6 Ways StartupYard Helps its Alumni Post Acceleration

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One impression some startup founders have about accelerator programs is that they are a “one-off” activity that lasts for just 3 months, at which point a company moves forward to either grow and scale or falter and die.

Thus the constant objection some founders have to attending an accelerator: “It’s going to take too much of my time.” And yet the purpose of a good accelerator is to be a platform for growth, and a means to save time and deliver faster than you could otherwise.

An accelerator’s value has to live largely outside the time-frame In fact, over 7 years of operation, StartupYard has continued to grow its role in the post-acceleration success of our invested companies.

While we’ve always tried our best to take care of companies that have been through our program, these years of experience have continually shown us that our involvement is often as critical after the program as during it. That has led us to greatly expand our post-acceleration activities with alumni.

Here are some of the things a good program should be able to help alumni with:

Fundraising and Prep

An important part of growing a sustainable business is laying the proper groundwork with co-founders, employees, and investors from the beginning. This is an area where young companies fail needlessly. Flexibility and a “move fast and break things” attitude are great until they become roadblocks to growth. When you’re at the stage that you need capital to execute sales and development faster, you’ll need what any serious company does: a plan.

Yet few early-stage companies have access to the experience and resources they need to set up their ownership structure properly, much less to continue to manage that structure in a way that serves existing shareholders, and prepares the company for future investment. Then there is the need to develop a full set of contingency plans based on different levels of investment, with optimistic and pessimistic assumptions considered and accounted for.

Unlike a typical Seed fund or VC, StartupYard works with founders from the pre-incorporation phase if necessary, and can guide the creation of a growth plan that makes sense, and can make the company investible in the future.

Many of the blockers to necessary investment for growing companies are avoidable. They’re things that can be overcome early, or they can become a drag on your success. Few companies make it from incorporation to venture funding without a few nasty surprises along the way. These can be greatly limited by an early-stage partner whose job it is to make sure you’re laying the right foundation.

The Alumni Network

Often forgotten, but very important in our experience, is the role of our alumni network in helping new StartupYard companies gain a foothold. Like the mentor network, our alumni group is composed of people who have experienced every challenge young companies face. Not only that, the alumni have been in the founders’ shoes in the very recent past.

Because our alumni maintain such a close relationship with our team, they can be continually called upon to share their working knowledge of their industries, and make connections for new startups that even our mentors can’t. After all, who knows better how to approach customers with a brand new idea than someone who has just done it themselves?

StartupYard, DemoDay Batch 8

StartupYard Alumni

To a surprising degree, our alumni have also come to constitute a base of early customers and partners for our newer startups. As our network grows to inhabit more industries, the chances that a fresh startup can begin cooperating with an alumni company grows every year. In our last two batches, multiple new startups have signed alumni companies as their first customers. The process also works in reverse: our newer companies have also become customers of our alumni.

The Negotiating Table

One of the biggest hidden advantages of being a StartupYard alum is the leverage it can bring to negotiations with new partners or investors. Of course, name recognition and the social proof a founder gets from attending our program are important, but they extend beyond just getting that first meeting with an investor.

Because the accelerator is a stakeholder, we are able to weigh in on the side of our startups to ensure that they are treated well and fairly by their later investors. Tech investors know, or quickly learn, that their access to deal flow depends on the reputation they’ve earned with us and other programs. Investors who are founder-friendly and straight-shooting are invited back, while those who don’t play fair will find that startups avoid them.

Here our mentor network also improves the position of our startups in negotiations. Being able to receive feedback from other alumni and mentors from the same industry helps founders to approach business deals better armed with the knowledge and context they need to make the best deals. Often too, our management team and mentors are involved in deals as advisors, bringing increased confidence and experience to the negotiating table.

Hiring

Of all challenges an early to mid-stage tech startup will face, hiring is perhaps the hardest. This is a problem that gets harder as companies grow, rather than easier. Finding and retaining talent is the number one barrier to growth for such companies.

Though StartupYard isn’t a talent agency by any stretch, again, planning is the best defense against this inevitable problem. That’s why we focus from the beginning on helping our startups to make the right early hiring decisions, so that their growth down the line won’t be disrupted unnecessarily by having to make drastic changes to the team in mid-stride.

This planning process includes not only understanding what kind of talent a young startup can afford, but also what types of people founders should hire first. Does a company need a COO or an outside CEO? Does it need a business development specialist, or should it hire a crack product development leader first? These questions are vital to the early success of young companies, and they’re very easy to get wrong.

Business Development

Business development with our startups is never confined to the brief 3-month window of acceleration. In fact, that’s more like an introductory period. Our startups continually tap our mentor network and corporate partnerships for business development for months and years after leaving the program.

We frequently connect alumni with new members of the network, as well as fielding requests from mentors and partners to connect them with our startups. As our network continues to grow, it becomes a richer resource for alumni and mentors both, often keeping connections going for years after the program. StartupYard’s in-person events and ongoing activities keep an open door between alumni and the broader network, so that early-stage companies that have grown in maturity and abilities can come back to mentors and partners when they’re ready, and mentors can keep up to date on what the companies are doing.

Press

Finally being part of StartupYard also means being part of our press operation. Though we aren’t the darling of the international media that Y-combinator is, our name recognition in Central Europe is high in the tech media, and we can leverage that name and our existing relationships with media outlets to highlight the activities and successes of our alumni.

In media, “relevance” is an important factor in getting any story told. Journalists look for familiar names and common connections to determine whether a startup or a particular story is noteworthy to its audience. Having the name of a well-known investor behind you helps to create that context for journalists and their readers, and makes it much more likely that you will receive coverage.

An exit is not a vision

5 Surprising B2C Growth Strategies Founders Rarely Try

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I’m not a fan of so-called “growth guruism,” or a believer that so called “Growth Hacking,” is what separates successful startups from failures. Solving problems that matter, taking pains to understand your customers and your market deeply, and doing truly unique and challenging things set the best tech startups apart- not the tricks they use, but how they use them.

Still, a growth strategy doesn’t hurt. Netflix wouldn’t be Netflix if it didn’t have clever marketing back when it launched. But it might not be Netflix the global dominant SVOD platform if it hadn’t sent its early-days DVDs to customers by mail in bright, flashy red envelopes, making customers proud to evangelize a sexy new product.

Even absent a full-blown growth strategy, it often surprises me that more founders don’t do relatively simple things that can help them grow much faster, and fine tune their marketing and sales efforts much more quickly.

So that’s what this is, a list of simple growth ideas that most people don’t bother to try, but which may just work for you. As a bonus, I’ll be adding real world examples that you can study on your own more closely.

1. Tame Your Mavens

There are lots of ways to launch a B2C online product. There is no right way, but there are plenty of wrong ways.

Something pretty much every B2C company I’ve worked with has struggled at some point to gain traction for the launch of a new product. It gets a lot easier once you have a following and a track record with loyal customers, but your first product is like your first date. If it starts off badly, things usually don’t get very far.

Bad Version: The “I Hope This Works” Strategy

To ensure your launch will get the traction they need, many startups will “soft-launch” – an intermediate step between a beta version and a market-ready product. A soft-launch may be just a stealth launch with no marketing attached to it. That relies on friends and your personal networks to begin creating buzz about the launch.

It might work, but then it might not. No way to know.

Better Version: The “Connoisseur” Strategy

growth strategy

You can and should think about putting a bit more punch into a soft-launch pitch. Instead of just meekly offering your product, and seeing what happens, identify and close a group of customers who will be ready to use it from Day 1.

Use your customer personas (I hope you’ve done them), to identify a group of people who are in your key demographic, and are influencers in your market, and among your customers. What does an influencer look like? Somebody with a strong social media presence, plenty of mentions in news articles, or a following for a product of their own.

This group is what marketers call the “Mavens.” They are the ones whose social capital is invested in spotting new trends and talking about them. They’re the self appointed taste-makers, and you need them to like you.

Once you have a list, do whatever you can to get these mavens onboard with your launch. Give them free stuff, promise them visibility, praise their god-like skills of discernment. Whatever you have to do to be their best friends, do that.

Ever wonder how those startups with cool ideas end up in the gadget section of the New York Times, or the front page of Wired? That’s a process that starts long before the launch. In fact the launch depends on that process succeeding. Startups with a great PR strategy pre-launch will time their launch around the PR, not the other way around.

Real World Examples:

Netflix targeted avid film buffs on early-internet chatrooms and indy film reviewers in the 1990s before launching their DVD delivery service.

IndieGogo and other crowdfunding platforms turned this strategy into their core businesses: getting product enthusiasts to pledge purchases and hype products in exchange for special access and perks.

2. Be Controversial, Asshole

Growth Strategies

Startup founders can spend a lot of time (maybe too much time) studying the every move of a Steve Jobs or an Elon Musk. We all learn that you need to act successful in order to be successful.

That’s fine and good, but don’t be fooled: you are not successful yet. Why do we talk about these people now? Because of how diplomatic and strategically minded they are? I think not. The things those entrepreneurs had to do to grow their reputations and businesses would look much different to us if they did and said the same things now.

I’m not telling you to be an asshole. There are plenty of very successful entrepreneurs who aren’t. But I am saying to speak your mind when you can, because later, you won’t get that chance. Consider Mark Zuckerberg ranting in the Harvard Crimson that he was smarter than the entire IT department of the university in 2003. Consider Steve Jobs frankly insulting his future boss John Scully by calling him a sugar-water salesman.

Or just consider any successful entrepreneur who made people question what they really believed about how things should work. Feelings get hurt in that process, and a small company looking for an edge can’t afford to worry too much about hurting people’s feelings, particularly people a lot more powerful than they are.

Real World Examples:

Bitcoin was launched by the anonymous “Satoshi Nakamoto” in 2009 via a controversial white-paper. Regarded by some as revolutionary and prescient, and seen by others as problematic in its economic theories, the paper continues to enforce the Nakamoto brand even years after its author receded into silence.

Google began its campaign to expand beyond its beginnings as a search engine and launch Gmail. The company adopted the motto “Don’t Be Evil,” which at the time was interpreted as a hard swipe at competitors (like Microsoft and Yahoo) that Google was positioning itself against as a new Big Tech player.

3. Have a Gimmick

There are a few kinds of gimmicks. There are physical gimmicks, like a piece of swag or a clever trinket related to the product, and there are software gimmicks, which are a kind of game or a tool your target customers will like. Let’s take this premise in 2 parts.

  • The Physical Gimmick

A physical gimmick isn’t going to work for every company, because not everything lends itself to a physical hardware product. Then again, a lot of things really do.

growth strategy

Physical products, even very simple or decorative ones, offer an opportunity for your brand to reach customers in a new way. We are much more likely, as social creatures, to demonstrate new products we’ve brought to our friends and family if it has a physical component. This type of thing is sometimes referred to as “swag,” but a proper gimmick rises above the level of swag to become a part of the product experience.

Consider Google Cardboard – it’s a gimmick that advertises Google’s VR technology. Instead of a t-shirt or a coffee mug, customers get something that is contextual to the product itself. Because the product is also probably rare or unknown, it appeals to the human need for discovery and for “being first.”

How do you turn your product into a physical gimmick? There’s no one answer, but think about the ways in which your product is going to be used. What kind of physical tasks are involved? In what context will it be used? In the office? At home? On the toilet? In the car?

Not long ago one of our startups Beeem, the physical web company that helps retailers or venues broadcast webapps to nearby mobile devices, sent us a gift. They were standard sized “Business Cards,” enabled with Beeem’s beacon technology, that would broadcast a website where our LinkedIn profiles and emails would be accessible.

This is not really the business Beeem is in, but it’s a very clever growth idea. Now, whenever I talk about Beeem at a conference, I can whip out my business card and tell everyone how to get to my special, on-the-spot website from their mobile phones. It makes me seem geeky but cool, and it gets lots of people to try the service at once. Win, Win.

Real World Examples:

Revolut, the recently launched “post-banking” fintech company that offers virtual bank accounts and ultrafast and cheap currency conversion, used a very similar technique to the one I described above. They created blank credit cards, which they then distributed at events for free. Users could “claim” their card by opening an account on Revolut and putting some money on them. Which many, many people promptly did.

growth strategy

Amazon, when launching the Amazon Dash service (which allows customers to order specific items with one click), distributed small “Dash Buttons” to consumers to place in areas of their homes where certain products are used, such as laundry soap or food. Today Amazon has hundreds of these devices available to buy.

  • The Software Gimmick

The other avenue for gimmicks is in software, either in a browser or via an app. A great example of a classic gimmick is The Calculator. Such as this Mortgage Calculator from NYT.

A software gimmick is something related to your product in some way, but appeals to your customers on its own, helping you to instill your brand in their minds. There are a number of classic gimmicks:

The Calculator: a tool to help your customers solve a specific problem related to the product (like the price of insurance, or the cost of owning something versus renting it).

The Map: A way for your customer to explore content or learn something with a geographical context. Examples: Airbnb, Kiwi.com

The Puzzle: A game to get your customer thinking about the problems that your product solves for them. Also a way to spread the world about the product. Example: Google Doodles

The Quiz: A questionnaire that gives the customer a feeling of accomplishment (and works well to qualify a customer for follow-up). Examples: commonly used on Facebook

The Secret: This is in the form of an easter-egg or a “lifehack,” that helps your customer accomplish something few other people know about. Examples: In&Out Burger, famous in the US for their “secret menu,” which contains a large list of items that are only available upon request. Google has famously introduced hundreds of easter egg functionalities, which fans share and explore regularly. By the way, if you haven’t already: Do a Barrel Roll.

4. Make it Rain – (Money, That Is)

The quickest route between two points is a straight line. This is as true in finding customers as in anything else.

StartupYard, growth strategy

One of the straightest lines to a customer is the offer of something for nothing. Pay your customers to be your customers.

While it doesn’t work for every startup, it has been proven over and over to work for a great many of them. In a B2C company, even a SaaS company, the classic marketing strategies still work fine. There are a lot of ways of getting people in the door to have a look around.

If you’re old enough, you might remember some of the classic tactics. Sending a potential customer a discount coupon with a specific cash value (only to be used for a purchase with the retailer). Promising every customer a cash rebate for signing up.

The classic rebate deal was essentially a way of giving a customer something for free, while also getting them to commit cash to the endeavor. That’s a classic foot-in-the-door tactic. Many younger entrepreneurs today are less familiar with these old-school techniques because they went out of fashion with the age of online ads. However, they are making a comeback today.

For example, the phenomenon of “pre-purchases,” particularly of products that are not actually constrained by distribution logistics. Yet companies like Apple and Amazon have brought back the practice in a big way, tapping into the same emotional experience that send-away catalogues relied on for a century before they were abolished in favor of websites and apps.

Even supposedly “crowdfunded” products are increasingly really just products in pre-sale. The shift toward a primarily marketing role among leading crowdfunding platforms has been noted for years. With good reason: the tantalizing appeal of something one cannot have is harder and harder to find in today’s online consumer world. Waiting can be a joyful experience, and it can make the product feel special and noteworthy.

Real Life Examples:

Damejidlo, our 2012 alum and now the dominant food delivery platform in Czechia, bought users by offering every new customer about €10 worth of free food. You could get more credits by bringing friends to the platform as well.

Uber and many other ride-hailing apps have also famously paid for customers, offering a free ride to newly registered users. Airbnb has offered similar deals to new customers, as well as hosts.

5. Become a Public Personality

Easier said than done, but it’s still worth a try. Becoming a known public face for your industry, or for the greater problem your company is solving, can open up an ocean of free publicity for what you make.

At StartupYard, for example, we operate on a loose rule that we don’t attend tech conferences unless we are allowed to speak at the event, such as on a panel, or a workshop or keynote. Once at the event, we apply our experience as presenters and coaches to try and be the most memorable and interesting speaker there.

By being controversial, being informative, and being most importantly fresh with our perspective, Cedric Maloux and I are both often identified as standout presenters. People frequently talk to us after speeches, and more importantly, they tell their friends about us. Being out there in public isn’t for everybody, but if you’re doing something that takes advocacy and education for people to understand and value, then you need to be a leader, and speak out.

Growth strategies

Here are some things that can really help you transform yourself into a public personality:

Join Reddit channels in your industry, and follow topics on Quora. Take the time to build your reputation as an expert in the field you engage with. This takes time, but it also keeps you informed about what interests people, what’s being talked about, and what most people are missing in the conversation.

Join Competitions (with a goal). Pitching competitions, speaking competitions, even pub quizzes are going to help you build your confidence and assert yourself in front of strangers. Make yourself a goal of first attending a minimum number of competitions every month. When you get better at pitching or speaking, aim to win all the competitions you enter. Approach them as a game, not an opportunity, and try to win. If you win, opportunities will come to you.

Get speaking gigs. This means volunteer yourself to talk in front of groups of people. Be it technical, or business focused, government, corporate, or open source, get yourself on the list of speakers at relevant events and go out and talk about things you know matter. Be controversial. Be informative. And say something people haven’t heard before.

Get a speaking agent: If you’re highly skilled in your area of expertise, it’s quite possible there are people looking for speakers just like you, and even better, are willing to pay you to advertise yourself.

 

Our next post: How to Create a Killer Talk

StartupYard is currently accepting applications for Batch 9.

We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

Michal Kratochvil, StartupYard, BudgetBakers, Startups, Accelerator

VIDEO: Mentor, Investor, Startup CEO: Michal Kratochvil Talks Acceleration

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Mentor, Investor, Startup CEO: Michal Kratochvil talks about life at StartupYard

StartupYard investor, mentor, and CEO of StartupYard alum BudgetBakers, Michal Kratochvil joined the world of startups after a career in corporations as Managing Director of Accenture Consulting in Prague. Michal gives us an idea of how working with startups has changed his view of business in the past few years, and how he became a believer in Acceleration.

Posted by StartupYard on Monday, 15 January 2018

 

Michal Kratochvil joined StartupYard in late 2015 as an investor, and our 3rd “Executive in Residence,” and has continued in that role ever since. In 2016, he took over as CEO of BudgetBakers, a StartupYard alumni company and personal finance platform that has grown rapidly to hundreds of thousands of active users under his leadership, and now employs about 30 people.

Michal joined us after a distinguished career at Accenture Consulting, where he served as Managing Director for Central Europe for over a decade. His switch to the startup lifestyle was gradual, as he slowly converted from his customary suit and tie, to t-shirts and jeans, also switching from an IBM notebook to a Macbook. Today Michal is deeply involved with StartupYard’s operations, particularly in selection of startups, and helping companies to grow their networks through his impressive personal rolodex.

Michal also studies martial arts, and is a fan of western style horseback riding, participating in rodeo events and exhibitions.

Great interview about #startup #acceleration with @BudgetBakers CEO Michal Kratochvil @startupyard in Prague! Click To Tweet

 

StartupYard, growth strategy

10 StartupYard Companies Raised €2.2M in 2017

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2017 was a good year at StartupYard. Not just financially , but also because we saw a number of our Alumni and recent graduates accomplish amazing things in the past year. Of course, 10 companies raising over €2 million total makes us very happy.

Still, the money is less important to us than what the money says, which is that these companies are doing good things that investors believe in, and that therefore we’ve done our job well.

10 Companies, €2.2 Million

More StartupYard alumni raised funding in 2017 than in any previous year. 10 Alumni and startups in the program raised funds in rounds worth between €35k and €750k. Many of these investments we’ve announced, but others have not been made public yet.

We’re also happy to report that there are additional deals in the pipeline, and we will hopefully be able to announce those very soon. We hope that 2018 will follow 2017 as another record year for fundraising.

How Does StartupYard Help Startups Fundraise?

The Network:  Aside from the obvious, which is that we begin by investing in Startups that go through our program, every deal that one of our alumni have closed in the past year has been with the help of the StartupYard network.

Through mentoring, and especially Demo Day and the following Investor Week, our startups meet and get a chance to pitch a huge number of likely investors, including business angels, VCs, and even banks and large corporate investors. In every case in the past year, our startups have been able to raise money because of contacts made during the program. In most cases, the startups raised directly from StartupYard mentors or existing investors.

The Reputation: As with any long-running accelerator program with a decent track record, we have a smart group of investors who will pay close attention to any startup we work with. Being around for many years, and having made many right calls in the past, we are trusted by investors to offer clear, honest and helpful feedback about our alumni.

That doesn’t mean investors do whatever we say. But they do listen.

Our investor network know that we do not shop investments that we don’t believe in ourselves. Credibility in the investment community matters very much. You don’t always have to be right, but you have to be informed, open, and honest. I can safely say that every company I’ve worked with in the past 4 years at StartupYard that deserved an investment, got it. We find a way to make it happen.

The Program: Just as important as having the right network to do your initial fundraising, you have to be an investable company to begin with. One of the things we look for in startups we select is that they are usually almost investible, or we see that with some hard work, they will be investable sooner rather than later.

That naturally incurs a big risk for us, but it also helps define our mission- not to find “the best” most shiney startups out there, but to find the ones with the most real potential. One of the metrics we use to determine our success at picking “go over show,” is how well our startups do after our program at raising smart money (that is, from investors who know what they’re doing).

The Backup: Another quiet but important part of StartupYard’s role with alumni companies is to provide “backup” in negotiations with future investors.

Having an existing investor on your side of the table is an important practical and psychological advantage in investment negotiations. For one thing, an existing, experienced investor helps ensure that new investors behave themselves, and make fair offers on fair terms. Knowing an experienced partner is behind the startup encourages fair play and discourages game playing.

For another, StartupYard has the network and platform to expose bad actors, and to make sure our startups don’t deal with them in the first place. We have the power, in extreme circumstances, to block investments in our most recent alumni. This should be seen not as a blocker for investment, but as a negotiating advantage for startups, who can always fall back on us to block or negotiate terms that are unfavorable to the founder, on their behalf.

As we say, we can be “the bad guy,” with future investors when we are needed to be.

Listening to What an Investment Actually Says

Many founders who apply to StartupYard, and many who join us and go on to raise further investment, begin with some wrong conceptions of what raising investment is all about.

Of course, it’s the money they’re usually thinking about. But this is only part of the picture. If you need money, there are lots of places to look for it. Not all of those places are good, and not all of them are ultimately worth your effort or the risk you take in going there.

I used to joke with our founders that if you got into this business just to make money, you should just sell drugs instead. It’s almost true.

If there is good money and not so good money (clean or dirty, smart or dumb) how do you decide whom to take money from, or whom to ask for it?

Try approaching the question from the opposite tack: not “how do I get this money,” but instead: “what will it say if someone gives me this money?”

It should say that the investor believes in the upside potential of what you’re doing. Any investor in an early stage company should be nowhere near defining the real market value of the investment, because that value hasn’t been fully explored or proven yet.

The investment has to say what the investor can reasonably believe. Here are some things an early stage investment should say about what the investor believes:

  • The company will be worth more in the future
  • The founders are honorable and trustworthy
  • The product is good and there is a market for it
  • The founders will work hard, and pivot if necessary
  • The founders will eventually sell or realize a profit
  • Failure is possible, and ultimately acceptable

Maybe one or two of those points surprise you, but I hope not. We should not expect early investors to be total true-believers in what a startup is doing, but we should be able to answer all these questions before accepting an early investment from someone.

We should also not expect investors to be unemotional, or completely calculating in their early-stage investments. A true opportunist is a dangerous friend to have.

Picking the right investor is not just about sleeping well at night, though that’s part of it. It’s also about making sure that you actually have the clarity of vision and the confidence you will need to do what the investor believes you can do. Convincing someone of something is a lot harder than telling it to yourself.

One of the best ways to get someone to believe all the things I’ve mentioned is to really believe them yourself. The best way to believe those things is to make them true.

Make Yourself Investable

As we’ve seen, becoming an investable company is about more than having a great idea, or the energy and determination to make it happen. It’s also about the network you have, and the choices you make early on.

If you think you have a tech idea with great potential, consider working with an accelerator like StartupYard to grow your immediate network, and turn the idea into a business investors and customers can really trust.

Finding investors, just like finding any business partner, is about knowing what exactly you need, and what to reasonably expect. StartupYard helps you figure those things out.

 

StartupYard is currently accepting applications for Batch 9.

We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

Startups: Do You Make Me Money, or Save Me Money?

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Something jumped out at me from a recent podcast by Y-Combinator with Des Traynor, Founder of Intercom. Asked about the problem he solves, he described how over time, their approach to sales has changed:

“. When you’re trying to pitch them something, they just say “Hey, here’s my two numbers, which one of these are you changing?” And I think when we show up and we’re like, well if you love your users you’re going to stick around, and they’re like sh-sh. Don’t care about any of that. Are you going to make me money or save me money? And we need to get better at answering that question. And we need to have better evidence to answer that question.”

In Startup culture, there is always a lot of talk about “solving problems.” Every product and service has to solve some problem. That’s true as far as it goes, but “solving a problem” for your users is not, in itself, enough to build a business on. You have to also answer some version of this question: how do you make me money, or save me money?

As we accept applications for StartupYard Batch 9, this question will be forefront on our minds when making initial selections.

Lots of problems exist, but not all of them are promising new businesses. How do you know when you’ve nailed down that problem that people are willing to pay money to solve?

You can check out the video podcast here:

A Problem That Isn’t a Problem

The reason we always begin our acceleration program with the classic Positioning Statement, is that expressing the problem you solve is one of the hardest things an early stage startup has to manage.

Often times the “problem” founders pick to talk about is just another way of saying that their customers want their product. Maybe they do, but why?

Over the course of in-depth positioning discussions with dozens of startups, I’ve developed a sort of framework for determining whether a problem is in fact a real problem, and not a “startup problem.” While not universal, this framework is extremely helpful in determining whether you’ve really nailed down the problem you’re solving.

I apply this mental checklist:

  • Does the problem have clear financial implications?
  • Is the customer aware that this is a problem?
  • Does the customer actively search for other solutions?
  • Is this problem something your customer would list among their most important concerns?

One of the most typical early positioning problems is that founders will identify things like “a better interface,” or “more efficiency,” or “saves time,” as the key benefits of their solution to a problem.

But by applying this checklist, we can see that benefits like “saving time,” are not always as urgent as they might appear. Does the time have a clear financial cost? Is the customer aware that they can do something faster? Would they actually seek a faster solution on their own? Is this time that they are wasting a concern for them?

You can sell me a way to shower in half the time every morning, but I wouldn’t buy it. It’s only a problem if the time I spend showering is a frustration to me.

Sometimes I ask founders: “Have you ever sat down and googled: “how to do x faster?” Most of the time, they haven’t, because that’s not typically how people behave. Only when something is taking so long, and is so arduous that it has become a clear problem, do people act to find solutions.

A Case Study: Steel Mountain

Steel Mountain

Getting your positioning, and particularly your problem statement to answer those questions can mean changing deeply how you talk about what you do, and how you see your customers, and who they are.

I’m going to use the case of one of our most recent startups Steel Mountain, the home-network security company that will soon be offering a single device to monitor and protect homes from digital intruders, viruses, and other threats.

Steel Mountain, it must be said, were already in a more than usually advanced stage of development when they joined our program, but I would say this exact roadblock was among their toughest questions early on. They had a compelling product, but they needed to really be able to express the problem that it solves.

The “You Need Us” Problem

After about a month in the program, their positioning looked something like this:

“The privacy and security of homes and small businesses are increasingly at risk from digital threats. Steel Mountain’s Secaura device plugs into your router, providing enterprise grade security across your entire home network. Unlike typical security software, Secaura covers all connected devices instantly, requires no active maintenance, and employs advanced artificial intelligence against known and unknown security threats.”

That is a very straightforward positioning statement, quite typical of a security company. Just one problem: it doesn’t quite pass the checklist I mentioned earlier. Let’s see:

  • Does the problem have clear financial implications?

Not really. We are told first of all that there is a threat lurking out there somewhere online. But that threat has no exact proportion, and the target customer (the head of a household or small business), is at pains to estimate how much exactly a digital threat means in terms of lost income, lost business, theft, or other mischief.

  • Is the customer aware that this is a problem?

Maybe… although given that this is such a simple solution to a complex problem, it’s rather doubtful that anyone who truly understands the problem doesn’t already have a solution in place. Perhaps there is market awareness of the problem, but we aren’t yet clear from this statement that the target market knows they’re in real danger.

  • Does the customer active search for other solutions?

Again, it’s not yet clear whether the target customer actively engages with this problem at all. Some probably do, but the alternatives mentioned, such as security software, serve only a minority of households. Most do not have a sophisticated solution in place. Is the product only for security minded people, or is it for people who can’t deal with complex solutions?

  • Is this problem something your customer would list among their most important concerns?

Again, we can speculate that the typical household or small business does not list security among its top concerns. Those that do are probably using more complex solutions. For those who are using no solution, it is seen more as a low-level, constant issue that many people would rather ignore than understand, and most people believe will never have an effect on them either way.

As we can see clearly from this checklist, we haven’t identified an urgent, well-understood need from a well-defined target customer. 

Making the Problem a Real Problem

How did Steel Mountain come down to a positioning statement that did involve a clear problem and urgent need for the solution?

First, they took the painful but necessary step of considering that while their expertise and the value of the product as they see it is in security technology, the typical customer in their target market has no way of evaluating such products.

Instead, they went back to these 4 checklist questions and identified a problem that satisfies all of them at once.

The problem they identified was this:

 

“Parents of families feel great pressure to provide a safe digital environment for their children, and are prone to wasting money and effort on partial security solutions that never completely protect their homes and families.”

Bingo.

For starters, we have narrowed the customer set in this positioning statement to parents. In doing so, we’ve been able to identify a more universal emotional and social problem that the target customer can easily identify with.

So the problem is no longer: “my home is not secure,” but instead: “I am afraid of feeling like a bad parent who can’t protect their family.”

How does it do with the checklist?

  • The problem has clear financial implications. Every parent has wasted money on safety equipment that wasn’t really needed. This solution promises to end that guess-and-check approach to digital security.
  • The customer is very aware of the problem. Any parent who gives their child a smartphone or a tablet knows the dangers, and tries to consider them.
  • Nearly every parent in the target market has or will in the future investigate digital security to protect their children. The solutions are in fact much broader than merely software, as in the earlier positioning statement. Education products, specialty devices, operating systems, and many other solutions are available to address the same concerns. This solution can now be compared to those as a cost effective and complete alternative
  • Child safety is a top concern for most families with children. Again, by shifting the problem to one of “parents with children” rather than “owners of homes,” we have also shifted the conversation towards top concerns that parents have, for their children. Now, rather than comparing Secaura to an anti-virus software, we can compare it to other home security essentials: baby monitors, door locks, or fuse-plugs.

This process also helped the founders identify more features of the product that were very attractive for customers. Parental content locks, and “bedtime” settings for individual devices, though the founders had included them as an afterthought, were of prime interest to this new target market.

The reactions the founders got began to change because of this new positioning.

When Steel Mountain’s CEO Will Butler began pitching the company with this strategy, the change in enthusiasm was remarkable. People in his target market started asking: “Can I have one?” And “I’ve always wanted that!” It went from a geek product to something the customer had to have, and should have already owned.

Steel Mountain CEO Will Butler pitches about the stress of living up to your role as a parent.

It’s often said that “people don’t buy security.” What’s really meant by that is that people have a hard time seeing the value of something that protects us against a problem we don’t understand. If the product solves a problem we do understand, and even better, one we already have right now, then the customer is much more likely to consider buying it.

Some security companies only manage to sell to customers who have already been victimized by attacks and theft. But others find a way to sell “peace of mind,” instead.

When solutions really find a clear and understood problem and customer, they begin to feel not just strong, but practically inevitable. Why hasn’t someone done this before?

Applying it Yourself

Of course, not every problem has to do with security, or money, or peace of mind. Your customer might not be concerned with saving or making money. The logic of the framework is about the relevance of the problem to a particular customer. Have you picked a customer and a problem that match?

If not, how can you change your thinking about who the customer really is, or what their problem really might be?

Squaring that circle is never easy. As a founder, you’re naturally absorbed in what you’re building, and driven by your own reasons for building it. Opening up and applying that work to problems you haven’t considered is part of a continuous creative process. It involves talking to your target customer and others about what their real feelings and concerns are.

You have to talk to a lot of people. Not just customers, but the people who sell to those customers, and understand them best.

Getting the problem right is a life or death challenge for an early stage company. That’s one of the reasons an accelerator can be such a great choice for a team like Steel Mountain, or many other companies we’ve worked with. The opportunity to shift your thinking and test it with so many mentors and potential customers in such a short time is a rare opportunity for a startup.

 

StartupYard is currently accepting applications for Batch 9. We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

Video: StartupYard Alumni Founders Tell Their Stories

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At the end of StartupYard Batch 8, we asked our founders, along with some alumni to tell us about their experience with us for 3 months. Here is what they had to say.

StartupYard is currently accepting applications for Batch 9.

We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

 

Accelerator, StartupYard

Choosing an Accelerator: 11 Questions to Ask

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So you’ve got an idea for a tech startup. You’ve done your positioning statement, you’ve talked to people you trust about the idea. Maybe you’ve even talked to customers. Maybe you’ve already sold your product, or gotten users to sign up for your beta. Fantastic. Now maybe you need a Seed Accelerator. Not every tech startup needs one, and not every accelerator is the right choice. How do you know?

To Accelerate or Not?

At StartupYard, 59 startup investments in 6 years have shown us that the most important factor for founders looking at acceleration programs is fit. If the founders and their company are a good fit for the program, with the other startups, the mentor community and investors behind it, then the stage of the company, the domain, and the market focus are not nearly as important.

Accelerator, Startup, StartupYard,

This is why we’ve invested in companies doing hardcore cutting edge technology like AI and Cybersecurity, but also companies doing technologically simple things, like marketplaces, and sharing economy startups. If the fit is good, then the diverse backgrounds and ideas of the founders enhance each other, and mentors and investors get more engaged, because all of them are able to find something they’re passionate about in every batch.

We emphasize fit over most other considerations. How can we actually help companies succeed?

Nothing can guarantee fit, but there are at least 11 things you *can* ask any accelerator to determine whether it is the program you really need.

So here they are:

1. Why Is the Accelerator Interested in My Startup?

Few founders ask us this, but to me, it’s a potential game changer as a question.

What I see as an ideal answer is: “Because we see potential in your team, because we believe in the market you’re in, and because we think our program can help you.” It helps if the accelerator likes your technology, sees it as a big opportunity, and doesn’t want to miss out. But that’s unlikely to be enough on its own.

If the accelerator can’t clearly show you why your interests are aligned, you should think twice.

2. Are You Convinced by My Pitch?

Everyone likes validation. But you don’t necessarily want an accelerator that isn’t willing to say “no.”

We are not convinced by every pitch we hear, and that’s ok, if we *are* convinced by the team. Founders should go into a program knowing that they may need to consider big changes to their approach, and their assumptions. We want teams with a passion for their ideas, but not with a toxic sense of pride.

If an accelerator is not willing to voice doubts when you ask, then it might be a sign that they aren’t going to challenge you when needed.

3. What Do Your Investors Want, and/or Where is the Money Coming From?

Another key question almost no one asks. You really should, because the investors largely determine the direction of the accelerator. They ultimately control who runs the program, and thus the decisions being made.

If the money is from a corporate sponsor, what does the corporation want? If the money is private, then why are the investors backing this accelerator? Pay attention to how aligned the accelerator team are with the investors. If the investors and the team have a solid relationship, then you aren’t dealing with office politics or competing ideas about what success looks like.

4. Does the Accelerator Management Team Have A Stake?

This is related to the previous question. Ideally, the decision makers at the accelerator have a financial stake in the decisions they are making. This helps you to determine what their motivations in working with you really are.

Is it a deal breaker if they don’t have a stake? Maybe not, but you need to know who you’re talking to. The decisions a person makes when they have no financial stake in the outcome are bound to be different. Is the person making a decision because of the politics of their job, or because they really believe in it?

5. Why Are Your Terms What They Are?

Terms vary between accelerators. I don’t think there’s an ideal formula for how much an accelerator gives, or how much equity it takes. Zero equity programs are not always a bad thing, and programs that give more or less money for more or less equity have their own reasons for doing so.

Accelerator, StartupYard

The answer tells you how the accelerator views their role in your company. “Founder friendly” terms are very important. On the other hand, a mature investor is also up front about what they would be willing to do in case something went wrong with the relationship.

The terms are one thing, but the answers are another. Any contract is in place primarily to outline a relationship, not to define it in personal terms. Those personal terms often matter more than what’s on paper, so you need to know why the terms are the way they are.

6. Have You Ever Fired a Startup During the Program?

Not every accelerator has ended a relationship with a startup in less than ideal circumstances. It does happen though, and the story is usually instructive.

StartupYard, for example, has been very open about relationships that have gone wrong. In case such a thing happens, we try hard to identify the mistakes that *we* have made that led to the problem. In each case (and there has only really been one out of 59), we recognized our own errors in choosing, working with, and helping those companies. We have only “fired” one company during our program.

Accelerator, StartupYard

We were not vindictive and did not blame them for our own mistakes. If an accelerator puts blame only on the other party, that may indicate that they don’t acknowledge their failures or their part in the relationship. We all make mistakes, but you need investors who learn from theirs, and are not afraid to tell you about them.

7. What Do You Expect from Me?

What we expect from our founders informs how we choose companies to work with, and what we see as success when they go through our program. We have our own tough standards, but they are not universally what all accelerators expect.

We want every one of our companies to be a unicorn. We expect them to try. We expect ambition and drive, and hard work. We expect companies to improve markedly in all areas during our program. We expect them to challenge themselves and to meet challenges that we help them set.

But if you ask us, we will tell you that we also expect things like personal availability, honesty, willingness to talk about your motivations and to discuss your feelings. We expect our founders to take a broad range of input that other accelerators might not insist on. We expect them to adjust their ambitions according to new realities; to make changes swiftly if something doesn’t work, and react to obstacles rather than avoiding them.

Some accelerators will give hard and fast expectations in terms of growth, even on a weekly basis. There’s nothing wrong with that approach, but you need to understand the consequences of failing to meet those expectations.

You just need to know what you’re getting into, and what success looks like to accelerator you choose. Be honest with yourself, as to whether these are things you really want, and can handle.

8. What is Special About Your Ecosystem? Why Should I Go There?

Accelerators are deeply affected by their location in a particular ecosystem. What that ecosystem has and doesn’t have, and where it is, are important factors in your decision.

For example, StartupYard is located in a beautiful, accessible, and highly livable city: Prague. Our geography places us between East and West. We see that as a big advantage, and we want startups who also see it that way.

Our ecosystem has its strengths and weaknesses. Its size makes corporates more available, while it also limits which industries are most engaged here. The history of our region affects what we have to offer startups, and we work hard to express those peculiarities and special qualities to our companies.

Pick an ecosystem that works for you. Just because a place is big, doesn’t mean it’s best. Just because there’s money, doesn’t mean it’s the *right money*. The accelerator’s answers to this question will tell you a lot about how they see their value to you.

9. Does the Accelerator Pay The Mentors?

Accelerator, StartupYard

Hopefully the answer is “No.”

Of course, accelerators do pay for input from professionals in areas like design, marketing, speech coaching, in-person sales, and other soft skills. These workshop runners are professionals, and you get what you pay for. Mentors are different, however.

A mentor community should be all-volunteer because the connections that founders make with their mentors must be genuine. These are people who you will be relying on to follow-up, to open their contacts to you, make introductions, and be available for further advice and support down the line. That has to come from a place of passion, not greed.

Our mentors do it for various reasons. It improves their personal or company brand, it makes them look good, it gives them insight into emerging trends, etc. Primarily our mentors tell us that they do it because of the personal fulfillment and stimulation they get out of being mentors. These are high achieving individuals, who relish the chance to talk to people at the beginning of their own journey, and share their wisdom and knowledge.

That should be enough.

10. What Entrepreneurial Experience Does the Management Team Have?

An accelerator is for true entrepreneurs. No one is better suited to recognize your entrepreneurial strengths and weaknesses than a fellow traveler. That’s why most of StartupYard’s management team are founders of one kind or another themselves.

The management team don’t have to all be former tech startup founders. I was not a startup founder when I joined StartupYard. Neither was our Associate Helena, or our Portfolio Manager Jaromir. But we had all been entrepreneurs of one kind or another.

Cedric Maloux, our Managing Director, was a tech founder before it was cool, in the mid 90s. Helena owns a Yoga Studio, I run several side projects, and our Head of Partnerships, Gustavo, ran his own healthtech company for several years- we met because he applied to StartupYard with that project. It failed, but no one has better insight as to why it failed, than he does.

A military leader with no combat experience is a danger to the people he leads. It’s the same in Startupland. An advisor who hasn’t seen plans and dreams fall apart, is a liability to the founders he or she advises.

11. Do You Have Partnerships with Potential Customers?

Accelerators are not just about learning. They’re about doing. A key part of growing your company is going to be working with larger partners inside and outside the tech industry. A B2B startup needs real customers to talk to, and a B2C startup needs to talk to companies who serve the customers they are after. So ask about the accelerator’s real relationships with companies that may be important to your success.

In Startupland, there are “Partnerships,” and there are Partnerships. Promotional partners are cheap, and the relationships totally impersonal. Sponsorships and co-operational partnerships are better. An ongoing partnership is better than a short-term one.

You want an accelerator with a real working relationship with key players inside multiple industries and corporations. You may not always know which contacts you need, so the depth of the partnerships are important. Just because a company’s logo is on the accelerator website, doesn’t mean you’ll get past the secretaries if you need to.

So when you ask about these partnerships, pay attention to which contacts the accelerator actually has: they should be C-level, or other empowered representatives like board members, founders, and investors.

No accelerator will have powerful contacts in every corporation or government institution you may need, but an accelerator should have strong relationships in a range of key industries. This is why StartupYard has a dedicated team member for Partnerships, and it is why we have investors with deep ties to tech-related industries, who can leverage their networks for founders.

 

StartupYard is currently accepting applications for Batch 9. We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

Blockchain, StartupYard Accelerator

Why Blockchain Startups Should Apply to StartupYard Batch 9

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StartupYard is currently accepting applications for Batch 9. One of the key verticals we are focusing on during this round is Crypto-tokens and Blockchain.

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

 

2017 : The Year of Bitcoin?

From the original appearance of Bitcoin on the web forum The Foundation for Peer to Peer Alternatives in February 2009, to today’s craze around ICOs and explosive cryptocoin market capitalizations, the world of crypto has drastically changed.

Bitcoin’s unsavory early associations have meant that many have tried to separate the discussion of Bitcoin and Blockchain technology. But that is an incomplete approach. Blockchain in a technical sense is just one of a number of elements that make up crypto-tokens, like Bitcoin, and will continue to form the basis for future innovations.

StartupYard, Blockchain, Bitcoin

The central idea behind crypto-tokens is to create trust via collaboration, communication and computation through cryptography. This approach relies on a number of technologies: the blockchain (a distributed database), a decentralised consensus algorithm (proof of work) that allows security and open systems of access (no accounts are necessary). For more information on bitcoin, we encourage you to follow one of its most outspoken evangelists: Andreas Antonopoulos.

Today, a lot of startups are working with crypto-tokens and distributed ledgers to create new decentralised services to reinvent entire industries.

Why is StartupYard Investing in Crypto Startups?

This week we also wrote about why cybersecurity startups should apply to StartupYard. Much of the reasoning is the same, however unlike Cybersecurity, where the list of customers is long, and the need is very well understood, crypto-token technology is in its early years.

Bitcoin is making headlines, but the deepest benefits to society of secured distributed ledgers, transparent transactions, and the decentralization of data sharing and communication are still to come. Most of the true benefits have not yet been realized, but are appearing on the horizon. Startups need a deep network of business, tech, and investment mentors who can help them turn novel technologies into tangible, real world change.

Our interest is in finding those founders who have the ambition to solve societal, business, and governmental problems using this technology for the good of mankind. The ways in which crypto-tokens can benefit us all can’t be tallied, but just a few examples are:

Transactions: Crypto technology opens up the potential for a true peer-to-peer transactional ecosystem, in which both people and machines can trade anything from processing time, to energy, bandwidth, or currency, in a secure, trustless and cost-effective way.

Net Neutrality: As open access to the internet comes under attack in the US and elsewhere, crypto can provide a check against the censorship of information, and the suppression or preferential treatment of some sources of data and services over others. Distributed ledgers may also help fight state and non-state propaganda operations by providing tools to check facts and records.

E-Government: Transparent, open, decentralised networks without a single point of failure allow for decentralised trust to provide potential open-source solutions to election fraud, voter suppression, online voting, and voter identification- all problems that are linked with corruption and inefficiency in state and local governments.

Security: Crypto and blockchain technologies provide a potential defense against cyberterrorism, cyberwarfare, and malicious destruction of data, or the dissemination of false data and malicious code across networks. It also provides the potential for more secure collaborative networks that are not based on a central entity such as a corporation or government, eliminating the need for 3rd party support of data storage and sharing.

Why StartupYard?

StartupYard, DemoDay Batch 8, Blockchain, Crypto

Opportunities for crypto and blockchain startups appear to be numerous at the moment. Blockchain is having its first day in the sun, and ICOs (Initial Coin Offerings) are now proliferating. However, this unregulated and largely disorganized market is poorly understood by institutional investors, and especially corporations and governments.

This is a shame, because it will be these players who will give breakthrough technologies access to global markets and the customer base they will need to really have an impact. This is what StartupYard offers: not the quick cash of an ICO, but the stable foundation of a sustainable, global business.

For that you need:

Credibility and Access

StartupYard is a trusted partner for corporations, utilities, and investors who are seeking to engage with early-stage cutting edge technology startups. Translating and aligning your goals with those of large organizations with a global footprint is a long and painful process in the best circumstances.

Without a key partner providing access and credibility, this becomes even harder. StartupYard allows a crypto company to get their foot in the door of banks, telcos, and large investors with our deep network of mentors and advisors. Convincing those in power to trust and rely on you is a key step toward achieving your global ambitions. It should not be ignored or minimized in its importance.

Business Fundamentals

Blockchain and crypto technologies are exciting, but the fundamentals of business have not altered because of these technologies. Companies that operate outside traditional business structures and legal frameworks put themselves at risk, and just as importantly, risk the future of their technological breakthroughs.

Building a sustainable and rational business is as valuable today as it was when StartupYard was founded in 2011. You need experienced partners who have built fast growing tech companies before, to share their mistakes and their successes, and give you your best shot at success.

Experience

StartupYard’s hands on experience in blockchain technology is still recent, but we have already made two investments into companies leveraging the blockchain – one in Cryptelo, which has turned to providing secure key storage and transmission for blockchain products (and is raising an ICO), and Bloknify, a winning project in our most recent hackathon in partnership with KB Bank. Blocknify is developing a solution for secure contract verification using blockchain.

Beyond that, StartupYard has a deep well of experience in turning novel technologies with unclear or undeveloped applications into real businesses. We helped turn an NLP product for the Albanian language into Gjirafa.com, the fastest growing tech company in the Balkans. We helped turn a team of music and neural network geeks into Neuron Soundware, now making enterprise grade IoT devices with on-board AI that diagnose faults in heavy machinery (like Airbus jets).

We helped boost a once hobby project (BudgetBakers), into a global company serving hundreds of thousands of active users, and we have helped Rossum, an AI company doing document analysis, evolve into a venture invested company with a growing team.

Not all of our bets will pay off, and crypto-token technology will be no different. But as any one of our alumni will attest, startups at StartupYard do not fail due to lack of preparation.

Should my Blockchain Startup Apply to StartupYard?

Are you an early stage company, with a unique approach using crypto and blockchain to one of the problems we’ve talked about (or a new problem we haven’t), that would benefit from a deep network of mentors and advisors with the reach and scale the technology needs to succeed?

Are you two or more founders, who know the value of an accelerator, and are looking to build a global, sustainable business, serving clients potentially all over the world? Do you believe in what you do? Do you think you can convince others that you’re right?

Does your work have the potential to impact the lives of many people in a positive way?

If so then yes, you should apply.

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

Mixed Reality Cloud, StartupYard

Meet Mixed Reality Cloud: Augmenting Our Reality

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It has been a year of firsts for StartupYard. In Batch 8, we’ve invested in our first vr company, our first Regtech company, our first Proptech company, and finally, our first Augmented Reality (AR), or “Mixed Reality” company as well.

Mixed Reality Cloud, headed by Adam Roszyk, is working on their first augmented reality product: Cloud Stories. It’s a “Photoshop for AR,” allowing creatives in advertising and digital agencies to create AR experiences for brands with no coding, and no need for a specialized IT development team. Roszyk’s mission, as a long time AR geek and a serial entrepreneur from Poland, is to push AR out of the realm of geeky ideas, and into the mainstream, by helping brands to create compelling content and experiences that blend with our reality.

Mixed Reality Cloud will pitch at StartupYard DemoDay Batch 8: Get Your Tickets!

 

The future of advertising (and content), is AR. Where will your customers be in 5 years? I talked with Adam about the project this week:

Hi Adam, first of all, I think we all need a little education on the difference between Augmented Reality (AR), and Virtual Reality (VR). What is the difference, and what does Mixed Reality Cloud do?

Hi Lloyd, first of all if our readers haven’t yet tried Virtual Reality – they’re missing something important. Both VR and AR are new types of human-computer interaction. They will replace keyboards and screens in the coming years.

For me, the difference between VR and AR is similar to how a PC is different from your smartphone – VR is like a PC, or game console – it cuts you off from the real world to take you to the center of a story, game or movie. It requires full dedication.

AR is lighter, but even more powerful – it’s gonna replace your smartphone. It allows a computer to overlay objects and information onto the real world, in a way that feels natural.

This “overlay” of information will be similar to what a smartphone gives you now, but will exist in forms more connected with real objects. It will allow computers to give us much more timely and useful data, based on what we see, not what we type and tap. It’s everything a smartphone can do, but without having to look at a hunk of metal and glass all the time.

 

Adam Rosyzch, Founder and CEO at Mixed Reality Cloud

If you think about it, we have been familiar with the AR concept for many years as a society, via Sci-Fi films like The Terminator, or Iron Man. AR is great for film because it eliminates the very non-human, nonorganic idea of staring at a screen all the time to get data and use a computer. It has been used to show audiences how a computer thinks and decides things.

Very soon, we will start seeing how average people will enrich their environments using AR.

That’s what we are working to do. Mixed Reality Cloud is like Photoshop for Augmented Reality. It’s a set of tools to build AR applications. We do that by creating a virtual space in which a designer can create and test ideas, and then deploy them to the real world in AR experiences.

AR experiences are amazing for mixing ideas with the real world around us. How does a new car look in your driveway? How does a lamp look in your living room? How cool would it be to have your favorite Pixar characters walking around your house?

We don’t currently have software specially made to design and build things in Augmented Reality, and make those experiences accessible for ordinary people.

There are great 3d engines, that try to support AR as well, but at their core they will stay 3d engines forever. We’re AR at heart, and we’re focused only on tools which are necessary to bring AR to everyday life.

 

 

What’s your background in technology, and how did you come to found your own company?

I was studying CS at University of Adam Mickiewicz in Poland, where I started my first company, FunBrush. It was an IoT connected toothbrush to make brushing teeth more fun for children. It allowed kids to watch a screen and play a game while brushing their teeth, and parents and kids loved it. I raised funding at a $1mln valuation for this company, and led it from idea, to first clients, but we failed with scaling up the project.

I think the idea was a bit ahead of its time. The technology wasn’t common enough yet to make it easy to adopt. But that’s life.

After that, in 2015 I moved to San Francisco to work at VicariousVR – where for the first time in my life I tried VR myself.

 

Is the Hype over AR/VR overblown right now, or is something bigger happening?

VR has been overhyped many times in the past. The promise of the tech has always been too big for what we could actually do.

Now the market is slowly realizing its true potential. Every month we see more and more examples of new industries adopting it as a tool; graphic designers, architects, data analytics, or even armies.

VR still has many problems – it’s tethered to expensive pcs, you need tracking devices, there’s no keyboard in VR, etc. However – it’s like the first Mac computers: first we see entertainment and business use cases, then devices get cheaper, operating systems get smarter, and most important there are tools, which can be used only in VR. Businesses begin to see an advantage over those who are not using it yet. Then we’re gonna see way more broad adoption.

AR on the other hand seems to be underhyped, really but isn’t. We still don’t realize how much it’s gonna change our everyday life.

Mixed Reality Cloud, Ghost Shell

The 2017 film Ghost in the Shell demonstrated the potential uses of Mixed Reality

We’re in the Node5 – everyone is sitting in front of their desk typing on a keyboard and staring at a tiny monitor in front of them. Let me just remind you of something: that is not some law of ergonomics, and it is not the way people worked even 50 years ago. It won’t be the way we are working 50 years from now either.

Having lived with AR for years, this arrangement already seems old-fashioned to me.

AR will allow people to work wherever they want, without any other physical devices. You know – computers let people get rid of calendars, rollodexes, calculators etc. Eventually they allowed us to move our work from the desk to the cafe, and have everything with us.

And now AR will help us get rid of the desks and computers completely. You just won’t need them, any more than you need a physical rolodex.

 

Mixed Reality Cloud is focusing first on advertising agencies. Why are these a natural early adopter for the technology, and what problem do you solve for them?

That’s right. Creative and digital departments in advertising agencies are our first customers.

It’s because those people are the ones who already recognize the potential of AR, and they already gets requests from their clients about creating AR experiences. Ikea just released an AR app for phones, where you can see how a sofa will look in your living room before buying it. That’s just the obvious stuff.

 

Mixed Reality, Startupyard

Using Mixed Reality Cloud to look at some food items that aren’t really there.

 

Every business can came up with a similar case of how AR can help them promote, sell, or educate their prospects. I think the first big innovations in this area will come from content, gaming, and advertising – that is the classic progression for a new medium.

But the problem is that marketing agencies don’t have the tools or the know-how required to offer AR to their clients. That’s why they’re using our first product – Cloud Stories – to fill the gap in their production toolchain, and have a tool – which allows them to deliver high quality AR content quickly.

 

You’ve been talking to a lot of potential customers in advertising and design. How do they see the future with AR advertising? What are some of the coolest ideas that might be mainstream soon?

Let’s dive 5 years into a future where you are using AR glasses everyday.

Anything is a control surface. Anything can be enriched with data, if you want it to be.

Just imagine how special your coffee mug is with those glasses: you can see how fresh it is, see how hot it is, or make sure you don’t accidentally start drinking from the wrong one.

Now your calendar, news feed, or maybe even your Slack channel are a gallery of holograms. These data take the shape you choose, and appear when and where you want them, making it easy to share them, experience them, and get the best use from them.

Or you can have a look at a bike you’ve been thinking about buying recently. And it’s beautiful – on roads of Toskania, late in the evening, displayed as a highly polished 3d animation right in front of you.

Ghost in Shell, Mixed Reality, StartupYard

More Mixed Reality advertising in the future city of Ghost in the Shell (2017)

Everything will change with AR. With AR everything around you will have an internet connection– through you. Floors, doors, newspapers, credit cards – also everything will have it’s own interface, yes – every physical object you want- will have any additional layer of information you want it to have.

Putting control surfaces on objects will be as easy as grabbing a new app today. Probably easier. Buying products will be a smarter experience: you won’t waste as much, because you can see how a thing will really work, and if you really need it.

You’re buying a tent – isn’t it difficult to buy one online ? How do you know if that size is right ? With AR, you can set up a campsite in your garden and buy everything you need from AR. You can see and really think through your decisions, and make smarter ones.

A bag presented in AR via Mixed Reality Cloud- it’s hard to tell it isn’t really there.

Imagine searching for a nice place for a date with your wife – wouldn’t it be cool to see 3d models of the places and dishes, instead of just flat 2d photos? That kind of thing can even be experienced on your existing smartphone – like a little window into the AR world.

AR will democratize 3d content – it’s a long process but we’re gonna get there. Now it’s time to build tools for capturing, creating, and editing this content.

 

Some people view this vision of the future as scary, or invasive. It’s a common idea in dystopian sci-fi, for example. Are these cultural critics wrong about the promise of AR? 

Wrong is a strong word. I think in films and writing, you use these ideas to highlight the nature of people, and show how society can go wrong. So advertising and Augmented Reality are often mixed in sci-fi to exaggerate the problems of our current world onto a possible future.

You can learn from these visions, but remember that you have an effect on your own environment. People won’t accept things that they cannot accomodate in their lives, and many marketing strategies have failed because of that. In California, for example, they tried to play tv commercials at gas pumps and checkout lines in the grocery store. People hated it, and they went away. The truth is they didn’t make sense for the advertisers because of that.

We should look at marketing as more about trying to offer people things that are genuinely relevant for them, in the right time and place to help them make decisions. This idea of dystopian hyper-aggressive advertising is not nonsense, but it does ignore the point of branding, which is to be seen favorably.

Brands can use AR to do public art and competitions. They can do it to delight their customers, and there will be ways of shutting it all out, just like there are today. Still today, advertising is a “price” you pay to get something you want, it’s not a tax that everyone must pay no matter what.

 

Why should big brands embrace AR technology, instead of relying on existing channels and methods of delivery? What’s the unique benefit in AR?

You could ask me about the unique benefits of mobile advertising in 2009. There are many benefits in the technology, but what made brands embrace it was that the users spent their time on their mobile phones. It will be the same with AR: the brands will follow the users, and the most creative companies will be there first.

In the last 10 years, it became possible for a company to thrive on the power of one mobile app. And AR will be just like that.

On YouTube you had RedBull, or a million startups selling cool new gadgets that look amazing on video. On AR there will be a big opportunity for brands to shape their image for the new generation. The risk takers will be rewarded.

Teenagers are already native to these technologies. They just gets how it works immediately, like a natural progression from mobile phones. AR will become something as natural as the swipe, or pinch to zoom – it will go from something weird, to the being “the way computers work.”

Brands cannot afford to wait much longer.

 

What is the main technical challenge you’re facing with your technology right now, and how are you planning to solve it?

The key challenges are streaming 3d content to a range of devices like phones, and standardizing how we code 3d assets.

3d models are essential for Augmented Reality, but the problem is that they’re much heavier than 2d photos. To be smooth and natural, they need to work very reliably and fast.

That’s why we’re working on a streaming technology, which will let users downloads only parts of assets which are necessary right in the moment. We’re working also on our own format for 3d assets, which will make integration with other tools easier.

 

You’re one of the younger founders at just 25. How has the experience at StartupYard been for you? Do you think your age has had a big impact on your experience?

Startup Yard has been great for me, mainly because it was reality check for the idea and strategy behind our plan. Talking to 150 mentors in the first month gave us a great perspective on the market and the product fit. It would be impossible to organize such an intensive period without your help. Thank you for that.

There’s no too old or too young in startups. Execution, experience, network and knowledge – those are important things, which you need to consider. Iyou don’t have them, fix it. Get the proper help on your team.
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Having no resources is a challenge, but having no resourcefulness is death. One thing you learn at StartupYard is how really to value the experience of others, and use it well.

Mixed Reality Cloud, StartupYard, Adam Rozsyk

 

Who has been your most important mentor from StartupYard, and why has that person been so influential?

I think that you Lloyd and Cedric have been the most important people in the program for me – always looking forward to hear my thoughts, share ideas, give your own perspective, and willing to show me what effects certain decisions have, before making them.

Darko Silajdžić, from DDB (one of the world’s biggest advertising firms) was really helpful – and in terms of validating our product ideas, Darko has had a profound impact as well.

 

How can people get access to the technology you’re working on, and start using it?

Sign up on our website to the newsletter about the latest/greatest in AR: www.cloudstories.io
Also you can read my medium, I write a lot about immersive technologies: https://medium.com/@RykAdam

 

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