Neuron Soundware, StartupYard, Startup Roku

Exclusive Interview: Neuron Soundware Wins Yet Another Award

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Neuron Soundware: Winning Awards and Customers

Since leaving StartupYard in this year, Neuron Soundware has made “soundwaves” in the startup community in Europe, winning multiple awards, including Vodafone’s Idea of the Year, and now, this week, Ceska Sporitelna’s Startup of the Year.

The company has come a long way in a year– from a small team that was able to demonstrate, at SY Demo Day 2016, a machine learning algorithm that could learn to mimic a human actor, to a company that provides machine learning diagnostic software to large equipment operators. They’ve received considerable press coverage. Already, they count both Siemens and Deutsche Bahn among their customers. 

I caught up with Pavel Konecny, Co-Founder and CEO of Neuron Soundware, to talk about what the team has been through since leaving StartupYard, and where they’re going in the near future:

Hi Pavel, a lot has happened for Neuron Soundware since you left StartupYard. Can you tell us what you’ve been up to since the program?

Pavel Konecny, of NeuronSoundware, talks about machine learning and sound.

Pavel Konecny, of NeuronSoundware, talks about machine learning and sound.

We were very busy of course. We have presented Neuron Soundware at international startup and advance engineering conferences in US, UK, Germany and Czech Republic. We got a lot of contacts, which we are going to leverage. We are also proud that we found our first paying customers including companies such as Siemens and Deutsche Bahn.

What are you providing for those new customers?

We provide sound analytics algorithms as a service – an early warning of the coming mechanical issues of machines such as wind turbines, escalators, etc.

Towards the end of StartupYard 2016, your team decided to focus on diagnosing mechanical issues for machinery. Can you tell us a bit more about how this works?

Neuron Soundware - StartupYard Alumni

Complex machinery with moving parts always has multiple points of potential failure. There are basically two ways to solve that issue: either you wait until something breaks, or you proactively monitor the parts you know are likely to break, and fix them before they do.

Waiting for a failure can be expensive, and even dangerous. We can’t wait for an airplane engine to just stop working. You can’t have a printing press suddenly fail an hour before the trucks arrive. The loss in business alone makes it a major vulnerability.

Why can’t humans do this kind of work? Why is a machine more effective?

I’ll give you a real world example: just google “failed wind turbine”. You would find scores of different pictures and videos from all over the world. Wind turbines are giant and very fast moving machines. If the blade breaks a part in the full speed, you can find the pieces miles away and this can be quite dangerous. Preventing these events is a huge challenge.

Currently they do exhaustive physical checks. What we found was that sound, the sound of a machinery operating normally, or machinery nearing a failure, was a very important source of data that was not being employed fully.

Wind Turbine, Neuron Soundware

Photo Courtesy of Kyoto Prefecture, Japan

If you can understand a machine by the sounds it produces, you can reduce the risk of sudden failures, and increase the effectiveness of maintenance, since repairs are directed according to some available data about what’s working and what isn’t.

A machine learning algorithm can learn to connect data points that a human would ignore. A particular sound or a particular frequency may lead to a particular failure at a higher rate. Many of these tasks are above the capability of a human, who has a limited attention span, and limited memory.

There are also practical ways in which a machine is more effective: nobody can listen inside an airplane engine while it’s flying. Nobody can consistently diagnose a mechanical failure based on auditory clues that humans can’t actually detect. You need machines and machine learning for that, and that’s the breakthrough we’ve made.

How does Neuron Soundware learn?

Some issues can be simulated and some just appear time to time and you need to be ready to record them.

Hence we have developed our IoT device equipped with several types of microphones, which we use for the initial data collection. The device is mounted to the machines, continuously listening and transferring audio files to our central server. When we collect enough samples, we use them as an input to our learning algorithm. The machine health monitoring is done using the same IoT device.

You’ve now conducted some pilots as well, how was the experience, and what have you learned that surprised you and your team?

We were surprised several times of the effectiveness of deep learning technology. It works with all type of sounds. If we collect enough samples, we can achieve quality of recognition above 99.5%. And that would get even better as the system would collect more data.

Already, our approach can detect and diagnose mechanical faults that human diagnosticians cannot.

What has been Neuron Soundware’s biggest challenge since leaving StartupYard?

Neuron Soundware, Napad Roku, StartupYard

The Neuron Soundware team wins Vodafon’s Idea of the Year

We are travelling a lot. So the most of the communication happens via Slack and Hangouts. We meet in-person as the whole team only once or twice a week. That’s an intense time, when we need to sort-out a lot of items quickly. It was very refreshing, when (Co-Founder) Filip got married in October and we were all together and not discussing business matters. So we went to (3rd Co-founder) Pavel’s band’s concert last weekend as keeping friendly team spirit is very important to us.  

You recently recommended another deep-tech startup for our program. Why did you recommend StartupYard? What do you think has been the most positive outcome of acceleration for your team?

We would not be where we are now, without StartupYard. We started with a long list of ideas, where to apply AI technology, and we end-up with The idea of the Year (awarded by Vodafone Foundation)- and now Startup of the Year (from Ceska Sporitelna).

So we would like to thank again the many mentors we met during the first month of the program. It also changed our mindset in several ways: how to validate the business potential; how to pitch our product. Rather talk to people than flood them with documentation.

I used to start a meeting by passing out a complicated document, outlining everything I wanted people to know. What I learned along the way is that it’s equally important for people to get to know me and my team as people. Business is about making a personal connection- and that was an important lesson.

You’ve been talking with investors recently. What have you discovered during this process? What are you planning to do with the funds when you raise them?


It takes much longer than anticipated. They all stated how simple it is. It looks nice as starts with an interview, a short two page document. Then you follow with more meetings and committee board presentations, longer documents and the whole process of due diligence.

It is difficult to imagine, even for me, what we could be capable of doing in two or three years with our self-learning AI technology. And how much value and money we can make. We will use the investment to expand our business. With a larger development team, we could quicker complete the self-service sound analytics platform we are working on. That would make our business highly scalable and we could ramp-up our sales team.


Neuron Soundware’s core technology has a lot of interesting applications. Where do you see your team focusing its efforts within the next few years?

We are working on a way to combine effectively the different datasets we are collecting.

That would practically allow us to skip the phase of training as the neural network would be already pre-trained to recognize a wide set of potential issues. This is basically the way a human mind operates: you use past experiences to gain insight on new situations, even if they are very different. A machine can be taught to do the same thing, once given enough data.

The goal then, would be to start shipping a small smart IoT device in large volumes, ready to be used within any machine. Imagine a kind of silent digital mechanic, always sitting and monitoring complex equipment, all the time, and getting better, and better at the job every hour of every day. That’s really the future we are building with Neuron Soundware.

The Startup Myth of “I Don’t Have Enough Time”

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In advance of StartupYard Batch 7, we invited finalist 13 startups to join us for a full day of mentoring in Prague at our Startup Day. We do this every year, not only to evaluate and help decide which of the startups we will invite to the accelerator, but also to provide some value to startups that have taken the time and energy to apply, and to engage in the process with us.

What’s notable is that without exception, whether they are accepted to the program or not, when asked whether the day was valuable to them, startups tell us that it was of great value. Founders often go out of their way to let us know they’re grateful for the opportunity, no matter the outcome.

The Startup Myth: Not Having Enough Time

But every year, we invite one or two startups to the accelerator that don’t end up joining us. The number one reason? “We don’t have time for it.”

This reasoning is sometimes a little baffling. Yes, an accelerator takes time, but on the other hand, as we take care to stress, it is an accelerator. The program is about moving faster than a company would normally move on its own. This doesn’t just mean doing more work in a shorter amount of time. It also means doing more important work, and doing it at the right time.

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When founders consider StartupYard, they sometimes start to see it as a kind of zero-sum proposition. If you spend 6 hours a day talking to mentors for a month, that’s 6 hours a day you can’t spend coding or selling. But let’s be real here- you aren’t going to code for those full six hours. You’re going to have your daily routine- the one you follow because nobody is telling you to do it differently. The one nobody challenges.

Being challenged on your everyday decisions by people who don’t know your company the way you do is sometimes frustrating, but it is also highly motivating. The time spent meeting with mentors is not wasted time. Just today, one of our founders told Cedric Maloux, StartupYard’s CEO, that every mentoring session so far had led to an actionable item for the team.

We have never had a startup come to us after the program, and say that the mentorship period was a waste. Even when they become frustrated at the constraints it puts on their schedule, in the end, they always see the value that it brings as being far beyond the time invested.

What happens instead, most commonly, is that startups simply work harder and better, accomplishing more meaningful progress in the limited time they have to actually build stuff, because they are responding to a constant flow of feedback and advice from people who bring them new ideas and new perspectives on what they’re doing, and what they aren’t doing.

Creative Destruction

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The fact is that startups waste a ton of time on things they don’t need to be doing. It’s a fact of life, and it’s not a failing. Every engineer and creative knows that a huge amount of their work never sees the light of day. It’s not a mistake to waste time, because you need to make mistakes and do things that eventually won’t work out. Risks are necessary.

And yet, there are things that founders just never need to do, and never would do, if they had access to the right mentor at the right moment. We’ve seen countless examples. Startups operating without complete information just do things they don’t need to do, or that are doomed not to work at all. Mentors often know this, and know how to avoid these time wasters.

Is it a waste to talk to someone for an hour if he saves you 50 man hours of wasted effort? How many such meetings would justify one month of mentorship? Not that many, really.

A mentor driven accelerator is set up to save startups from wasting time in ways that truly don’t help them. The hours spent mentoring are usually spent stripping out many of the things that founders are wasting their time on, and prompting them to move faster in areas they are less comfortable with.

If you imagine your daily tasks piling up while you attend mentoring sessions, then consider also that the mentoring sessions are meant to savage those plans, and eliminate most of them anyway. Mentorship is not just about kicking around ideas- it’s about creative destruction.

Time Compression

Startup Myth, StartupYard

The other aspect of acceleration that is frequently overlooked is that of time compression. Acceleration puts startups in a position of having access to processes that usually take weeks or months, and having them happen in days or hours.

A startup on their own may wait a month to get a single meeting with one of our busy mentors. A follow up may be weeks more. But while they’re with us, these meetings happen as soon as they can be practically arranged. Our mentors place our startups higher on their list of priorities, and when they connect startups with other advisors and contacts, that urgency shifts to those contacts as well.

We ensure this happens by only retaining mentors who consistently engage with startups, and keep our startups high on their own priority lists. Try and get a C level executive at a Telco, a Bank, or a major software company to not only respond to a request, but to do you a personal favor. We’ll wait.

The biggest time waster for early stage startups isn’t having meetings. It’s waiting for meetings. And with an accelerator, the waiting is not a major factor. Startups frequently tell us that they accomplish more in 3 months, as a business, than they expected to accomplish in 2 years on their own. That’s the power of acceleration- we save time, we don’t waste it.

Get the most out of your mentors

5 Tips to Get the Most out of Your Mentors

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As we welcome our Batch 7 startups for their month of intensive mentoring with StartupYard’s community of over 100 mentors, we start as always with a focus on two things: product positioning, and mentor relationships.

Product positioning, as you can see from our piece on that above, is essential to building the communication tools a team needs to communicate what they’re doing, and get the right advice at the right time. But being able to get the most out of your mentors is equally as important. Here are a few tips for that:

Get the Most out of Your Mentors:

Focus on Clarity, not Accuracy

One of the hardest things for founders to do early on, is to start speaking in the language of an evangelist for their ideas and work. It pays to keep in mind the difference between “clarity” and “accuracy.” A mentoring session can go fantastically wrong if the team starts leading the mentor down the garden path of fine-grained technicalities that distract, rather than enhance, the big picture.

get the most out of your mentors

Founders are likely, for example, to describe their competitive advantages in technical terms, rather than strategic ones. They are more likely to provide more detailed descriptions of their technology and its features, rather than talking about what bigger problems they solve, and what customer outcomes will look like.

Not only does this leave less for mentors to weigh-in on, but it also puts much of the conversation on the founder’s side of the table, keeping it on subjects where they are experts. It’s important to be clear about what you do, but to moderate the information you share to only that which is relevant to the mentor. Don’t defeat the mentor in detail; instead focus on helping them to understand what you do in their own terms.

Every Meeting is a Sales Opportunity

In a sense, mentors are a kind of customer. Either they’re going to buy into your idea and want to help you in whatever way they can, or they aren’t. Your job is to sell them on your potential, and to keep them on your side, helping you accomplish your goals.

Startups sometimes treat mentorship as some sort of an audition: “tell me what you can do for me”. Mentors sometimes do this too, and it’s generally not very useful. The more constructive angle is to spend the first few minutes of a meeting working to get the mentor into your thinking, and help them see the logic and opportunity in what you’re doing. A mentor that feels comfortable with your ideas and believes in them will be much more ready to help.

Mentors do become customers, but more often they become references for potential customers. We see this time and again. A mentor isn’t a customer, but knows the perfect customer, and a friendly recommendation from a trusted colleague is worth many times more than the best marketing in the world.

Do You Know Someone Who…

Mentors need help finding out what you need. Mentoring is partly about gathering advice, and partly about gathering contacts. This is a consistent point of failure for startups at StartupYard, and at every other accelerator where I’ve mentored personally.

Startups usually love the productive work of getting actionable advice, but they shy away from asking to tap into a mentor’s network. And yet this is a huge part of a mentor’s value. The advice you can get from anyone with enough experience, but each person’s network of connections is unique, and has its own strengths to consider. Don’t waste that opportunity to find out how a mentor can connect you with people you need to meet.

For the love of God, Follow Up

It never fails that when I run into our mentors or see them at our events, they will ask me about startups that they wish had stayed in contact with them. It’s usually something like: “Hey, how is [Startup] doing? I haven’t heard from them. I offered to get them in touch with [Important Person], and they didn’t follow up.”

This is prototypical, particularly among newer entrepreneurs. Failing to leverage offers from mentors is understandable, but it needs to be a strong point of focus. A mentor who promises something, and then doesn’t reach out, is not a flake. Usually, the mentor doesn’t really know how important the contact is to you, and doesn’t want to force you to waste time talking to people you don’t need to talk to.

And once a mentor makes an offer that is not followed up on, he or she is much less likely to ever offer such help again. Making mentors feel valued by following up on their offers, even if it just to be polite, leaves the door open to more constructive future offers.

Of any type of mistake startups make in mentoring at StartupYard, failing to follow up with mentors is the least forgivable. At best, it’s a symptom of shyness, and at worst it’s lazy and disrespectful to mentors you may well need in the future.

Smile

Simple, but disproportionately important. You need mentors to like you. You need mentors to want to introduce you to their colleagues, or to think of you when an idea or an opportunity strikes. You want them to feel like they can give you a call; that they aren’t bothering you, and that you like them.

It’s simple, but still, it’s hard to do consistently. Projecting your enthusiasm is a skill that entrepreneurs have to learn, and for that, I recommend one of my favorite books, the legendary How to Win Friends and Influence People, by Dale Carnegie.

Spoilers: it’s not really that hard. But it takes more than superficial manners. It takes focusing on how you view others, so that you treat them better and consistently focus on their needs and their interests. If you can do that, with a smile, you can build a productive relationship with almost anyone.

Soldigo, StartupYard

Meet Soldigo: An SY 2015 Alum with a New Brand

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

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

StartupYard, Soldigo

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

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

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

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

Soldigo, StartupYard

Zsolt pitching Soldigo at StartupYard’s 2015 Demo Day

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

What about your biggest challenges?

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

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

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

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

– we enabled the possibility to add subcategories

– connecting the store with blogs is also possible now

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

– new server makes it all work faster and better

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Yes, We Still Need Accelerators

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a few weeks ago, I was in attendance at Pioneers, in Vienna. It’s a great conference, and there were quite a few really interesting startups on display, including several of our own, like Claimair, TeskaLabs, and Satismeter.  What’s more, it’s the right kind of conference for startups. Why is that? Well, as we’ve talked about in the past, there are a multiplying array of “startup industry” events out there, many of which deliver little benefit to actual startups.

Pioneers though, is pitched at investors for its exclusivity. Startups not only have to be selected for the Pioneers top 70, but they also attend for free. Investors, rightly, pay for the event, and for the opportunity to talk with so many promising founders.

There are a lot of VCs at Pioneers, and that’s a good thing. But there were few accelerators, and I think that’s a shame. Here, I’m going to talk about why I think so, and why we still need accelerators.

VCs and Backwards Goals

Part of going to Pioneers, for startups, is identifying fundraising goals. These are included in the company descriptions, and used to match startups with investors at the event. Fine so far.

Most startups, knowing that the event is aimed at tech VCs, say they’re looking for anything from 1 to 5 Million Euros. The average seemed to be about 1.5 Million. While it’s generally true that VCs want to invest in specific ranges, at specific stages, the truth is that most of the startups who are asking for those amounts don’t actually need the money right now. But in order to appeal to as many as they can, startups try to optimize their “ask,” before talking with the investors.

Instead of assessing their near-term business goals and funding needs, and narrowing their focus on a specific type of investor, they’ll craft a pitch for investors that portrays them as emerging companies that are “months away,” from a breakthrough advance that will turn the industry on its head.

The customers are just waiting to buy. The specific market need is a foregone conclusion. So really, in their imagining, it’s just a matter of the VC believing in the long-term prospects of the company and its industry, and assuming that the money is going to help them ride out their short-term challenges.

It’s a case of “get the money now, and figure out how to grow after that.”

It Doesn’t Work That Way

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In order to paint rosy pictures about the future, founders tend to make startlingly bold predictions about their ability to do things that literally no one else has ever done in business.  A new technology is new; and proving the market need for it is really at the heart of what an early stage startup should focus on. When I hear from a startup that their new technology is going to “change the way that X does Y” (eg: doctors diagnose cancer, or manufacturers bill distributors, or parents teach children), the first question I ask is “does X really want to change the way they do Y?”

Maybe they do. But then again, maybe they don’t. Maybe they do, but they want to do it in a completely different way. Maybe, maybe, maybe. Startups assume that investment is going to paper over those questions.

Ironically, VCs seem to operate according to the exact opposite assumption: a company that needs their money is not a company they want to invest in. Ideally, they would only invest in companies that have already proven they can make partnerships and sell, and the capital they receive will go mainly to doing more of what they already do well.

In effect, venture capital is an accelerant, not a fuel source. Startups treat it as a first step, when really it’s somewhere near the end of the process.

Why It Happens

Why then the disconnect? I think there are two problems:

1- Founders have been convinced that the “funding gap,” between early stage investors, -like business angels- and VCs is an artifact of the business; a bug rather than a feature. They become persuaded that they need to conform to what VCs expect, because VCs are too rigid, and need to have items checked off their list in order to invest. If they just tick the boxes, they’ll get the investment.

It doesn’t help that in some overheated markets, that’s really true. Some startups do seem to raise investment by ticking the appropriate boxes at just the right time.

But in reality, the funding gap is there mostly because it’s a bad idea for most investors to get involved with a company that doesn’t have product market fit, but wants to commit  significant time and resources to developing new technology.

Simply, too much money at the wrong stage can be a bad thing. It can encourage a startup to build up technical debt without solving key issues of market fit. The funding gap can keep that from happening, by making it harder for startups to raise money at the wrong time, or for unsound reasons.

2- VCs are not always motivated to tell founders about these concerns. They stay positive and encouraging, in case the startup suddenly proves it can really grow.


I can’t say how many times I’ve talked to a really impressive startup team, with really impressive technology, who are having problems raising money, and don’t know why they can’t. Investors seem impressed with them and their tech, and yet they don’t pull the trigger on investment.

“Everybody really likes it, and we’ve had really positive feedback. Some VCs are very interested in what we’re doing.” Of course they are, because why wouldn’t they be? But eyeing someone in a bar, and marrying them are two different things: startups can easily fall into the belief that “interest” equals “appetite.”

The Rule Book is No Good

Knowledge about the “startup industry,” and about investors has grown among startup founders. They’re now able to suss out and learn about the way VCs work, and the way they make decisions.

I was recently handed, at another conference I will not name directly, a literal book called the Startup Playbook. This kind of thinking predominates among people who neither invest in startups, nor run their own. 

My belief is that this leads some founders to the mistaken conclusion that because they understand how VCs work, they can therefore get investment from VCs.  However, the fact that a startup understands a cap table and has a clear idea of the kinds of things a VC invests in does not mean that they can get that VC to invest in them.

And this is where accelerators still play a vital role. There are plenty of stars in the tech industry who are simply unaware that they are stars. Because they play by the “rule book,” that everyone is increasingly aware of, they may forget that the rules don’t have to apply to them. And accelerators are, at the core, about breaking the rules.

We Still Need Accelerators

If you compare accelerators with other investors, we should look like odd ducks. We shouldn’t behave according to typical patterns. Because our appetite for risk should be unusually high, our tolerance for uncertainty should also be commensurately wide. Open questions, to us, should be good things, and sure things, less interesting.

That approach can really help startups to focus on doing what they do best, which is solving problems no one else knows how to solve. Where a lack of certainty may be a negative to a VC, it is ideal for us as a starting point. Uncertainty is something you can work with, and something you need in order to be truly unique. You have to question everything, and be questioned on everything.

Founders usually seem to expect an accelerator to behave the way a VC would: to be encouraging but vague. But more often than not, startups in the situation I’ve described end up expressing a sense of relief after a meeting: “I’m so glad we talked about this. I never get feedback that’s so direct.”

This is part of why VCs look more and more to accelerators to be the first movers in new market categories, new technologies, and new business concepts. More and more, our own contacts in the VC world turn to us not only for opportunities to invest in startups, but also to steer startups in our direction, hoping that the accelerator will be a proving ground for the team, the business, and the technology itself.

Attending an accelerator is not for every startup, but it is increasingly becoming a badge of confidence that VCs are looking for. And every year, we see VCs paying closer attention to our program, and others like it, to gain insights and opportunities they can’t get anywhere else. 

 

6 things

6 Things Our Startups Learned in 2016

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As our 9 startups leave us, and begin the real journey of growing into their own companies with their own bright futures, we thought it would be valuable to look back on some of the things that many of them learned in the past 3 months. I asked our teams: “In what way has your thinking changed in the last 3 months, and why? What lesson did you learn that you couldn’t have learned any other way? Some of the answers are collected below. Here are 6 things our startups learned in 2016: 

The Customer is Not Always Right, and a Customer is not a Client

Many of our startup teams have experience in business, but many have also spent the earlier part of their careers working on technology projects as consultants, engineers, or project managers. That’s vital experience for any startup founder, but experience is a double edged sword. We as often as not encounter situations where our founders’ experience in business works against their judgement as startup founders.

As a consultant, or a project manager, one works at the behest of a client who understands what they are paying for, and why. Their needs have already been laid out in clear terms, and the solution, including the work needed to solve it, has in a sense been sold even before the work begins. Because projects have clearly established parameters for success, a project manager or consultant has something to work towards, and clear feedback on the work already done.

But it’s just different with startups. Startups typically have customers, not clients. They produce something new, and find people (customers) who understand and want the value that product provides. A client asks for something, and it is delivered. A customer doesn’t know what he or she wants yet, but can be convinced that they need what the startup provides.

Most of the time, startups are working on concepts and products that customers not only didn’t ask for, but may not even understand. Much of the early work of a startup is to figure out what a product actually is, and how that can be communicated to a potential customer. Instead of working toward a common goal, a startup has to do the work, and then convince a customer that what they’ve made is worth buying or investing in further.

Because so many founders are used to tailoring their work to the needs of a client, they can start to adopt the objections of the potential customer as their own objections. Every week, we hear some variation of the result

SY Team: “What about x feature you were working on?”

Founders: “we talked to a potential customer, and they said they didn’t want that.”

SY Team: “How did you try to convince them that it would be valuable for them?”

Founders: “We were really just listening.”

Just listening is what a consultant does in the first meeting. But a startup is pitching something new; something probably unexpected, and something that customer doesn’t yet know that they want. First meetings with customers have to sound out the idea, in order to see if it is being communicated properly. If the customer doesn’t like the idea, then it may be time to talk to others, before changing the product.

We also hear a variation of that story, where the startup adopts the ideas of its first potential clients, instead of selling its own vision:

Sy Team: “Why are you doing x feature now? Why focus on that now?”

Founders: “Because a potential customer said they wanted that.”

Sy Team: “Did they agree to buy from you if you had it?”

Founders: “Well… not yet. But we think they will.”

This is of course an ideal circumstance of a customer,  They now have an expert team developing a dream product for them, and best of all, they’re doing it for free. If the customer doesn’t like the result, they lose nothing in the exchange; while the startup has invested time and resources into something it may not be able to sell at all.

A Pilot is Not Just a Pilot

We happened to have quite a few companies in this cohort that struck deals for piloting their products with prospect customers.

That’s great progress, and it opens the door to future business. But it’s not the customer’s job to push the sale, or to evaluate the pilot by themselves. A startup that runs a pilot without specific goals and success metrics is like a car dealership that finishes test drives by dropping the customer off at home.

Maybe the customer will come back after the pilot, maybe not. But you’ve failed to do your part in the transaction if the pilot you run doesn’t have a clearly defined goal.

If possible, a startup should run a pilot that can easily become a long term business relationship. There should be a conversation before the pilot begins, that covers these questions: “What will define a successful pilot?” “Who will determining that a pilot is a success?” “What will be the next step after a successful pilot?”

Ideally, a pilot doesn’t end, it just becomes a business relationship. If a customer wants to “evaluate” a pilot after it concludes, then very convincing evidence needs to be prepared that the pilot actually worked. It should not be a question of expense for the customer, but of opportunity: the pilot should prove that an opportunity exists, and that the customer can’t afford to skip it.

Customers can readily agree to a pilot, if it costs them very little of their time or focus. They can agree to a pilot just to get out of a meeting with a startup- and we’ve seen that happen plenty of times. The startup comes back with the good news that they’ve agreed to a pilot, but when it comes to taking the steps to make that pilot customer a paying customer, no progress has really been made.

Partnerships Should Cost Something

Like the aforementioned pilot, a partnership can be an easy thing to agree to. We’ll put your logo on our website, and you put your logo on ours. That is the extent of a great number of tech company partnerships, and there’s nothing inherently wrong with that. It is good to give customers a sense of who you are connected with in your industry.

However, a partnership in name-only is not as good as a partnership that costs both you, and the partner, something real and tangible. I’ve touched on this in the blog before, but it bears repeating here: you should partner with companies that need something real from you, and which you need something real from in return. Without a mutual interest on the table, a partnership is at best an unnecessary distraction

Play to Your Strengths as a Founder

One of the hardest things about being in an accelerator, from what I’ve observed, is that every mentor has a different view of the kind of company you should be. Often though, a mentor’s ideas about your company are as much a mirror of their own desires, as of what kind of company you should really be building.

That kind of feedback is very valuable- it gives you insight into what makes others passionate, but it can’t replace your own passion.

Founders sometimes run into what I have started to call a “passion gap,” between the passions of their advisors, and their own desires. They try to be like the mentors they admire, instead of trying to do what they really love doing. This can lead a founder to feeling frustrated and worthless, when he or she isn’t as good at what they’re trying to do, as at what they really love doing.

What we’ve learned over the last few years, is that you need to play to your strengths. You just have to do what you love- and you can’t make yourself love whatever you are doing. It can be a magical thing to see a founder find the sweet spot between what they love to do, and what makes sense from a business perspective. That balance can be very hard to find, and it may only come up after many brainstorming sessions, and a great deal of work that doesn’t go anywhere.

In one case in recent memory, a team in our program went from a pervasive sense of failure and disappointment, to make increasingly positive steps- and it all started when they took themselves off the hook for what they thought others expected of them. Once they started doing what they were actually good at, things turned around in a hurry.

How to Ask For Help

The startup life attracts a certain type of personality. You have to be a little crazy to want to start a company, with no guarantees that there is a real market for your product, or investors actually interested in funding it. We look for the type of person who is comfortable dealing with uncertainty, rejection, and oftentimes, failure.

 

We stepped down from being managers lecturing and teaching rookies in our business workshops to becoming students and listening what others had to say. Others that we by all means respected. So the chance to realize and re-discover humility or meekness was not only useful in the process of mentoring but also further down the road as this attitude helped us see things we might have not seen in our previous business, or wouldn’t have seen without Startupyard.

What that means, is that we attract founders who don’t take “no” for an answer. That’s a good thing generally, but it also presents problems. Knowing when one should listen to negative feedback makes the difference between a naive founder, and one who is able to adapt and thrive despite problems. Drive and independence of thought can as well lead a founder to ignore important feedback, as it can cause him or her to persevere when others would quit.

Listening well and actually getting the help you need often comes down to what questions you’re asking. To me, there are essentially 3 types of questions that founders ask most: “open” questions, “closed” questions, and “save me” questions.

An open question can be: “what type of email marketing service should we use?” That’s fairly straightforward- the founder is just asking for input and options. Nothing amiss here.

Closed questions are productive as well: “do you think this landing page is good?” While it’s a yes or no question, it starts a useful conversation.

Finally, “save me” questions are where some founders run into real problems. “How do you reach out to the press to get good PR?” Or, “what should we do to improve our sales funnel?” Worse still, would be a startup founder asking an investor: “is there any appetite for this kind of investment?”

These are “save me” questions because they aren’t really questions, they are cries for help. The founder is really asking: “what should I be working on?” “What should I do right now?” These questions first fail to instill any confidence, and second, don’t elicit very useful responses. The response will depend almost entirely on the mood of the mentor, and put all the work on their side of the table.

A far better question is an open or closed one, which essentially asks: “Am I doing the right thing?” “Am I missing something?” A mentor or advisor is far better equipped to react rather than to dictate. And when a founder puts the work in ahead of time, shows their thinking, and asks questions that shed light on that thinking, they are much more likely to get substantive and useful feedback.

It’s Not About Dreams, It’s About Vision

StartupYard Accelerator

“It is not about dreams. It is all about a vision. And StartupYard helped us to find a path, how we can make our vision a reality. So we just need to roll up our sleeves and get busy. There’s a lot of work to do. “

One of our founders told me this week that for them, the realization that the work of a startup is about vision, instead of dreams, was a core part of their experience at StartupYard.

I had never thought about it that way, but I think he was on to something. A lot of founders have dreams, and there’s nothing wrong with that. But dreams don’t necessarily come with a coherent plan for dealing with the reality of any given situation. You may dream of big valuations and great achievements, but without a clear vision for how you will achieve them, they’re just dreams.

Vision, on the other hand, is about having a concrete, realistic set of objectives, and a way of achieving them that makes sense, is aggressive, and can be clearly communicated to investors, advisors, and partners. While we look for startups that have big dreams, we end up pushing them to pursue a clear vision.

TotemInteractive: Make Ads People Love

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TotemInteractive, StartupYard’s first Polish startup team, came to StartupYard with a novel concept, and has executed on a broad vision to change digital outdoor advertising in a major way. The team, experienced in digital media and cloud systems, is creating a platform into which marketers and advertisers can put their creative energy to generate meaningful, lovable, interactive display ads in place of boring, old fashioned posters and billboards.

I caught up with Piotr Piekos, CoFounder and CEO at TotemInteractive, to talk about the future of outdoor digital advertising, and cloud based marketing. Here’s what he had to say:


Hi Piotr, tell us a bit about TotemInteractive and your team. How did you come up with the idea?

TotemInteractive

Pietor Piekos, CoFounder and CEO at TotemInteractive

TotemInteractive is a software platform that aims to help marketers with deployment and performance measurement of cross-platform, interactive marketing campaigns launched on electronic screens in public and in-store locations. Basically, interactive display advertising, instead of boring old posters.

The idea came from our observation of two trends: the propagation of digital screens in public spaces, and the fact that mobile devices have become an inseparable part of almost every activity that we do outdoors. TotemInteractive believes that digital advertising outdoors as often depicted in scfi movies in not just an imaginary future. We think that it is a natural consequence of the mobile and IoT revolution. TotemInteractive’s plaform aims to be among the first players on that market.

You have a background working with digital agencies. How does that help you when it comes to creating a platform for digital interactive ads?

Throughout my professional career I had seen a number of solutions aiming to resolve the problem of unified and streamlined visual communication across different devices. Some of them already succeeded in industries like gas and oil (crisis centers) or places like decision-support systems for high-level corporate executives.

Budget constraints are less of a worry for these types of businesses, allowing the vendors to reach high complexity and sophistication with the systems they deploy. I have been involved with several dozen such products. Knowing exactly what our target market (advertisers) expects, we are able to provide a lean and user friendly answer to the market demand. In short: we want to move what is already possible with multi-million dollar equipment to the world of advertising, where price is always a consideration.

What about your team? How are you uniquely qualified to bring display ads into the modern age?

To answer this question, I will first need to explain a bit about the requirements for the platform. We had composed a team with very technical specific requirements in mind: such as quality of service (your ad has to be there at all times),  and scale (platform needs to work on hundreds of screens simultaneously).

Our team consists of people who are experts in building complex, distributed systems. Michal is a system-engineer who is a specialist in cloud based deployments. Kamil and Piotr have been working on large scale deployments of tailored B2B systems for years.

 

Leszek Knoll

Leszek Knoll

TotemInteractive

The TotemInteractive Team

TotemInteractive

The Totem Interactive Team Hard at Work

 

On the business side: Leszek Knoll, my CoFounder and COO, brings startup entrepreneurial experience on board. He had built startups in the past and knows well the rules of the game.

I have been working in professional audio-visual industry for several years: my expertise is based on several dozen deployed, consulted and rescued projects related to large scale visualization systems. Lastly, we are backed by several mentors who hold strategic positions in advertising segments: in agencies, brands, and large media-house conglomerates.

Tell us a little about how the TotemInteractive platform works. What does it enable advertisers to do?

TotemInteractive makes it possible to directly interact with a big digital screen in public spaces using your mobile phone. It can be a game, where you use your mobile as a controller, or a socially engaging voting system for your favourite band during the music festival. Whatever you can image.

Our platform stays hidden behind the scenes, a cloud based system that supports various applications for live screens. It’s a sophisticated enabler, allowing marketers to very easily create and deploy interactive campaigns, without a need to engage substantial resources to prepare, code, test and deploy their own cloud based or local solutions.

How is TotemInteractive different from traditional static display ads?

It is not boring! Our platform transforms traditional ads into something that delivers real value to the consumer. Suddenly, those displays become engaging, fun and an experience sharable with others.
TotemInteractive

You’ve already run a few pilot campaigns. Can you tell us a little about how these worked, and what the results were?

Even though our MVP is still in development phase, we had done a proof of concept campaign during a job fair, at Silesian University of Technology. Our results show that, first of all: people are really keen on interacting with this new type of medium, when the motivation for doing so is clear.

Registering more than 10 engagements per hour, per screen, gives us good reason to believe that such advertising can be much more effective than traditional display ads. Not to mention, that 42% of the people who played our game were willing to share their Facebook data with us through the platform. Try doing something like that with a poster.

You have spent quite a bit of time identifying market needs and exploring different approaches to the market. What has the exploration process revealed that you didn’t know a few months ago?

Major conclusion was that a seed-stage startup will have very hard times when it comes to deployment of a platform across multiple screen networks. We had found out that it is a very capital intense goal, that we simply cannot afford to chase at this moment.


What are your immediate plans for expansion? What does TotemInteractive have planned for the next year?

We want to reach the retail market (in-store digital signage, banking, car dealerships). Gradually we also want to move to the events market. In the next year we want to be recognizable by marketers in CEE and western Europe as these guys that can put their creative, potentially viral, ideas into motion.


Long term, where do you want to be in 5 years?

 Market leader in interactive digital signage! We want to provide marketers not only with technology, but with unsurpassed reach (network aggregation), for their digital outdoor campaigns.

How has StartupYard shaped the company’s growth in the past 3 months? Are there any particular mentors who had an outsized impact on your team, direction, or traction?

Well, StartupYard was immensely helpful in terms of momentum that our business reached during this time. Definitely, mentoring was a revealing and beneficial experience for us. It was about knowledge sharing, feedback (both positive and negative), but also some of the mentors allowed us to enter real sales opportunities that we are chasing at the moment.  Without SY it would not be possible. But not only that: I believe that our business development potential is now multiplied by your expertise in marketing and the power of your network.