Waymark, StartupYard

Introducing WayMark: AI for Regulatory Compliance

Waymark Tech is the second company of the StartupYard Batch 8 group to hail from sunny England. Mark Holmes, CEO and Founder of Waymark, left the world of financial services to found his first company at 38, with a unique set of life experiences from the City of London.

Holmes founded Waymark in response to a problem only AI can address: the modern world of regulations in a global economy. It’s an AI layer that sits between a company and millions of regulatory documents, directives, and alerts, and helps compliance officers and others to parse the laws and regulations that matter to them, when it matters to them most.

This not only helps companies to avoid costly mistakes, but levels the playing field, so that companies big and small can compete in a marketplace that is frequently unbalanced in favor of one or the other. Mark sees it as his mission to make regulation accessible and useful, rather than allowing it to become an enormous drag upon innovation, and the technological and business advances that can make people’s lives all over the world easier. I sat down with Mark to talk about his vision of an AI that dreams in regulations.

Mark will pitch Waymark tech along with all 7 of the StartupYard Batch 8 Startups at our DemoDay: November 22nd, in Prague. Care to join us? 

 

 

Hi Mark, how did you get into RegTech (Regulation Technology) to begin with? Tell us how you decided to found a startup to attack that problem.

Often when we think about regulation, especially RegTech, it’s in the realm of Financial Services. That’s where I started.

My father worked in the City of London as Head of Investments for a large commercial property firm, and I spent most of my career there as well. I worked with Morgan Stanley in the equity derivatives department, then Nomura, Deutsche Bank, and HSBC.

I grew up around that culture, which I think has been really valuable to me in my career, and also in what I’m doing now, which is a lot about solving the day-to-day frustrations of people just like I used to be, or my father was.

Over time, I was pulled into focusing on financial technologies, and selling products for big banks and asset managers. During my time at a technology vendor, a lot of my clients were treating me as a pro bono consultant – trying to find out information on regulations and how other clients were approaching them.

As I looked deeper, I realised they were all dealing with regulations manually and knowledge sharing was an informal process. I felt there was a way technology could help with this. I also began to see that it could be applied to other industries as well.

Mark Holmes, Waymark, StartupYard

For your customers, what are the pain points that Waymark solves? Why can’t those be solved using existing approaches?

Ever increasing regulations and more complexity is proving just too much for the Industry to handle. The current approach is to throw bodies at the problem, but this is costly and just not scaleable – especially as the businesses grow their product lines and expand into new territories, which brings about more regulatory pressure.

You have a few forces acting at once to create this pressure. The benefits of scale due to mobile technology and e-commerce, as well as the easy transfer of knowledge around the world, means that companies more and more see themselves as global entities. They can execute strategies across many regions like never before.

The goal of a big corporation is to spread the best practices and products to all its markets, to maximize its value. These markets can look similar from the perspective of the product team, or the marketing team, but they are sometimes alien planets in terms of legal issues and regulatory oversight.

As globalization has gone on, regulation has not really slowed down. The complexity of regulations act as a bottleneck for big companies to execute their strategies globally. It’s like having one product idea, and then having to independently develop it in every market you serve. That’s a ton of work, and it can make sharing innovation globally not worth the effort and time.

 

Can you give us an idea of what that bottleneck looks like?

Ok, let’s say you’re a vineyard in Napa, California, and you have a wine that just knocks people’s socks off. Wine dealers from Europe are constantly buying small batches, and you want to go directly to the European market yourself.

You’re making money, you know wine. But hang on. You have a laundry list of obstacles to overcome. There are 28 countries in the EU, and all of them have a page just like this one on the website of the U.S. Alcohol and Tobacco Trade and Tax Bureau.

What do you have to do to export to any one of those countries? You have to meet a unique set of requirements: Labeling requirements, winemaking standards, import procedures, local licensing, taxes and tariffs, identity and business documents, recycling standards, marketing regulations and limitations, contracts with distributors according to local law… and on and on.

That is of course ignoring the fact that many nations protect their own industries by making competition harder for foreign companies.

Why can’t get you get a nice wine from a small vineyard in Napa? That’s why. Not because you wouldn’t pay for it, but because it’s just too much work.

In the end, that is a shame for consumers and businesses both. We do not have access to all the innovations and products we can, not for a sound business reason, but because the regulatory landscape is too complicated.

 

Why are regulations becoming more complex, instead of streamlined along with the global economy?

An important question. The truth is that this is as much about politics as about protecting people from harm. Regulations are absolutely necessary to ensure that profit motives are not in total control of what corporations do.

Plus, regulation is increasingly local, while corporations are increasingly global. It used to be that broad regulation covered many smaller companies. Now a single large company must be compliant with a patchwork of regulations across many territories.

Regulations are easy to write, but their effects are hard to predict, so we move in a bit of a cycle. We have a bunch of regulations and directives, and slowly businesses find ways to get around them and innovate faster, and that leads to problems. Then a new set of directives come in and local regulators have to “right the ship.” The corporations then have to scramble to get into compliance again and clean up the mess.

Since the financial crisis in 2008 for example, there has been an increase of 492% in the number of regulations published in Europe and the US. They are wide ranging and touch every aspect of a business. They require a sea change in technology used, in processes and in policies. In the UK, the introduction of the Senior Managers regime means that managers now have to be fully accountable for what goes on – so liability has shifted to personnel rather than the company.

That is why I founded Waymark. It’s an AI layer that lives within a company’s existing information system, and augments it by connecting the company’s activities to relevant regulations. Moreover, it continually monitors the legal landscape, updating compliance officers continuously on new developments.

WayMark, StartupYard, Reuters

Thomson Reuters [graphic], tracked 201 new regulatory alerts a day in their report on the Cost of Compliance 2017. Companies need that data to be put into actionable format, and addressed directly to the people who it will effect immediately.

What does that look like? Well in financial services alone, there will likely be 200 million pages of regulations globally by 2020, according to Regtech Rising. That volume will be just unmanageable for big institutions and corporations. They will have to have an active AI layer between them and the mass of regulations to keep up.

 

What does it look like if a company doesn’t use this kind of RegTech in the future?

Story time: some people might remember in the late 90s, that NASA sent a spacecraft to Mars called the Mars Climate Orbiter. What is memorable about that project is that it failed, when the craft crashed during orbital insertion.

What was the glitch? Well, NASA had a contract with Lockheed to provide some of the ground equipment used in the mission. One of those pieces of equipment was using software programmed in non-SI units (pounds and feet), instead of SI (Metric) units.

The agreement between NASA and Lockheed was solid, but it was not properly implemented across the whole operation at Lockheed. The key people just didn’t ever get on the same page. That’s a straightforward example of how a big enterprise can get killed by a small mistake, that Waymark could solve.

In this case, an AI that checks the software against the requirements, to make sure it follows the agreement, would have caught the error easily. Regulations are many times more complex than that, so it becomes nearly impossible to be compliant, and still deliver products to the market and not get sued.

Some would say it’s now impossible altogether. For every dollar a bank invests in compliance, currently, they pay three dollars in fines. That’s how bad it can be. We pay the cost as consumers, one way or the other, with higher prices or with non-compliant products.

 

Let’s talk about the role of startups in fintech and other industries: how are these new companies using the regulatory environment to their advantage? What can big firms do about it?

Technology-driven nonbank companies, aka “Fintechs” work in a regulatory void – they are not subject to the same regulatory pressures as the traditional big bank incumbents.

This is changing with regulators working out best approaches to regulate FinTech without stifling the innovation. Big firms can turn this challenge into an opportunity by collaborating with, rather than competing against these FinTech firms. Same goes for other industries, such as professional services. The core skill is not in technology, so by partnering with a tech firm, both sides can benefit and ultimately the client is the winner.

With Waymark, for example, a big firm can eliminate a significant part of the process of integrating a new service into their offering to clients. Waymark is an AI layer that lives on your existing software, so if you are suddenly doing something that is forbidden by regulations, you’ll know right away.

Think of GDPR, the new European Data Privacy framework. On day one, it’s likely that a huge number of big companies will not be compliant. How can they move forward with new products if they’re spending all their time catching up with the old ones?

We don’t want that day to be the end of innovation in Europe, so these companies need to adopt new standards, but also new approaches to compliance. They need to get ahead of changes to compete.

 

You noted that increasing regulatory complexity is going to make product release cycles slower for big firms. Why is that? How will you fix it?

As firms expand their product scope and geographical reach, so they will have to be aware of the regulations in many regions imposed on new products. This increases complexity within an organisation and so will slow release cycles down.

It is one thing to create a global supply chain for, say, a new version of the iPhone. But it is something else again to have a unique manufacturing and supply process for every single market you’re serving.

That’s a big reason why industries push for alignment of regulations, and also seek to make products that meet regulatory requirements everywhere at the same time.

But that is just another layer of complexity, because it means when you’re designing the product, you have to design it with dozens of different regulatory systems in mind. That is not easy.

What Waymark allows these companies and the regulatory consultants working with them to do, is get product-specific feedback across many different legal systems at once, so they can build something that is broadly compliant with their target markets from the beginning.

If you want to make one particular component using a particular substance, you’ll be able to see, from the drawing board stage, the regulatory problems that decision can cause you. You can address that problem from day one, instead of having to deal with regulators at the last minute, long after any changes can be made.

 

What kinds of customers is Waymark looking for today? Who is the ideal early-stage partner?

We are looking for Professional Service firms such as management consultants or law firms. People who appreciate how much promise there is in AI for regulatory compliance, and are already experiencing serious pain in keeping up with regulations.

An ideal early stage partner is one who has clients in highly regulated industries and is looking for a way to provide a real value added service to their client base.

 

In the medium to long term, what industries or customer set do you want to target, and why?

We are focussed on Financial Services, Life Sciences and Energy. The way our platform is designed, however allows us to move into other industry verticals swiftly and so would like to partner with someone in FMCG or Telecoms as well.

Soon, I expect that this kind of technology is going to be necessary across essentially all industries and large enterprises of any kind. Once the early-adopting companies show others how much faster and more efficient they can be thanks to AI for regulation, others will have no choice but to implement their own solutions.

 

Where do you see regulations in 5-10 years, when AI will possibly have a huge day-to-day influence on company decisions?

Interesting question. AI itself will be regulated and I think we will never be at a point where a company’s decisions are solely made by AI. It will be important to be able to show how a decision was made rather than just a black box.

I think in practical terms, regulations will be machine readable and directly plugged into activities – i.e would work on a real time basis, moving in line with business activities. That would mean, for example, that a factory that is making products would be directly connected with regulators, meaning that changes can be made very quickly when they are needed.

You could imagine a country’s whole supply chain being able to react to air conditions or power demands instantly, and regulators being able to tweak regulations on a constant basis to make them work better.

 

Back to the present, how has your experience been at StartupYard? What drove you to choose Prague as a second home for the company?

It has been very worthwhile moving to Prague for 3 months. The connections, the clarification and validation of ideas has been invaluable. We are now a proper company and not just a couple of people with a platform. We decided we needed a presence on the Continent due to Brexit driving companies in this direction, and Prague is a good base to give access to CEE.

 

We would be remiss here if we didn’t talk about Brexit. What will Waymark’s role be in helping UK and EU companies deal with the chaos that Brexit is likely to bring large companies on both sides of the channel?

The chaos and uncertainty around what regulations apply and those that no longer apply will be a big part of the problem. Also the possibility of regulatory arbitrage – i.e. if moving from UK, which regulatory regime would be better to move to for your business, will be a big opportunity.

Waymark will be able to help people play out these what-if scenarios to optimise their business. So in effect -not that I’m happy about it- Brexit is just one more argument in favor of using Waymark for regulatory compliance.

The current system, built on individuals accumulating knowledge by picking through documents for years, is very vulnerable to big changes. If tomorrow Brexit happens, then all that systemic knowledge is in doubt, and very hard to replace.

What kinds of customers or partners do you want to get in touch with you today? How can they reach you?

We are primarily looking to partner with Professional Service firms but also SMB’s looking for help with regulations. They can reach us by mail: mark@waymark.tech or via our website: www.waymark.tech

 

Mark will pitch Waymark tech along with all 7 of the StartupYard Batch 8 Startups at our DemoDay: November 22nd, in Prague. Care to join us? 

RentRocket

RentRocket: The New World of Renting

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

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

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

 

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

Klara Flisnikova, RentRocket

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

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

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

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

 

So RentRocket is based on your experiences?

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

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

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

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

Petr Vlcek

 

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

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

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

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

 

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

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

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

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

RentRocket, StartupYard

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

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

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

 

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

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

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

RentRocket, StartupYard

 

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

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

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

 

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

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

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

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

 

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

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

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

 

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

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

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

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

 

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

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

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

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

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

 

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

Startupyard is the best kickstarter ever for a startup.

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

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

 

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

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

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

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

 

How can potential customers start using RentRocket today?

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

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

 

Steel Mountain

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

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

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

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

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

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

Will Butler, CEO and CoFounder at Steel Mountain

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

Thomas and Will, Co-Founders at Steel Mountain

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

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

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

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

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

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

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

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

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

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

Steel Mountain

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

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

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

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

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

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

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

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

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

Steel Mountain Features

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cryptelo Co-Founder Vastimil Klíma

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

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

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

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

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

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

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

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

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

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

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

 Vlastimil Klima, Cryptelo

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

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

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

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

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

Bitcoins may be anonymous, but they may not.

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

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

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

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

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

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

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

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

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

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

6 Years and 59 Startups Later: Here’s Why StartupYard Works

This week our CEO Cedric Maloux and I sat down for a conversation about the struggles and the excitement of recruiting and working with amazing startups together for the past 4 years as MD, and his 6 years as a mentor.

 

StartupYard last year announced our largest fundraise so far, of about €1 million for up to 20 new startups in 2017-2018. How did we get here? What have we learned? Here are the most interesting exchanges that came out of our discussion:

Hi Cedric, every week during the StartupYard program management meetings, you ask founders one question: “What are you struggling with right now?” I think it’s fair to start with the same question here:

Sleep! [Laughs].

I have two sources of stress when it comes to every StartupYard round, and this is now going to be my 5th time going through it. The biggest stress is Demo Day. Like a parent or a teacher watching their kids take the next big step in life, our whole team works very hard to make sure our founders and startups look great, professional, in control, and ready. But when they go out on that stage, our hands are off the wheel, and they are on their own. That’s a big scary moment for me, and for the founders. I don’t want them to feel that they’ve failed themselves.

The other stress is right now. We are looking for startups, talking to startups, trying to get the right startup founders to apply for our next round at StartupYard. We will invest in up to 20 companies in the next 12 months. I am always slightly panicked at the idea that we’ll miss one, or that one won’t find us, and will miss an opportunity that can really help them to succeed in business, and hopefully in life. I get real joy from making a difference in people’s lives, so I have that fear that I won’t do all I can.

What specifically are you afraid will happen, or not happen?

We can make the wrong choices. We have in the past – though not often, thankfully. StartupYard takes a big risk in trusting people we barely know, to be strong and committed and honest and open enough to go through a really demanding experience. It is very humbling. And I know we aren’t always right about people. We invest in founders, but you don’t really know someone until you spend every day, all day, with that person. Sometimes we’re not sure, and they turn out to be just amazing. Other times we are sure, and it turns out we were off.

So I’m stressed right now about those decisions, and knowing that later is too late.

So what helps you sleep at night, knowing that you’ll never be able to perfectly predict who will apply, and how they’ll perform?

Luckily we surround ourselves with really great advisors and investors. We have a great selection committee, who really get what we’re trying to do. They serve as a check against our biases and assumptions. We have been very lucky, but we also work very hard to remain humble, knowing we will make some mistakes.

In some way, every investment decision we make at StartupYard is a bit crazy from a normal perspective. We invest our time and money into people we have met maybe twice or three times. It takes a lot of faith. Among investors, accelerators like StartupYard are the ones with the least actionable data, KPIs or traction to judge in a startup. We have to believe our hearts and our noses. We have to trust in our experience and instincts more than other investors, who can point to solid numbers to tell the story. We go on much less.

Hearts and noses?

Yes. If you’re investing in a later stage, it’s all about numbers and trends. We can see trends, but we have very little in terms of numbers. So we also have to really understand people to make the right choices. I say our hearts and our noses, because our hearts are for people, but our noses are for opportunity. If we believe in someone, and we believe that there is an opportunity in what they’re doing, then that is enough for us.

Central Europe Accelerator

What makes you particularly fitted for a role like this?

I think a person can’t imagine what it takes to go from an idea to a profitable company unless they’ve done it, and experienced it themselves. I have done that multiple times in my life.

And unless you’ve experienced the opposite, which is failure, you probably think somewhere in the back of your mind that it can’t happen to you. I’ve also failed, publically. The last time one of my ventures was mentioned in Wired, it was in the context of the company going out of business.

So I know what that’s like to be notable enough to be in Wired, but still to fail. I have a deep technical background (I studied AI at University in the 1990s, when it wasn’t cool), and I’ve had a long career in sales. If a founder can’t sell; to employees, to co-founders, to investors, and customers, then he can’t make his ideas a reality.

So sales is not just about closing deals?

No. It’s about everything. Selling is essential. I’ve sold customer-facing services. I’ve sold B2B products to big corporations. I’ve sold my own company. Selling is an art. As we say, “telling isn’t selling.” You have to be able to not just talk about your ideas, but sell them.

Also, I learned a lot from running online businesses during the 2000 Internet bubble and the 2008 financial crisis. These things taught me the hard way about discipline in the fundamentals of business.

What was your hardest lesson through those experiences?

Cost understanding and control is at the heart of your company. You can only control one thing: your costs. Revenue projections, cost control: these are the things that get you through a crisis. It’s all about planning. Not your revenue, or development time, or investors, or customers. Just costs. Knowing when the money will run out. So financial hygiene is a top priority.

You’ve run companies. You’ve sold one company. So from that background, if you were starting a tech startup today, would you apply to an accelerator, even knowing everything you know?

Short answer, yes I would.

Long answer, I do have a few tech businesses on the side that I have started with other people, and with one, I’ve been encouraging the CEO to apply to an accelerator (though not StartupYard because it’s not in our area of focus). That should tell you what I think about accelerators, and not just about StartupYard.

If I was starting a business, I would go to one tomorrow, because no matter how much experience I have, I am limited by my own capacity as a human being. One thing that I’ve learned over the years, is that success doesn’t come from what you know, but from who you know. Your network is a vital ingredient for success.

A great startup has these things:  a hard problem to solve, a great solution, a clear value-proposition, a strong sales/marketing team, perfect timing, and great connections. You cannot be in control of every one of those things at any one time. You can however always work on your network. An accelerator connects you with people who help you seize opportunities and move fast when the time is right. Your connections help you discover weaknesses, and also opportunities. Knowing you need help is a strength, not a weakness.

Speaking of networks, StartupYard has quite a few corporations on its mentor list. Why do you focus so much on corporates during mentorship?

It’s a good question, and one we are asked a lot. Startups even tell us they would like to meet more people who are more like them. Usually when you meet a mentor, like at a competition or in a conference or at an incubator, or many other accelerators, they tend to be investors, or entrepreneurs.

It’s actually relatively easy to get a meeting with an investor or an entreprepreneur, which is why it’s easy to convince them to mentor startups. But, if you’re a B2B startup looking for early traction, you need to go door to door, talking to customers. And most of the time doing that, you’ll meet low level people.

What we decided early on, was to incorporate high-level corporate decision-makers, not just a lot of people, but leaders and C-level executives. The people who aren’t so much in the internal politics of their corporations, but are in a position to make things happen for startups. And we have many concrete examples of that working really well.

If the Chairman of the Board at a bank invites one of our startups to talk to his executives, that’s a meeting where people will be paying attention. It will have results. Not long ago, our mentors at Microsoft brought one of our startups to meet Satya Nadella, CEO at Microsoft, in Redmond. You won’t be able to name many early-stage companies who can get that meeting.

Yes, I was genuinely surprised when that happened too. The engagement from Microsoft was extraordinary. What do you think the corporate people get out of being startup mentors?

As it happens, those heads of industry share many of the qualities of startup founders. Ambition, drive, vision. So they love to be exposed to young founders and interact with them, not just about ideas, but about ways of working and thinking. The CEO of a global corporation told me a while ago that it’s his job to know what’s going on outside his company, because they are under constant attack from startups. You have to know your adversary.

We sometimes call corporations “dumb and slow,” but it would be a mistake to think that the people running them are either dumb or slow. Often the people at the top are thinking very far ahead, and when a startup is looking for the right stakeholder, the top is often the best place to start. Outside of our program, our founders would just never get meetings with such people. Even if they did, it would take years to get them all, and by then it wouldn’t matter.

I feel very proud of our mentor group. One mentor told me recently, that it was an honor to be included. That just made me feel very proud. We have spent years developing StartupYard as a platform, but we can’t rest on our achievements. We have to keep improving and building that network ever round, or it dies.

You said you can’t rest. What is your biggest difficulty when it comes to talking to founders about acceleration?

I would say we see two types. There is the founder who really understands the value accelerators can bring, and is eager to join. The other is the one who is more defensive; defensive of their ideas, of their priorities, of their sense of control and sometimes pride as well.

They may see joining an accelerator as a risk rather than an opportunity: that they risk wasting time. But often I think it’s just that they risk giving up control. Startup founders can be control freaks, as everyone knows, and we ask people to give up some of that control in order to grow, and that is a hard thing to ask of people who have always performed at a high level in their lives. Even the tiny amount of control we want them to give up can seem like a big, big change.

But if you’re so concerned about making the wrong choices, that you don’t act, then you risk never making decisions at all. Our biggest challenge is to show skeptics that the accelerator is called an “accelerator” for a reason, and it is not to slow them down or take up their time. That interrupting their process and refocusing them can actually save them time, and not waste it.

All our alumni will confirm this to you and in fact, they often talk about the empty period after the program. Once a founder told me he wished the program never stopped. And this was a startup which already had some revenue, but had skyrocketed with us.

You have to be a bit smart and a bit arrogant to start a business, but you need to let your intelligence prevail, and admit when you need other people. We all start as fools in life, and the only people who are doomed to remain fools are the ones who refuse to admit this, and don’t let themselves be questioned.

Some founders will tell us that all they need is cash.

That’s true. But when you ask them: “If all you need is cash, then why don’t you already have it?” They start telling you about their real problems – the reasons investors aren’t giving them money. It’s usually because they haven’t earned it yet. They don’t have enough data, they don’t have enough traction, or they don’t know how to sell to the investors.

You are absolutely right, and in an environment where cash is king, it’s sometimes difficult to explain to these people that to deserve cash you need to go through some steps.

What we find is that the act of just applying to StartupYard, and answering very specific questions about their business can help founders to realize what they don’t know. Even just forcing yourself to really answer these questions, you can begin to see that there are a lot of areas where you can grow and learn more.

So you need to bring people down a bit to build them up?

Yes. The acceleration process is challenging not just intellectually, but also emotionally for some people. But if you want to really run a global business, and meet your potential as an entrepreneur, that is the kind of challenge you will have to face, one way or the other.

We aren’t here to judge people and their ideas. The projects we look at are very early stage, and the people running them have a lot of room for mistakes and wrong roads. Our job as an accelerator and the job of our mentors is to support people who are taking these creative risks, exposing them to dangers and opportunities. We prepare them for taking good risks, and being aware of the dangers they will face.

Over the past 5 years, I have repeated certain things over and over again through every program. One of them is: “be careful, about what might happen if…”

To you, what is the biggest misconception about what StartupYard does for founders?

What I think some founders don’t expect is that the mentorship process, and the whole acceleration program, is aimed not just at their business, but at them as people. It would be waste of their time, and ours, if we spent our energy trying to make people into something they don’t want to be. So we pay very careful attention to discovering, with our founders, what it is in their hearts that they really are passionate about and want to do and to become.

So it’s not just about business for you?

There is a saying: “just business, not personal.” But I think this is very misleading. Growing a global business is all about who you are as a person. If you do something that is true to who you are, and who you want to be, that is infinitely better, for everyone involved, than if you’re just trying to make money. You can make money in a lot of ways, if that’s what you want. We want to help people to become their best selves as founders, and that means finding in them that special energy they possess that no one else does, and helping them to tap into it.

The biggest successes in business don’t think “It’s just business.” They know it’s about more than themselves or this one goal. It’s about relationships and it’s about being true to who you are.

Any last words?

Apply to StartupYard! Applications close June 30th, so I hope anyone who recognizes themselves in what we’ve talked about will consider applying now.

I can’t wait to be impressed.

You can now apply for StartupYard Batch #9.

  • Artificial Intelligence
  • VR/AR
  • IoT
  • Cryptography
  • Blockchain
Applications Open: Now
Applications Close: January 31st, 2018
 

Innovation Nest, StartupYard, CEE Allstars

StartupYard Podcast Ep. 3: Chris Kobylecki of Innovation Nest, Krakow

In late May, StartupYard took part, along with two of our alumni (BudgetBakers and Claimair), in a private conference for Central European Startups we called “CEE AllStars.” Put on with the help of Google’s Campus Warsaw, and led primarily by the team at the VC fund Innovation Nest (who co-authored an article with us a few months back about the Polish startup scene.

Cee AllStars

The unique event was put together by a group of accelerators and early-stage investors from Poland, Estonia, Czechia, and Germany (as well as a few other locations), in order to provide a refreshing alternative to for-profit startup conferences in which startups normally compete with a great deal of noise to talk to investors. This event had a 1:1 investor to startup ratio, and every single startup had to be personally recommended to attend by one of the organizing investors.

I sat down with Chris Kobylecki, of Innovation Nest, to talk about the event, and about his take on the Polish tech ecosystem and more. Here is our interview:

(Apologies for the audio quality here: the interview had to take place in a busy venue, but I did my best to make sure our voices were audible).

 

StartupYard Podcast Episode 2: Thomas Patzko of ImpactHub Zurich

This week I visited Warsaw, for Google Campus’s exlusive “CEE Allstars” event, matching investors and startups at a 1:1 ratio for 2 days of pitches and discussions. During the event, I sat down for an episode of the StartupYard podcast with Thomas Patzko, to talk about Impact Hub Zurich, growing startups in one of the world’s richest and most conservative countries, and fundraising for Central European startups.

 


Key Takeaways: 

  • Switzerland, with its high cost of living and conservative society, stigmatizes startups and entrepreneurialism
  • Risk aversion in Switzerland goes back in history to its political neutrality
  • The social safety net is built around employment, not self-employment
  • In Switzerland, salary levels are guaranteed according to a person’s level of education, offering graduates attractive salaries
  • Small traditional businesses are respected, and are in fact the backbone of Swiss society 
  • ImpactHub mentors its members on investor relationships – Thomas focuses on helping startups understand investor motivations
  • Swiss startups can suffer from “over-investment,” causing them to defocus in order to match investor benchmarks
  • Communities like ImpactHub are growing in their importance as a defense against predatory investors or wild speculation. 
  • ImpactHub encourages its members to tackle problems that are outside of their experience

About Tomas:

For Thomas work is more than just making money. That is one of the reasons why he has worked in multiple fields, including a private home for the aged, building and leading various country presences of an insurance corporation, and for nine years as an independent business consultant and coach. His journey of finding possibilities to facilitate real change and encouraging individuals to experience happiness in their professional lives, has led Thomas to the Impact Hub where he curates the relationship with corporate partners and conducts business development. He holds an M.Sc. in economy and business administration and has completed advanced degrees in coaching and sociology.

About ImpactHub:

ImpactHub is built around the belief that the world’s greatest challenges will never be solved by one person or organization alone. We need to work together.

ImpactHub has set out to build a thriving innovation ecosystem where people collaborate across organizations, cultures and generations to solve the grand challenges of our time. ImpactHub Zurich, among the largest of ImpactHub’s locations, has nearly 1000 members, and reaches 10s of thousands of people in Zurich and across Europe. It was founded in 2010, and has 3 locations in Zurich.

StartupYard Alumni

SY Alumni Talk about the Value of StartupYard for Them

This week, the popular podcaster Florian Kandler, of Startup Milestones, published another video with a pair of StartupYard Alumni from 2015: Jakub Ladra, of Claimair, and Ondrej Sedlacek, of Satismeter. Through the course of the talk, the two founders focus on the core value of acceleration at StartupYard, what their personal experiences were during acceleration, and what advice they would give to other founders thinking about joining.

The pair also jump into a discussion of what to look for in a good accelerator, and other tips for pre-accelerator startups.

StartupYard Alumni Talk Acceleration:

 

Key Takeaways:

  • Ondrej Sedlacek (Satismeter)
    • You need to find an accelerator that has the appropriate focus for you.
    • Mentorship is about recognizing patterns between different conversations, but also about learning how to communicate your ideas more clearly.
    • The biggest single value is simple: great advice. The impact of that advice from mentors, investors and the SY team is increased because of the compressed timescale of acceleration. You are forced to make decisions quickly.
    • Setting clear goals for yourself also helps you to use the advice of mentors and advisors better: focusing them on what you need.
    • Good accelerators attract investors who look at every startup in the program. Your chances for investment rise thanks to your participation.
    • The StartupYard program helped to narrow the focus on the product, and think in terms of execution and milestones.
  • Jakub Ladra (ClaimAir)
    • Mentoring is uniquely intense and important for building your network. Connections made there can last and change your business over time.
    • You talk all day about your value proposition, and this is a big challenge. We had no idea how intensive this repetition and iteration can be.
    • Management team meetings at StartupYard reinforce learnings from mentors, and bring up new unexplored ideas.
    • The act of prioritizing between ideas during “mentoring madness,” was deeply valuable. The ongoing discussions were a big challenge, but worth the time to go through.
    • The accelerator is especially important in helping a startup scale: laying the legal, technical, and strategic groundwork for sustainable growth.

 

You can now apply for StartupYard Batch #8.

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

Ada Jonuse: Lithuanian Startups Need to Think Bigger

 

I will be heading to Lithuania for the first time on May 25th to mentor startups and host a workshop at LOGIN Startup Fair, in Vilnius. As you may know, StartupYard has only ever accelerated one startup from Lithuania, the Slovak/Lithuanian team behind Feedpresso, the AI enabled news collection and curation app (which I also use myself).

Ahead of my trip, I caught up with Ada Jonuse, a well known figure in the Lithuanian tech community, and an advocate of women professionals in the technology sector. Ada has been an event organizer in Lithuania for many years, and has worked in the European Parliament, including as the head of the office of MEP Antanas Guoga from 2012-2014, where she organized #SWICTH!: international event on ICT and entrepreneurship in Vilnius. September 2016: with 10.000 participants, the event garnered the Guinness World Record of the biggest programming lesson in the world.

Here’s what she has to say about Lithuania, the tech scene there, and more:

Hi Ada, you’ve worked in the European Parliament, founded several IT education initiatives in Lithuania, and you “gather talented women in tech.: Tell us a bit about yourself, and why do you what you do.

Right now my main occupation and passion is being CEO and co-founder of Lympo.lt. Lympo is a platform which helps to find the best personal trainers near you and I have a vision that it will gradually evolve to a general global talent sharing platform. We want to make money-free exchanges possible with Lympo points underpinned by blockchain technology.Lithuanian Startups, StartupYard, Ada Jonuse

Actually, I always wanted to become a politician and this is why I returned to Lithuania after 10 years abroad. It did not quite work out as expected as the party I was running with for parliamentary elections got involved in a massive corruption scandal. During my years in the European Parliament I had an opportunity to work with a talented entrepreneur turned politician (and a poker star!) Antanas Guoga. He inspired me to join Lympo and this is how I found myself in a world full of new discoveries.

When I recruited first team members for Lympo in December, I had no idea what the difference between back-end and front-end is. 🙂 For me, leading a startup is a big responsibility and a commitment to never stop learning.

StartupYard is headed to Vilnius for the first time this year, for the startup fair at LOGIN. What should we expect from Lithuanian startups? What are their key strengths?

LOGIN is a great event and I am very glad you will be visiting Vilnius. You will be surprised that Lithuanian startups don’t actually have to be Lithuanian: their founders, CTOs and key developers might be coming from Ukraine, Belarus or Russia. This talent influx made the startup ecosystem in Vilnius much more interesting. You should expect tech-heavy companies focussing on providing various niche B2B solutions: it could be, for example, VR, big data, medtech, fintech. The key strengths are very talented engineers, hard working teams and drive towards perfection. On the other hand, they might lack business development or global strategy elements.

When people think about the Baltics and tech, it’s usually Estonia front and center. Would you say Lithuania is following in Estonia’s footsteps, or making its own path forward? What does Lithuania lack that Estonia has, and where are Lithuania’s advantages?

Lithuania is on its own path. In recent years, we concentrated on enabling fintech companies to thrive in Lithuania. The Bank of Lithuania did a great job and now the country has one of the most innovation friendly regulation systems in Europe. Another big topic is gaming industry. Lithuania attracts a lot of IT talent from Russia, Belarus and Ukraine. Great gaming talents could make Vilnius a strong gaming hub. What Lithuania lacks in comparison to Estonia is obviously a big success story like Skype and all the experience and connections that came with it. So far, we also lacked a proactive government that makes digital innovation its top priority.

Lithuania is a small country, and sadly many Europeans don’t know much about it. What do you wish more of the European community knew about the character of the country, the people, and life in Lithuania?

It is natural that a country of 3 million people is difficult to remember. I wish Lithuania was known more for its amazing nature. We have superb quality air, water, lots of space and fresh and healthy natural food. I love gathering wild berries in the endless forests of Lithuania. It is such an exceptional experience. Most people in the world are deprived of these crucial elements of good life. I started appreciating this a lot after my traineeship with the UN in Kathmandu, Nepal, which is one of the most polluted Asian cities.

Estonia has cultivated a strong reputation for an innovative government, in addition to the private tech industry. Has this had a big influence Lithuania as well? How does the government relate to the tech ecosystem?

Lithuanian government is very innovative in the fields of e-government and digital services for citizens. This works great. Much better than in the majority of EU countries. However, on the larger scale I miss more strategic government actions. Let’s take education: IT education in schools is old fashioned and starts way too late. At the same time, there is a huge lack of developers in the country. I personally constantly struggle to find people. Therefore, I co-founded an initiative to provide every Lithuanian fifth-grader with a BBC micro:bit microcomputer in 2017. Lithuania is celebrating 100th anniversary of modern statehood next year and this will be our gift for the upcoming 100 years!

On the same theme, how does Lithuania compare with the rest of Europe in terms of conditions for entrepreneurs, in things like taxation, bureaucracy, and legal complexity? 

Within Europe I had a chance to live in Germany, Belgium,  the UK and Italy. I dealt with bureaucracy in all these countries. Now, back to Lithuania ten years later I realize how simple our bureaucratic system is. It took us less than 2 days to establish a company and we didn’t use any paper at all! When it comes to taxation, as an entrepreneur I have one single wish for the Lithuanian government: tech companies must have tax exemptions for the first year. In order to pay an employee 1500 EUR I have to spend 2600 EUR. This is killing startups.

As mentioned, you founded W@Tech, a platform for professional women in tech. Would you say the Lithuania and the Baltic states generally are doing better, or worse than the rest of Europe when it comes to being inclusive?

I am right now part of an amazing project – Women Go Tech mentorship program which connected me to a wonderful mentor Darius Montvila. The very fact though that this program exists shows that we lack women talents in Lithuania as well as in the rest of the world. Having in mind that women are top users of many tech products, from social media networks to e-commerce platforms, it is staggering that only 17% of startups have female founders.

W@Tech aims to make these names known and show more role models to inspire younger generation. Together with W@Tech, I plan to organize a conference on VC startup financing in Berlin this autumn. It will be almost impossible to find female VC speakers, but we will do all it takes to at least uncover some names.

What would you say are two or three of the top challenges for Vilnius as a tech ecosystem today, and what are local entrepreneurs, investors, or the government doing about them?

Number 1 challenge is a lack of global mindset and network. There are so many startups that aim to operate in the Lithuanian market. It is simply too small. Entrepreneurs don’t have connections to big tech hubs like Silicon Valley, London or even Berlin. Number 2 challenge is related to that. It is a lack of big ambitions. As access to finance is difficult, startups must make money as soon as possible, but they need to find a business model and grow first. Big ideas have to find markets for their expansion. Government played an important role in securing more IT talent by making visas for non-EU citizens easier. We even have a startup visa now, so the whole startup can migrate to Vilnius with the assistance of the city and the government.

Big ideas have to find markets for their expansion: @adajonuse on #Lithuania #startups Click To Tweet

You can now apply for StartupYard Batch #8.

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

For you, what are the two or three biggest successes in tech to come out of Lithuania in the last few years? What parts of the tech ecosystem show the most promise going forward?

 

One of our great successes is  a mobile social marketplace for secondhand clothing with more than 11 million users and its top market Germany. Actually, the co-founder and CEO of Vinted, Justas Janauskas, is advisor to my company Lympo. We learn so much from Justas. I believe that more successful companies should mentor young startups in Lithuania. [Vinted secured 27M Euros in VC funding in 2015]

I also admire Trafi – a public transport app based on machine learning, data from the crowd and self-learning. It was the official public transport app for Olympic games in Rio. Last year, Trafi launched a partnership with Uber for connecting public transport with Uber services.

When it comes to fintech, I have to mention the Bitcoin wallet SpectroCoin. It has achieved great results last year.

Top 3 #startups in Lithuania to watch via @adajonuse: @trafiapp, @vinted and @spectrocoin Click To Tweet

It is a bit unfair, but I must mention two exciting companies I work with myself: PM Screen producing 3D holograms and interactive screen apps with amazing projects in the US and Dubai; and a.lot parking – a parking technology company that aims to transform parking industry in the US. With license plate recognition technology so common in Lithuania, we want to ensure seamless parking experiences and even enable everyone to rent out their private parking space in a garage.

So, you see, the variety of companies is huge: from marketplaces to machine learning and fintech. And then there is a big lot of niche B2B tech startups working with big data, sensor technologies, 3D printing and much more.

What would be your 3 top reasons for visiting Vilnius (or other parts of Lithuania), and what are a few things a visitor simply has to do there?  

 

I love Vilnius. It is my home town and honestly one of the best places in the world. Vilnius has a charming medieval old town, a great bar scene and vibrant cultural life. People here might not smile a lot, but they are very helpful and sincere once you get to know them a bit better. I would propose to discover some great street art and the atmosphere in the upcoming part of the town, Naujamiestis, close to the train station; to take a balloon flight during one of the fantastic summer sunsets and to simply try to get lost in the narrow streets of Vilnius. You will discover so much.

SY Podcast: Mergim Cahani, Founder and CEO of the Fastest Growing Tech Company in the Balkans