StartupYard’s 2015 Applications Are Now Closed. Here’s What We Learned.

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StartupYard closed its applications on Monday for the March 2015 accelerator round. As you probably know, 10 teams will now be selected by a careful selection process, and these teams will receive €30,000 and spend 3 months in our mentor-driven accelerator at Node5. In addition, €250,000 will be available for follow-on seed financing for the teams that show the most promise through the course of our program.

We’re excited to get started, and we hope you are as well. We can tell you that we received over 200 applications in total, which is 4 times the number we received for the last round. and that most countries in Central Europe were represented.

Here is a map of applicants:

Screen Shot 2014-12-17 at 18.15.55

Where did Applicants Come From?

We were certainly not surprised that, combined, over half of our applicants come from the Czech Republic and Slovakia. Interestingly, Slovakia in total provided the most applicants of any country, with the capital, Bratislava, submitting 30 applications on its own. We had expected this position to be occupied by The Czech Republic, with the largest number of applicants coming from Prague, our home base. Nevertheless, just these two countries combined submitted more applications than our total for last year, and each far exceeded their application numbers over the previous round.

We also saw applicants in significant numbers for the first time from The UK, Germany, and Italy, 3 countries in which we did not focus promotion for StartupYard.

 

What Surprised Us?

With an increased interest in all things Startupland, as demonstrated by Startup Lithuania’s impressive presentation at Slush this year, Lithuania was the surprise dark-horse winner for 3rd most applicants. With all of them coming from Vilnius, that city out-applied Brno, and Kolosice, the two second largest cities in The Czech Republic and Slovakia, respectively. Lithuania’s applicants approached 10% of our total, thanks in part to their promotion of StartupYard to their early stage startups. If these teams are anything like what we saw in Helsinki, we’ll be happy to have them at StartupYard.

It was also a slight surprise that we received no finished applications from Poland at all. But on the other hand, Poland is forging an important and powerful argument for its own accelerators, many of which do work very similar to our own. We had hoped for a few applicants from Poland, but we did not focus our energy on recruiting there.

A breakdown of the applicant totals per country.

A breakdown of the applicant totals per country.

What Have We Learned?

Tripling our seed funding this year doubtless increased interest in StartupYard as an option for early stage startups.  So just as the total number of applicants increased, so did the volume of communication we received. Both via email and in person at conferences and events across Europe, we encountered some new questions. I plan to write about these more in an upcoming post, but I’ll briefly mention them here.

What is an Accelerator to You?

As tech accelerators are becoming more common in Europe, and in Central Europe, shared concepts and methodologies are still being hashed out. At the Numa Accelerator Summit last week, for example, it became clear that European accelerators do not often even agree on what the mission of an accelerator is, or on what metrics we should measure our success.

In France, for example, startups seem to view accelerators more as incubators, with dashes of seed funding and a bit of guidance. This is reinforced by the growth of “corporate accelerators” in the region, which draw their talent from the corporate workforce, and not necessarily from self-starting entrepreneurs. These “accelerators,” function more as in-sourced R&D teams that are segmented away from their typical corporate structures, to give them a measure of freedom- but not too much. Few others at the summit took entrepreneurs as young as StartupYard’s, and I did not talk to any others who ran as intensive a program as we do.

Differing Expectations

A common reaction to StartupYard’s investment terms in Finland and France, where I have spoken personally to dozens of startup founders was shock: “10% equity?” I had this reaction from startups who compared our equity terms to those of TechStars, which is not a constructive comparison to begin with. A few of the same teams who reacted with shock to our terms also revealed that they had not been accepted to TechStars, which is much larger than StartupYard, and also requires that a project be much further along. Others were still bootstrapping their products, and had no investors- yet they worried over an equity stake, as if there was a great deal of money already in play.

We’re serious when we say that for us, the team is the most important thing. We have seen projects change drastically in our program, and that is often because teams join us at a time where our mentors have the greatest chance of a positive influence on their direction. So comparing us with an organization that gives twice the money we do, and takes half the equity, is not really appropriate- especially when that program only takes teams that have very evolved proofs of concept. At StartupYard, we invest money in your team so that you can make it through 3 months with us, and have a chance to build some runway, and get more investors. Our investment of greatest value is our mentorship, and our time- not the funds or perks that we provide.

Don’t get us wrong here: there is enormous value in what larger accelerators do, and the startup ecosystem needs them. But it needs us too. And for a generation of people who are now being taught that entrepreneurship is how they will craft the future and build their careers, outreach to younger startupers is needed now more than ever.

In Bucharest, in Vilnius, in Bratislava and in Prague, this is a message that is reaching the right ears. Entrepreneurs in these regions are hungry for opportunities like the ones we offer, and investors are keen to connect with those types of people. In western Europe, the situations is more complex. There are probably thousands of young entrepreneurs in France, the UK, Germany, and Poland who need and want exactly what we provide, but in these larger markets, the message of what an accelerator does seems to be dominated by the money, and by the few accelerators who give the most. It’s not surprising, but it’s definitely a new and interesting challenge for us, as we are arguing our case, more and more, in a broader conversation about what our mission should be.

As we grow as an accelerator, we too will have access to more investors. We too will become more selective. That is how we will best be able to serve our local ecosystem, and our own investors. We have to grow as our region grows. But we need to make a strong case now for the accelerators and incubators who will follow us down this path- that the kind of work we do is still vital, and will be vital in the future, even if we ourselves move on and grow past it.

 Infographics for this post were made with Tableau. It’s a cool tool, so check it out. 

What StartupYard Has Talked About This Year

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At StartupYard, we take blogging seriously. And with good reason. StartupYard has received a lot of press in the last year, and every one of those media mentions relies on information represented in our blog. Our blog gives our applicants a feel for what we do, and what we are all about. And that’s apparently a good thing, because we’ve quadrupled our applicant pool compared to our previous round of acceleration. Having attended plenty of startup events this fall, I can tell you that a number of people I met had become familiar with me, the startups we accelerate, and with StartupYard, through the pages of this blog.

As an open source community, this channel of communication will play an even more important part of what we do. We posted over 70 times last year, on topics ranging from interviews, company profiles, opinion pieces, and news.

But you may have missed one or two of them. Well we forgive you. To help you catch up, here is a list of some of our most popular posts, sorted by category and date.

 

Tips and Tools for Startup Life

News About StartupYard

 

Interviews with Mentors and StartupYard Teams

 

From Slush to LeWeb, 6 Things to Remember When You’re Pitching Anyone, Anywhere

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I’ve been hearing a lot of pitches lately. Aside from last week’s Open House at StartupYard, where we welcomed 8 pitches from local startups, I’ve heard dozens more in the past few months. last week, I was at LeWeb, the French startup conference, and it seems that pitching is the new black.

Some have been elevator pitches, some casual and conversation, some long and more formal, in conference rooms, at booths, on-stage, and on the bus or in a taxi. Interestingly, an elevator seems like the only place I haven’t heard a pitch this season. But nevermind- all of this pitching has drawn a few little details to my attention, and as a frequent pitchee, but a non-entrepreneur, I’ve noticed a handful of things that I wished pitchers did a bit more often when talking to me, or a group I am a part of.

Some of them seem easy, but aren’t, and others seem complicated, but are actually easy to do.

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What is your Startup called again?

Wow, you would’ve thought this was obvious enough. But it is not. I would say that over 50% of the startups that pitch me mention the name of their company no more than once. And since I deal almost exclusively with non-native English speakers, they do so with an accent that ranges from the highly intelligible, to the marginally understandable. This isn’t as big of a problem when we’re both standing in front of a conference booth plastered with the name of the startup, and the founder I’m talking to is wearing a company t-shirt (which is a better idea than you probably think, btw), but I can’t tell you how many frustrating minutes I’ve spent pouring over a stack of business cards (I easily come home with 50 of them in a week), trying to match the company name on the card with the face of the founder in my memory. This happens because the founder didn’t say the name of his company often enough.

Adding to that, startup names can be fairly arbitrary, and can have weird or unexpected spellings. That’s fine, but if your accent isn’t perfect, or you’re not using any visual aids to pitch your startup, go ahead and repeat the name 2-3 times a minute. In fact, every time you would normally say “we,” or “our,” go ahead and try to say the name of your startup. It often works really well. Words to avoid are “our company,” “our startup,” and “our team.” Always say the name of the company, or “The X Company team.”

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Say My Name

Oh, go ahead and laugh. But as I’ve written before on this blog, a person’s name is the sweetest sound they will ever hear from another human being. If I’m at a conference, I’m wearing a nametag. And if I hand you a business card, my name is written on it. If you pitch me, I will always hand you a business card, and a lot of investors and most accelerator folk will do the same. So use my name when speaking to me.

I think this makes people feel uncomfortable- that is, saying another person’s name in conversation, instead of just saying: “you.” But believe me, even though I know it’s a sales tactic, it still works. Why? If for no other reason, because you took the time to learn my name. That will make me instantly like you, and instantly appreciative of your attention. It works, so do it.

Acknowledge your Challenges and Be Interested in Feedback

I’m a startup mentor, and I’m an angel investor. That doesn’t make me an expert in what you do, but it makes me someone who’s worth listening to- if only because I have the tendency, when I’m really impressed, to give people money. And I think it’s safe to say that I would only give money to someone who seemed interested in hearing what I have to say. You don’t have to agree with my feedback, and you don’t have to pretend that I’m an expert when I’m not, but you do have to be genuinely interested in what I have to say about your ideas. Why? Because I’m in a position to help make your ideas realities. A lot of the people you talk to will have opinions- they may be wrong, but it’s your opportunity to impress them by showing that you’ve thought about the problems already.

I also notice a tendency among very polished pitches, the kind that win pitching competitions, to do away with an acknowledgement of challenges that a company may face. I think this is can be a big mistake. In the case of LeWeb, for example, I was frustrated with the winning pitch, by a company called JukeDeck, because it completely ignored the enormous technical challenges associated with the product, which generates music automatically for videos and websites. When asked about these challenges, the founder avoided the question, and talked about his experience with music theory, and machine learning, as a competitive advantage. But this is a considerable risk. The founder was refusing to acknowledge a huge challenge, and having spoken afterward to a few people who viewed the presentation, I can say that this did not go unnoticed. You need to acknowledge and address doubts that you expect to be raised. Not ignore them.

I don’t know about all investors or accelerators, but we at StartupYard are not going to fall over dead if you politely argue your case with us. We are interested in the process of discovering what you know, what we know, and how we can work together to make your product a success. That, more often than not, involves a little spirited debate. If the person you’re pitching raises an objection, show that you understand the objection, and appreciate the thinking behind it, then attempt to politely rebut it. If you don’t understand the feedback, ask for clarification. Very often, founders dismiss feedback by saying they don’t understand it, or they respond to feedback in a way that shows they don’t understand. Don’t put yourself in this position- ask for clarification, and demonstrate that you understand the objection. You don’t have to have an answer, but you do have to acknowledge the feedback.


Consider that I may have something of value to teach you

I’ll give you an example: just recently at LeWeb, the Paris startup conference, I spoke to Alban Margaine, a co-founder from a startup called Braineet. He gave me quite a good pitch for their startup, which is an “idea engine,” of sorts for connecting retail brands with customers who have interesting creative or marketing ideas. I raised a few objections, and he handled the interaction beautifully: he showed that he understood those questions, and countered by showing me some data which supported his argument. He didn’t tell me I was wrong, he simply showed me a reason why my assumptions might be inaccurate. But then he did something that almost no startup co-founder ever does: he asked me about my own experiences, to see why I had drawn the conclusions that I did.

I think that pitching becomes an adversarial, game-like exercise for many of us. We begin to forget that it carries with it an opportunity to learn and profit in ways that we hadn’t expected, but ought to have been ready for. So remember who you’re talking to, and treat them as a resource. They will appreciate your interest, and your thirst for knowledge.

 

Success is the intersection of luck and perseverance.

LeWeb speakers Peter Pham and Jeff Bonforte touched on this during their talk this week at the conference. Bonforte relayed a story in which he had been working on selling a company for several months. Deals had fallen through, term sheets had been drawn up and abandoned, and the situation oscillated between hopeful and miserable. Then his electric car ran out of energy while it was near the Google headquarters in Mountain View. Google had not been part of the conversation about this company up to this point, though he had known people there. Events transpired, and Google ended up buying the company he had been trying to sell less than 12 hours later.

Benforte doesn’t attribute this turn of events to luck, nor to his own industry. Instead, he simply states that his perseverance, playing out over months of hard work, finally met with a lucky outcome. He had been plugging away at selling this company for a long time, and he would have continued. At the same time, he had been honing the sales pitch he had used for potential purchasers, and he had raised a lot of awareness of the deal in the offing. By the time it happened, his luck simply caught up with his hard work. Had he not worked hard, it’s unlikely he would have been prepared to make a deal in just 12 hours- but had he not been lucky, he would not have made the deal that day. Still- he probably would have found luck another day.

A lot of founders get burned out on pitching. They can’t be blamed for this- it’s thankless, emotionally exhausting, and harder work than it seems. But you shouldn’t let yourself forget this: every time you pitch, every time you talk to an investor or a partner, that could be the moment you write about in your own autobiography. Every pitch you do could be the one that gets you where you want to be. It isn’t plain luck, and it isn’t all hard work: it’s being prepared when the two meet that counts the most.

 

Know what you want to accomplish and control the conversation

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A panel can be a cruel mistress. Make sure they ask the questions you want them to.

When you pitch, you have to have a goal in mind. And that goal has to fit the venue in which you’re pitching. State that goal, in your pitch, very clearly, before finishing. If the person or group you’re pitching to has to ask you what you want, then you have not used your pitching opportunity to accomplish much. Worse, by not stating your specific goals and challenges, you don’t control the conversation about moving forward, and leave yourself open to being picked apart on one of a million details.

I witnessed a pitch at LeWeb for example, going horribly wrong. The startup was a “suggestion box,” app for large companies. The founder had been vague and unclear about what the unique competitive advantage of the startup was (since the technology was not new in itself), and the panel really wanted to know. Worse, the founder didn’t make it clear what the company was trying to accomplish by pitching. When asked whether they were looking for investment, and if so, what for, the founder didn’t have a good answer.

It struck me that if the founder had simply stated that he wasn’t sure what his advantage was, he would have elicited advice rather than criticism. But instead, he reached a bit too far, and started talk about how his company was “reinventing email.” Red flags rose, and the panel had nothing but more challenging questions about the company’s strategy. That’s where things went downhill. The founder and panel began vehemently arguing about whether the idea was innovative or not. The founder lost control of the message, and began desperately trying to list ways in which his product was unique- none of which sounded unique at all, given that he appeared so defensive. The crowd turned sour as well.

This problem is, I think, the most common cause of a pitching disaster, particularly on stage, when a pitching session includes a panel, which they do at many conferences. The pitch seems to go fine, but it becomes clear when the panel begins to ask questions, that the founder has not made clear what they want to accomplish by pitching. Raise awareness? Money? Recruit partners or employees? If the panel doesn’t know the answer, they don’t know what about the pitch was important, and they will simply target the weakest aspects of your pitch, bringing up things you aren’t necessarily willing or able to talk about. The point of focus will be the value proposition that the company is making, and that proposition may be difficult to support in a 5 minute pitch. In some cases, founders try to backpedal and cover for their weaknesses, in an attempt to head off the objections, making the situation even worse. Instead, acknowledge your challenges, and make them a part of your pitch. This will put you in control of the conversation, and steer it towards positive solutions, rather than highlighting problems you haven’t addressed.

Open-Sourcing StartupYard

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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.

 

 

The StartupYard 2014 Open House at Node5 A Success

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The StartupYard 2014 Open House was a big success. In front of a packed house of over 100 guests, startups, mentors, and investors, Chairmain of Microsoft Europe Jan Muehlfeit and StartupYard Managing Director Cedric Maloux held forth, while our panel of StartupYard mentors reviewed 8 pitches from local startups.

Ondrej Bartos
Ondrej Bartos

Wayra gave us a little love as well:

 

 

Jan Muehlfeit

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Muehlfeit, who is stepping down from his role as European Chairman at Microsoft to take a more active public role in “unlocking human potential,” spoke for about 40 minutes. Topics ranged from education, to issues of labor and creativity in the digital economy. He shared a few anecdotes about his friend and colleague Bill Gates, and about his career with Microsoft, which is ending this year.  Muehlfeit plans to work as a “mentor, coach, and trainer,” as he puts it, for entrepreneurs and technologists around the world, to unlock human potential. He will start as a senior strategic advisor for  the private equity fund Atlantic Bridge, and will lend some of his time in the coming year to advising StartupYard’s incoming teams.

Muehlfeit covered a broad range of topics during his address. We live tweeted his talk, and here are a few of our takeaways:

 

 

 The Pitch-Off

We were pleasantly surprised at the number of applications we received for the pitch-off, in which 8 entrepreneurs pitched theirs startup ideas to Muehlfeit, and our other mentors in attendance: Ondrej Bartos, of Credo Ventures, and Petr Ocasek, a StartupYard co-founder and CEO of AngelCam. Over the coming week, we will write a bit more about how the pitching went, and about the process we used to select the pitches that appeared at the pitch-off. Here is a quick overview of the pitches, along with their self-descriptions:

Factorify

Factorify is an SaaS for manufactures and small and medium-sized factories which want to be more effective and be able to plan, calculate and track everything. We want to bring inovation and flexibility to production.
 

hotcar.io

The HotCar.io application reveals the history of used car advertisements, puts the data insight into used car market and shows often car defects so the customers can negotiate the best price and minimize risks for the used car they are eager to buy.
We also provide market benchmarks, analytics and demand/offer program for used car sellers.
Moreover, we would like to do a Full Customer Service – we search, inspect and ask for a discount on a car/car type specified by a customer.
 

shards.io

Shards.io is aiming to provide a real-time BI over large amount of structured and semi-structured data. Our stack of technologies includes a distributed storage able to run on commodity hardware or cloud infrastructure and web-based UI for data analysts.
 

Portadi

Portadi helps workplace teams manage access to cloud apps with minimal effort. Portadi increases compliance and visibility into access rights to cloud apps and minimizes the security risks of distributing sensitive passwords to users.Each team member gets a custom dashboard with their team or company cloud apps or websites. Users don’t see app passwords, they simply sign in with a single click and land right in the web application.Portadi gives team managers and business owners the definitive answer to who can access which cloud app or website and provides a centralized audit trail. Portadi exposes how each apps is utilized allowing team managers to optimize paid subscriptions and better assess ROI of app purchases.
 

f8

F8 provides a two-way sync between the world of documents (meeting minutes, brainstormings, project documents, business analysis documents, theses, etc.) with the world of personal task management.It significantly reduces the time overhead keeping those two worlds in sync (e.g. distribution and tracking of meeting minutes actions, agenda preparations, etc.).Its target audience are project managers, analysts, writers, students and possibly more.
 

Datlowe

We are trying to provide a top class text processing tool which enables users to get information out of texts, search the texts better, and classify them. DATLOWE digs really deep into the language providing us with the structure of sentences. It means we understand the text well. We know what words are subjects, predicates, objects, etc. and how they depend on each another. Combining these information with smart dictionaries allows us to extract more information with higher precision than most of the competing methods.
 

SentiSquare

A StartupYard alum, SentiSquare discovers the most important topics in social media content and automatically produces summaries of the topic-related comments. It’s a “sentiment analytics” engine that will revolutionize the way global brands engage with their customers online and offline.

 

Educasoft

Education and content platform, Educasoft, maker of MyPrepApp and Hrave.cz another StartupYard Alum, took this pitching opportunity to announce that they have closed a funding round, and are focusing on the Czech market, soon to be followed by other Central European markets. 
 

StartupYard Announces Strategic Parternship with Mazars

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Finally, StartupYard is pleased to announce a strategic partnership with Mazars, the global accounting and consulting group with offices in over 50 countries. Founded and headquartered in France, Mazars is the 11th largest single accounting firm in the world. Their consultants will meet individually with StartupYard startups to ensure that they are taking all the appropriate legal and accounting steps as new companies.

Maloux noted of the new partnership: “even though they don’t cover the preferred topics of novice founders, tax, accounting, and legal advice are extremely important and need to be done well. I’m very happy that the experts from Mazars will help our teams to establish solid foundations, and make the best possible financial decisions early on, setting them up for success after leaving the accelerator.”

The partnership will extend for a minimum of two years, with Mazars consultants in close communication with all StartupYard teams.

Education Content Platform and StartupYard Alum Educasoft Secures Funding

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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.”

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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”. 

Cedric Maloux: 4 Tips for Targeting Your Elevator Pitch

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We’ve gone in-depth in the past  about honing your pitch, crafting a position statement, and talking about your ideas in clear, relatable ways. Today we’re going to talk about what I’ll call the “Targeted Elevator Pitch.”

By the way, 20 Teams signed up in just 3 days this past week, to be a part of our Dec. 4th “Pitch-Off,” as part of the StartupYard-Node5 Accelerator Open House. Out of these, we have room for less than half, but each team will pitch for just 90 seconds, with no slides or other visual aids. If these teams can deliver a perfect Elevator Pitch, then 90 seconds should be easy.

 

Cedric Maloux pitching StartupYard

Cedric Maloux pitching StartupYard

We all know the elevator pitch of course. It’s the 30-second version of your pitch that tries to position your company with an investor, and sell them on the idea, if not the whole investment, within the space of time it takes to get from the ground floor to (hopefully) the penthouse.

You’ll deliver this version of your pitch in so many situations, and so often, that you may lose sight of its real purpose, which is not really to grow awareness of your company or your ideas, but instead to generate interest so your audience will be hungry for more and become your allies in your search for investment, partners, and other opportunities.

The problem is that it’s hard to keep in mind that different people will hear your elevator pitch in very different ways. Some people may be impressed by you and your status as an entrepreneur, while others may be having bad day, have heard too many pitches recently, or are not interested in your idea for the same reasons that others may be. Finding and exploiting the interests of your target are key to your success.

The elevator pitch is about aligning your audience to you, grabbing your audience’s attention in one sentence. How can you bring them to your level? You’ve been living/working/researching your subject for months, even years, and they have not. How can you bridge that gap in one sentence, and make sure they go from not knowing who you are, to being eager to hear what you have to say? The last thing you want to do is start blasting who you are, what you do to someone who is not fully ready to listen.

For this reason, the first sentence of your pitch should not be about you but WHY what you are about to say after is interesting/important/relevant/sensational/worth listening to. Your mission is to grab their interest in less than 5 seconds. Once you put them in that place/time where you know they are truly listening, then you can deliver your pitch efficiently. Otherwise you might as well talk to the wall. Psychology studies can help us here a lot as we’ll see.

So here are 4 keys to targeting your elevator pitch, so you’ll be sure your audience is ready to listen to you.

 

The elevator pitch is also suitable for most Prague escalators.

The elevator pitch is also suitable for most Prague escalators.

 

Create Consistency

People have a general desire to appear consistent in their behaviour. A famous set of experiments has shown that when someone is asked a hypothetical question, such as “would you consider volunteering for X cause?” No matter their initial answer, they are over 25% more likely to agree to volunteer after being asked directly, than those who are not asked the question hypothetically first.

This is commonly known as “foot in the door,” psychology, or the consistency effect. That is, if you ask someone a hypothetical question where the obvious answer is positive, then they are much more likely to answer positively when asked more direct questions.

Think about it: If someone called you and said: “Hi, do you think it’s unfair that telecom companies charge so much for data roaming in Europe?” If you’re like me, you’d say “hell yes, it’s totally unfair, and it makes me crazy.”

Now consider what would happen if someone called you and said simply: “Are you interested in getting the best data roaming rates in Europe?” :Click:

But in the first case, since you’ve already answered once with a yes, you will be much more likely to allow the salesperson who posed this question (and showed some affinity for your feelings along the way), to finish their sales pitch. You might still not buy, but you’ll feel much more inclined to listen attentively. This is the power of the consistency effect, and the building of rapport with your target. Getting a person to answer “yes,” to anything; literally to almost any question, is better than launching into a pitch directly. Saying “this traffic’s crazy… isn’t it?” Is better than nothing, and the more you can show that you share the interests of the target of your pitch; the more specific you can be in eliciting a positive response, the better.

 

Ask a Data Backed Question – Reach out to their logical brain

A fact is worth a 1,000 opinions, and when it comes to pitching, your audience is more likely to be interested in facts than in your opinion (who are you anyway?). For this reason, starting your pitch with strong data as an introduction is a great way to appeal to their intelligence, and make them realize that what you are about to say is big/important. A data backed question is a great way to grab their attention.

“Did you know that the worldwide mobile gaming market is going to be worth $10 Billion in two years, and that 52% of casual gamers are women?”

This has two immediate effects. First it shows your target that you do know how big a market you’re talking about, and it also shows that you may have an insight or an angle on that market that is unexploited, or has hidden potential that you can unlock.

There was a great example of this in the pitch from founder Nikola Todorovic of Warrant.ly, one of our 2014 alumni. He asked: “Did you know that X Billion dollars a year are wasted in unclaimed warrantee payouts, and that most of this money is wasted because consumers lose track of their paperwork?” That’s a very powerful question. There are potentially billions of dollars being left on the table, because the warrantee system is so broken. And that’s a prospect that is always attractive to an investor.

business-bar-chart-1392339-m

 

The Power of Because

Dr. Robert Cialdini writes in his 1984 Best-Seller Influence, the Power of Persuasion, about the power of “because.” Below is a synopsis of his position:

It’s a well-known principle of human behavior that when we ask someone to do us a favor (in our case, listening to our pitch) we will be more successful if we provide a reason. People simply respond better when given reasons to do something.

A famous set of experiments asked grad students to request that riders on the New York subway give up their seats. Students who were tasked with asking for seats for no stated reason, had minimal success, and were even drawn into verbal conflicts with the people they asked. However, when students were allowed to ask for a seat, while giving an innocuous reason for doing so: “I am tired,” “my legs hurt,” riders were overwhelmingly willing to accommodate the them.

The effectiveness of this request-plus-reason is nearly total: Ninety-four percent of people asked in a similar experiment, if someone could skip ahead of them in line for a Xerox machine “because I’m in a rush,” allowed the experimenter to skip the line. Compare this success rate to the results when the request is not justified. Under those circumstances, only 60 percent of those asked complied.

Subsequent experiments further showed that the specific reason was not as important as the specific word “because.” In fact, if the experimenter simply stated that they wished to skip the line “because I need to make copies” (which is not a justifiable reason for skipping the line to a copy machine), 93% of subjects still conceded their place in line.

So give a reason to your audience to listen to you by using the power of because. “Let me tell you about our project because….” Try to use a valid reason but remember that it does not matter as much as you might think. They now have a reason to listen to you.

These are just 3 simple tips. At the end of the day, put yourself in the shoes of the person in front of you. Is what I am saying interesting because I am saying it, or is it because I can justify its interestingness? You surely have been in a conversation where people were talking to you, and you are just day dreaming or nodding along, but not listening. The reason might be that they did not include you in the conversation: they didn’t make it about you. This leads us to our 4th tip.

 

Excluding To Better Include

Another way to include someone in your thinking is to actually exclude the person from something else. “I know you are not the target audience for this, but did you know that….” This intro is very powerful because the recipient mind thinks: “I’m about to learn something new here. I better listen”. We all like to learn new things and grow as smart people, so if you tell a person they don’t know something simply because they have not been looking at it, they are much more likely to listen and decide for themselves. But they have to listen to you in the first place to do that!