal with the post at all. More work for the company, but much less hassle for the consumer.

The guy I mentioned was very angry about this. My experience is that being angry is not the winning approach. The paradigm is shifting. You have to offer a super-nice return process (so that you acquire and retain customers) and you have to be able to process the returns with a very low overhead (so that you actually make some money).

If you have the capacity to do this yourself, go ahead. If not, go Retino!

So for you, this is more about the mentality the e-shops have, and not the technology they’re using?

The technology follows the mentality. If you haven’t built a good return system, it’s because you aren’t focused on it. If you don’t invest in your returns process, it will be a mess. If it is a mess, it is because you don’t care if it works or not. It all goes back to the mentality.

I’ll share a personal story with you: About 10 years ago, my family ordered a new computer from CZC, which as you may know was one of the early Czech e-commerce platforms, founded by Josef Matějka.

In that time, it was still more common to buy electronics from a local retailer, not e-shops, so this was a kind of a big deal. Anyway, something went wrong on their side, and they were unable to deliver the computer on the date they promised. That was a problem as we were leaving for abroad and would not be back for some time.

I bet this sounds like a familiar story to a lot of people. But the amazing part is what happened next. We called and told them the situation. Somebody from CZC, and I am not sure, but it could have been Matějka himself, drove over 400km to deliver that computer in person. I personally met them and got the computer at about 10pm that same day.

You see, this happened over 10 years ago and I still remember it. Back then, I told everyone what happened, and CZC was for a long time my first choice when buying electronics.

That says so much about who Matějka is, and about the company he was trying to build, that they would go so far to fix a mistake they made. It might not even have been their own fault, but they took our needs very seriously. They took responsibility for keeping their promises.

Obviously I can’t be the only person who had such a good experience with them, so their success over the years has never surprised me. That customer-first thinking is a principle that any business can adopt today, without changes in technology. Technology only helps us to do this, but it does not change our mentality.

 

Today you’re focusing on the local e-commerce market. What will be Retino’s focus for the future? WIll you explore different business models, or expand geographically?

Both. There are so many things to do in returns, but we have to prioritize. Right now we are focusing our salesforce on the Czech and Slovak markets.

That does not mean that we cover only the Czech and Slovak market. One of our pilots operates in 13 markets and we have to be able to run the return process in all of them, so we are very well technically prepared for the expansion. It’s just that our salesforce is limited for now, and there’s still much to do in the local market.

We have international ambitions, and I think our model can work very well in all EU countries. This is especially true when you consider the new GDPR regulations on privacy and data in Europe. You’ll just have to trust me on this: few e-commerce platforms are fully compliant yet, and they will struggle to be compliant if they don’t adopt new software like Retino, which is fully compliant.

We also have put a lot of thought into vertical scalability, and we have come with different business models and revenue streams. Some of them are for an even larger business than what we are doing at this moment. You’ll see…

A look at Retino’s Simple Returns Management Platform:

What would you say are the top 2-3 mistakes that most e-commerce companies make when it comes to their returns process and policies? How can they improve today?

An unhappy customer turned happy is more valuable than just a happy customer. We see large corporates in banking or telcos actually deliberately “doing a little wrong” to their customers so that later they can fix them and gain more loyalty. Consumers see apologies and mea-culpas as a humanizing thing, and they do appreciate a brand that is not afraid to be human, admit some mistakes and offer compensation.

I’m not telling you to do this intentionally, but the principle holds. If you have an e-shop, every time you see a customer unhappy with your product, try to convert him back. If the customer is nice, do whatever you can to achieve this, and don’t worry about how much it costs you. It will cost more not to do it.

I would say that this mindset shift has to occur before anything else, but if you want a couple of “quick fixes”, consider this:

1. A return policy should be clearly visible and not hidden in your general terms and conditions. The best shops actually show their policy on the product detail page next to price and delivery date.

2. When you physically get the goods back, always notify the customer that you received them. We see many shops not doing this, although it’s very important for the customer.

3. Never delegate your responsibility to your dealer or manufacturer. That is incredibly frustrating and trust-killing for customers. It is you who agreed with your customer and it is your reputation on the line. Take charge of it.

 

What kinds of early customers are you looking for, and how can they start working with Retino?

We are looking for customers who want to do their returns and claims right, and we’ll be happy to help them with that. More than that, we want customers who are seeking to differentiate themselves in terms of great service.

Our ideal customers understand intuitively that this is the way they should approach returns, but they don’t have the time or resources to do it themselves. Their current system may be a mess, or just not very efficient, but they are ready to do better. Retino represents thousands of man-hours of work and a lot of thought and care. To replicate it, much less maintain it, would cost an e-shop a lot of resources on an ongoing basis.

Our solution stack makes sense for most shops processing 20-2000 monthly returns. Integrating Retino is easy and can be done in one day, no developer needed in the process. With the largest shops, we also work on custom integrations to fully unleash the potential of our automation service.

We ship new features every week or so and all our customers benefit from that with no extra cost. This is a problem best solved by specialists.

The best way how to start with us is to fill our demo request form at www.retino.io or simply drop us a line at sales@retino.io. We’ll get in touch with you, discuss your process and issues, see if we can help and set up a demo.

 

 

Tell us a bit about your experience with StartupYard so far. What have been the biggest surprises, or challenges you’ve faced since you started?

The StartupYard team is composed of excellent people who know what they’re doing. They also see personal fit as important measure. So, even though the acceleration program is very demanding, it is a happy place to work at and we are basically one large family.

I knew that StartupYard’s network of mentors is extensive (and it was the main reason why I applied for the program), but it actually exceeded my expectations. There is virtually everyone relevant for any business in this region in the +1 network of StartupYard’s mentors.

I found the mentoring sessions very important, because 1. mentors asked me questions that I didn’t really want to hear, but they were super important for steering the business in the right direction, and 2. we got a lot of good leads for our business that we would have hard time getting otherwise at this stage.

I’m  thankful for Retino being invited to StartupYard and I’m happy to work with the StartupYard team every day. If you have a strong team and a solid idea, I would very much recommend you applying for StartupYard.

Most importantly, I would like to thank my team – Karolína, Kryštof, Vojta and Radim – for bearing with me during the program. Acceleration is tough and time-consuming, but they all proved to be very self-sufficient. Even though I was not always available, they worked hard to push our story further every day. I’m very grateful for having such an awesome team. Thank you!

Retino and the Other Batch 8 Startups will Pitch at StartupYard’s DemoDay: November 22, in Prague

 

RentRocket

RentRocket: The New World of Renting

RentRocket, led by CoFounder and CEO Klara Flisnikova, joins StartupYard as a member of Batch 8. The team behind RentRocket comes from Zonky, the Czech peer-to-peer lending platform that pioneered the concept in Central Europe.

What is RentRocket? It’s more than a real-estate platform, or a property management system. Flisnikova intends to digitize the rental process from end-to-end, allowing property owners to list properties, screen and manage tenants, and handle all aspects of the transaction in one place. To do that, RentRocket is starting with a simple core value proposition: an easy to use, effective screening tool for prospective renters, that provides a reliable history of an individual, and ensures that they are trustworthy and capable of keeping commitments.

RentRocket is currently in the final stages of development for its public platform, which will launch in the coming weeks, and be available to landlords in the Czech Republic as a first step. Klara will pitch RentRocket at StartupYard DemoDay Batch 8, on November 22nd, in Prague.

 

I sat down with Klara to talk about the thinking behind RentRocket, her experiences as a landlord, and how she founded her first startup:

Klara Flisnikova, RentRocket

Hi Klara, tell us a bit about yourself, and how you came up with the idea behind RentRocket.

My dad was in the construction business since before I can remember, and I grew up around the construction sites. To see things always under construction and undergoing massive change, I think, gave me insights into the hidden workings of the world around me most kids don’t experience.

Later on my family acquired some properties in Prague, and when I moved to Prague for university it became my job to take care of them. Having grown up around this business, I could see right away that the property management companies and real estate agencies my parents had used were not providing a lot of value. I got rid of them both, and started renting the properties out myself.

So I learned the hard way, and met lots of different kinds of people in the process. Many of them nice, some of them not so much. One of the things about being a property owner that you don’t realize at the beginning is that it’s a very personal thing. You deal with people’s homes and their personal circumstances. You see things others don’t see, and you deal with people’s problems, including the ones they don’t show to others.

 

So RentRocket is based on your experiences?

Definitely. Property management is a business, but it’s also very personal. It is the renters home, but your property – that is a situation ripe for conflicts. You see people’s bad sides as well and I began to wonder how to fix this. So I started to choose my tenants more carefully, evaluating them and setting the right expectations from the very beginning. There is nothing worse than a promise you cannot keep. This is a business I think a lot of tech people don’t understand the way longtime owners do.

That’s why RentRocket is focused first on establishing a basis of trust between renters and owners. That basis is in data: letting owners and renters both know that their agreements are on a good footing, and that both parties have a good background, and can be trusted. We do that right now by providing background checks of tenants, but in the long term, the qualities of the owners are also very important. Good renters deserve good landlords, and vice versa.

After university I went through KPMG to Zonky, still renting in the meantime. At Zonky I worked as a data analyst and was responsible for reporting. And it hit me, that the process I used for tenant selection is totally similar to loan approval. The same data that affects someone’s credit obviously also affects their ability to pay rent. In the US and other countries, credit checks are standard for renters. Bad credit is a big problem.

At Zonky I also met Petr, without whom I absolutely couldn’t build RentRocket. Petr and I worked closely while analysing data flows in the backend systems at Zonky. And one day I told him about my project, and that I would like to finally launch it. He immediately took interest and I knew from my experience, that he is hard worker and someone I can trust. When I proposed the opportunity to join Startupyard he did not hesitate to jump on. And here we are.

Petr Vlcek

 

We struggled together for a long time to come up with the name RentRocket. What about the name really appealed to you, and told a story about what you’re doing?

Finding a name was really hard for me, because originally I thought I was good at names and that creativity will solve everything.

But being realistic, real estate is an unbelievably crowded space. There are all kinds of services, good and bad, and it’s very hard to differentiate. So we came up with more than 100 names, and checked the viability of all of them.

I wanted something that would not be too closely connected with flat or homes. I also wanted to highlight our scientific approach and the new sort of renting experience we want to promote. That’s why chose to be a Rocket. RentRocket!

 

You mentioned you were a data & reporting manager at Zonky before founding your own company, how did that experience inform what you decided to do with RentRocket?

Zonky was totally the most challenging, complex and enriching experience I could get and perfect foundation to start my own thing. I learned so much about product creation, leadership, development, customer service and much more.

Working with so many hard working people, together with Lucie behind the wheel setting up a truly motivating atmosphere, was an amazing journey. Also the way the whole community was created – the honesty and transparency – is something I would love to replicate in my own company.

You could literally see people became so engaged in creation of the platform, that it became a part of company culture to cooperate on the development with the most engaged ones. That culture as it was developed at Zonky is a big influence on me now. The whole grand idea of “from people to people” really came true in that sense.

RentRocket, StartupYard

In a two-sided marketplace, companies tend to focus on one side or the other: Renter or Tenant. What is your focus, and how did you conclude that it’s the right one?

It is always a chicken or egg question, right? But if you look at companies who do it well – such as Airbnb or Uber – they always start with supply – eg. homes or cars. You start with the scarce side of the marketplace, try to get on board early adopters and build a critical mass of supply. Once you reached your critical mass you may focus on pairing up the demand.

We have to think about how different stakeholders in the property market are motivated. Renters have more short-term motivations, and owners think more long-term. So long-term is where we need to be first.

 

You mentioned how crowded the market is. Airbnb, other short-term platforms, not to mention agencies and management companies. What is different about your approach? What do you see as your competition?

You are totally right, but I am glad that so many players are doing well in this market. It proves that there is a lot of demand for better solutions. We are rather at the beginning of big changes, than at the end, in my view.

The rental market is still very unstructured and uncultivated, in the Czech Republic especially, compared to western markets. That is probably true of many regional markets that are not under the same pressure as bigger cities like in New York or London. Still there are problems, but there are also more clear expectations from all sides. In smaller markets like Prague, it has not been really systematized.

RentRocket, StartupYard

 

Our goal is to completely digitalize the rental process. Moreover, there is a lot of potential to be unlocked once you’ve done that.

Of course I am aware that companies such as Ulovdomov or Flatio could be our direct competition, but I think that maybe we can help each other too. They solve slightly different problems, and like many players, they see their value in short-term problem solving. We see our role as a long-term value creator.

On the other hand, I am not so keen to work of rental agencies – our traditional competitor. . But even here, I see a chance for us to have an impact. My aim is to bring the best service possible to our customers, whichever way they choose to manage their properties.

 

What have been some of your direct experiences with being a landlord, that have most informed your decisions about RentRocket, and what the company focuses on?

As I mentioned previously, I’ve had some pretty tough experiences as a landlord.

The flats not being returned in a good state, flats deserted in the middle of the rental period, and I could go on and on. The first aim of RentRocket: to stop that situation from happening from the beginning, by helping landlords pick tenants they can trust.

As they say, some people always have a story about why they can’t pay, or why damage isn’t their fault, or why they need to leave suddenly, or whatever it is. All this sparks frustration and anger on both sides. What I learned that most of these situations could be prevented – either on the owner’s side by better screening, or on the tenant side by better education and communication.

 

Most renters and landlords have their own horror stories. What is your worst story about being a landlord?

The worst one comes from the times when I started with property management, and this particular tenant was supplied by an agency. One of our flats was devastated by a Great Dane, which was regularly left by its owner in the flat for days. It was horrific, incredible cruelty for no reason I could ever understand. Why have a dog if you refuse to take care of it?

Anyway, you would not believe how hard it is to get the competent authorities to do something about it. Once the flat was opened by the Police and Vet Administrator, the dog was not there anymore, the flat was totally wrecked, with crazy holes scratched on the inside of the door. Total disaster, complete reconstruction was necessary.

 

Which types of customers are you interested in addressing in the near-term? How will you reach out to them and engage them now?

At the beginning we are focusing on semi-professional owners; those who already have some experience with renting, and to agencies which want to do a better job on tenant selection.

What is important to us is a close connection with our customers, especially now at the beginning when we need to establish ourselves and gain the trust.

We plan to exploit our networks first, get feedback on our product and then continue accordingly with long tail user acquisition. We want to build a sustainable, long term business that can be replicated in other markets.

 

Looking toward the future, how do you see RentRocket’s path forward? Will you focus on certain types of markets (like cities), or go instead for geographic regions with similar legal systems and traditions?

Definitely I see RentRocket as a purely online service focused on medium-sized to big urban markets with an excess of demand, which will allow us to expand rapidly.

Once we reach a critical mass of users and learn how to acquire a meaningful share of the Czech market, we would like to try other cities in the CEE region. Still, our ambition is to be global, and available in many markets.

Cracking how to win over a single market is a key thing. There is no global leader in long-term rental “proptech” the way there is in transportation or short-term rentals (Uber, Airbnb), and I think this is because it is a more complex day-to-day problem. Airbnb’s big innovation was the way it allowed people to discover destinations, and management was an afterthought to that. It was about opportunity, not necessarily long-term thinking.

Our focus is on great management experiences from the beginning, and long term value.

 

What has been your experience at StartupYard? How has your view of your business changed during the acceleration process?

Startupyard is the best kickstarter ever for a startup.

We joined StartupYard with just a small team, and our ideas. The accelerator focuses you, gives you a mission and puts you in the flow of building your company. The mentorship is a big challenge, but it makes everything about what you do more urgent and more clear over time.

The accelerator is a very tough experience, and there are a lot of moments where you question yourself and what you’re doing. But I think we have become stronger, and we have moved much faster and in a clearer direction than we could have done alone. I have found the mentoring and feedback to be motivating. Hard work pays off, and here you definitely work as hard as you can.

 

If there is one piece of advice you would give to landlords, and one to tenants, what would that advice be, and why?

To landlords: Choose your tenants wisely, you would not marry someone after a blind date, so why should you sign a year long contract with someone you see for 15 minutes and know nothing about?

To tenants: Know what you need and want up front, be open and honest about yourself and your requirements. Be realistic about what you can afford. Landlords will totally appreciate that.

Actually this part about honesty and transparency goes both way. If you are honest, not greedy, fair, and vigilant, then you will be fine most of the time.

 

How can potential customers start using RentRocket today?

Customers can sign up for our service through our website www.rentrocket.io. I personally will contact them and see how we can help. Right now we are testing the first version of the product, therefore we offer more personal service and on-hands approach.

We are looking for people who are ready to help us get the service just right, and want to be part of a new way of managing and renting properties. It’s just the beginning!

 

Steel Mountain

Introducing Steel Mountain: A Digital Guard Dog for your Connected Home

Steel Mountain is not your grandpa’s anti-virus software. It’s a new way of looking at digital security for connected homes. Today, internet connected devices are proliferating in the home, and with them, opportunities for breaches of privacy and digital theft. Steel Mountain’s flagship product, Secaura, will attach directly to a home’s wifi router, and provide comprehensive protection against attacks anywhere on its network, 24 hours a day, without impacting the speed of your internet connection. Best of all: it’s self-updating, requiring no intervention from the user to keep security up to date, all year round.

StartupYard recently announced Steel Mountain as a member of our 8th Batch of tech startups, with a Demo Day coming up on November 22nd, 2017, in Prague. 

I caught up with Will Butler, CEO at Steel Mountain, to talk about digital home security, and his plans for changing the standards of privacy and safety for the Internet of Things. Our interview is below:

 

Hi Will, first why don’t you tell us a bit about your team, how you started working together, and how you came up with the idea behind Steel Mountain?

Thomas Maarseveen and I go back seven years whilst studying engineering together in the UK. Since meeting we’ve collaborated on a number of technical projects together; websites and apps, crypto, drones, 3D printers.. We’ve done a lot of cool stuff over the years together.

Will Butler, CEO and CoFounder at Steel Mountain

The idea behind Steel Mountain originally came from Thomas’ browser-based AdBlocker not working. To solve this issue, Thomas decided to block his ads by hacking his router and filtering out the ads there rather than the end-point. This then inspired the idea of blocking digital threats at the gateway of the network- the router. The evolution of this idea was natural as Thomas and I had a history of ethical hacking and experience in cyber security and networking.

Thomas and Will, Co-Founders at Steel Mountain

What drew you to focusing on security, and particularly consumer level security?

Whilst i hold value in my security and privacy, I have always despised using my anti virus software. It slows down my PC, conflicts with other software and intrudes on my usage with annoying popups all the time. Moreover, with critical security issues fast approaching with the IoT (Internet of Things) booming, a solution is needed now.

The consumer security sector has been neglected for a long time. We haven’t seen much innovation in it for 25 years from the old incumbent companies that we all know, and with the growing complexity of home networks, we now need a new approach to deal with new threats/ That is exactly what Steel Mountain offers.

 

What makes the technology behind Steel Mountain unique compared to other approaches, like typical firewalls or anti-virus programs?

We deal with the threat at the gateway of the home network with a device that plugs into your existing home router. This means we do not slow any of your devices down, it requires only one installation to protect everything and can provide security for hardware devices that cannot otherwise protect themselves, like smart fridges and lightbulbs.

Back when consumers were first buying PCs, there were not many points of entry for intrusions and exploits. Hacking 30 years ago was focused more on social engineering, exploiting human weaknesses, and less on “brute force” attacks, or finding a bunch of “zero-day” bugs (bugs that no one has reported yet), and using those to compromise a system.

But now you don’t have one processor and one piece of software running in your home. You have dozens and dozens of them, all of which can have vulnerabilities. Your fridge can be hacked. Your nanny-cam can be hacked. Your electrical system, your phone, computer, TV, and video game systems. There are many points of entry, and many potential points of failure now.

Plus those failures are more dangerous than they used to be. Now everything you do is digital, like your finances and even your health. So you have more to lose in an intrusion. A digital intrusion could have even worse consequences than someone physically getting access to your home.

So if the vulnerabilities are multiplying like this, security software just cannot keep up anymore. It’s like you’re building a bigger and bigger city, and you still rely on just one policeman to catch all the criminal activity. You should worry more about what your software can’t see at all, which is what is going on in all those devices you have.

For this, you need a single security layer that stands between your network and the outside world. That is what Steel Mountain does: we are building a single defense point and channeling everything through it. That’s the only way to really provide protection today. This is like the difference between the local cops and the NSA. You need a much more in-depth security system today.

 

Steel Mountain

 

What are some of the dangers most consumers don’t really understand when it comes to home security in a connected world?

That they are currently completely exposed to cyber theft and monitoring if they have IoT in their home or even an android smartphone.

I’m not just trying to be alarmist here. It is this simple. Everything right now is exposed, and nobody, from the device manufacturers to the telcos, to the companies that provide the firmware for these devices, is keeping up with the multitude of threats to IoT devices.

You might think too that you don’t have IoT in your home, so you’re ok. But most of us already do. This technology is now in everything, sometimes whether you realize it or not. Today it’s just a light bulb or a fridge, or a baby monitor, which doesn’t seem so dangerous. But soon home electrical systems and kitchens, and our cars will be controlled this way too. So physical dangers will become more real as well.

 

Why do you think that despite all the publicity around high-profile data breaches and hacks, as well as digital home invasions, the average consumer is still under-protected?

The average consumer remains under-protected because current solutions are high friction and have no focus on user experience. We still see cyber-security as something geeky and obsessive, even though that idea is pretty out-of-date at this point.

It’s also about who designs and markets security products, which is to say: security obsessed people who aren’t always in touch with the average consumer.

A security product should be passive, non-intrusive and usable by anyone. Current solutions fail to make a complex security solution accessible and seem easy to install or interact with. Current security solutions always seem like “work,” but we think they should be as simple and unobtrusive as possible.

Security is traditional sold through fear mongering, and the problem in doing that is that people become resistant to it over time.

Steel Mountain Features

Even here we are talking about all the dangers, and the truth is that most people don’t respond to these triggers. What’s the lesson there? What do people respond to? 

So our view is that you have to appeal to people’s sense of responsibility and their more evolved sensibilities: taking responsibility for your family, doing your basic duty as a parent or a homeowner.

You lock your doors and check for mold and termites in your home, so the same logic should apply when you’re securing your network as well. It just has to be part of the basic package of having a safe home. Like child-locks on your medicine cabinets, or having your chimney swept once in awhile. It should be that simple.

So, people make a lot of these basic decisions without thinking too much. Do I buy the regular power strip, or the one with a surge protector? Our responsibility, as a security company, should be to make that decision obvious, and then to follow up on that, and make it simple enough that people stick with it.

 

Why do you think design is so important for a security company?

We are selling peace of mind, and in order to do that, convenience and user experience is imperative. True peace of mind in our case means you never need to think about it again after installation. (If you don’t want to.)

There is an interesting balancing act in designing something that should be easy to use and to forget about, but is also mission critical for your safety. You have to kind of make it visible, but at the same time non-threatening and friendly. This is why our approach is to create a kind of friendly hockey-puck type device that just sort of sits there and says: “I’m here… everything is fine.”

It’s sort of like something between a smoke detector and an Apple TV. It isn’t daunting or flashy, it’s just there, it’s solid, reliable, always on; nothing to worry about. In some ways this is just applying the same approach to digital security as has existed in physical security design for a long time. Simple, subtle, but not a toy.

 

You were previously located in Virginia, outside Washington DC, which is a natural hot-spot for digital security products. Why choose Prague and StartupYard as your next home?

We moved back to Europe because we saw an opportunity in the market. Europeans, generally speaking, are more privacy aware. That has been shown very much in the way regulations have evolved in Europe, now including the GDPR privacy regulations. People value privacy, and see it much more as a basic necessity than in other places.

Right now in the US, you have companies like Amazon convincing their customers to put cameras in their homes, so the company can literally watch their homes and their delivery people can enter people’s homes while they’re gone.

That is pretty surprising to many Europeans (and many Americans too). Maybe I’m crazy, but I don’t think Europeans will widely accept that kind of sacrifice of privacy in their homes for more convenience. I hope that they won’t, because it sets a scary precedent for the risks we’re willing to take with our personal security.

But also, Europeans understand that big companies are going to try to compromise our privacy even without us realizing it. These companies would like to listen to everything we say and watch everything we do, because there is money in that. But European culture more or less believes that the welfare of society is more important than the business benefit of intrusive tech.

That is why companies like Facebook and Google have so many more challenges in Europe with regulations and oversight, because they take that kind of thing much more seriously.

The reason we chose StartupYard is because they have a very relevant network which we are currently leveraging. We couldn’t be happier here.

As I don’t have to tell the Czech people reading this, Prague has a long history of security engineering and cyber-security businesses like Avast, AVG, Cognitive Security, etc. Czech businesspeople understand security and take it seriously, which makes our lives easier, and provides more opportunities.

Plus, Czechia has a global reputation for security knowledge and prowess. We have definitely seen that this is based in fact.

 

What would you say is the most important thing you’ve learned in your time at StartupYard? What was your hardest lesson? Have you grown as a company and as founders because of that experience?

This is my first company. Obviously, you have ideas about how easy it is to make deals, and negotiate with people based on your common interests. When you really believe in your ideas, it feels like you can convince anyone you’re right.

One thing I’ve really appreciated in the process of mentorship at StartupYard, and then talking with corporations and partners about future plans, is that corporations are not one entity at all. They are a collection of different power centers and objectives, mixed with a lot of personal and political motivations as well.

When you start meeting with these companies, you realize that you have a lot of work to do to show many different people that it is in their interest to help you. Having people sponsoring you in a corporation is great, but it only takes one person in a position to block you, and you’re stuck.

As a startup, you move fast every day, and you don’t ask for permission. That’s how you build something new and different, but at the end of the day, people from the older world of business have to buy into what you’re doing. You have to respect the fact that these people have been in the market much longer than you, and they know a lot of things about it that you don’t.

I hope, and I think, that we have become more humble in that regard.

 

 

What can we expect from Steel Mountain in the near term? When will people be able to buy your products and use them in their homes?

Steel Mountain will be making it’s flagship product, Secaura, available for pre-ordering from March 2018. Subscribe to our website and we will keep you updated.

We have many details to take care of between now and March, and we are tackling the complex process of manufacturing and distributing the hardware, as well as maintaining the security service that comes with it.

Our aim is to be a part of people’s homes for the foreseeable future, so it’s critical that we build everything now on a solid foundation. Security and privacy is very dependent on trust, so we are building partnerships with trusted companies that have a good track record of delivering on their promises.

Exclusive: Cyber-Security Guru Vlastimil Klima Talks Blockchain and Cryptelo

This week I sat down with the renowned cyber-security expert and co-founder of StartupYard alumni company Cryptelo, to talk about a topic we’ve covered a lot lately: blockchain, and security. 

We have informally dubbed Cryptelo. “The Unbreakable Dropbox.” You can also check out a previous interview with his fellow co-founder and CEO at Cryptelo, Martin Baros, or visit their website to learn more about their products.

Hi Vlasta, tell us a bit about your involvement with Cryptelo. How did you and Martin Baros start working together?

Martin actually came to me after encountering security issues himself. He wanted to create a secure storage solution that didn’t exist anywhere on the market.

As an entrepreneur, he had a natural instinct that caused him to seek me out. When he proposed the idea, I realized: “yes! Why hasn’t anyone done this?” I joined as his chief cryptographer, and together we built Cryptelo.

Cryptelo Co-Founder Vastimil Klíma

You have a fascinating background in Cyber-Security, and are named among the top cryptologists in the world. You’ve worked for the Czech government, and you were among the few to seriously break SSL as a whitehat. What drew you to cybersecurity?

As a little boy, I was a very good chess player and a mathematician in high school. I also took part in the International Mathematical Olympiad. Later, I learned/realized that since that point I had been watched by the “head hunters” of the secret service.

That sounds like something from the movies, but it really happens!

Once I graduated with a mathematics degree from Charles University, I ended up working for the state, in a secret department for censorship and cipher development. As I discovered later, there are many great mathematicians and participants in the international mathematical Olympiads working in the secret services of the various states.

One of the big attractions for somebody like me to this kind of work is the opportunity to solve very complex problems that no one else has done before. You have a sense of tackling the unknown, which is very rewarding.

In my work I dealt with the development of cipher and cryptographic devices as well as cryptanalysis. Later I was also in charge of the ciphers for our agents abroad. After the Velvet Revolution in 1989, I was entrusted with the development of ciphers independent of the Soviet Union.

For almost two years I worked for the General Staff of the Czech Army, and then I went to the private sector. The pearl in my story is that I did my first private-sector job together with Eduard Kucera and Pavel Baudis (nowadays Avast’s vice-presidents) for their company, which is now among the top antivirus companies in the world. I’m quite proud of that.

Then a number of security companies followed, for which I developed different cryptographic products or did security and cryptological analysis or cryptographic designs. Some time ago I worked for the Czech National Security Authority on the design of cipher and cryptographic devices already in operation for five years. I was very fortunate to have always been able to work with the most advanced technologies or even the “upcoming” technologies, both in cryptanalysis and in cryptography.

Let’s talk about blockchain. Today it’s often described as highly secure. As an expert, what is your view on this?

The “blockchain” concept is very good and very safe compared to other [data verification] concepts. It is based on distributed security and responsibility, which is great.

But it’s just one building block in the whole system. Much depends on the other parts of the system. Surely you remember the lesson that an attacker chooses the weakest link in the chain. In security, you are only ever as good as that weakest link.

 Vlastimil Klima, Cryptelo

Why is it that despite the integrity of bitcoin’s ledger, there are still so many bitcoin heists and thefts?

Bitcoins are based on the blockchain principle, but paying with them requires the protection of cryptographic keys. In all major world bitcoin thefts, these keys have been stolen. The thieves then simply transferred the bitcoins to their bitcoin accounts.

So this is something like building the most secure safe in the world, with keys impossible to copy and locks impossible to crack, but then having it breached by the thief simply taking the keys off your desk. The whole concept of the unbreakable safe is not much good if getting into it is so easy.

Let us note that there has been a shift in our collective understanding of security – we are not talking about cryptographic techniques, but only about keys, their creation, distribution and protection. In many respects, we have figured out cryptography quite well. Information can easily be made very secure in terms of encryption. But that does not mean we have “solved security.” Far from it.

People think of Bitcoin and other cryptocurrencies as anonymous. Is that a mistake?

Bitcoins may be anonymous, but they may not.

The advantage of bitcoins and other blockchain-based coins is that transactions with these coins can be verified. For the same reason, it is possible to see how the coins “travel” on different “wallets”.

If someone makes a mistake, you can determine who they are, and what they bought for bitcoins.

I worked as a forensic expert on investigating several bitcoin thefts involving illegal drugs and arms markets, and managed to prove who controlled the marketplace and who stole the bitcoins. These are not truly anonymous platforms.

If I’m a regular guy wanting to buy crypto-coins of any kind, how can I protect myself from theft?

Every security breach up till now has consisted of theft of cryptographic keys, which were inadequately protected.

Here comes the simple advice: protect your keys and do not give them to anybody else. At big markets and shops, it is common that you have to give them their keys to make deals for you. Here you have to be very careful, because the purses of the big stores are the most threatened. Just give them small amounts or at best trade peer to peer.

As a cryptologist, what are one or two ways you wish every software company would think differently about data security?

This is very difficult. We all do just what we have to do. It is natural that we do not perceive security as important until we become a victim of a security incident. I have experienced this myself, so I know what I’m talking about.

Most of the time, data security problems arise from a lack of time and money to do the work properly. And attackers choose just this kind of company to attack, because it is vulnerable. So the best defense against security breaches is to maintain a high standard – higher than your competitors.

Predators prey on the weak. As we say: the gazelle does not have to be faster than the cheetah, it simply has to be faster than the other gazelles.

SY Alum Decissio Uses AI to Accurately Predict StartupYard Investments

You may remember Decissio, a Batch 7 StartupYard alum that has been working on the “Jarvis for Investment Decision Making.” Earlier this year, the company announced its kick-off product, an intelligent dashboard for VC investors and Accelerators to evaluate and monitor companies they invest in.

Decissio aims to go beyond a typical investment dashboard by combining up-to-date company data with complex big-data based probability models and machine learning algorithms, helping investors to continuously evaluate their investment decisions.

As Decissio and founder Dite Gashi continues to gather data and build the company’s flagship SaaS product, they have focused on piloting their approach with small controlled experiments.

One such pilot has been in partnership with StartupYard. Decissio’s Mission: to process all of StartupYard’s applications for Batch 8, our latest batch starting next week, and deliver predictions on their success based on a variety of factors, including written applications, founder profiles, founder/market fit, and the current state of the company.  

Dite Gashi

Dite Gashi: Founder and CEO at Decissio

The numbers are in on this pilot, and they’re very promising. We’re not ready to stop reading applications or doing our own research just yet, but we’re now confident that Decissio can be a big part of making our application process better, fairer, and more efficient.

The following case-study is a co-production of Decissio and StartupYard, written by Dite Gashi, and Lloyd Waldo. A more detailed write up and analysis will appear shortly after publication at Decissio.com. For more info on the technology and related work, please visit Decissio.com.

Warning: This post is long and contains big words. Skip to the bottom for a bulleted Tl;Dr 

Good Small Decisions = Big Positive Outcomes

The StartupYard application process doesn’t happen all at once. It involves a long series of smaller decisions. Does a startup have a unique idea? Does it fit into our mentor group and experience? Do the founders have enough experience? Is there strong competition in the market?

Some decisions are even more granular: did the founder answer questions thoroughly and clearly? Were they responsive in detail?

Small details often reveal big trends. But a human mind isn’t set up to think in that direction. We aren’t programmed to carefully add up small decisions to make big ones. Enter Decissio, whose mission was to apply a machine-learning approach to small decisions we make in the application process, not to override the judgement and experience of our evaluators, but rather to augment it with important insights.

StartupYard Alum Decissio.com uses #AI to accurately predict future StartupYard startup investments... Click To Tweet

The Framework

An application to an accelerator consists of a relatively small data set. We have a written application, founder profiles (on LinkedIn), sometimes a website, and whatever has been written about the company online.

Rarely do we have hard financial data on the companies, in some cases because there is no company in existence, and so the founding team has no financial data to look at. Nor do we have much access to the IP teams are working on. We have to rely on what founders say, and what they have done in the past.

But a bunch of small data sets together make up a bigger data set. Decissio examined over 1300 previous applications to StartupYard, along with the rankings our evaluation committee has generated, and used that data as a benchmark for incoming applications.

They found a number of statistically significant trends in that data. Startups that were successful as applicants to StartupYard could be ranked point-by-point, according to the following framework:

  • A Completeness Score: how thoroughly the application is filled in, and with how much quality information.
  • Effort Score: The quality of the writing in the application, particularly the responsiveness of answers, and the scope and variety of detail provided.
  • Relatedness Score: how closely a founder’s profile and experience matches the content of the application
  • Founder Linkedin Score: The completeness and quality of a founder’s LinkedIn profile
  • Media Mentions: The number, quality, and sources of mentions of the company or product online, along with sentiment analysis
  • Money/Work/Revenue Generated: The ratio of previous investments and time spent on the project to real revenues (if any).
  • Spell Check

Believe it or not, Spell Check is powerfully predictive of application quality. Note to founders: always use Spell Check.

The Analysis

This is where the historical data from previous StartupYard applications comes in. While it’s not very useful to directly compare older applications to newer ones, because the topics and ideas in them are often so different, it is useful to weight the importance of the different factors in the framework according to their impact on previous decisions.

Furthermore, the final analysis includes proprietary algorithms by Decissio that can dynamically weight the outcomes for individual teams, based on cross-referencing between different data sets. For example: Decissio’s AI can adjust its expectations for the Effort Score, if the founders are experienced in marketing and sales, or have no such experience. Thus each team is examined according to its own merits, and not an evaluator’s less informed expectations.

As “calibration,” or maintaining consistency and fairness of scoring across a large number of applications is a significant problem with humans, Decissio can re-calibrate an evaluator’s judgement to keep them from penalizing teams for the wrong reasons. As the standardized testing field has long known, human scoring can be so inconsistent that a significant amount of scoring time (even up to half) must be devoted to calibration in some cases.

Since our evaluations involve multiple rounds with a Pass/Fail outcome, each examining more and more detailed information, highly predictive models can be built for an application that will make it through round 1. A less predictive but still strong model can be built for round 2, and a much less accurate, but still useful model can be built for round 3, and so on.

The chart below shows overall predictiveness of the approach over multiple rounds. StartupYard uses a “first past the post” system of ranking, where the ranking cutoff for each round is smaller. This means that in round one, 70-80% of applicants are rejected. In round two, just over 50% of the remaining applicants are rejected, and in round 3 (which are day-long in person interviews), only 20-30% are rejected.

Decissio False Negatives

None of Decissio’s bottom-ranked 63 startups were ultimately selected, meaning that virtually all of the first round of evaluations could be handed over to the AI, leaving a much smaller pool of applicants to evaluate, and allowing the human evaluators to use a much lower cutoff, in a smaller, better initial pool. In this scenario, only 20% of human evaluated startups would need to be rejected in the first round.

We would expect false negatives to rise, as Decissio gets only one pass at the data, and with each round, human evaluators gather more data, which causes their behavior to diverge from the model.

For example, if use of Spell Check is 90% predictive of the Pass/Fail rate for round 1, it may be only slightly predictive of the success rate of round 2, and by round 3, it may lose its predictive power altogether. By the time an application involves a detailed look at a founder’s CV, and personal interviews with that person, other factors can arise that vastly outweigh any minor inattention to detail, like spelling.

Or the predictiveness curve can go in the other direction as well, with certain data only gaining predictive power in later rounds. Media mentions may have a low predictive power in the earlier rounds, and become more powerful later on. This can be because a company with a low early round score for Relatedness or very high Money/Work/Revenue ratios, can have many mentions in the media, but also fatal problems in their business, team, or technology. Thus, hype is not strongly predictive in Round 1, but by Round 3, it becomes a major asset to an applicant. Once all other factors are examined, media exposure becomes an affirmation of market fit, demand, or interest.

How Well Does This Work?

Decissio’s Success rate in the first round of applications (the on-paper evaluations), was 73%, far exceeding random chance. The accuracy dropped as expected in subsequent rounds where evaluations focused on personal interviews, from 50% in the 2nd round, to 20% in the final round. Still, this means that exactly half the time, a startup that passed the first interview with our selection committee was predicted to do so by Decissio, based only on their written application and profile.

There are two ways in which this kind of analysis can be useful. Either it can be used to identify applications that have a high likelihood of success, or it can be used to filter out those with the lowest likelihood of success.

Decissio Picked the Top 2 Ranking Finalists

We don’t have enough data to be able to confidently say that an application will definitely fail. However, on the opposite side of the scale, the results from Decissio’s analysis did correctly identify StartupYard’s two highest human-ranked finalists, and placed both in its own independent top ten prediction.

Decissio Picked the 100 lowest-rated applications with 89% Accuracy.

Still, the most immediate benefit of Decissio’s approach is in the earliest rounds, where pass/fail decisions are by design based on less human-focused information than the pass/fail decisions in later rounds.

This theory holds up with Decissio’s results: their bottom 100 applicants in this pool of applications (out of around 130), was 89% accurate, meaning that only 11% of the time, we determined a startup to be worth advancing, while Decissio did not. Clearly, in terms of identifying a lack of potential, Decissio’s approach is already very effective.  

Further mining of the available data could produce a much more precise prediction. For example, by analysing co-founder and founder/investor fit according to the work histories and digital footprints of both can theoretically yield very reliable predictions of compatibility, which in turn raises the chances of success or failure for a startup.

These factors would require a different kind of data to solve; a kind of data we don’t collect systematically right now. But this kind of approach, which treats people as nodes in a system that has its own features beyond those of individuals, has been deeply developed already, particularly on the level of enterprise management consulting involving things like the Meyers-Briggs Type Indicator Test.

It may prove true in the future that a set of personality tests of some kind are more predictive of success in a particular accelerator program or industry, than the content of an application, though we don’t know what that test would look like, or how it would be used.

SY Alum Decissio.com predicts first round StartupYard application decisions with 89% accuracy, picks two finalists. Click To Tweet

 

Potential Applications:

Time Saving

Decissio was able to predict with strong accuracy (73%), the likelihood that a startup would make it through the first round. This means that evaluator’s mental resources can be focused more on rounds in which more human-level data is being examined, particularly personal interviews and meetings.

An evaluator can spend relatively less time making early-round decisions, because Decissio can compare cursory evaluator consensus to its own scores, and “call out” the circumstances in which these do not match for further study. There is less of a chance that a good application will be “overlooked” in this way– a constant fear among startup investors dealing with many applications.

Bias Reduction

While a human with experience can “skim” an application and be able to tell it isn’t strong, that subjective evaluation is highly prone to error and internal biases. Very poor spelling could cause a human evaluator to give up on an application, whereas an algorithm might see past this issue and find more value in the startup than a person would look for.

This process could also serve as a check against more latent biases, such as gender, age, nationality, and sexual orientation. While it’s difficult for a human to differentiate between their instinctive reactions to people based on conditioning, and their objective evaluations of people in a professional context, an algorithm can demonstrate more consistency in that regard. Biases can’t be eliminated even this way, but they can be better controlled.

Thus, Decissio can be a check against the human decision making process, enhancing it without replacing it.

Fighting the “Best Horse” Problem

Decissio’s approach can also serve to fight the “best horse” problem, whereby a candidate with a strong outward appearance can advance well into the selection process without revealing sometimes severe deficiencies.

The best horse problem is one of reinforced selection bias. Imagine you have 10 horses, and you send them all running around a track. Then judging by the outcome of the test, you give special care and attention to the fastest horse, believing that it above the others has greater potential as a champion.

In this way we sometimes pick winners for all the wrong reasons. The horse to finish first can finish first for a number of reasons not having to do with potential as a racehorse. Cheating for example, or luck. Likewise, the last horse around the track can be the one with the most future potential.

In our application process, a very strong written application or interview performance can mask a basic weakness in the founding team’s experience or ability. It’s only much later that these weaknesses reveal themselves in a lack of tangible results from the company.

Startups can and do advance very far in accelerator programs while still lacking the core abilities and disposition needed to thrive. It can take a long time to recognize a fraud or a fish out of water.

Creating More Useful Feedback

Another thing this big data approach can solve is the information problem. What happens frequently with accelerator applications, as we suspect happens in many fields, is that successful written applications contain a near-perfect mix of description and data. Something like the “golden ratio” often described in mathematical analyses of artworks and natural proportionality.

The human mind likes a certain level of balance in the information it receives. When a person writes, they tend to favor either information or analysis, but only experienced writers know how to mix the two into pleasing and easy to read narratives. It’s a problem even good writers frequently struggle with. 

Too much writing about ideas, and the application seems too “light.” Too much data, and it seems too dense or too technical. In formal writing analysis, this formula is often used to describe balance between facts and ideas, where the value a is descriptive and creative writing, while b is supporting data and factual information. Those familiar with the classic “5 paragraph essay” often taught in schools, will recall the same proportionality. About 3 parts of persuasive writing, for every 1 part of factual basis. 

This type of training is not universal even among professionals, which sets up an arbitrary test of writing skill that may not be as relevant to the outcome as we tend to believe. If our job is to train people how to be better entrepreneurs, then we fail at that mission from the beginning if we can’t differentiate between someone who deserves our help, and someone who doesn’t.

By offering feedback on the strength of an application according to the above mentioned metrics (Completeness, Effort, Spelling, etc), Decissio could potentially improve the chances of failing applications where the main problem is poor writing.

An opportunity to improve an application is also an opportunity for us to see value where it is hard to spot. Telling an applicant that their application is failing because of style and substance can help those applicants to better express themselves, and thus deliver us more opportunities to find quality teams.

Conclusions

StartupYard and Decissio pilot project shows that AI assisted investing can improve results quickly. Click To Tweet

The results of this pilot clearly show that there is great potential in enhancing our decision making process with machine learning and data analysis.

We are not at the point where we’re ready to let a machine determine our investment strategies on its own- the way machines already do some forms of investing without human inputs.

Unlike an investor in securities, or a high-frequency bond trader, an accelerator’s main advantages are as a first mover. We invest in companies that don’t exist yet, have limited information on their markets, and have a limited history, or no history. So we invest in people – and people are inherently hard to quantify.

Our anecdotal experience of meeting teams in person *before* evaluating their applications, consistently reveals that the application process cannot identify many important personality traits. For an accelerator, success comes only when we are right about a trend, and a particular person, at just the right time.

So employing an AI powered decision-making approach cannot mean abandoning the unique advantages we have: the ability to see things others don’t see. Expertise (and hard work) is still the core of sound early-stage investing, but AI can help us to focus that expertise on the “creme de la creme” of potential investments.

It can save us from becoming jaded by the junk applications that routinely swamp our inboxes.

A startup is not an individual, it’s a team. And it is not in our interest to arbitrarily eliminate applicants who are not good at writing applications, or have other deficiencies more visible on an application than in real life. However, it is in our interest to conserve and spend our resources (including our time and energy), where the potential for gain is highest. 

This approach can benefit higher-dollar investors too: later stage investors have many of the same problems accelerators have, but on a different scale. A Seed or Series A investor makes decisions involving 10-50x more money than any single investment from an accelerator, and they also receive more requests, on average, than a small accelerator does.

Currently the most obvious and most immediate advantage of using Decissio’s AI is for very early stage investors with many applicants, such as government innovation programs, and big accelerators like TechStars, Y-Combinator, and 500 Startups. 

Tl;dr:

  • StartupYard alum Decissio analyzed our past applications over a 6 year period.
  • Decissio used this data and their own AI to predict which applications to StartupYard would succeed.
  • Two of their top 10 picks were also StartupYard finalists
  • They accurately predicted the bottom ranked half of applicants.
  • This approach can be used by accelerators to:
    • Improve applications overall
    • Save time on the poorest applications
    • Reduce systemic biases
    • Get better information on applicants
  • Decissio’s AI could be applied to other early stage investors, such as Series A and Seed Investors, or to large accelerators, particularly Tech Stars, Y-C, and 500 Startups.
  • At the end of the day, AI will help early-stage investors to get better information, and spend more time focusing on the human-focused side of their work.
Central Europe Accelerator

11 Things We Say All the Time to Startups

“You Just have to…”

Paul Graham has an amazing post on his blog, called “Before the Startup.” You should read it. I’ll wait.


Ok, for those who haven’t read it: he talks about how his role as a startup mentor is often just to repeat the same things. After a while, he realized that the problem wasn’t that startups didn’t know things- it was that they were asking the wrong kinds of questions. And they were doing it because they’d been trained in life and education to do it that way.

Instead of asking “what do you think about…” startup founders ask: “how do I…” They do this because the education system and tech culture itself tell them that there are “secret answers” or “key learnings” that apply to almost any situation. Like the college student who asks if a piece of information will be on the test, startups look for “tricks,” asking what they should be doing, instead of asking for mentors to react to what they’ve actually done.

We have much the same experience at StartupYard, and so we thought it would be useful to break down those things we say so often, and explain why it is we say them.

For this piece, 11 Things We Say All the Time to Startups, there will be two contributors: StartupYard Managing Director Cedric Maloux, and Community manager Lloyd Waldo. The original version of this post appeared on our blog in March, 2016.

“It’s Not About You”

Cedric: Startup founders tend to focus, particularly at an early stage, on what they want, and what kind of company they want to be, instead of the problems that they will solve for their users. When they first start talking to their customers, they will talk about “we,” and “us,” instead of “you,” and “our customers.”

So it’s almost always necessary to refocus your messaging early on to make sure that you’re focusing on your customer’s problems, and are bringing them something of value, not just attaining a goal that you have as a company. Less “we need your support,” and more: “you need this product.”

“You Are Not Your Customers.”

Lloyd: Banish this aphorism from your speaking vocabulary. You created a business and risked everything to run a startup on the strength of one idea. You are not like the people who will be your customers. You may know a lot about them, and you may even use your product, but you also created it yourself. That does not give you an excuse to not talk to users, and try to understand them better than you do.

“No One Will Believe Your Projections”

Cedric: When we talk about projections (user growth, revenue), founders can get too caught up in how to make projections that investors might believe in.

But that’s backwards. Investors will never believe in projections, because they are just that- projections. Instead, you need to develop a plan that makes those projections seem attainable. Investors don’t invest in your projections- they invest in your plan, and if that plan makes sense, it doesn’t matter whether the projections are believable or not.

“How Will This Help You Grow?”

Cedric meeting with StartupYard Startups in 2015

Lloyd: Startups come across a lot of ideas about things that might help them grow. It’s important to keep in mind the goal of doing anything connected with so called “growth hacking,” which is to actually grow.

Vanity statistics, like Facebook likes and Twitter followers, are not growth (not alone). But the logic often goes like this: Step 1: Likes on Facebook (or whatever), Step 2: …? Step 3: Growth. Focusing on how something will lead to growth is important- you can’t go from step 1 to step 3 without taking step 2. So what is step 2?

“What’s the Next Step?”

Cedric: Just like startups have to focus on how doing things will help them grow, they have to also make sure that every step they take has something after it. Everything has a desired result. You got a meeting with a potential partner? Great. What’s the next step? If there is no next step, then what will that meeting accomplish? What will that partnership accomplish without a clearly stated goal?

“Where’s the Call to Action?”

Lloyd: Simply put, you shouldn’t be communicating with your customers if you aren’t giving them something to do, or something they value.

Startup founders usually get a sense that they have to be activating their customers, but they also have to activate them to do clear and understandable things. There also has to be a clear way of measuring whether that activation is actually working. Enter the Call to Action: if you don’t have one, in an email, a post on social media, or a landing page, then you are wasting your users’ time and attention for nothing.

“You’ll have to test this and see”

Lloyd: Founders are prone to confusing advice with directions. As a mentor, I can give good and actionable advice, but just because I think it will work, doesn’t mean it works. The only way to see if the advice is sound is to try it, and pay attention to the results. Testing can’t tell you everything, but not testing tells you nothing.

“I can’t hear you.”

Cedric: When you meet with employees, with investors, or with anybody, remember that you’re the founder of a company. Your opinion matters, and you need to be heard, loud and clear. Some founders just don’t know how to make themselves heard, and make their presence felt. Instead of owning the room and controlling the conversation, they react passively, and let others lead. Instead, be the boss, and say what you think in a clear, audible voice. You’re the boss.

“It’s Your Company.”

Lloyd: Leading from that, remember that whatever you’re doing, make sure you believe in it. In an accelerator, you get a lot of advice, and a lot of direction. But it’s your company. If you aren’t happy with things a certain way, then the last word is ultimately yours. You should listen, and be open, but you shouldn’t do things just because people tell you to. If something doesn’t feel right, ask for help, but don’t “go with the flow.” It’s your company.

“Stop Selling, and Start Creating Visions”

Cedric: Selling isn’t about getting money from people. It’s about giving them something they can believe in, and are willing to pay for. To sell in the long run, you have to build a vision that people can relate to, and that people want to be a part of. If you focus on your vision, and on communicating that vision to people, then the money conversations -the selling- are just a detail. A small part of the overall experience, and not the focus.

“You Need to Control This Process”

Cedric: B2B sales are very different from B2C sales. In B2B sales, you need to remain in the driver seat, not waiting for the customer to decide that they’d like to work with you. You need to own the process: move each separate piece like a conductor, anticipate every question and issue, and close the deal. Going at the pace that the client picks is, in effect, accepting the client’s own objections and doubts as your own. If you don’t set the pace, then no one will, and many deals that could happen just won’t.

Ouibring, StartupYard

SY Batch 7 Alum Ouibring Gains Investment – With a Twist

Good news often comes all at once. Yesterday we announced that Neuron Soundware had raised €600,000, and StartupYard has raised €1 million in a record breaking investment round.  Today we’re able to announce that Ouibring, a StartupYard company (Batch 7) that helps travelers and shoppers to bring joy into each other’s lives by bringing rare items home with them from abroad, has also raised seed investment.

StartupYard, Ouibring

OuiBring Founder and CEO Joel Gordon, signing a deal with Busyman.cz

The Details

The seed investment comes from the Czech incubator Busyman.cz.

Since joining StartupYard in late 2016, Ouibring has quickly built a following of more than 60,000 Facebook fans. Filip Major, the founder of Busyman commented: “Ouibring has the potential to change the global consumer goods logistic system as UBER is changing the way people move”.

The investment will power global expansion, as Ouibring connects more of the 30 million flights carrying almost 1 billion travelers each year with shoppers all around the world.

Ouibring connects shoppers who need help sourcing hard to find products, and travelers with spare luggage capacity to create a win-win situation. On Ouibring’s platform it’s possible to order hard-to-find goods from your home country, or discover new items that travelers can then bring with them when they visit a city near you.

Ouibring, Startupyard

The Twist

Busyman.cz has acquired a minority stake in Ouibring using a digital commodity, “Crown,” which is a “non-pre-mined” digital currency.

Crown has a market cap of more than $13m USD, processes hundreds of transactions per day on its blockchain and provides powerful security features. As part of this deal, Ouibring will move its client-to-client transaction settlement onto the Crown blockchain, making every transaction easily trackable, efficient and transparent. Ouibring also aims to emit its own token of exchange on the Crown blockchain.

“Our customers care about security and compliance. Using the Crown blockchain to create unique new features will help make Ouibring even more reliable and easy to use for our customers” says Joel Gordon, CEO and founder of Ouibring.

About Ouibring:

In our interview with him earlier this year, Joel told us the story behind Ouibring as a new online shopping experience:

 

” The idea for Ouibring came from experiences gained living and working abroad for the last 15 years. The fun and excitement when a special package delivered by a friend arrives is the inspiration for Ouibring’s tagline – ‘Bring a little happiness’.

As any expatriate knows, living abroad can give you a special appreciation for things that those at home just take for granted. You look forward to that time when a friend will bring a special something you’ve requested from your home. That’s a magical feeling, as if you’re the only person in the world that has what you have. We wanted to capture that feeling, and make it something anyone could enjoy. A special moment of joy only for them; an experience no one else is having.

At the same time, we can give others the chance to make a bit of money, and reduce waste by sharing their spare luggage capacity.

One story I really like is how even a small, generic item that is plentiful in one location can provide a whole lot of pleasure and luxury when it appears in an unexpected context. When a Ouibringer arrived with three massive bags of Monster Munch Pickled Onion and delivered them to a travel blogger living in Bangkok. They really made her day.” 

Joel Gordon
Joel GordonCEO, Ouibring

 

What’s Next for OuiBring

CEO Joel Gordon moonlights as a user of his own product: here he delivers some treats to customers in Thailand.

Ouibring has already attracted hundreds of shoppers and travelers from around the world. The company is continuing to explore alternative approaches to shopping and fulfillment for adventurous people everywhere.

So, to celebrate this big step for the young company, why not jump over and order something for yourself, or sign up to bring a little happiness into someone else’s life?

You can now apply for StartupYard Batch #8.

  • Robots
  • Artificial Intelligence
  • VR/AR
  • IoT
  • Cryptography
  • Blockchain
Applications Open: Now
Applications Close: June 30th, 2017
Program starts: September 4th, 2017
Program ends: December 1st, 2017
Pavel Konecny, Neuron Soundware, StartupYard

SY Alum Neuron Soundware Closes €600K Investment from J&T Ventures

We are very pleased to announce that Neuron Soundware, or 2016 Alum, and winner of “Vodafone Idea of the Year 2016” has closed an investment from Prague-based J&T Ventures, of €600,000 to grow their team and expand their sales to capitalize on early traction with clients like Siemens.

The story broke first on Euro.cz this morning.

Congratulations @startupyard alum @NeuronSW on exciting progress, and fundraising €600K to expand operations! Click To Tweet

The Details

Pavel Konecny, Co-founder and CEO of Neuron Soundware, made the announcement today in Mlada Fronta, together with Adam Kocik, Managing Director of J&T Ventures The investment will help Neuron Soundware to beef up its team, refine its technology, and expand its customer reach to include aerospace manufacturers, rail operators, and automotive companies.

Neuron Soundware, founded in 2016, joined StartupYard the same year. There the founding team, a group of AI experts led by Konecny, conceived of a device which can listen to heavy machinery, and over time, learn to recognize mechanical issues and predict when the machinery is likely to fail. Since attending StartupYard, they have developed a device employing high-end sensors used in aerospace, and audio processing software that can be plugged directly into heavy machinery and can warn of future mechanical problems. The company announced a cooperation with Siemens in 2016, and was invited to join the Airbus Innovation Lab the same year.

“We are continually impressed by the Neuron Soundware team’s technical prowess and ability to attack very complex problem sets with novel approaches and technology,” Kocik commented on the investment, “this technology is going to be even more essential as the IoT [Internet of Things] matures. Neuron Soundware will help to make machines safer, more efficient, and longer lasting.” The investment, a cooperation between J&T Ventures and a private investor, will be used to refine the engineering of Neuron Soundware’s physical devices and software, and to support its outreach to large industrial machinery firms, where demand for the technology is already growing.

Neuron Soundware, StartupYard Accelerator

According to Konecny, the technology, based on “deep neural networks,” learns from the sounds machinery produces, and can detect patterns too faint or complex for a human to hear, diagnosing issues with machinery well before they become catastrophic. Konecny says of the technology: “Sound is a rich source of data, and also quite universal, which is why mechanics and engineers rely on it so much. But a human cannot listen to 100 airplane or diesel engines for 1000 hours each, and make sense of it all. A machine can do this, and when one engine fails, it can apply that learning to all it has already heard, thus greatly enhancing our ability to detect and prevent future problems.”

“When Neuron Soundware joined us for our 6th program [out of 8], their approach to understanding sound had never really been tried before,” commented Cedric Maloux, our CEO, “leveraging StartupYard’s mentor network, locally and abroad, they were able to very quickly prove that there was a huge need for this kind of technology.” The company notes that future applications for machine learning and sound reach beyond machine maintenance, to product testing, autonomous navigation, green energy solutions, and even security. “Sound is everywhere,” remarks Konecny, “and we’ve just started to see how we can use it to understand more of how everything works.”

About Neuron Soundware:

Neuron Soundware is a deep tech startup, exploring the use of self-teaching, constantly learning neural networks in a wide range of audio analysis and audio manipulation applications. Since 2016, Neuron Soundware has focused on technology to monitor and diagnose industrial equipment to predict failures and increase efficiency. They include Siemens and a number of other leading industrial and transportation equipment manufacturers among their clients.

About J&T Ventures:

J&T Ventures is a Venture Capital fund based in Prague. The fund invests up to €500 000 in technology firms at the seed stage in CEE region. Since 2014, J&T Ventures has been invested in 11 growing and promising innovative startups with the goal to contribute to their dynamic growth and value creation. The fund focuses mainly on B2B sector with a particular interest in FinTech, IT (Big Data Analytics), IoT/IoE & Smart City IoT and Retail.

 

You can now apply for StartupYard Batch #8.

  • Robots
  • Artificial Intelligence
  • VR/AR
  • IoT
  • Cryptography
  • Blockchain
Applications Open: Now
Applications Close: June 30th, 2017
Program starts: September 4th, 2017
Program ends: December 1st, 2017