Guest Post by Ondrej Krajicek: What It Means to Be a Mentor

About Ondrej Krajicek

Ondrej Krajicek is Chief Technology Strategist for Y-Soft, and Y-Soft Ventures, a Brno-based printing and 3d manufacturing tech company where he has been a team member since almost the beginning. Ondrej is a dedicated startup mentor, and a longtime member of our community, where he has published his thoughts and unique perspectives on the technology business and other topics many times. Today Y-Soft is one of Czechia’s few technology “unicorns,” and serves large and small companies all over the world. At Y-Soft, Ondrej considers it his mission to grow the Czech economy by encouraging technologists to focus on crafting superior products and relying on their best skills, rather than focusing on cheap labor and manufacturing. 

What It Means to Be a Mentor

Thank you StartupYard for giving me the opportunity and looking forward to the next cohort.

I should have started writing this article after my mentoring day at StartupYard, which is November 21st. Having past experience with several cohorts, I just could not resist and started as soon as I got the idea. So it is rather sunny day in Texas and I am looking forward to working with StartupYard and the incubated startups once more. I am writing this to give myself more clarity on why am I doing this, what should I deliver to the startups I am going to talk to and what should be my take aways from the day. I also have a tiny ambition that this may change somebody’s perspective on mentoring and improve the experience for any mentors out there and those being mentored as well.

I have been working with StartupYard since 2014 and it has been a tremendous experience. They truly have a great team with three people who really stand out: Helena who handles all the scheduling, Lloyd who does a great job with no-nonsense PR (a true rarity in Europe) and Cedric, who leads it all.

You are not the smartest guy around…

I will never forget two immortal quotes from Bohumil Hrabal in Slavnosti sněženek: “Máte štěstí, že jedu kolem.” and “Říkají o mně, že jsem odborník.” Apologies for Czech, it really never gets old.

10 years ago, having been invited to be a mentor, I would probably feel honored and entitled. If repetition is the highest form of flattery, than asking someone to be your mentor is definitely the second highest. And after the thrill of being asked to mentor dissipates, the first thing I need to consider is my responsibility to the teams I am going to work with.

Being a startup team in a world class accelerator is an overwhelming experience. There is little time for everything and spending time with a mentor is an important investment on the team’s side. They are investing time, energy and money in that discussion, regardless of its length. And as a mentor I should never forget that.

I am not a mentor because I am the smartest guy around. I am not a mentor because I am successful. I am a mentor because I had to solve problems, perhaps similar problems in different contexts and I, my team and company survived to see another day.

So how can I make sure that the discussion is worth their while?

Be Useful

One of the best mentors I had the chance to meet, Ken Singer taught me one of the key principles of Silicon Valley: Pay it Forward. If someone seeks your help, help them — without expecting anything in return from them. Someone else, some other time, will help you too. Next time you are pondering how to replicate Silicon Valley success in the Czech Republic, think about this and the culture which is preventing this simple approach to take of here.

How does this apply to being a mentor? Do not expect any tangible benefit in return. You will not get shares or money just because you graced someone with your presence and shared your experience. Certainly not by answering few questions.

Being useful means adopting the mind set of freely sharing anything and everything which feels relevant to the situation. Connecting people with people.

Tell Stories

The real problem is that sharing is difficult. Robert Kaplan gave a great talk about mentoring which is available on YouTube.

If there is one principle I need to follow, one thing to take from Robert Kaplan, than it is that I should not tell them what to do. Kaplan claims that mentoring advice is only as good as the story, but what if it’s you telling them stories. Stories are about context, problem, solution and lesson — just like bedtime stories of our childhood. Just this time, it’s about business.

Instead of asking them to tell me their story and risking, that my advice would only be as good as their story, I should tell them mine and let them take what they feel they should.

I see mentoring as a form of leadership. This is the less obvious kind where I do not manage anyone, certainly not the team I am talking to. My biggest power over the team is listening.

That is easier said than done.

Ask the right questions

I usually start with three questions:

  • How can I help you today?
  • What can I help you with?
  • Can I have a whiteboard please?

But no, these are not the right questions. As Kaplan teaches, leadership is about finding the right questions and my “right” questions are about users, employees and customers.

  • Why is anyone going to pay you for your services or products?
  • Why should people work for you?
  • Why should your customers choose you and not your competitors?

The hard part is not asking these questions, but feeling the answers.

Own It

In 2015, Harvard Business Review published a nice article about how it is impossible to put yourself in the proverbial shoes of your customers. Cutting to the conclusion, I am not trying to put myself in the shoes of their customers.

I need to become one. This is where my stories help. May be, sometime in my past, I was in a situation which would require products or services of the team I am talking to today. My experience, if it is relevant, kicks in when we start debating the need, the constraints involved and how is their solution solving the problem. Which is now — for the time being — also my problem.

Mentoring is like acting. I love theatre: drama, comedy, opera, but I would be terrible actor. But here I can immerse, I just need to be authentic.

Share beliefs

Authentic means that I need to tell them the truth. Not that I expect to lie or think that some mentors lie, but if I am not authentic, they cannot trust me and probably won’t. This is not a place and time for rhetorical alchemy as I am not here to influence: no careful dosing of ethos, logos and pathos. I am a stand and a big bazaar and the mentored team shall pick only what they like. I am not a major stakeholder as I am not materially vested in the team’s success. I am here as a volunteer.

Acting, management and mentoring are alike at least in one more thing: filtering does not work. So how should I establish authenticity? I need to share my beliefs. How can I prove myself? By story telling again. After all, marketing is all about proof points, isn’t it?

When the team shares my beliefs and values, they understand my story and how is it relevant to their products and services, they are in the position to take some advice.

Teach? Share failures!

Merriam-Webster defines the noun “mentor” as a trusted counselor or guide. Having the right context from the team, being their customer at the moment and consistently with my beliefs and values, I am ready to share advice. What I did and how it worked. What I did and how it failed.

In my experience, the best way to share knowledge with others is to share your failures. When I succeed in something, I am seldom completely sure why I succeeded. When I fail, sooner or later I find out why exactly I failed. Failing gives me clarity and confidence. I am never giving up and I dare say that I learned to patiently and diligently study the failures I was part of, my failures or failures of my team.

That clarity and confidence also enables me to share it with the team. It is their choice whether they want to repeat mistakes of others or make their own mistakes.

Not that I agree with the failure worshipping, which seems to be a thing in the startup culture. As Tomas Sedlacek put it in his tweet, I strongly preffer trial-success than trial-error. I also believe in failing fast and measuring hard, which I will probably never fully learn.

And I am not as selfless as it may seem. There has to be something in this for me.

Why am I here today?

Mentoring is a learning experience, so first and foremost, I am hear to learn. Occasionally, I learn about new approach, business model or technology. I used to focus on that.

Today, I am here to train. To stretch my muscles in a different way than I am stretching them every day at work. If you ever exercised with a trainer, you know that your trainer is changing your exercise quite often. You are doing something else on Tuesday than you did on Monday.

Change is good as human body excels at adaptation and always finds equilibrium of achieving results with minimal energy. Human brain is no different and is actually great at building and making mental shortcuts. I am here to train active listening skills in extreme conditions (time is short), maintain an open mind and apply what I know on problems I do not have. I am here to push myself for patience, which is one of my biggest weaknesses.

And I am here to relax. Other teams and other people struggle with difficult issues too. Others are also trying to do what they believe in.

I am not alone in this.

Dot Glasses, Philip Staehlin

SY Investor Launches DOT Glasses: The $3 Glasses That Could Help the World See

Over 1 billion people in the world need glasses, but can’t afford them or don’t have access to them. That’s why StartupYard investor and mentor Philip Staehelin launched a Czech startup – DOT Glasses – to try to solve this massive problem 3 years ago.

Today he believes they finally have the solution, and are about to launch large-scale production of the world’s first, one-size-fits-all eyeglass frames (which were designed by a joint venture of Mercedes-Benz and AKKA Technologies), along with a transformative lens concept.   

Philip is the former CEO of CCS, the former Managing Partner of Roland Berger, and an alumnus of many other international companies like Accenture, T-Mobile and A.T. Kearney.

Earlier this year, DOT Glasses received a “matching funds grant” from CzechAid (up to CZK 5m over 3 years), and they’ve recently won a place in the EU-funded Startup Europe’s Soft Landing program to India (called the “Ecosystem Discovery Mission”). They were one of the 24 European representatives selected for the program.

I sat down with Philip this week to talk about the launch of DOT Glasses, along with the crowdfunding campaign to support the company on hithit (you can check the link to contribute). Here’s what he had to say:

Lloyd: Why glasses?

Philip: There are a few parts to the story, of course. If you’re asking specifically why I decided to focus on providing glasses to people in developing regions, it’s just one of those weird coincidences that suddenly made me realize that a 700-year-old industry could still be disrupted.

If you mean, why glasses and why provide them to developing regions, it’s because I’ve long been focused on making an impact beyond my immediate “bubble”, and I was at a stage in my career where I wanted to use my time and resources to help those most in need of things we take for granted here in the developed world.

The idea specifically came to me while I was skiing, and it’s funny because at first it seemed like a pretty first world problem to have. I’m mildly nearsighted now (although I used to have very bad eyesight, and had laser surgery 15 years ago to correct my vision), so I wear glasses. I can do without them, but I like the world in sharp focus.

Philip Staehelin, Founder of DOT Glasses

When I ski, I don’t like to wear my glasses under my ski goggles, so I usually go without – which isn’t always good especially when skiing moguls. On the ski lift, I was daydreaming about buying some “off-the-shelf” lenses to pop into some specially-designed ski goggles, providing me improved (if not perfect) vision to make my skiing more comfortable. I didn’t want to spend money on prescription ski goggles – it wasn’t worth it, and it was a hassle – but I started thinking about what could be “good enough” vision and how I could stock some limited range of lenses on the shelf next to ski goggles, so people could just select what lens helped them enough.

The next ride up on the ski lift brought me a eureka moment. “Good enough” vision was all about smartly limiting the selection of lenses. It’s kind of like the 80/20 rule that’s prevalent in so many facets of life and business. 20% of the effort for 80% of the gain. 20% of the lenses to achieve 80% of the vision clarity. If it was true (and the implications came crashing down on me all at once)… it could transform an industry. But not the ski industry with a few million customers at best.

Rather, it could disrupt the eyeglasses industry for people in need. Actually, “disrupt” is the wrong word in this case, because more than 1 billion people need glasses but have no access to them or can’t afford them. So there is not a current player to disrupt. It’s more about tapping into a new, massive customer segment that has been unaddressable because of the challenges of costs, logistics, lack of optometrists, etc.    

When I got back home, I started researching the issue. You may think, living in Europe, that we are drowning in optometrists, because they are on every corner of every major city. Actually we have something like 1 optometrist for every 3000 people, and about 60% of those optometrists are usually based in the capital cities.

On the contrary, in many underdeveloped regions, such as in parts of Africa, there are not enough optometrists to go around. In some cases, there are only a handful in an entire country with millions of people. In Ghana, there are about 50 optometrists for a population of nearly 20 million, and the per capita income is less than a dollar a day. Getting glasses can take a week’s travel and several months’ wages.

Which means that for a vast swath of the world’s population – glasses are either an unaffordable luxury, or they’re simply not available. If you have +/-1 diopter (also known as 20/40 vision), you can absolutely live a normal life. In the UK for instance, 20/40 is the required driving standard. But once you start getting past +/-3 diopters (20/250), it starts to become difficult to lead a normal life. I have first-hand experience, as I used to have -6 diopters before my laser surgery, and as a kid, I literally couldn’t find my family at the beach if I didn’t have my glasses.  

That’s so interesting. Basically there is no existing market to help these people.

Exactly. Poor vision is the #1 health issue in the world, but almost no one talks about it. It causes roughly $230 billion dollars of economic loss every single year, but on an individual level, poor eyesight prevents people from learning in school, it prevents them from having a meaningful job (or any job), and it hurts families and communities. Poor vision literally traps people and families in poverty. But it’s been too challenging to treat poor vision in more remote parts of the world, even though the solution has been around for centuries.

So in the end I decided on a simple concept (I actually call it “maximum simplification”): a set of glasses that are both modular, and cheap, which can reach developing regions fairly easily, and don’t require a professional optometrist to be dispensed to the end user. All you need, to provide a pair of customized DOT Glasses is a very simple testing tool (that we developed), and the components of your individual set of glasses: the 6 pieces of the snap-together frames, and the right strength of lenses (which, by the way, are “left-right agnostic” – a concept we also developed, allowing for the same lens shape to be used as a right or left lens, which reduces lens stock requirements by half). The end result: robust, good-looking, glasses that are available to a buyer for about $3.

$3 is a lot to some people

Yes. If you live on $2 a day, then $3, comparatively speaking, is pretty close to what a person in the developed world would pay for their own glasses from an optometrist. We have worked very hard to make them as affordable as possible, and $3 is the lowest we’ve been able to get it. For those wanting to correct a less severe problem with their eyesight (e.g. -2 diopters), this price point may not be absolutely compelling, but for the more severe cases, it’s the best investment they will ever make. It will be completely life changing.

Why haven’t charities really attacked this problem before?

They have – there have been many projects targeting this problem, but none has been able to address all the issues needed to scale properly. Those that train optometrists are doing a great thing, but the world needs about 100,000 optometrists to bring the per capita ratio even close to a 1st world ratio… and they still wouldn’t be located in rural areas.

There are a lot of economic incentives against optometrists locating themselves in poorer areas. They go where people can pay more, especially if they are in high demand. That means you can train thousands of new optometrists and still have little impact in remote regions. They will go where the money is.

Others focus on delivering self-adjustable glasses with some fairly advanced technologies (two stand out: fluid-based lenses and Alvarez lenses). But in reality, these are over-engineered which keeps costs much too high. They deal with one shortage (optometrists), but they exacerbate another shortage (money). And they don’t look like normal glasses – they’re simply not fashionable enough.

Those that attempt to solve the problem by providing regular glasses as cheaply as possible still run into issues such as: huge stock of frames and lenses needed to address all of the combinations of faces (including pupil distance and ears distance from eyes) and eyesight requirements. This increases the cost of stock, and makes replenishing that stock much more complicated and costly, but it also requires a trained optometrist (or at least an optician) to measure the eyesight to a fairly granular level. All of this adds complexity and costs, which makes it impossible to propagate into more remote rural areas.

Also, I think one of the big problems with the all-charity approach is that they often fail to take the motivations of the people they are working with into account. If you develop real economic incentives for people to distribute the glasses as a product, for example, by supplying a few local people with the training and the equipment necessary to dispense them, then you are effectively creating a new market. That’s the reason we developed our own super easy testing kit as well, because at the end of the day, we want this to be a new viable small business opportunity for people in these remote areas, where previously providing glasses was not economically feasible.

That is why the glasses are not free to begin with. If we relied on charitable donations, we would also miss out on the opportunity to leverage the entrepreneurial energy of these local partners, who, let’s be honest, are going to understand their own local markets and customers a lot better than we do.

This is really the core failure of many NGO projects: they don’t really consider the long-term incentives of the participants and recipients of their help. Of course, not relying on donations also allows DOT Glasses to scale much faster than other organizations, as the business model is sustainable and the revenues are reinvested into growing the footprint to help more people. The more we can sell, the faster we’ll grow. We just need to “prime the pump” with donations and/or social impact investment in the early stages in order to build out our first networks.

So you’re not a charity.

No. We have charitable intentions (and we’re a true social enterprise), but I also believe that it’s in a way disrespectful to people in economically challenged regions to assume that they are not motivated in the same way that people are in developed regions, by the opportunity to pursue success and prosperity with hard work. That’s why we believe end-users of our glasses should be paying for them, and the profits from that activity should benefit the local economies as much as possible. Ultimately, that is the way to help these regions develop.

Also, in many cases, charitable activities can have a detrimental impact in the area they’re trying to help. They may end up hurting developing economies, even though they have the best intentions at heart. Think of food charities that end up displacing local farmers who can’t compete with free stuff. That’s a real problem with charities, and one that is rather insidious.

Even sending volunteers to teach in slums can have negative consequences, because the local government starts to depend on the free handout (in this case, education) and doesn’t develop a properly functioning, stable educational infrastructure of its own. Which means they don’t care about creating their own teachers, and those few teachers that there are may actually have lower salaries because they’re competing against “free”.

With our work, we hope to create microbusinesses, with the help of microloans if necessary. We want to have entrepreneurial people start up their own eye care businesses. In the process, they create a better life for themselves and their families, but they’re also selling a new lease on life to those who can’t see well. And it’s been proven, that there is a tremendous increase in productivity when someone gets their poor vision corrected, which means additional wealth creation for individuals, families and communities. It’s a true virtuous cycle.  

You spent a career as an executive in big corporations, as a consultant, and finally as an investor (including in StartupYard). What would you advise someone like yourself, who is thinking about a career shift toward charitable/entrepreneurial work?

It’s a great question. The road from the boardroom to developing DOT Glasses for remote regions of the world was a pretty long and winding one. But the fact that it was long and winding is important, as I learned new things from every role I ever had. Small things and big things. I became more well-rounded, and I could see the world from more angles.

I’m a huge believer in cross-pollination of ideas between industries, between companies, between countries, etc. For example, I brought a lot of my mobile operator experience to my role as CEO of a large alternative payments company, because both had a lot of B2B and B2C customers, both needed customer care, both needed direct sales, both were concerned about customer churn… and in some cases the mobile operator approach could be adapted to create a better solution for the payments company.

This isn’t a unique experience obviously, but the corporate world is set up against this to some extent. They want to hire people with experience from their own industry. But I went through a few different industries, as well as through consulting (which teaches you a lot about how to structure problems, organize projects, analyze data, and find the core essence of the analysis), and I started using that breadth of experience to mentor startups.

Startups (especially with young founders) often know a lot about their technology, their market dynamics and perhaps a few other select bits of information – but they often lack the big picture. They also often lack some key skill sets that they will need, such as sales, finance, and strategy, not to mention, they have no idea how to talk to the corporate world (although I admit I’m hugely generalizing).

So I help them with that. But perhaps even more important than providing some insights into missing skills, is providing cross-pollination. It’s all about identifying new opportunities (even new tangents) that aren’t obvious. It’s about synthesizing new value by bringing together entirely new elements. Which is what I did with DOT Glasses.

Coming back to part of your question though, the answer is to strive to become a cross-pollinator. Constantly learn new things, challenge yourself, get out of your comfort zone as often as possible, get out of your corporate bubble, and go out into the world and do things. Mentor startups, work in a charity, join a business club – but if you do it, do everything actively. Make an impact. Don’t be passive, because then it’s just a waste of time. I like to say that “life is too short to do just one thing”. I believe in side interests. I believe in planting lots of seeds and seeing what sprouts. And eventually one of those things can grow into something bigger and more beautiful than you could have imagined.

But don’t forget the lessons you learn in the corporate world about pursuing long-term economic interests, including your own?

Yeah, that’s right. Social impact work is not necessarily charity. We don’t just give, we also look for sustainable opportunities that can grow the overall economies we are focusing on. That in the end is a benefit to us, and to those regions. In my view, there are many, many activities that are currently approached with a “charity” mindset, that might be better served by a social impact, entrepreneurial mindset as well.

Hey, this isn’t rocket science here! We all know the saying: “give a man a fish and he eats for a day; teach a man to fish, and he’ll eat for a lifetime.” Well, it’s not just teaching is it? Make someone your business partner, no matter what it is they’re doing, and make it mutually beneficial, and that is going to create opportunities for you both.

How do you think corporate officers, like you were in the past, can better contribute to this kind of sustainable social impact?

Let’s say this: I think it comes down to really trying to understand, and develop a respect for the people you are trying to help. When I think about social impact, I think about not only looking at ways of improving someone’s life, but also improving my own, and the lives of those around that person. That comes back to you, in the end. There is a part of social impact that should be “selfish,” in a way. I am doing this because I want to live in a better world, for me as well as for you.

I think it is a danger among those of us who enjoy some material success, that we begin to imagine that we are giving and no longer taking anything. However in most charitable activities that just isn’t true. We are taking a lot, in terms of what matters to us: respect, reputation, the feeling of doing good works. That is something of value. You should always be aware of what motivates you to do what you do.

Again, nothing wrong with feeling good for giving back. But I would encourage people to go further than that, and to think about how their actions really tie back into their own lives. This is how we empathize with people in the real world.

If I am helping someone in a remote village in India to see better, then how is this affecting my own life? I can tell you, it does affect my life. Leaving aside that each individual with the proper tools in life has a chance to change the world, to be the next Einstein, I am also helping to make sure that this person is being economically productive.

If people are more economically productive, it is more likely that they will be prosperous, and so will need less support in other ways. Eventually, developing regions become developed, and I can enjoy the benefits of that development in my own life. That is a prosperous cycle, and if you don’t actively look to see it, I think you lose sight of why you’re doing what you do. You may end up not really respecting the people you’re trying to help.

What have you learned from this that you didn’t already know? What has surprised you?

 

I’m an inventor at heart. I have lots of ideas. But I have learned something really new in the process of moving this project past “idea” stage, and into realization.

What I discovered is that the true “innovations” that end up happening are not only around the idea itself, but rather the things you have to invent in order to get that idea to work. What I mean is, the “solutions around the solution,” are actually where a great deal of the creative work happens.

So I start out with the lightning strike about “good enough vision” which creates a transformative lens concept. But to realize the potential of the lens concept, I had to work very, very hard to develop one-size-fits-all modular glasses (only my 3rd industrial designer cracked the nut – the first two didn’t find a solution), because I realized that the combination of those two elements could be the magic bullet to solve a vexing problem that no one else had managed to solve.

But after I had the glasses, I realized I needed some tools to facilitate the streamlined process I was imagining, so I had to design a vision tester and a pupil distance measuring tool. And then to bundle all that together into one “kit”, and designing an end-to-end process around that kit in order to get the glasses to those people that needed them… it was one problem after another that had to be addressed.

Each step required an innovation, but the innovations built on each other. Would someone have designed my pupil distance measuring tool without my modular glasses? No. But they were required for the entirely new ecosystem that I was building. So building the entire ecosystem took much more time than I expected.

So in the end, the work is more creative than the ideation.

Yep. It is. That’s something you can’t know until you try. I’m happy to have found that out, because being really creative and solving real problems every day is how I like to live my life.

 

If you’re interested in contributing to the DOT Glasses project, you can do so today by clicking below and pledging to their crowdfunding campaign: 

Budgetbakers - StartupYard Alum

Michal Kratochvil: Budgetbakers CEO Talks Profitability and Pivots

Michal Kratochvil is a StartupYard investor, former head of Accenture Consulting for Central Europe, and currently the CEO of StartupYard Alum and popular personal finance management platform BudgetBakers (SY Batch 5), a role he took up in 2016.

BudgetBakers informed investors this month that they are now cash flow positive and, in fact, that monthly revenues had nearly doubled in just a few months, after 2 years of mostly steady growth. This news came just months after BudgetBakers nearly halved the size of its team, and pivoted to focus developing some the flagship app’s core features (like integrations with banks).

I sat down with Michal to talk about the last 6 months at the company, and what he’s learned from the ups and downs of running a tech startup for over 2 years. Here is what he had to say:

Hi Michal, so you’ve been with BudgetBakers for over 2 years now. What were the surprises? If you could go back to the beginning, what would you do differently?

Michal Kratochvil, CEO at BudgetBakers since 2016

I should say I did everything perfectly, and everything went according to our brilliant plan, right? :laughs: Ok, there are always going to be things you would want to change because you know the outcome, but this is cheating. If you’re asking how I would have changed our general approach, there are a few things I would do differently. I would try and make some of the “surprises” less surprising.

How would you do that?

Let’s be concrete. When I joined BudgetBakers, Founder Jan Muller and I explored many options as to where we could take the company. I spent a few months getting to know all the possibilities, and coming up with plans.

We decided to focus on a couple of core activities. One of them: continuing to develop our B2C product, which was already enjoying a lot of popularity, with tens of thousands of active users (it was then in Version 2, we are now up to Version 6). Today we have added tens of thousands more, and recurring revenues have grown from nearly zero, to tens of thousands of Euros per month.

The other activity was to explore the second pillar of our business, which I believed was going to be our partnerships with financial institutions, particularly banks. There are a lot of opportunities for personal finance management software companies to help banks and their customers. Banks are very much in need of new ideas and new ways to serve their customers, and we have a personal finance product that people choose to pay for. So I think we have a lot to offer, either as a white label, or in some other form of partnership.

Of course, working with a bank is a difficult process, and matching up and actually managing to make a deal at the end of the day is very tough. They have dozens of priorities, you have just a few.

What I think is interesting is that my advice about the former (B2C), and my advice about the latter (B2B) will slightly conflict. I believe now that we had to be more patient when it came to developing our B2C product, particularly in our release schedule, and I believe we should have been less patient in our B2B activities with partners.

Why more patient with the B2C product?

You know, I think it comes down to just human nature. We keep making the same mistakes, because we don’t really change that much as people. We are startup guys. We want action! Get the products out the door.

When I joined the company, I saw that our dependence on platforms like Google Playstore and iOS App store was a vulnerability. You are getting most of your business directly from these places as an app maker.

What I did not expect, which I found out quickly, was that your fortunes can really hinge on these platforms on a day to day basis. When we went from, I think v2.x to v3.0, it was a major shock to me how violent the reaction was from the user base. Instantly, your rating drops from average 4.5 stars, to under 4. Closer to 3. Then slowly, over months, it starts to go back up as you fix some of the things you got wrong, and customers sort of get used to some of the changes.

BudgetBakers provides a complete personal finance solution for individuals, families and small business.

Why does this happen?

Please, if I knew why, then it wouldn’t happen. :laughs: I think people just do not like change. When we make major changes to the apps, even when we have to make them and the long-term results will be better for the users, still nobody likes change. You moved that one button, you disrupted my flow in the app, so I’m pissed. One star. That’s what happens.

Not to mention, there are bugs that appear when you make major releases. This also provokes a harsh reaction, especially from your biggest fans.

So how would you try to be better at this?

What I would do differently, which frankly I have still not gotten 100% right, is to make us a bit more patient with the release of a big new version, and try and take the release in smaller steps. Try to create more of a transition in the product from one version to another, and game out more of the steps needed to get from here to there.

You need a bunch of things to work really well in order to push a major release. You need to migrate data and settings, you need to create a path for the users to move from the old UI to the new UI, and still be comfortable with the product.

We do testing, and we try to get everything working, but if I’m being honest, the temptation is always to push too fast, and to get the release out before it is really ready. I am saying this, knowing that we will still want to move too fast in this regard.

Do you think you will ever get the timing exactly right? This is a problem even for huge software companies.

I think it will never be totally right, but it can definitely be better. What you do not want is this sudden shock reaction from your userbase, who are suddenly giving you one-star reviews because of what is really a dumb mistake, or a series of small errors that can be avoided.

As you grow in maturity as a company, you have to get better at this, because your customer base is growing also. It is starting to include people who do not have patience for these kinds of issues. They don’t know the history of the product, and their level of engagement is not as deep. You can become really invested in big changes to the product, and then fail to explain these changes well or to justify them to the users. Then you have problems.

We are no longer in the land of early adopters at BudgetBakers. Our hardcore, long time users, while they are still really important to the way we think about the product, and test the product, are not the average user anymore. They become increasingly the edge case, and this means you need to be casting new hooks and talking to less engaged customers as well.

I would say our power users are 20% of our paying customer base. So the 80% are the silent majority, and these are the people who you need to aware can very quickly change their mind about you. These are also the people who will not tell you what they need. You have to really dig in to understand them. They won’t spell it out for you.

Your 20% might be very vocal about changes, but they will not walk away either. What they tell you is important to them, may be important, or it might not be. The more casual users, who are seeing you in a less personal way, can be less forgiving. If you don’t give what they need, they go elsewhere.

Part of growing your product maturity is to understand that your customers’ actions are more important than their words. If people complain, and yet we can see that they are using the product, maybe even using it more, then we should take this under consideration. Everyone likes to complain about changes.

[Author’s note: at the time of writing, the current rating for BudgetBakers’ flagship app, based on nearly 89,000 reviews, was 4.5 Stars on the Google Play Store]

One of the biggest mistakes you can make is to deprecate a popular feature without a real replacement.

Yes! That is a huge danger. Worse if you really don’t appreciate how important something is until you take it away from your average users. That can be surprising. Every time we do a big change, it does surprise me, even though I know now to expect this.

Just spending a little more time on something and getting beyond “it works, get it out the door now,” is what we have to work on. Just sleep on it, and play with it for a little longer. 3 weeks more of testing. I keep saying this, but every time the temptation is the same, to rush the release. You want those new features to be out in people’s hands, and you want that feedback.

It’s a bit of an addiction, maybe. We can’t stop the cycle. It’s like the binge and the hangover. You load so many things into the big release, and then you deal with the hangover, which is negative feedback, complaints, etc. You feel that all the way down your funnel, for weeks and months.

In Node5 where we work, as you’ve seen yourself, there is a sign about “the better is the enemy of the good.” This is it. We always want to be better, but sometimes you just have to be good.

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, January 15, 2018

In 2017, Michal spoke on video about his experiences as a StartupYard investor, mentor, and CEO.

 

 So be more patient with your release schedule. What about being less patient with your partners?

Let’s say not “less patient,” because you have to be persistent in this business. Instead, let’s say: “more opportunistic,” or “less confident,” about the likelihood of any one deal working out.

A big danger for any small company, particularly just after raising a seed investment as we did, is that you commit too many of your resources to one deal. You can spend a lot of money and effort working on this one deal, and if it falls through, for whatever reason, this is money that is not coming back.

This can be just bad luck. A deal can fail to happen because somebody changes positions, or gets fired. That happened with us. The deal we hoped would happen just didn’t. It not in our control, nor in theirs. It just didn’t happen.

So if I had this to do again, I would remind myself that you need to be constantly building up your pipeline of opportunities. You can’t stop building a pipeline, because when you stop, you inevitably become increasingly dependant on what others decide to do. Basically, more dependent on chance and luck, because you aren’t making the opportunities actively.

When you are working towards one particular deal, you get focused on the value this deal can provide for the company. However, that deal is worth nothing until it is signed. Until it is signed, you need to be constantly working on alternatives in your pipeline. That is a best-case scenario, which is that you have to tell partners, “sorry, we made another deal.”

You know, going back to someone who you dropped 6 months ago means you start the process all over again. You can’t afford to do that. They can move on in that time. You are basically starting at zero, so you need to be building that pipeline until the moment you make a deal.

Do you have a new appreciation for the role of luck in this process?

Yes, in a way. Of course luck doesn’t matter if you don’t do the work. We did well by really investing in our technology and building up our products from the ground up. We did the work. At the same time, this work in the case of this particular partner, didn’t pay off. It was bad luck.

That being said, this same hard work can pay off in ways you don’t expect at first. When this deal fell through, for example, we had to make a really hard pivot to focusing on growing our B2C product faster, and adding more features that we were very sure would attract more customers.

As a result, we sat around really asking ourselves: what can we do in a matter of days or weeks to increase the sales of this product? That led to some big changes, and as we’ve seen, some dramatic results in the end. Our revenues basically doubled in a few months.

We absolutely could not have done this if we had not been investing well in the development of our backend. We would not have had this resiliency that we had, and the pivot would not have worked without that.

Still, and again, there was an element of luck here as well, in that in the moment we turned away from the B2B business, there was a new opportunity in the B2C space that was just opening up. I’m talking specifically about the ability to connect our user’s accounts directly with their banks, so that they can get a view of their finances without doing any manual data entries. This was the perfect moment to really focus on that functionality, and as a result we made a deal very quickly with a big data provider to connect with two or three times more banks than we had before.

What have been the hardest moments in the transition to a cash-positive operation?

When we had to make this particular pivot, we had built our team with the hope that we would make this B2B deal. When it didn’t happen, we had to change the team. Letting people go and shrinking the team has been very tough on us. No easy way to say it. It is not fun.

I have plenty of experience with this, but quite honestly, it is not something you want to get used to. It is not nice, and it does hurt.

You don’t have to talk about that…

Well, it is fresh, but also there are some things I think we can learn from it. We can do better, always. I want to be clear first of all that I still believe in each individual that we had to let go. This was not about them, but about where we needed to be as a company. That is important to emphasize for me: it was never a mistake to work with any of them. If I could keep them all, I would.

Have you learned something you didn’t know about building a team?

Yes, I always believed that you need to consider several things when hiring someone. First: you need to consider the immediate goals of the company, and the talent you need for those. Then you need to consider the long-term health of the company, and just as importantly, you must always consider the personal development of the people you hire.

I believe strongly in this, that you must invest in people when they join your team, and also in the case that they may choose to leave, or you are forced to let them go. Still, I believe we owe it to people who we hire to see that they land in the right place. I’ve put a lot of effort into making sure that these people have their next steps and are secure. That’s something I believe we promised them from the beginning, and you must keep your promises.

I’ve been managing people for 25 years. There are those managers who keep their promises and commitments, and those who don’t. If you do keep commitments, and if you are focused on the good of your employees during and after their time with you, then you are going to have a better time in life, and an easier time finding people to work with you.

But hiring for a startup is different than hiring for a big company…

Yeah, because the promise is a bit different. You are building this little family, and you’re asking people to be more flexible, and find their role in the company over time, instead of having that pre-defined by an HR department or something.

That means to me that I have asked people to have faith in me and the company, and I have put faith in them as individuals. I could not sleep at night if I did not believe I was doing all I can to help those who have helped us. That is a core commitment that you make to people as a leader. You must follow it through.

Now, as to keeping your promises, I think one thing I would do differently is to work harder not to overpromise on our ability to keep the team the way it is. I believe we did well in this, but there is room to do better. To make clear, also to ourselves, that certain people are being hired for a short period for their skills, and others are being hired for the long-term goals of the company. If you are clear about this with your hires, then you get the right level of commitment going both ways.

I wanted, because this is a startup and we are such a small group, to make everyone a part of the core team. The truth is, not everyone is in a position to be in that relationship with you, and in many cases, it would be better to treat them as more “true freelancers,” rather than to try and force a match with your internal culture. You need to have a clear idea of what kinds of people you will need when you go through a squeeze, and which ones will be the first to leave in that scenario.

You have to make clear the stakes involved with someone when you hire them. Let them know what you need to keep them around, and get a clear idea what they want to get from you as well.

It makes no sense to try and makes someone a part of your work family if they are never going to stay more than a few months. However it is also a waste to treat someone as a contractor for years, and not show some commitment from your side. This is a balance I always think we can do better.

Any last piece of advice for any other StartupYard alumni facing the same dilemmas?

As I said, better to oversell than to undersell. Always build your pipeline of partners and customers, even when it seems like a deal will happen. Always have an out, and a B-plan that is already underway. If you find yourself and the whole company depending on one event that is beyond your control, then you have already dismissed too many good options.

You will not fail if you can continue to add value to the company in some way. If what you do can be made to impact your bottom line, then you’re probably doing the right thing. Investing in your core technology, all the time, is one thing you can do. You should always see a few steps ahead: “ok, if this deal doesn’t happen, how do I make this investment pay off anyway?” I would say this has been key to us turning a profit this year.

SY Alum Turtle Rover: “You Can Speed Up, But You Can’t Skip Anything”

SThis week as part of our ongoing series of talks with alumni, I sat down with Szymon Dwonzczyk, CEO at Turtle Rover to talk about his company’s transition from a pre-product academic startup, to a Kickstarter funded project, and eventually a post-acceleration StartupYard company.

Szymon focused on providing some insights into running a hardware focused tech startup, and shared his experiences with crowdfunding, venture capital negotiations, and his philosophy of customer-led product development. In particular, Szymon talked about the process of a small company building its confidence and sense of self through exposure to customers, advisors, and investors.

Here’s what he had to say:

Hi Szymon, as you know, this series is about giving advice to our current members and your fellow alumni. What do you think you’ve learned in the past year that you didn’t know before?

It can sound a bit formulaic, actually, but I think since joining StartupYard, I have realized that self-confidence is probably the most important quality that a founder can have. You have to be focused on building up your self-confidence and self-esteem. Without that, you can’t get anywhere.

So why are you so much more self-confident today?

I think in a year the Turtle team have grown enormously in our confidence about our ideas. We are able to see more clearly that the best way forward is the way that we believe in most. I think today I am much better able to say that I can adapt and learn how to grow the company in a way that makes sense for us.

I would like to point to three ways that I think anyone can build that kind of confidence, and explain why they have been important to me.

Number one, being forced to speak and perform in public. I can say I was not afraid of speaking in public before joining StartupYard. However I always had issues getting my point across to people. It was not hard for me to speak to people, but hard for me to express how I felt, and not only what I thought. The mentoring process and prepping for the Demo Day is an emotional experience, and it made me much more open.

I can say this changed for me a lot, leading up to, and after our Demo Day. It turned out that I really enjoyed the experience of refining our company’s story, and getting the pitch exactly right. I found I enjoyed expressing my feelings more. I liked seeing in people’s faces that they understood and were suddenly excited about this crazy robotics guy from Poland. I was excited too.

Szymon presents Turtle Rover at StartupYard Demo Day 9

If people can see the same thing you can see, this is enormously good for your self-image. You can be sure you’re doing something valuable.

Number two, I think is talking to a lot of people who may disagree with you. Talking to people often, and early on in your thought process, is really important as well. I realized I think that because of the mentoring process, we probably made as much progress in product development in 1 month as we had done in the previous year.

That is not even because mentors gave us new ideas. Just because they confirmed many things that we initially believed, and helped us to dismiss other things that we were not sure about. Mentoring strengthens your ability to fight for what is naturally right for you. You lose this fear of making mistakes and going against your instincts, because everything you believe has been tested with over 100 experienced people.

Talking to people early and often about your ideas helps you to see them more clearly and take action. Talk to a lot of people.

Lastly, I think being forced to think more about our competitors has helped us to understand ourselves, and to value what we do even more. As you say yourself Lloyd, your competitor can be anything your customer is doing. Your customer themselves can be your competitor, especially in our case because we provide a product that is targeted at makers and robotics people.

I think we saw our competition as always these companies we wanted to be like. Like Boston Dynamics for example, or even companies like Tesla- if they started to make autonomous rovers, we would be screwed!

That’s the way we were thinking, but we saw increasingly that our true competition is not as strong or as well-defined. We compete with behaviors and ways of thinking; what is possible, and what is not possible. If we can convince you that it is possible to create your own robot, with a never-before-seen set of abilities, from scratch, then we have won against our competition in that way. If you decide to build on top of our platform, then it’s a success for us.

You mentioned that your understanding of competition changed quite a bit. How did your understanding of your product change in the last year?

:laughs: It’s funny because the product, just looking at it, changed very little. It is still Turtle Rover. It looks the same, essentially. What changed was our understanding of the product and who it is for.

When we first were making Turtle, of course it was just for us. We are robotics engineers. Then we thought as you always do, that it must be for people who are like us. This assumption we held for way, way too long without any real feedback.

Then two things happened: first we successfully ran a kickstarter campaign, and then we were accepted at StartupYard. In that space of time, we started to see that our customers were not like us, actually. They were photographers, teachers, engineers, makers. All kinds of different people actually.

It was this sudden realization: “oh… this product isn’t a robot to you, it’s a way to do what you really wanted to do.” Maybe it sounds obvious, but it wasn’t.

Then we were suddenly hearing from a lot of mentors and investors, and again they were telling us, “there’s something here for these people, there’s something for them.” There are suddenly many more possibilities.

What I learned, most importantly, is to make assumptions and test those assumptions more quickly, and more consistently. We had many ideas over the years like: “you can use Turtle to do X,” but we would just think about it. Then actually working with live customers and mentors, we decided “ok, if someone says we should do X, let’s try it.” We actually saw them how complicated it might be to sell that idea, or to make it work. Or we can see how easy and natural the idea actually is.

I think this is something I have learned: do less planning, and do more doing, in general. If you have ideas, get feedback, and get that idea to the MVP stage as fast as you can to get the right kind of feedback from the right people.

So basically, you’re following the Tesla approach to product development…

Yes, I think that’s fair. We are not doing anything at scale like Tesla, so we don’t face the downsides of this approach.

There is a big advantage in shipping a product to the right people even before it is ready. For example, we had a case recently where we were delaying shipping a bunch of rovers to customers because of an issue with Android/iOS compatibility. FInally I just said: “screw it guys, ship it and tell the customers about the issue.” And we shipped it, and you know what? The issue was with our own systems, not with the product. The rovers we shipped worked fine for the customers.

There are many cases like this, where you allow something internally to become a big deal, and actually to customers it maybe isn’t a big deal. Particularly since we have these early adopters, and we are still in the test phases, we have learned you have to have more faith in these people to help you and to solve problems themselves.

The result for us is that many times our customers show us how to do things because we have given them that opportunity. One customer ordered the rover for a museum exhibit, for example, to demonstrate the technology. I found I was almost trying to talk him out of this idea, because I saw that there were going to be some connectivity issues that would be hard to solve. I wanted to help him set this up so it would not fail.

I needn’t have worried because the museum guy is also a tech guy, and he anticipated these issues, and had his own solutions. Actually his network solution was better than ours, so it’s something we benefit from. I had to trust him to do that, and trust that we were sending him something that would not be embarrassing to us when he tried to use it.

Do you think this strategy is something startups should do more, generally?

Yes. Totally. I didn’t realize to what extent early stage companies really ignore their customer feedback and don’t trust their customers to understand them as a small company, and accept errors.

You end up basically fearing the power users of your products because they are the ones who will cause the most “problems” for you in customer support etc. That’s wrong, because these people help to build your knowledge base, and discover a lot of problems before anyone else does. You can use them to make you stronger.

You see so often these small startups that try to act as if they are big corporations. That is a shame to me, because they are missing a once-in-a-lifetime opportunity to have a different relationship with customers. Later on this is not going to be possible so today, we really choose to open up and be transparent with our users as much as possible.

Do you have any concrete advice for a hardware startup in a similar position to Turtle?

Yes. If you are thinking about crowdfunding, such as Kickstarter, then do your research on the most common failures. Don’t believe every catchy bulletpointed list of “tips & tricks.” The people you want on Kickstarter are the ones supporting you, not just the product.

Most importantly: do not outsource your development from the beginning. That is my view, particularly if you are crowdfunding, you will be tempted if the campaign is successful to outsource more and more, and depend on more and more others. This is where most kickstarters tend to fail: they get a lot of traction, and then they try to outsource too much.

If you outsource too much, you don’t gain enough experience. You get the job done, but it doesn’t help you to streamline or improve your processes. It doesn’t help you understand what you are capable of on your own.

We intentionally kept our campaign limited in size, and only accepted true first adopters. This is because if you fail to deliver on one project on Kickstarter, basically you can never do it again. That failure will follow you everywhere. People will think you’re a scammer, and you can’t even prove them wrong if you’ve outsourced the failure, and don’t have anything to show for it. That’s why we were very conservative in our goal, and we are still today working on completing it. If we go back to crowdfunding, we have to have that good history of delivering.

The other thing I want to say is that if you are talking with VC investors, you really need to understand the Venture Capital approach to business. You have to decide if that is the right way for your business to grow. I am open about not being convinced of this today. I believe it may be better for us as a company not to raise money. Startup founders need to be open to this possibility, that it can be better to leave money on the table.

That’s just my feeling. I’m a very Slavic guy, and VC culture is very American I guess. I see VC money as a way to scale, not a way to survive. If I had something I was absolutely sure would scale tomorrow with more money, ok, VC is a good idea. However if you are thinking VC money will save your business or help you to develop a product that is not proven yet… well I think you will have a harder time.

To me, it is a lot easier to build a business model not counting on the investment, and simulate where can you be in 2, 3, 5 years from now. Then use the VC money to speed that up – instead of 5 yrs of development, be there in 2. But anyway, don’t underestimate the power of time – you’ll always need time to learn all the processes in your company, learn how to run the team and prepare the product – it’s not about money, not about finding the right mentors, it’s about gaining the experience that most probably you don’t have – and it needs time, and time only.

At the end of the day, you can speed things up but you can’t skip anything.

 

Mark Holmes, Waymark, StartupYard

Focus on Founders: Mark Holmes: From Zero to Seed

Waymark Tech, a Startupyard Batch 8 alum, is a London based AI regulation intelligence company, with clients among the top accounting and consultancy firms in the world. Waymark helps big enterprises to stay on top of regulatory changes, and bring alerts and guidance about regulation compliance to the right places in the organization, at the right time.

You can read more about Waymark’s story and its Founder and CEO Mark Holmes in our last in-depth interview. This week I connected with Mark for a one on one chat about his journey since StartupYard. Since he left us nearly a year ago, Mark has managed to raise a seed fund for his young company, and now has a team of 5 working on Waymark Tech, as well as a growing list of clients either actively using, or testing their technology.

We decided to focus our discussion on the challenges for a first time founder raising seed capital. From hiring the right team, to picking the right investors, we took a detailed look at the process, and what Mark learned from it. Here is a version of our conversation – edited for clarity and length.

Hi Mark! We’re gonna talk today about the process of going from a one-man-show startup, to being CEO of a small startup team that has raised seed investment, and gained a lot of traction with their product. Sound good?

Looking forward to it. Lots to tell. Lots of ground to cover since then. As you know, we’re now a team of 5, we have a bunch of customers in our pipeline, and the product is out in the world being used by companies today. We also had Credo ventures join with StartupYard and Seismic Foundry as our seed round investors in March.

That’s where I want to start. Can you tell us a bit about how that process worked for you? What’s it like to negotiate a deal like that for a first time founder?

Well, I did just about everything wrong at the beginning, but you learn as you go. You figure out what investors are looking for, what they need to see from you to feel comfortable. You have to figure out also what you’re looking for, and what kind of an investor you really want. It’s just a big learning process for everyone, and I think we got the result we really needed. That’s the important thing.

What did you get wrong?

There were thankfully no big mistakes in the process, but rather I found out that many of the things that investors look at are just very different from the things I thought would be most important.

I’m a product guy, and that’s where I come from. Going into the process of raising funds, I also had some customers who were ready to work with me. You think from your own perspective, this is enough to justify an investment. Of course it isn’t, because a VC investor like Credo are looking for more than this. They want to see the big picture in 5 years. They want to see it down the road, and how this thing you do can become really essential and irreplaceable for the customer.

The fact that you have this customer ready to buy is great, but the investor wants to know how you are going to make that a growth relationship, and how you’re going to repeat it everywhere you can.

To demonstrate you are doing something that people are not going to be able to get on without, that’s not the same as having a great product. It’s having a sticky product, that can’t just be replaced tomorrow. Especially for the early stage investors, they want to see that this will be at the heart of your industry in the future, which people will depend on. I did find this helped me to make some critical product decisions as well.

You made more scaling focused decisions?

Yeah, definitely. More importantly, I made more customer focused decisions, that were not necessarily about the product features. You have to get over this fear of rejection, which is very big for a product person. It’s maybe the worst thing I can imagine, to be told someone doesn’t like my product. You fear they’ll dismiss you, and you will lose your chance with them.

Now that I’m selling and not just building, I see that this doesn’t happen. Actually the opposite, because you aren’t selling the idea only, you’re selling the relationship you’re going to have with the client. They have something to react to and to give you feedback, which makes the product even better, and makes the relationship even better.

I found out when you show your product to a customer, even if it doesn’t completely work yet, that actually builds a lot of trust, because they can see what you’re doing is real, and it’s not so big a risk for them to start trying it. I felt this surge of confidence from getting all this feedback, positive or negative, because people are showing that it matters to them. You are doing something that matters.

Knowing that now, what would you tell yourself to do differently when approaching an investor?

Maybe this: that they are “technology” investors, but they are investing in you at the end of the day. The product can be the best, or just good enough. I want my product to be the best, but the investor needs your team to be the best, your traction to be the best, and your technology to be unbeatable. At the end of the day, the product is a small part of that mission. A critical, but ultimately small part of it.

One thing I didn’t do, which I honestly should have before talking with investors, is to know more about their portfolios and their history. Focusing more on how the investor’s portfolio and the team they have is going to be a help in scaling and really in growing your business. Do they have the existing clients and companies in the industry you’re targeting, and can they open these doors for you that can’t be opened otherwise?

You always say at StartupYard that it isn’t just the money. That’s really, really true. The wrong money is not a blessing, if you aren’t also getting the right network and the right support to use it.

I didn’t read enough about investors before talking with them, because obviously it feels like they are the ones interviewing you. It’s not like that though; you have to interview them too, and figure out if the relationship really makes sense, apart from the financial consideration. That goes both ways too: how do they enhance your ability to scale, but also how do you enhance their portfolio? Are you going to be of value to the investor in the future? If you are, that is a good sign you will get the support you need, because they also need you.

It ended up that investors started to sort of pitch me on their ability to help the company grow, and this is when I started to pay more attention to an investor’s history, their other investments, and the decisions that the individuals you are working with have been a part of in the past.

As a result of this growing awareness, I did end up stepping away from the table with some investors who were interested in a cooperation. I saw that if you can’t see how you’re going to enhance each other, and have more of a marriage than a business relationship, then it might not be the right move. That’s particularly true in an early stage investment. These people are going to be around for a while. They will maybe have board seats. They will have opinions. You want them to compliment what you’re doing, not make your life harder unnecessarily.

I am ultimately happy with my choices, so I think I managed it ok.

What were some of the harder topics for you in the initial discussions with the VC investors you talked to? What did you need more preparation for?

There are obviously some things I wasn’t familiar with, that I had to study up on. Liquidation preferences, and preferred shares, shareholder rights, and other legal and technical things. These are really important to get your head around, so you know that the goals you are setting together make sense from everyone’s perspective. You want to have your expectations be aligned as much as possible.

I found I had to get used to this idea, that for a VC investor, they are really expecting most of their investments not to produce much in the long run. Just a few will pay back the fund, and maybe one will be that unicorn that will change everything. That being said, this is the kind of mindset they have when they are making decisions about who to talk to. Can you be the unicorn for us? Can you pay back our fund?

That is much less about your product than about your ability to scale, and to be sticky. I know that having a great shiny new product isn’t enough if it isn’t used by anybody, but I’m still a product guy. Still the focus on scaling and traction is really powerful from investors.

I also struggled with this, and we worked on this together a lot at StartupYard, which is that you have to have a story that someone can understand and relate to. These are really smart people, but generalists, and usually not as involved with your industry as you are. They are fast learners, but you have to give them something to work with, and that was something that was a challenge for me.

I’m doing regtech. Even just a year ago, this was not something being talked about much. Nobody knew what the stakes were for this industry. How important will this be, right? If you remember, at our DemoDay for my batch, we came up with this great story about a vineyard in the UK that made this wine, and then come to find out they can’t call it “wine,” because of some EU regulation they had no idea about. So they call it a “fruit-based alcoholic beverage,” which is just a crap thing for selling a good wine.

That was a story that early investors could really see very clearly. You can sense the frustration when you tell that story, and people get it immediately, that it’s this real problem, and it can effect them too. Once you can do that for people, you can get them to start seeing what you do as something that matters. This was a new discovery for me, just how powerful these little stories are in helping people to just “get it.”

You said the focus on the team was also a surprise for you. Why is that?

I knew they would want to know about my team, but it was something that went deeper than I thought. It’s not just having talent, which any company can find.

The investors are focused on your team because that is where the value is really being built in the company. With just a technology you have something that potentially anyone can do. There can be other ways to solve the problem. You are not likely to be so unique that nobody could ever replicate that technology.

I had grown the business through outsourcing, which is cheaper. Well, anyway it seems cheaper, particularly when I was trying to get a lot of things done very quickly. The investors look at this as a bigger risk in the long run, than slowing down a bit and building a great team that is going to continue to grow your product in-house and bring that organizational knowledge and experience that makes you viable in the long run.

There are other things like security concerns, IP concerns. However, I think it’s mainly that the investors do recognize that the team is going to be critical in building the company’s value, and reduces your risks.

It makes sense, for sure. If you are one founder, and it’s all in your head, that’s a big risk for someone to invest in. To gain trust, you have to also trust people, and bring people in, so I took that very seriously, and thought hard about how I was going to grow my team, and what kind of team we were going to be.

What is important to you about your team members? How did you pick them?

I got this I think from an old boss of mine in the finance industry, a long time ago. He said you can hire the best person for the task, but that isn’t always the best person for the job. There is talent, and there is fit, and you have to balance them.

Being with StartupYard was a good experience in this regard as well. In the program you’re with other companies that are struggling sometimes to find the right fit for themselves. Founders or employees come and go, and I saw some examples of what I wanted, and some of what I did not want. That gave me something a little more concrete, and made it easier to make these decisions.

When I was growing my team, to be frank I did not always choose the people with the most experience or the most skills in their area. I looked at their fit in the team, and their long-term vision for themselves, and tried to pick the best people for the job. I let some people pass with very impressive skills, which I think in the long run is the right thing to do. I couldn’t imagine how to work with them every day. We need that sense of belonging in the team, to be our best.

Also, I want to build a team that lasts beyond me individually. I am the “get it started” guy. I’m a builder and an idea guy, and I want to make something that I can pass to the next person to really grow it and nurture it. When we reach a size and a state where I feel I can hand this over to a great team that can take it to the next phase, I will probably step back and think about my next step personally. Since this is my nature, I am planning for that to happen eventually.

Ok, so more personally, is this something you can see yourself doing again in the future? Are you going to start another startup, if and when that time comes?

Look, never say never. Ok? I didn’t think I would even found one company, but there was just this moment that all of us know who found companies, that I knew I had to do it. It was just something I couldn’t let go. So here I am, and that’s the journey.

And by the way, I now see why some people do it over and over. I didn’t know this before, but the more I work with our customers and the more I solve their problems, I just keep finding even more mind boggling problems that I could fix, so my ideas are still growing. Your confidence grows, and your ideas just come faster, so maybe one day I will have to do it again. I don’t know.

I have spent 15 years in financial services and I do have other interests, so I want to explore them too. It might be a business, but it could be angel investing instead. I think the entrepreneur spirit is something that comes from having your eyes really open to what is possible, and what is not being done, that could, and should.

So to cap this off, can you give me maybe a bullet point list of the things you wish you knew a few years ago, that you know now? What would you tell young Mark of 2 years ago?

So many things. Ok, I’ll try and give you a simple list:

  • Know what kind of founder you are, and let yourself be that to some extent. Don’t try to be somebody else completely. I am a product guy, but this doesn’t mean I can’t focus on scaling and selling. I am selling now maybe 70% of the time. Still I spend time on the product, where I get inspired to keep going. Don’t lose that.
  • Remember that investors want to commercialize, scale, and grow. If you aren’t ready or you don’t want to go at their pace, you can choose not to. If you do, understand what it means for you.
  • You have to sell. You have to sell! You have to overcome this fear of rejection, and sell what you have, as soon as you can. That is so valuable to the creative process, and it will make your product better.
  • See clients as an advisor, and not a buyer. The old saying is “ask for advice, and you get money. Ask for money, and you get advice.” That’s it. If you are looking at your customers as the best source of insight, you are going to be rewarded in so many ways. Keep that focus where it should be, on listening and responding to clients.
  • Think about how your company is going to become essential, and how it is going to become impossible to replace. Whatever this is that makes you stick, you focus on that and you don’t lose focus. You don’t want to be one of many alternatives. You want to be the one that the customer has to have. That’s how you raise investment, and that’s how you get deep into solving customer problems.
Jakub Ladra, Claimair

Focus On Founders: Jakub Havej: Failing to Scale

Over the next few months, we’ll be publishing a series of interviews with alumni founders from StartupYard. We’re calling it “Focus on Founders.”

These are personal stories from alumni founders about critical moments in the history of their company. Some of the stories have happy endings, some don’t. Our hope is that our alumni, current, and future members of the StartupYard program will benefit from their experiences, and hopefully recognize in their colleagues, positive examples for themselves.

Jakub Havej: Founder of ClaimAir on Failing to Scale

To kick off this series, we’re going to start with Jakub Havej, founder of the legal and travel tech company Claimair, which helps travelers request and actually receive compensation for flight disruptions, delays, and baggage issues.

As Jakub will attest, the past few years have been bumpy for him and his startup, with big swings in the size of the team, and the overall strategy and direction for the business.  Over the past half year though, the company has managed to stabilize, and record a steady operating profit, and begin to reinvest in itself.

I sat down with Jakub to talk about his failed attempt to scale his company faster:

Jakub, Claimair is cash flow positive. How does that feel?

First I have to say, It was not just last month, but for the first time we had a cash-flow positive month was in November 2017. Then from February to June this year, we were also cash-flow positive on average.

So I would say today we are able to break even on a monthly basis, and steadily invest more into the business. That’s the difference today: we’re steadily generating more operating profits.

Our goal isn’t to generate profits right now, but to bootstrap the company’s growth. So profits will be reinvested for the foreseeable future.

Claimair had a lot of ups and downs to get here. Tell us about the decision to go for break-even.

It was all about the realization that we had to survive. We really struggled with fundraising last year, and had some bitter dissappointments in that regard. We ended up having no other choice but to tighten up and focus on becoming sustainable, which we can now say we did.

In summer 2017, part of our “roadmap” was to raise a seed investment. As it usually happens, we had some very promising leads, and it seemed to me it would really work. Then at the last minute, with our cash running out, investors backed out without really giving a reason. Then we really had to struggle to survive.

Unfortunately, and this not a new story for startups, we had been planning too much on the investment, and had already started to operate as if we had it. We were too ambitious in that regard, and the shock of having this stop suddenly was hard on us. At the end, you could say I’m glad that happened. It forced me and the team to make decisions we had delayed too long.

The truth is, I was always focused on generating profits. I didn’t create ClaimAir to burn money on a monthly basis. I want to create a viable business. So with investment dissappearing, I got back to my initial mindset: “Wat are the necessary steps to generate positive cash flow?” Within the next few months, we reduced our expenses, got a much clearer vision of our future revenues, and had a target.

In that time, when we were operating in “emergency mode,” we learned how long it really takes to convert opportunities to revenue. We had to cut expenses in half to keep going. Finally revenue did start to grow, and we hit break even.

How is it to let people go for the first time, as a founder?

It sucks to let people go. It was really hard. We had a team of developers working on a great product. I didn’t want to lose them, but I also knew that the product was ready. The significant work was done, and the company had to focus on execution.

That is so hard also because these people helped you to get to this moment when the product (in our case, our claim processing systems), really works, and you have to let them go. It doesn’t feel fair at all. It isn’t fair.

However, we had to make that choice. Continuing to develop the product was in conflict with our vision at that point. It became unsustainable. We lost some other team members as well, and that also shows you who people are. The ones who stick around despite all this uncertainty are people you really come to value.

It’s important to go through these changes because you end up with a core team you can really count on, who have been with you in your worst moments, and you know can hang on and stick with you. In that way, the process is healthy.

Knowing how things turned out with the seed investment, how would you handle it differently today?

Shareholder, Claimair, StartupYard, Central Europe, Accelerator

Jakub Havej, of ClaimAir, talks flight compensation at StartupYard Demo Day.

To be honest, there is a part of me that says I would change nothing. We learned a lot from this that made us the team we are. I can’t replace that. Ok, if I am giving advice to the next founder in my situation, then I can say a few things, and maybe they can do better than I did.

Our mindset was always to generate a decent profit, and I’m not a really greedy guy. I didn’t really intend to build a huge startup from the beginning. Over time though, I got distracted by the excitement and potential that some of my investors and mentors saw in the business. The upside just keeps getting bigger, and your eyes just keep getting wider.

When you are in an accelerator, you are getting a lot of advice about “low hanging fruit,” and about scaling fast and take charge of the moment. That is absolutely valuable, but on the other hand, many of the “low-hanging” fruit that you can get excited about turn out not to be so low hanging. They turn out to each have their own unique challenges. You can run around as an early stage company and keep trying to reach all these opportunities, and never get any of them.

You can run out of time doing that, which is what we almost did. If you’re raising money to try and capture an unproven market, as we were trying to do, you’re under immediate pressure. You have to prove the value as fast as you can. We ended up working on scaling instead of getting the core activities right. and we didn’t manage to actually scale that way. The big opportunities were always just out of reach.

At the same time, our B2C business kept growing steadily. And we kept ignoring it, because it wasn’t as big as any of the opportunities we were seeing. At some point though, suddenly you realize you have a core business that is something worth focusing on, and getting right.

How would you avoid getting distracted next time? How would you keep focus?

Honestly, from the beginning, I would not have tried so hard to define who our product was for. I know this is blasphemy for StartupYard! It’s just that in our case, our customers were finding us, and telling us who they were. We needed to listen more, and not just try and listen for what we wanted to hear.

In the first years, you get hundreds of suggestions and recommendations, and you have to get through those quickly and evaluate whether they are worth your time. You want to hear about “multipliers.” You want to work with businesses because of the upside potential, and you don’t want to just plug away every day working with small customers.

I was always sure about what our product should be, right from the beginning. I wasn’t sure about how we should acheive growth. So we got focused on these big opportunities that always seemed closer than they really were. You find out that no matter how valuable some deal can be to you, that does not make it the priority for the other side.

Literally, as a startup you can be living and dying by one person’s decision inside some corporation, and that person just forgot to write you their answer a week ago. They’re on holidays. It’s that kind of disconnect in priorities. Too many of these disconnects, and you are at risk of losing your way.

 

So nothing you tried to scale quickly worked?

Some stuff works. It has to be repeatable and it has to be sustainable. You can push through a quick deal for a little bit of money with a B2B product, but the question is how essential you become to someone else’s life and ultimately their job and how well they can do it.

The truth is we never found that sweet spot in the B2B space. We were always nice to have, but not essential to anyone.

Yet again, we were slowly becoming this kind of product for B2C users. They really were relying on us more and more. We weren’t focusing on making their lives easier, as we should have been. We were focused on making our company bigger.

As it turned out, we should have focused on what was working from the beginning, which was simply PPC advertising that was profitable. We ignored things that were working in order to go after “opportunities” that were not as likely to happen as we thought.

So you’re profitable, but it’s not a gold mine… is that your feeling?

Maybe you can see it like that, but I feel great! I feel we did everything we could and tried to scale faster, and we didn’t find that fit. At the same time, we have a nice and growing business, we have customers who love us, and each month we’re able to invest in doing our jobs better. Making our service better for those people.

It’s so fun to talk to investors right now, because actually I’m raising money again. This time though, it’s to do this: to make our company better at what we have proven we can do. So investors will buy into a different vision than we tried to sell before.

It’s a great feeling, because now we can interview an investor and see if they are interested in helping us do what we do well. It is less about their ambition, and more about ours. Defining our ambition in this way, and accepting it, took a lot of reflection and changes in our team. I’m glad we went through it all.

Now I don’t need to beg. That’s something I learned about myself. I hated to beg. And now I don’t have to. Agree with me or not today, because my company makes money. I don’t need anyone else.

So you’re an SME for good?

Actually I still see huge potential for growth, but what I realize is that the shortcuts everyone hoped would be there aren’t really there.

Today I believe in a different kind of growth than we were trying to achieve before, and I think our advantage in this is that we have already tried everything else. We aren’t distracted anymore by the “pot of gold” at the end of every rainbow. We know where the money is, so to speak.

I won’t say more today, but we have some interesting ideas we are working on.

What would you tell our current teams and other alumni about your experience? What can they learn from you?

Listen to yourself. You will simply not achieve things you don’t believe in yourself. Don’t let an investor or anyone else make you do something you don’t think will work. It will be a self-fullfilling prophecy. Maybe that will work with some other founder somewhere else. Just don’t sell out your vision for the money. It won’t work.

Be good at what you actually do well. We came back to being a product company. At the end of the day, maybe there were other ways to grow, but I knew we could do this, and have a great product that makes us unique. So that’s what we’re doing.

Also don’t take money because of fear. The doubt that you’ll grow as fast as you need to is always there when you are talking to investors. It’s always “this other player can do this tomorrow,” so you always feel you need to hurry. You feel dependent on the investors because of that. Just know you don’t have to. You can stop. You can go into safe mode. You can cut costs.

Now that I’m fundraising again, I’m not so susceptible to this thinking, and it feels really different. The fear part of it is gone. You can’t be experiencing fear when you’re talking about investment.

E.On, StartupYard

E.ON COO Tomáš Bělohoubek: Mentoring is a Training Camp for the Mind

This year we were happy to announce that E.ON, one of the world’s largest electric utility service providers based in Germany, and operating in 30 different countries, had joined StartupYard as an official strategic partner. What does a strategic partnership between a tech accelerator and a major corporation really look like? For E.ON’s views on the benefits of cooperation and involvement with the StartupYard program, I asked E.ON COO and StartupYard mentor Tomáš Bělohoubek to talk about his vision for future cooperation with high tech startups.

What inspired E.ON to become a strategic partner of StartupYard? What are you hoping to accomplish?

Our cooperation with StartupYard began about two years ago with the participation of E.ON managers in the SY mentoring program. There we got the opportunity to regularly participate at SY events, get in contact with a great selection of startups and learn about the acceleration approach.

The idea to enter a strategic partnership with SY was born after E.ON implemented its “:agile accelerator” in Czechia. As our accelerator is new on the market we don’t have the network and capabilities to fully conduct our own scouting for suitable startups. And frankly speaking I do not aim to develop this capability fully in-house, as I do not believe such large corporation can be its own honest startup disruptor.

Tomas Belohloubek, COO, E.ON

StartupYard is thus an ideal partner for expanding our network and scouting for new potential startups. Additionally we are very excited about SY’s cooperation with the GAN (Global Accelerator Network), which gives us access to an international pool of selected international top startups.

“Bringing in-inovations” is not just an empty phrase for us. It’s actually our main challenge. It’s been fashionably late for companies like ours to engage with startups and accelerator programs, as an image building exercise, and potentially as a way to scout out the best new ideas.

This indeed only touches on the surface of what companies like E.ON should be doing with the startup ecosystem. The truth is that in big companies with extensive operations and deep knowledge of their industries, there is a lot of creative potential waiting to be unlocked.

And interacting with “outsiders” (actually here I play with both meanings of the word), allows us to take a fresh view on possible future and sometimes even helps to reconfirm our own visions of our industry and enterprise.

So finally it is related to a change of thinking and approach and deeply connected with a change in corporate culture. Even in big companies, people have innovative ideas, but especially in big traditional companies the rigid system usually prevents them from making it happen. Our goal is to change it and create a bandwidth to help innovations happen.

So, my view is that rather than treating high tech startups as a force that will either work for or against us in the future, I believe E.ON must actively offer our own deep experience and reach into our industry, to make our organization an open testbed for solutions that we don’t focus on yet; not because we don’t know these opportunities exist, but because we do know working with startups is about challenging your focus and your basic assumptions, and also helping startups to do the very same. 

You’ve mentioned using your interactions with startups to challenge your own thinking. How does that process work for you?

We send top executives and other team members to meet with and mentor startups in programs like StartupYard. As I said, this is often viewed as a kind of image building exercise. Many companies do this because they wish to be seen as engaged with startups, even if there is only little motivation in the corporation itself to adopt or internalize any of the learnings this process generates.

A good mentorship experience forces you to talk not only about new ideas, but also ideas you may have had in the back of your mind for a long time. It makes you suddenly connect things that have been lurking in your subconscious, sometimes for years.

Working within a big system like E.ON inevitably causes a tunnel vision syndrome. Mentoring takes us away from this for a kind of training camp for the mind, where we expose ourselves to people who are less bound by the usual rules. Its been always refreshing for me to talk with the passionate teams about their products and ideas.

It can make you think: “oh, doing this is not as complicated as I thought.” The outsider view can clarify your biases and challenge them.

Likewise, I have seen that pushing the startups to confront the realities of the wider world of corporations helps them to get a better picture of the challenges they will face. Every startup must have some naïveté to get started, otherwise they would never choose to do what they’re doing, and face the incredible risks they face. We can help them if only by curing them of illusions, and then being a touchpoint for them to get a deeper understanding of the world and industry they are trying to reform.

We have five members mentoring at StartupYard already, and my expectation is that their experience will show more of our colleagues the true value of giving back to people just starting in business.

What do you see as the most important thing E.ON can offer startups?

Startups may sometimes view us big corporates as kind of bunkers or reinforced military bases, against which they have few tools to compete in “open battle”. We often hear from startups that either corporations are not responsive, ignoring their ideas, or on the other side might “destroy” them, or “invade” the market space they are trying to attack.

There is a lot of truth in that actually, yet I believe we have mutually lots to offer – if well managed!

Startups do offer their ideas, MVPs, or final products on open basis, whereas Eon like company offers real live testing and scaling.

As mentioned already, we do aim to create testing platforms for new ideas. Sounds very simple, but those who tried, know it’s a real challenge. It touches not only the technical and process boundaries of the somehow calcified corporations, but also mindset of the people and general culture. I’m however convince we are one of those able to sort these barriers out.

And how does your accelerator program work?

Our new :agile startup accelerator program is able to give up to six start-ups per year the chance to accelerate their businesses with selected top specialists in the field. We currently run two batches per year with an acceleration phase of three months and a budget of up to €10.000 per start-up for selected trainings, travel expenses and office space.

After the acceleration phase, every selected start-up will be able to pitch their idea in front of E.ON’s top management and a selected audience of investors and top specialists. On a larger scale, the E.ON group can also offer cooperation across Europe, and offer also the chance for piloting new ideas and an investment partnership.

In terms of the Czech startup scene, we will offer two startup pitch days per year that will in the future be publicly accessible. There we would like to invite rising stars in Czech entrepreneurship, and people from the startup scene, accompanied by international guest speakers.

In the long term we would like to create an image for E.ON that represents us as a strong independent partner for the development of MVPs and use cases with startups, as well as to create a pioneer network in the CEE region around energy innovation and sustainable development.

Meet Deaf Travel: Building a Better Internet for Deaf People

Deaf Travel, the last of the StartupYard Batch 9 startups to be interviewed, is our first non-hearing team in the program. They are a team of Deaf entrepreneurs who have dedicated their careers to building up the Deaf community, both online and offline. Their mission today is to create an online platform and community focused on helping Deaf people to enjoy travel and adventures with the same depth that hearing people enjoy.

They are doing this by bringing together public attractions and organizations, with the worldwide Deaf community, and offering them a space where the needs of Deaf tourists can be met with Deaf-friendly video content, interactive maps, and other features that make foreign travel enjoyable and interesting. I sat down with CoFounder and CEO Jan (Honza) Wirth to talk about his team’s vision for the future of Deaf tourism and the internet. Here is what he had to say:

Hi Honza, first of all we should acknowledge that there is someone else in this conversation, Tim, your interpreter. As a deaf person, what do you find most challenging about communicating with hearing people?

Most hearing people have many misconceptions about the Deaf. They think we have less intelligence or skills and feel we can’t do many things, such as drive a car, work, etc.

These misunderstandings stem from the communication barrier we have between hearing and Deaf people. If we had a common language, then many of these false ideas would solve themselves. Hearing people can learn sign language, but a Deaf person cannot learn to hear! As a Deaf person, I deal with these barriers every day.

Jan Wirth, DeafTravel, StartupYard

Jan Wirth, CEO and CoFounder of DeafTravel

One of the ways we can solve this is through interpretation. In fact, what many hearing people don’t realize is that interpretation in our own sign language is far superior for Deaf people than simply reading. Written and spoken languages, such as English or Czech, are native for hearing people, but they are always second and third languages for Deaf. I can write and read in English and Czech, but for me that is a very different experience than it would be for a native speaker. Writing is the same: we must translate our thoughts into a foreign language in order to write. Thus even in writing, an interpreter is very helpful.

I use different methods to try to break through the communication barrier. If I have to communicate about something very important like a mortgage, legal issue or a job interview, then I use an interpreter for clear understanding for all. In common interactions like a restaurant, ticket office or a shop, I can use gestures and writing back and forth. It is for deeper discussions that an interpreter becomes essential to bridge the divide.

How did you come to found DeafTravel, and why is a for-Deaf, by-Deaf travel platform so important to the Deaf community?

I have been dedicated to improving the Deaf community my whole life. I am the founder of our first community center in Prague, called Znakovarna. This is a place where Deaf and the hearing can gather to discuss new ideas and learn from each other, and support each other and the community. We host seminars, talks, and other Deaf-oriented events. Deaf Travel is one idea that comes from seeing what Deaf people talk about and what they really miss in the market, which is a way of getting this Deaf-friendly experience wherever they go.

The Deaf Travel Team. The majority of the founders are deaf or hard of hearing.

Nowadays, smartphones are common within the Deaf community and they have a huge positive affect for us. Such technology and the ecosystem of apps allow us an equal footing for chatting and staying in touch with our friends and family via video, or text. We can use our native sign language to make quick interactive video chats. We can even use some interpreting services via our mobile phones, which opens doors that have been shut to Deaf people until now. It is a great time to be alive.

But mobiles haven’t solved all the everyday barriers for us. Yes, the tech is amazing, but they aren’t the ultimate answer for the barriers we have, especially when we travel. In the USA, the benefits for the Deaf there have skyrocketed, but these don’t spread worldwide for various reasons.

One of those reasons is that European and worldwide Deaf communities have many sign languages, just as hearing people have many languages and cultures, and so there are always added challenges for smaller Deaf populations to find content in the sign language which they use every day. Those of us who travel, especially in Europe, learn International Sign System (IS), which is not an actual language but follows the rules of most sign languages and uses signs from various sign languages.

Let us not forget, even when a Deaf person does understand multiple sign languages and written languages, this does not change the fact that other Deaf may not have those skills. Hearing and sighted people take the internet for granted today. You can Google anything, and find whatever you are looking for. But how does one “Google” content which is in a sign language? How does one tell Google the signs they want to search? Of course these functionalities are not available.

Think of it like this: imagine the internet was only in Chinese, and to use Google, you had to learn how to read and write in Chinese. Not impossible! But very hard, and very unnatural. You would not find the internet so useful if the only way you could communicate and consume content was in a language that is not your own. Thus, Deaf people are discouraged from creating and sharing content, because other Deaf people cannot find and use that content very easily. It means that for many purposes, the internet as you understand it is beyond our reach.

On the close horizon, we have newer tech, virtual reality (VR) and artificial reality (AR), that has great potential for us all. For the Deaf it could mean even better access to information, because we are such visually-oriented people. VR/AR means more access to interpretation and visual information displayed in a Deaf-focused way.

Still these technologies are yet to become reality. We want to begin to change that, and we understand that the way to do it is to begin using what we have to solve the problems of Deaf travelers. Deaf Tourism is on the rise, and we can feed and encourage this with content and a community in the format that Deaf people will really be able to use, and ultimately contribute to themselves.

Our platform can give deaf travellers access to information equal to hearing travellers, just by using the smartphones or other devices that Deaf people already have. It’s a visual platform, using maps and images to help Deaf travelers find content focused on the sites they are visiting. Eventually, we will be able to provide a forum for the Deaf to create and share relevant content, based on real world landmarks, much in the way that Yelp, Google, or Facebook function for hearing communities today.

Many of our mentors and investors have been surprised to learn about the difficulties that deaf people have with getting information in a format they can use. Can you talk about why reading and writing are such a challenge for the deaf? 

There are two main problems that are caused by many forces, socially, economically and politically. In addition, these problems are worldwide in varying degrees.

The first is that education for the Deaf has been historically lacking, sometimes pathetic, and often downright horrible. For most of history, we have been treated as mentally disabled by society, because people did not understand that we can learn and think just as hearing people do if we are educated in a way that makes sense for us.

Read more about Jan’s life working with the deaf community in Prague

The curriculum in most Deaf schools is not the equal to the what is taught in hearing schools. As well, the Deaf students who are sent to the hearing schools do not always have a quality interpreter. These same students also have less socialization with their hearing peers, since the language of the hearing school is spoken.

The second problem in both of these types of schools is that the teachers usually don’t know the students’ native sign language. Which means the student is using an interpreter, or even nothing in many cases. The student is simply expected somehow to adapt. Most deaf schools in the world focus on making the students learn to speak, and the actual education is dismissed as less important. This is sad, since teaching speaking to Deaf is rarely successful or needed.

This is treating the Deaf as if their goal in life should be to compensate for their lack of hearing. I think that’s just silly. I wish to live in a world where the Deaf are treated as different, and not as disabled. We can teach and learn from each other, and we have rich cultures and languages to draw from.

As I think the StartupYard team have learned from us during our time together, we can share our ideas and our dreams with a little shared effort. The Deaf have much to offer and indeed to teach the hearing, just as we have much to learn.

Let’s talk more about Deaf Travel: what does the solution look like today, and how can people use it?

Our first focus is on proving the value of Deaf content for travelers. We are doing this by focusing on getting landmarks and tourist locations and attractions interested and involved with the platform. This means creating content focused on these locations, that the Deaf can use in place of guided or audio tours, and also content that the Deaf can use to do their travel research, such as deciding what monuments to visit, and even finding Deaf-friendly services in the destination city or country.

This means a Deaf tourist can experience the story of the site in his own native language without being dependent on others. The Deaf tourist today has little freedom of action or choice in making travel decisions. If we do not depend directly on others to help us plan and navigate a trip, then we still must face a lack of depth and context in what we see and experience. Tell me how many times you would go to the cinema if the sound was always turned off? That is the experience we face almost everywhere, and the worst outcome is simply that we choose not to go somewhere new.

DeafTravel

We want to create a way for Deaf people to enjoy traveling, and also a reason for Deaf people to travel and experience more. If more content and services exist and are accessible for Deaf people, then more of us will travel, and so even more demand will arise for these services. We want to prove now that such a demand does exist and that it will grow when attractions and cities invest in building up their ecosystem of Deaf resources.

What do you want Deaf Travel to be a few years from now? How will Deaf people use it in their daily lives? (note: talk about tripadvisor, Yelp, deaf reporting, etc)

It’s simple really. We envision individual Deaf travellers accessing our platform of videos via our Deaf Travel App. Similar to the services of Tripadvisor or Yelp, our app will be a community of amateur and professional deaf video “reporters”. Each reporter will upload their videos to our server and the community can search for, watch and review individual videos and locations, based on visual maps instead of text search. They will be able to use it in their daily travels at locations around the world.

The key is to create this connection between the “local heroes,” and the travelers. You can be a local hero in your home town, who makes videos and helps visitors, and you can benefit from the work of your fellow heroes around the world when you travel. You can also create content as a traveler, aimed at your own community, who may also travel to the same places in the future. This new online community platform will also be a place for promoting Deaf-owned or Deaf-friendly companies, Deaf events, interpreting and other services.

Deaf Travel will be supporting the community so that the community will support itself. What do you think happens when one restaurant in Prague becomes known internationally as the place to be for deaf visitors? I can tell you: it will be very successful, and this will allow entrepreneurs from the deaf community and from outside it, to explore new opportunities. It is a big, untapped market that is still invisible to most people.

How will Deaf Travel deal with the complication of having many different native sign languages that travelers know?

Yes, many people think that there is one universal sign language, as I mentioned. I’m not sure why! I mean how would you get people in every country to agree on one language when each culture is different? Yet people think we Deaf could do this ourselves.

Karlův most, Praha (ČZJ) from Deaf Travel on Vimeo.

 

Each community in each country has its own natural sign language which is connected to that culture, as all languages are. After all I am a Czech man in addition to being Deaf. I need a language that fits with this identity, and it is the Czech sign language. Each sign language has different dialects as well, just as spoken languages do.

How do we solve this situation of such diversity?Deaf Travel will use video reporters in each country to have that local sign language in the videos there, in addition these videos will have a second communication mode called International Sign System (IS). This fills the function that English fills for many international travelers.

Not everyone knows IS, but most Deaf tourists have learned it by travelling and meeting other Deaf in their travels. IS was developed by Deaf in the European region where many languages and cultures converge. It uses the basic visual grammar, syntax and structure that almost all sign languages have. It then adds clear vocabulary from various sign languages. It is not a pure language, but a good method for everyday communication.


Today you’re looking for tourist attractions to join you as partners to create quality content for their deaf visitors. That is hard to scale. Over the long run, how do you see the platform being monetized and growing as a business?

 

As I just mentioned, the community of travel vloggers and reporters all over the world will add to our video library quickly.

A traveler in Peru and a traveler in Germany could upload their videos during the same week, but from different trips, and thus we’ve increased our library by several short videos in two different countries in the same week. Those videos will be catalogued and tagged on the appropriate map for that region. The map with these pinpointed videos will be the growing visually searchable platform for other Deaf travellers.

Understand that the Deaf community is small and news always travels fast within our network. Awareness of Deaf Travel’s platform will equally spread like wildfire, because Deaf travellers will be eager to add their own amateur travel vlogs to the database alongside our professional ones to share their experiences, good or bad, with the community. Everyone has a need to communicate and to help each other. You just need a way to do it.

These videos will be accessible for free or for a monthly subscription price for our full-length professional travel vlogs. In the world, there are approximately 466 million Deaf and Hard of Hearing. 70 million of those use a native sign language, for those who do not, we will offer subtitles as well. So, the market potential is great and will sustain our mission of supporting the community by tearing down the travel communication barrier.

You’ve been our very first Deaf founding team at StartupYard. How has the experienced matched up with your expectations? What have been the biggest surprises?

Overall, the experience has been amazing. There were a few moments when things did not click with us, but I’d say 99% of the people we met and worked with were great.

At first, I was truly shocked that we were picked for StartupYard. I didn’t think there would be much interest in our project. Then after meeting so many mentors and EVERY one of them showed interest in our vision, our motivation increased exponentially. We now feel like we really have something that will make this dream of barrier-free travel a reality.

Perhaps I did not have enough faith in hearing people to see the potential that we see in this idea. However I have seen that this is a problem anyone can understand, and it has been wonderful to see that others who have not experienced these same problems can deeply empathize with it.

As the StartupYard team have told us many times, what we do must become somehow obvious on first sight to people with no experience of the problem. That is something I think we have accomplished and it is really exciting to be able to open people’s eyes to it.

What kinds of partners and potential clients are you looking to talk to right now, and what’s the best way for them to start cooperating with Deaf Travel?

That’s a great question. We’re looking for well-known tourist destinations that attract thousands of tourists every year. The kind of places that are famous and have a very interesting story to tell, like cities such as Prague, castles, zoos, museums, and other such attractions.

Lesser known sites are also of interest to us, because our mission is about equal access to information for our community. It is our way of supporting the social and civil rights laws in place now. We don’t want to be dependent on others to provide these services. We know what we want and need. The world has provided us with the political backing, and we want to partner with those who support this vision too.

We don’t need people to see this necessarily as a charitable or humanitarian activity. It is an opportunity for Deaf and hearing people to fill a great need that exists and to build new businesses and provide all-new services. Invest in serving the Deaf community and we will vote with our money just as everyone does.

Thus if you are a forward-looking institution or a business, that can see a great opportunity to lead the pack and be a magnet for Deaf tourism, then we want to talk to you. If you are an adventurous Deaf person who wants to serve the Deaf community, or an entrepreneur who wants to explore a new market, then we want to talk to you.

Meet Behavee: The Future of Recommendations is Open Source

StartupYard Batch 9, has been defined by “tech with a soul.” That trend continues even when the focus of the startup is on what people traditionally think of as a dry and boring topic: big data, behavior analysis and product recommendation.

That’s because Tomas Pluharik, CEO and Co-Founder of Behavee, believes strongly that the future of recommendations is at once more personal, and more private. Behavee is focused on providing e-commerce and content companies with the tools to truly understand their customers, but without breaching their privacy or mining their personal data and shopping history. They do this by training their machine learning systems to understand how customers behave, and use that knowledge to create instantaneous micro-segmentation of customers based on what they are interested, and what they really want – not just what a company wants to sell them, or what they’ve bought in the past.

To do this, Tomas has arrayed a team of experts in big data, marketing, machine learning, and software engineering with a strong corporate background, who are tired of the way big data is being used for marketing, and believe there is a better way. Behavee is an open-source recommendation engine that learns from its experiences, but doesn’t violate your privacy.

I sat down with Tomas to talk about his vision for the future of marketing in an age of privacy and a post-GDPR world. Here is what he had to say:

Hi Tomas, tell us a little about yourself and your team. How did you all end up together founding Behavee?

We’re a team of corporate refugees who have all worked many years at the Big 4, banks, telcos, and pretty much every big corporations you can imagine in Central Europe.

Behavee, Tomas Pluharik, StartupYard

Without getting into too many of the messy details, I originally hoped to form a spinnoff from one of the Big 4 consultancy firms, to pursue what I found most interesting about big data, which I’m sure we’ll talk about here. Anyway, that experience showed me that my colleagues and I were living on a different planet from our superiors, and we needed to escape to startupland as soon as possible so that we could really do something that big companies don’t have the appetite for.

We teamed up, David, Jan, Richard and myself (team bios are here), and banded together with Michal and Juraj from the banking sector, and Marketa from Microsoft, and we formed what started as a kind of big data agency. I have really enjoyed the fact that the team has been very dynamic, and a harsh selection process outside the cushy corporate environment, which has molded us into a team of hardened individuals who can stay lean and scrappy.

Behavee focuses on user behavior and micro-segmentation for recommendations. What is the unique approach you’re using, compared with other recommendation services?

Ok, how much time do you have? Just kidding, I’ve learned now to make this as clear and straightforward as possible, although in the background it’s tremendously complex.

First of all, we must understand how content and product recommendations currently work online. Or rather, how they don’t really work. What happens mostly today is that e-commerce companies and content companies hoover up a huge mountain of personal data about their users through the use of memberships, cookies, browsing history, purchase history, and data collection services.

With all that data in one hand, and with a pile of products or content to promote in the other hand, they do what you might expect anyone to do in this situation: they figure out the best way to get the most people they can to buy the products they have or look at the content they own.

Now, in this process, they like to think that what they are doing is helping their customers to find products that they need and want. That is sometimes true. However, as you may imagine, it also produces a huge number of recommendations for things customers not only don’t want, but which are actively annoying or nonsensical for them.

A good example of this approach is if say, I bought a phone on an e-commerce platform. The e-shop can recommend me a case for the phone while I am shopping, or even after I purchase the phone. So far so good. Now say I bought the case. Great! Now what does the recommendation system for that e-shop do? It spends the next 6 months advertising that same case to me, over and over again. That’s a true story by the way. Many people, if not most people know it well. 

Why does it do this? Because it is not looking at *me* and thinking: “Tom already bought that case… let’s find something else Tom would like based on what he is actively doing on our platform.” No, instead the e-commerce platform is saying: “We have a couple hundred of these phone cases lying around… we need to sell them to anyone who bought the phone.” That includes me, even if I bought the case already. Who knows- maybe they get lucky and I buy it again? 

I know that sounds pretty dumb actually, but even the most advanced e-commerce companies are still doing this. Even Amazon does that. They can’t stop.

Wait… why can’t they stop doing this?

Because, as I said they have this pile of user data, and this pile of products. They have to move the products using the data. So these little annoyances like seeing the same promotion 50 times after you bought something are not their cheif concern. Their chief concern is to sell the products they need to sell.

What do you do differently?

Ok, now we’re getting somewhere. Behavee is different because we don’t need this giant pile of customer data. We don’t need to know the history of any single individual and what they have bought, or what they are like. We instead anonymously study the behavior of many people, and from this we derive an understanding of how people really work, and what really motivates them. What we do instead of focusing on the past of someone’s shopping activities, is to focus on how a customer behaves, what she or he does when they are visiting the e-commerce or content site, and use that behavior to understand what they are looking for right now. Not a month ago, but right now today.

In order to do that, you must break this addiction to looking at a customer’s past, and focus on a customer’s present. The fact that I bought a phone 6 months ago is irrelevant, if I am in no way motivated to buy a case. So don’t show me something I am not ready to buy. Instead understand me by the way I behave, and show me something I really want. That is what Behavee is doing. Behind this is machine learning technology, analytical tools and automation software to help e-commerce and content platforms make better recommendations automatically, based on dynamic micro-segmentation, which basically means making offers that work for a customer based on what they do, and not who they are.

How can you understand what a person wants by how they are browsing a site?

Let me give you a nice analogy. My grandfather ran two pharmacies during the second world war and before the period of socialism. He said that after many years, he could tell what a customer was looking for in his shop, just based on how they looked, what they did in the shop, and generally how they behaved. Actually it’s very intuitive, because in-person sales is all about reading body language and judging a person on how they are behaving and how they present themselves to you. Are they confident? Unsure? What items are they interested in? You get that all by observing.

In fact my grandfather said this is the trick to serving people is not to judge based on the past: you pay attention to how they act right now, and not always to what they say about themselves. Very often a customer does not know how to get what they really want. You must understand them and help them to understand and see the products that they really need. Maybe a person who has bought the same thing every week for years doesn’t actually want that same thing again. If you presume too much, you will miss an opportunity to sell them something else.

So this is what we do at Behavee. Our recommendation engine first of all observes how many thousands of people behave on a website, and then just like grandpa in the 50s, we train our machine learning systems to recognize what people need by how they behave: what they look at, where they go, how much attention they pay to something, etc. Then we can actively micro-segment and offer a customer something specifically for them, that we know with a high degree of certainty that they will want.

The best way to give an amazing customer experience is to make it feel like the person magically found exactly that thing they wanted. It feels as if that thing is there waiting just for them. That is the experience we want for customers of e-commerce. Less flashing lights, and more understanding of the individual, but without being creepy and pushing against their privacy.

Our solution looks on the whole customer journey from beginning to the end. We do not ask how we can sell a pile of products we must sell; instead we ask “what does this person need, right now, and can we offer that?”

To do this we are an open-source, open platform company. The more our recommendation engine learns from customer behavior (all without keeping any personal data about individuals), the better we can be at helping e-commerce and even content companies to recommend the “next best thing,” for any individual, based on what they themselves do.

So this is ethical big data?

Of course, privacy and anonymity I believe are fundamental rights that we ignore at our peril.

However, I want to stress that even if I didn’t feel that way, this approach to recommendations just works better than looking deep into someone’s past and trying to predict their future that way. If we keep doing that, using a person’s history to define their future, then we will always miss on the best opportunities, and we will never recognize when our customers have changed and are not interested in the same things anymore.

Using someone’s history all the time is like never letting them grow up. You show you don’t understand or even care about someone by doing that. You bought jeans? You are the jeans guy forever. That is somehow both deeply personal and dehumanizing at the same time. It doesn’t work. It will never work.

Just imagine in my story about my grandfather if he had, instead of looking at his customers as people, just looked at them in some spreadsheet with all their past purchasing activities. That is ridiculous. Maybe he could sell them something that way, but could he tell from this if the person in front of him has a cold right now? No. You can see how this approach can be taken to such extremes that we end up not being able to help people anymore. Ultimately people are looking to be understood, not to be treated as pieces of data.

We work with pseudonymized and anonymized data. We don’t keep data of individuals after using it to train our algorithms. If someone came to me and asked for data deletion (as is anyone’s right now with GDPR), I would have no trouble because I don’t even have it, and I don’t want to keep it. Behavee has no knowledge of individuals, and that makes us better at recommendations than if we did.

As for our partners and clients, this will be an adjustment, but a much needed one.

So you see GDPR (General Data Protection Regulation), as an opportunity to change the way online marketing works?

GDPR will clear the marketing space of the random advert calls for a while and will partially reset some marketing functions (like loyalty programs). The opportunity is in the approach to lead generation. It will be hard to generate direct leads from endless databases anymore. Now you must be smarter and more proactive in thinking about the customer journey.

Though anyone who knows me can say that I am not a big fan of too much regulation, I believe GDPR for the most part did a necessary amount of damage to the current system. It made it so that these ways of using big databases to sell are less attractive, and that is ultimately better for consumers and businesses.

You’ve already launched the service with some pilot customers. Can you talk about that process? What surprised you, both about the client’s needs and their reactions to Behavee’s capabilities?

Yes we started and we expected to collect the data for a month to make something beneficial for our clients. We still do need a lot of data, to be clear, but we don’t need to keep that data for very long at all to train the algorithms, and that data does not need to be linked to any specific person.

To our surprise, in only a week, we were able to generate interesting reports for the client that had an impact on their sales right away. I did not believe we could provide such a benefit so quickly, so that is a very welcome shock. Actually one of our clients is now calling for more help after he just saw the data we are providing. We are becoming very busy!

On which kinds of projects or in which industries do you see Behavee having the biggest impact in the near term, say 1-2 years?

What we can do right now, and for the near future is to provide a much better insight for our clients into how their visitors behave, and how to work with them. On top of that, we can provide, after some time of monitoring customer behavior, a way of automating recommendations of content and products, and also offering customers relevant products from other sellers, with revenue sharing for the lead originating site (referral marketing), if that is desired.

In short our focus is mostly on e-commerce and media. However we see great potential in interconnecting verticals and businesses over the whole internet. Realtime behavioral analysis of users can be used even in industrial segments, but as I said our main focus is now on e-commerce and media.

Tell us about your decision to join StartupYard. You’ve got many years of corporate experience on your team, so what was the biggest motivator for joining the accelerator?

To be frank, we were initially not sure if we should join. But I knew the product is too fat and unfocused, communication too complicated and clumsy and our sales cycle too long 🙂 . So at the end of the day we give it a shot.

I must say that it surpassed my expectations. The network we have through StartupYard is very strong, even stronger than before, and there is a level of trust that we bring with us into meetings and new potential partners and clients because they know we are an “SY Company,” so it means we are serious and have backup on our side.

The StartupYard management team has been great. It can be very helpful to have someone always with an outside perspective, bringing past experience and knowledge of the network to help us stay realistic but also to be more open to new possibilities too. I can only say I recommend it, even if you have lots of previous experience. This is not about someone telling you what to do, but rather having a support system that you couldn’t buy otherwise.

What kinds of partners and customers are you looking for in the near future?

Ok, so I could tell you that we are looking for the most forward-looking and most progressive e-commerce companies, financial institutions, media, etc. That is the startup thing to say!

Actually these businesses are generally very conservative, and the most conservative players can use our help the most. Some of these companies are trying to build their own closed solutions, and that is ultimately not going to be enough, or is frankly just a bad idea. Smaller startups and younger companies are already set up to use data more wisely, but bigger institutions are big machines that have only a few speeds.

Thus we are looking to work with companies that deal with lots of customers in a pretty conservative, by the book big data approach. That is where we can do the most good, because generally these companies have a lot of tools and a lot of data (and with this they do make a lot of sales) but not much in the way of connecting all those tools to the data to actually improve their customer experiences. Behavee isn’t about “press this button and user your data to sell more.” It’s about collecting the right data, and using it the right way to ultimately grow your business stronger, with better customer experiences. That will generate more sales, and not only in the long run.

What we have learned recently is that being open-source is not a deal breaker for big companies and conservative institutions if they understand what is actually being shared, which is not their own operational data or the data of their customers, but the deeper understanding of how customers behave in general. In this way a bank that is using Behavee can benefit from our understanding of an e-commerce company, and vice-versa. Everyone can become stronger this way.

So if you have a lot of data and you somehow feel that you aren’t quite giving your customers what they are really looking for, then we are open to a discussion with you. Let me convince you that open-source is the future, and that understanding customer behavior, not just mining your data, is the key to being competitive today and in the future.