StartupYard’s Viktor Fischer on Quitting Your Job, and Overcoming Fear

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Hi Viktor. You’ve had a really interesting career, co-founding Innovatrics a decade ago, and most recently becoming a junior partner with McKinsey and Company. Can you tell us your personal story as an entrepreneur?

Hi Lloyd – sure, thanks for having me.

When we founded Innovatrics in 2004, I had no clue how to build a business. We created a software development kit around a fingerprint algorithm, put it online and waited to see who would buy it. When after 2 weeks no-one replied, we started to think about who might be the customer, what were their needs, what was the right product, what was the right pricing, and how we would sell it.

Early on we copied competition (copying is good), and negotiated licensing deals with major biometrics players such as Bioscrypt and CrossMatch – to survive. Over the next several years we found our niche: high-speed AFIS (Automated Fingerprint Identification Systems), defined the target customer segment. We fine-tuned the pricing and focused on the most efficient marketing & sales channels. Last year Innovatrics won Deloitte Top 50 in 2014 for its 344% revenue growth and last week was designated IT firm of the year in Slovakia. I am congratulating the team for those fantastic achievements.

After 5 years at Innovatrics, I decided to pursue an international MBA to grow my network and then entered McKinsey. Surprisingly, although McKinsey works for corporates, it follows a very entrepreneurial way of working. Projects (called “engagements”) are delivered by small teams (2 to 3 people full-time supported by experts and senior leaders), who work by quick iterations with the end product in mind (similar to “scrum methodology”). There is flat hierarchy and even junior members are encouraged to disagree with the most senior partners.

Aside from consulting, you are also an active angel investor. How do you pick your investments?

I only have 3 criteria: First, would I be a user of that product, and would I be excited to use it? This is my way of validating the value proposition.

Second, I need to know the management team, and have them be introduced by a person I trust.

Third, I need to have the knowledge I can use to help the startup. In broader terms, anything commercial, and in narrower terms, anything related to defining value proposition, validating product/market fit, modeling financial plan, raising funds, orchestrating B2B sales, or expanding internationally.

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Fischer chats with fellow StartupYard mentor Ondrej Bartos at a StartupYard event

Have you ever broken one of those rules? If so, what was the result?

Yes, sometimes an edge in 1 or 2 criteria can balance-out the 3rd criteria. For example, recently I invested in MPower Financing via Angel.co. MPower provides loans to US university students coming from ethnic minorities.

Although I would not be a user of such a product, I like the mission of the company: I believe funding should not be a barrier to education. And I know the founders really really well (both CEO and CTO are my MBA classmates).

You recently left McKinsey to open your own club/bar, and focus on startups. What motivated the move? What will your club be like?

:Laughs: how much time do you have? I can talk for hours about this.

I think we do our best job when we do something we love (call it passion). There is one way that really worked for me to find that out: Think that tomorrow is the last day of your life. Really. Then imagine:  If that was the case, what would you truly like to do today?

My answers were: A) go for a drink to a nice place with friends, and B) help startups grow. So I left the corporate job and bought an old but legendary nightclub called Meloun. The idea is to create an ultra-lounge like we all miss here in Prague. An exclusive place with great drinks and great music for a fantastic night out. It will be kind of a secret place so I cannot say more about it at this stage – sorry!

To help the startups, I am becoming more engaged with the teams, helping where necessary depending on the stage of the company, and more engaged with the local entrepreneurship community (including Startupyard).

Can you tell us the story of your favorite investment, and, if you have one, your biggest investment mistake or failure?

I don’t have a favorite investment – all my startups, those I invest in or simply advise are like children – no one is preferred.

Failure? Probably those I decided to pass on (yes, I’m thinking Gjirafa), or those where I miss the team’s engagement. There is nothing more demotivating than a non-motivated team. There are two mindsets with which a company is created: either to be a lifestyle business, or to build a company changing the world. There is nothing wrong with either of those. But it needs to be clear from the beginning to the team, the investors and the advisors.

You are an active StartupYard mentor, and you hosted a workshop with us this year. What motivates you to work with startups in your free time?

My sole motivator is to help startups avoiding mistakes I made. Whether it is in their value proposition, defining a target customer, pricing structure, international expansion, or even personal work-life-balance and facilitating discussions between shareholders. I have scars on my back in all these areas. I want to help people avoid getting a divorce, arguing with business partners or putting thousands of work hours into a feature that is not needed.

Do you believe that successful Czech entrepreneurs like yourself are giving enough back to the startup ecosystem in terms of attention, mentoring, and investment?

First of all, I am Slovak. Just kidding, I miss Czechoslovakia and I believe the countries together could again reach the 10th place in industrial production they had in 1938 – although in different industries :laughs:.

It will not happen however without the government’s support. When founding Innovatrics, we received around 150 thousand Euro from the French government to get us up and running. Although there is a risk to receiving government funds (often startups use that funding to delay product introduction to the market), there is an improvement in Government funding: the Czech government spends ~2% on GPD on R&D and Slovak government spends ~1% on R&D versus the US ~3%.

I know I am not answering your question, but I don’t know yet whether local entrepreneurs are helping enough. I know some of them invest through [prominent venture firms] Credo and Rockaway, or directly, and they mentor via Startupyard. But I don’t have a benchmark. It would be great to compare for example the amount of Czech angel and VC funding to overall angel and VC investments in the UK, and US, but I don’t think there’s a clear benchmark.

What is a piece of advice you find yourself giving over and over again to startups? What is the hardest piece of advice for startups to really listen to?

Overcome fear. Often I see startup entrepreneurs doing what is easy: sitting behind a computer developing the next feature set.

Call a prospective buyer or an expert to get early feedback. Find an expert via LinkedIn. Send the deck or a link to the demo and set-up a call. There are plenty of people out there who would help you. Doing it you have nothing to lose. Not doing it, you lose the opportunity to score your first customer or a future team member.

Sometimes it feels  the hardest part for startups is to listen. Whether the founders are really able to listen, hear, reflect and incorporate the advice is what I am looking for during interviews.

Your career has been split between The Czech Republic, Slovakia, France, and recently Switzerland. How do you view the development of startup culture and investments in these different regions in recent years?

I cannot compare yet. But what I really like about the investment culture in other countries is the humility with which the investors and advisors help the entrepreneur. An entrepreneur is the shit, and our only mission is to help her succeed while increasing her self-confidence. Not the other way around (ie beat her idea and her self-confidence to death).

Are there things that bigger economies like France could learn from the startup and investing cultures in Slovakia or the Czech Republic?

I like how some of the local VCs really help the entrepreneurs think about the business during the investment process. They help to define and validate the value proposition, set up pricing, create financial model, key KPIs and develop a first 100-day plan. This process is beneficial to both parties and if I were the entrepreneur, I would embrace it fully.

Andrej Kiska recently told me in an interview that Czech (or Central European) investors are not as conservative as their reputations suggest. Do you agree with him?

I agree that the mindset is changing. That’s good. From my experience however, even as recently as the Webexpo couple of weeks ago, I noticed some investors using traction as their investment criteria (quote “For us to invest, you need to have customers. At least one.”) I think people should be the first criteria of choice and overseas that is understood.

What about StartupYard makes you keep coming back? How do you hope to have an impact on us as and our program?

This comes to my 2nd passion: helping startups grow. StartupYard is the largest local accelerator. Still however, some people do not know it. David Semerad from STRV mentioned during his talk at Webexpo that “YCombinator is like StartupYard but million times bigger”. I would like to help StartupYard bridge that gap, by making connections to  the international market stronger and by voraciously helping startups export. If we’re Czech only, we will not be successful and our startups will not be successful.

StartupYard FastLanes two Startups from Krakow

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We visited HubRaum in Krakow last week, and “FastLaned” two very interesting startups while we were there. This was the penultimate stop in our tour of 6 cities, including Pristina, Sofia, Bucharest, Prague, and next week, Warsaw.

While it was tougher to generate interest from Polish startups in StartupYard, we had expected this. StartupYard has never accelerated a Polish startup, and part of the reason is that Polish startups are a bit more spoiled for choice than their counterparts in Central and Eastern Europe.

But we encountered the same kinds of issues in Polish startups as we do all over Central Europe. Just like Romanian, Bulgarian, and Kosovan startups we’ve met, as well as our own Czech startups, communication and positioning of global tech products remains a failure point for Polish startups as well.

According to several of the mentors I talked to a HubRaum, the situation is not always helped by the fact that Polish startups are in a much bigger market than their Czech counterparts, meaning that they can avoid the problems of international competition for longer.

Accepting the Premise of the Question

One trend that I’ve noticed throughout our roadshow, and which was on particular display in Krakow, was founders’ generally being unequipped to answer doubts or hostile questions from the audience. We often call this a “non-question question,” and it usually consists of an audience member’s opinion –always hostile to the general idea or area of the startup– followed by a sort of “what do you think about that,” phrase to make it look like a legitimate question, rather than a statement.

For example, we had one pitch where a startup was working on a live-streaming social application for events. The question came like this: “Don’t you know that there are serious privacy and copyright concerns when it comes to live streaming? Don’t you worry that you’ll be sued?” This is marginally a question, but it was obvious that the person asking it was down on the idea, and wanted to point out a “fatal flaw” she had discovered. This is often the case: a doubter seizes on one issue surrounding the technology or the business, and seems to declare that therefore it will never work.

There are two ways to answer a question like this, but most startups don’t know them. First, you can accept the premise of the question, meaning that you agree that the problem does exist as described, and then talk about how and why that problem can be overcome. This is a difficult way to answer a non-question, because it acknowledges that the doubter is correct, and then takes an uphill route to show why this doesn’t matter as much as they think.

In my example above, the founder could state that while there are privacy concerns, the app would somehow have privacy protections built in, or would not be allowed to be used in such a way as to disrupt anyone’s privacy. A similar answer might be found for copyright concerns– perhaps there is a legal reason why livestreaming events is considered legally ok, or perhaps there is another solution.

Don’t Accept the Premise

The second way, which is much safer but less often practiced by startups, is to not accept the premise, and answer the question on your own terms. That answer looks like this: “this is a new area of technology, and concepts of privacy and copyright are quickly evolving. Clearly livestreaming will be an important area of innovation in the future, and we are working on the best and most responsible ways of bringing that technology to our users safely and legally.”

This is a non-answer for a non-question, but it is also generally the best answer. Just as the questioner does not know what the legal or social situation will be in a few years, neither do you. If technologists and inventors let themselves be stopped by the possibility that what they’re doing may lead to some legal wrangling in the future, then they really shouldn’t be working on new technologies at all. Disruption is exactly what it sounds like- it doesn’t go with the flow.

“Nobody Will Notice”

This is probably the worst possible answer to a non-question, but it’s one we’ve now heard at least twice from founders pitching on stage. We hear it even more in private meetings with founders. The founder accepts the premise and accepts the outcome suggested by the non-question. There is nowhere else to go, so the founder simply says that for whatever reason, nobody will notice, and everything will be fine.

Obviously this doesn’t inspire much confidence. The founder is basically saying that their technology is non-disruptive, and will never be interesting or popular enough to bother anyone. If it is a live-streaming app, it will never have a lot of fans or make a lot of money, meaning that anyone with copyright or privacy concerns won’t have much to worry about.

That’s obviously not the road you want to go down when pitching your ideas. So go with option two, and don’t accept the premise of the question in the first place.

StartupYard FastLanes 4 Companies from Bucharest

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As part of our 6 city StartupYard FastLane tour, we visited TechHub Bucharest last week, “FastLaning” 4 companies, which is more than in any other city but Prague..” StartupYard has now FastLaned 15 companies in 4 cities, with two more cities, Krakow and Warsaw, coming up.

TechHub is an international ring of startup incubators, whose mission is to help startups “start up faster.” The space they have recently occupied near the center of Bucharest is perfect for startups. It’s compact, but with a comfortable atmosphere, and plenty of space for events, meetings, and work.

Energy And Atmosphere

Just as we had encountered in Kosovo and Bulgaria in the past few weeks, there is a very positive creative energy among Bucharest’s young startup community- a sense that anything is possible, and that growth and dynamism in the tech industry is just getting started.

There was also a healthy variety to the pitches we heard, and the founders we talked with while visiting over several days. We heard pitches in e-health, gaming discovery, fintech, e-commerce, and IoT, among other domains. Each of these ideas was original, and not a local “me too” version of a popular global product. Of the entrepreneurs we talked with, most had a global focus, or at least an eye towards international markets, which showed that Romanian startups are gaining the confidence and the appetite for the world tech stage.

“Cheaper,” is not the Pitch

A pleasant surprise for me on this tour has been that “the cheaper version of X” has not been included in any of the pitches we’ve heard throughout Central and Eastern Europe. A stereotype of only a few years ago, that this region produces cheap knock-offs of popular concepts, banking on the lower costs of development and deployment to compete with international products on the local level, seems to be fading quickly.

The region is of course still cheaper to develop in and represents a strong pool of low-cost talent for western companies, but the startupers we’ve met this year are not as interested in carrying over this mentality into their startups. Instead, they’re focusing on the quality of their products, and their ability to compete head to head in the global market on innovation and creativity. There are probably still many local clones, and they have their place, but significantly, these are no longer the companies coming forward to apply for StartupYard.

It’s Still All About Communication

George Dita, of TechHub Bucharest, who has also invited StartupYard back to participate in HowToWeb’s Startup Spotlight in November, made an interesting comment while we chatted about the local startup scene. “You can see this progression from West to East,” he said: “If you start in the US, or UK, the sales and communication skills are the strongest, but as you move East, that goes away. In Eastern Europe, technical talent is incredible, but sales and marketing are missing.”

This observation has matched our experience so far, but that is in itself a great opportunity for StartupYard. We can act as a gateway for the amazing talent and the ambition of Central and Eastern European startups who lack the background, culturally and experientially, they need to compete with other global players. We see ourselves in that role even more these days, given the success of TeskaLabs, a StartupYard company that was recruited in TechStars London while still attending our program.

As we say, you can teach an engineer sales, but it’s much harder to teach a salesman how to think like an engineer. Startups in Central Europe have tech talent coming out of their ears. The only barrier to competing in the west is confidence and competence in communicating, and selling their ideas. We hope to continue replicating successes like TeskaLabs in the future.

We think it’s very important in today’s startupland to have sales and marketing as fundamental part of the team and the company from day one, but we can work with teams that need to foster that part of their business into something that really performs. They only have to get why it matters, in order to learn how to do it. That is a transition we have seen happen with startups from this region.

What we see, time and again, is entrepreneurs who can’t communicate their ideas effectively, but more and more, we see that they are aware of this, and are working hard to get better at it. That tells us that there are many exciting things coming up from Eastern Europe in the future, and we’re excited to be in the middle of the transformation.

StartupYard FastLanes 2 Startups in Sofia, Bulgaria

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This week, StartupYard director Cedric Maloux and I spent two days in Sofia, Bulgaria. This was stop number 2 on our 6 city tour of Central Europe for StartupYard FastLane, which kicked off in Prague this month. We visited Kosovo last week, and we have now FastLaned 11 companies so far. This was my second visit to the Bulgarian capital this year, and as before, I was not disappointed by the local startup scene.

From our FastLane event at Vivacom Art Hall, an exhibition and startup space which has been built in the former headquarters of Bulgarian Telekom, the former state telecom company, we selected two teams to join the StartupYard FastLane. These teams will now skip the first 2 steps of the StartupYard selection process, and they’ll have a much better chance of being among the startups that reach the final interviews with StartupYard.

StartupYard has never taken a team from Bulgaria, so we were somewhat unclear on what to expect from startups in Sofia. Chris Georgiev (@chrisGeorgiev), of Imagga and StartupBG, who organized the event and helped attract the startups we chose told us that local startups were “a little spoiled,” due to fairly good access to local programs like incubators and grants for startups.

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Still, we were very impressed with the startups that pitched us, and we noted how friendly and open the attitude of the crowd was. About 60 local startupers and entrepreneurs showed up to hear the pitches.

What Pitching is Really About

During this tour, and throughout the 2 cohorts we’ve done, we’ve noticed a pattern that helps us identify really interesting founders.

First of all, the idea that the founder is pitching really doesn’t matter much, when it comes to which founders stand out. Of course we want to hear pitches that are about tech products, but beyond that, there is no keyword or area that is more likely to make a startup interesting.

Sometimes you hear that a space, like security, is “hot,” and there are a lot of companies being funded, but really, it’s just that there are a lot of problems in that space to solve, and so there are a lot of pitches about products in that space. Some are good, many are not.

So if it’s not the idea that is most interesting, what is it? For us, it’s about the founder’s ability to communicate his or her solution to a real problem. If a founder can do that in a way that makes the solution seem obvious, even inevitable, then that is a very interesting founder indeed.

But we don’t expect founders to be born with those skills. We only expect them to be able to learn them, and grasp their importance.

That’s why during our tour, we are meeting with as many of the teams as possible before the pitching events, to give them individual training on pitching, and to watch how they react to our input. The founders who can implement simple feedback into their pitches, and improve dramatically over the course of a single day, are the types of founders we want to work with.

The results are pretty surprising. In Sofia, for example, one founder, the rare business oriented founder with a lot of experience in marketing and communications, at first approached the pitch training with some obvious confidence. He knew sales, so this was going to be easy. But as we worked through his position statement (the core of the pitch) it became clear that his sales skills weren’t translating to pitching as he expected.

What impressed us about that founder, and the reason we FastLaned his startup, was that he took that experience, and built on it, delivering a far better pitch than he had started with. What is often surprising is that after only a few hours of work, founders who were hopeless at explaining their ideas to others can become so much better at it. We might not end up taking that startup for any number of reasons, but the reason won’t be because we don’t understand his idea.

At every one of these events so far, people who have attended pitch training with us have told us how much it helped them to really understand how to communicate their ideas. Imagine what 3 months of acceleration can do.

After all, as founders, this would be their daily job in a successful company. It’s more than an exercise- it’s what they will have to do in order for the company to grow. Talking to investors, hiring new people, and signing new clients, is all about making them believe in what you’re doing. That’s all about pitching. So we look for founders that can embrace pitching, because it will be central to everything they do going forward.

This also confirms a suspicion we had last year, that we had rejected many applications that might have been very good startups indeed, simply because they weren’t yet able to relate the ideas in a clear and persuasive way. That shows that a tour like this one is probably more important than we even suspected.

This reaffirms how important pitching events can really be. We can’t tell, from a written application, if a founder has the ability to grow in this way. Some really don’t. Others surprise even themselves.

The most interesting founders, in my view, are the ones who can grasp the underlying importance of the exercise- which is to define, in as simple and complete a way as possible, what their company will do to benefit the world. It’s not about the ideas being presented, but the ability of the founders to communicate to people they don’t know; to bring themselves to the level of their audience, rather than to find an audience that is already at their level.

Moreover, developing a killer pitch is an exercise in self-examination. Do you really believe in this solution? Is your approach really as simple and as beneficial as you’re claiming? Or is it difficult to talk about because it’s not as easy as it should be? In the process of developing their pitch, founders have to address those questions over and over. Ultimately, if you can’t find some way of selling your ideas, maybe they aren’t good enough to sell yet.

A founder who is humble and self-aware, and also confident enough to address these problems head on, and solve them, is an ideal candidate for StartupYard. The idea can and will change, but the person doesn’t change as much. If they aren’t flexible and self-aware when they start, there isn’t much we can do to make them more flexible and self-aware at the end of the process. We can foster good habits, but it’s much harder to kill bad ones.

More than anything, I see the failures that we have had at StartupYard have been connected with this. The idea was good enough, but the founder wasn’t flexible enough to adapt it, and make it really great. On the flip side, our biggest successes in the last few years have been from founders who could accept change, and were not afraid to question themselves.

We talk about “passion,” quite a lot. Passion is essential. But passion doesn’t mean blind belief. It means commitment, and ultimately, the willingness to do what is necessary to succeed. Often, when we hear: “I will do whatever it takes,” what that really means is: “I will do whatever it takes, except changing my mind.” But that last part- the willingness to adapt, is really the only thing that accounts. It’s the only thing that separates most entrepreneurs from the great ones.

The opportunity to really see what passion means to these founders, on an individual basis, has made this tour worth our while so far.

StartupYard Fastlanes 2 Companies from Kosovo

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Call it tiny, but don’t underestimate the young republic of Kosovo, where StartupYard managing director Cedric Maloux and I spent two amazing days and nights last week, meeting startupers and young people who are full of energy and promise for the future. Here are a few of the takeaways:

A Beautiful Place to Visit

Set aside your assumptions about the Balkans. While Pristina, the capital, doesn’t have the hallmarks of an old European city, with ancient gardens and cathedrals, or many quaint old cafes on stony streets (streets that aren’t paved are dirt tracks), it has its own kind of weird beauty. The city is a mix of the not-so-old, and the brand new. A crazy quilt of apartment blocks, avenues, standalone restaurants, and gleaming hotels.

We were told during our visit that remittances from the Albanian diaspora are one of the main sources of capital in the country. That money is proof of Albanian and Kosovan success around the world, and a sign that Kosovars and Albanians, by and large, are committed to returning home. You can see the effect of capital returning to the country: new construction is everywhere, and restaurants and cafes have sprouted on every street. In just a few days, we met dozens of people who had been educated outside the country, run successful businesses and made money- and all had come back.

Kosovo, perhaps surprisingly, considering its history of ethnic conflict, is rated among the freest and most equal nations, particularly majority Muslim nations. Over 95% of Kosovars are counted as Muslims, and yet the country is officially secular, with freedom of religion upheld for all.

Young and Hungry

With an average wage of just 300 Euros a month (Kosovo uses the Euro, although it is not a Eurozone country or even a member of the EU), the country’s standard of living is obviously lower than in the EU. There is also a massive trade imbalance, with the country importing far more than it produces.

But that situation has been improving, with 5% growth in GDP per year between 2003 and 2011. The private sector, virtually non-existent in 1999, has grown steadily. We encountered a strong sense of optimism from the entrepreneurs we met, mostly at ICK (Innovation Center Kosovo), a non-profit business incubator which is funded by the Norwegian Embassy, among other benefactors.

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The country is also young, with the fastest rate of population growth in Europe, at 1.6%. This demographic pressure, plus a high rate of unemployment, means that many young Kosovars are experimenting with new business ideas, and looking to bring foreign capital and foreign business into the country.

A Lot to Learn

Cedric and I had lunch with Driton Hapciu, an ICK Board Member, and Renaissance man in the Kosovan tech industry. An electrical engineer by training, Hapciu was among the first to found an IT firm in Kosovo, long before the country formally existed, back in 1994. He pursued Peace Studies in Norway, and now, he says: “I’m just here to help.” He talked about the need for practical business experience and programming skills among young Kosovan engineers, who are educated heavily in math, but leave university with few real job skills.

Hapciu was also among the very first mentors to advise Mergim Cahani, in the earliest days of Gjirafa before the team joined StartupYard, and became a growing force in the Albanian and Kosovan tech scene. Every entrepreneur we met knew StartupYard because they knew Gjirafa, and most were eager to follow the search company’s example.

Small Fish Attract Big Fish

One gets the sense when talking to Kosovan entrepreneurs, that anything is still possible on the Albanian web. Basic services that Europeans and Americans take for granted have not been implemented yet. Online payment systems, e-commerce, online advertising, and marketing are in their infancy. There is not even a dominant platform for business listings in the country, and until the advent of Gjirafa, there was no online access to the country’s 100,000+ bus routes and other transport information.

I meet with a Kosovan startuper to talk about his project.

I meet with a Kosovan startuper to talk about his project.

Indeed, we were understandably skeptical when we first heard the pitch for Gjirafa, a “Seznam for the Albanian Web,” but meeting with tech entrepreneurs in Kosovo, one can see that these deficiencies also represent enormous opportunities. In what other country in Europe can a startup reasonably hope to become the gateway to the web for the next generation? That position is filled almost everywhere, by the likes of Google, Facebook, or other global players.

Their entrenchment also means that few companies seriously challenge them to keep innovating in smaller markets like Albania and Kosovo- I think this is why Google has ignored the region until now. And competition on the local level is of course good. Just ask the Czechs, who, thanks to Sezam.cz and its serious challenge to Google’s dominance, benefit from the fight to win market share with better products, faster speeds, and more alternatives. Google is rumored to spend more on development per user in the Czech market than in any other market in Europe. That’s no accident.

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Cedric Maloux gives his pitch training workshop.

With plenty of room for local growth, startups in Kosovo hope to prove that their innovations can compete on the global stage. While many of the entrepreneurs I met with during our 2 days there were eager, they were often naive about the demands of the global market. Instead of innovating around a single vertical, trying to solve a single real problem, many presented amorphous business concepts that incorporated many different solutions for a whole host of issues.

This is not surprising, given that they’re dealing with a market in which there are no dominant solutions for many common problems. How can a startup based on retail operate in a country where e-commerce has almost no penetration? And what good is an online media business if it doesn’t have an ad-platform that can support it? The temptation is to try and re-invent e-commerce and advertising in order to have a market to serve. My hope is that players like Gjirafa will be able to provide a sort of guiding light for other local startups, encouraging them to work in narrower verticals, and providing a broad basis for the growth of online business in the region.

So keep your eyes on Kosovo.

Photos thanks to Innovation Center Kosovo (ICK)

StartupYard FastLanes 7 Companies From Prague

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Last night,  7 startup teams pitched StartupYard in front of an audience of about 70 visitors at Node5.

An Intro From Cedric Maloux

The event kicked off with an introduction from Managing Director Cedric Maloux, who told entrepreneurs in the audience: “If you have an amazing idea for a startup… kill it!”

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He went on to say that only great ideas which refuse to die and never go away, are the ones entrepreneurs should choose to work on. If you can’t find a reason why your startup idea won’t work, and neither can your friends or anyone else you consult, then it might be something that will succeed.

Cedric introduced the StartupYard program, and talked about our application process, which we share with a syndicate of 5 accelerators in CeedTech.

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FireSide Chat with TeskaLabs

Ales Teska, Co-Founder and CEO of TeskaLabs, sat down with me to talk about moving his startup to London and attending TechStars, as well as raising 337K this year.

He discussed the differences between the two programs, and urged B2B businesses to base their technical operations in Prague, but considering also doing business, particularly sales, in London. He pointed to the openness in the UK business landscape to startups, and the speed of dealmaking in the city, where, he said, you can do in a week what would take a month in Prague.

Cedric introduces Ales Teska

Cedric introduces Ales Teska

At the same time, Teska noted that the StartupYard program was the perfect preparation for TeskaLabs’ move to London, and that his team would not have been prepared for the harsher TechStars environment without having attended StartupYard first.

He described TechStars as a higher pressure, “sink or swim” environment. Whereas at StartupYard, our team is here to make sure startups are making good choices, and have all the information and guidance they need, TechStars leaves teams to fail or succeed on their own- only keeping them aware of their progress.

At the same time, TechStars has a more intensive mentoring period, involving up to 7 or 8 meetings a day with mentors, nearly twice what Startups experience in Prague.

He also described the feeling of “mentor whiplash,” that his team has experienced since leaving StartupYard. Mentor whiplash, he said, is the feeling of being advised to do completely contradictory things by equally smart and persuasive mentors. “When a mentor states their opinion, it’s as a fact,” he said, “it can be very difficult to deal with all of these conflicting ‘facts.'”

The Pitches

7 startup teams pitched us last night, and we were impressed with all of them. With little prior experience, and not much time to prepare, all 7 entrepreneurs who pitch to us impressed us with their poise, and their enthusiasm.

So, without much hesitation, we agreed to accept all of the teams from the event into StartupYard Fastlane. They will proceed past the first few rounds of evaluation, and will have a chance to present their startups to our full selection committee, a mix of StartupYard stakeholders and advisors.

Here is a collection of photos from the pitching portion of the event:

What’s Next?

StartupYard will host FastLane events in 6 more cities: Budapest, Sofia, Pristina, Bucharest, Warsaw, and Krakow. If you’d like to pitch us in one of those cities, sign up using the form below, and we look forward to meeting you!

Sign Up to Pitch at a StartupYard FastLane Event
 

Update! StartupYard FastLane: Pitch Us in one of 6 Cities in September

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The time has come! Today, we kick off our 6 city tour of Central European capitals, visiting incubators and workspaces in the Czech Republic, Romania, Bulgaria, Kosovo, and Poland.

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Sign Up to Pitch at a StartupYard FastLane Event
 

Startups in these countries will have the unique opportunity to pitch StartupYard’s team in person, and jump ahead to the final rounds of selection for StartupYard 2016, kicking off in January.

After applications close November 1st, StartupYard will select up to 10 teams to join us at StartupYard 2016, where they will receive 30,000+ Euros in investment, and over 500,000 Euros in perks, as part of an intensive, 3 month mentorship based program with dozens of workshops, and meetings with scores of mentors. Our program has accelerated 35 startups since 2011.

StartupYard, Fastlane 2016

StartupYard is expecting hundreds of individual startup applications from about a dozen countries for our 2016 cohort. We work hard to make the application process as fair as possible, but that doesn’t mean that it’s a perfect process.

Through a written application, much less one of hundreds like it, it’s very difficult to judge the passion, excitement, intelligence, and flexibility of an unknown startuper.

StartupYard is forced every year to relegate the vast majority of applications we receive to the dustbin, usually without ever meeting or really getting to know the applicants. We have to make very difficult decisions about hundreds of startups, based on very little information.

We probably miss out on amazing startups every year, because we don’t have time to get to know them all.

And that’s a shame. We don’t believe that a startup’s success in our program and in growing globally is necessarily connected with their ability to make themselves sound good on paper.

The decision to accept a startup into our program can have a massive impact on their future, but paper applications can’t communicate passion, people skills, poise, and responsiveness to feedback. These are things we only learn about the relatively tiny number of startups we interview in our final selection rounds.

We owe the startup communities in the countries where we recruit a fair shot at getting our attention. So we’re coming to you.

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Pitch StartupYard in Person: In any of 6 Cities

There will be 7 events, all in the month of September.

  • Prague, Czech Republic, September 2nd at Node5
  • Pristina, Kosovo, September 17th, at Innovation Center Kosovo
  • Sofia, Bulgaria, September 22nd  at VivaCom
  • Bucharest, Romania, September 24th with HowToWeb
  • Krakow, Poland September 29th at HubRaum
  • Warsaw, Poland, October 14th at Reaktor

How to Sign Up

Startups interested in pitching us at any of these events should sign up using the form below. Once we have verified that you meet the basic requirements to pitch us (that you are in our field, and other details), we will share your info with our local partners, and choose which teams to invite to pitch.

Sign Up to Pitch at a StartupYard FastLane Event

Even if you are not invited to pitch on-stage, this does not mean that you can’t meet us and pitch us in person. Some startups just don’t sound good on paper. That’s ok! We want to meet you, and we still want you to pitch us.

We’ll be in each city for at least a full day, providing time for you to do just that. The StartupYard team will host open hours in each of the venues we visit to give startups a chance to meet with us in person.

How it Works

StartupYard will visit 6 cities and 6 tech hubs such as incubators and workspaces (plus hold one event in our own city of Prague), where we will make ourselves available for a full day of mentoring, pitch training, and finally listening to the pitches of any local startups who are interested in joining our program and getting funded in 2016.

Local startups can choose to meet with us for mentoring and introductions, or come to pitch their startups in person, and talk to us afterwards. We will be providing constructive, experienced based feedback, in cooperation with our local partners in each city. These are not competitions, and there is no grand prize. However, they serve as an opportunity to grab our attention, as well as the attention of local influencers and investors who will also attend these events,

Those teams that impress us during this series of events will be invited to move directly from an initial application to StartupYard, directly to our final selection rounds, bypassing hundreds of other applicants in the process.

This is your chance to show us who you are.

Sign Up to Pitch at a StartupYard FastLane Event

Introducing: StartupYard Jobs

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Every week it seems, we get emails from local software engineers, marketers, sales professionals, and others hoping that we can help them find a new job.

At the same time, we regularly get emails from our startup alumni, complaining about how hard it is to find great people to work for them.

The solution is obvious. So we’re pleased to present: StartupYard Jobs.

This could be your desk. Or, you know, something nicer.

This could be your desk. Or, you know, something nicer.

StartupYard Jobs will be a continuously updated listing of available positions with the startups in our portfolio, including jobs in IT, engineering, design, marketing, sales, administration, and anything else that a startup might need.

Sign Up For our Newsletter:

To keep up with StartupYard news, including new positions at our startups, signup to receive periodic emails from StartupYard. We will never share your email address with anyone else.

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Central Europe Accelerator

StartupYard 2016 Applications Are Now Open! Mobile, Data, IoT

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StartupYard is happy to announce that applications are now open for StartupYard 2016. This will be StartupYard’s 6th overall cohort of startups, and Managing Director Cedric Maloux’s third.

Sorry! Applications are now closed

Applications Close November 1st, 2015

Applications will be open until November 1st, 2015, and as was the case last year, StartupYard will share an application pool with our CEED Tech partners. For startups, this means that all teams who apply to StartupYard will have the opportunity to list any of the CEED Tech accelerators as a “second choice,” and these accelerators will have the opportunity to evaluate those teams when and if StartupYard decides not to invite them to our program.

Acceleration Starts January 2016

Startupyard 2016

The application review process will proceed through November and December, with our selections being made by the new year. Selection will proceed from written applications, to intermediate steps which will be announced to the pool of applicants directly. At the end of the process, we will invite between 15 and 25 finalists to visit StartupYard, where we will make our final selections.

We have decided to make some changes in the way we conduct our selection process, in order to give a fairer and more complete opportunity to every startup that chooses to apply. These changes mostly apply to the middle of that process, where differentiating between startups that are ready for acceleration, and those that aren’t, is the most challenging. We’ll talk more about that in a future post.

As with the previous cohort, we will aim to select between 7 and 10 teams to invite to the program.

For some perspective on the final selections (and how difficult they can be), for the 5th cohort, we invited about 15 teams to final interviews out of a pool of about 240, from which we invited 9 to join the program. In the end, the cohort included 7 teams, of which one was subsequently fired, leaving 6.

It is an accomplishment to be selected for final interviews (less than 10% of companies are), and we do hope to see those who we selected last year applying again this year, if they are still interested.

€550,000 In Available Funding

startupyard 2016

Terms between each of the 5 CEED accelerators are similar, with €30,000 of seed funding available for each of up to 10 teams, per accelerator. For participation in the accelerator program, StartupYard takes a 10% equity stake in each of its portfolio companies.

As part of our program, StartupYard provides office space at our homebase Node5 for the full three months, meals for the first month of the program, dozens of invaluable, exclusive workshops from industry experts, including representatives of Google, Seznam and others, and more than 500,000 Euros in program perks, provided by corporate partners and sponsors like IBM, Microsoft, Mazars, SendGrid, Google, Softlayer, and many others.

In addition to the €30,000 available as part of a European Commission grant program called Fi-Ware, an additional €250,000 in follow-on grants (given free of any equity exchange) will also be available following the 2016 program.

These follow-on grants are given through the EC at the recommendation of StartupYard, and can be awarded in varying amounts, usually tied to the startups also gaining outside investments.

Data, Mobile, and IoT, Global Products, Platforms

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As in previous cohorts, StartupYard’s continuing focus will be on companies that leverage data and mobile technologies for products with global applications. We are seeking teams that have a proof of concept, and ideally are already working with a few customers, and looking to scale globally.

What does global mean? In general, it means that StartupYard accepts teams that are working on ideas which can be marketable and disruptive regardless of their geographic location. Language independent, and globally scalable products are our “bread and butter,” and a look at our most recent cohort gives an idea of the sorts of products that we might be interested in.

As you can tell from browsing our portfolio, StartupYard particularly favors companies that are developing unique and valuable platforms that leverage big data and are attractive to mobile users and enterprises.

Some of our biggest successes, including BrandEmbassy, Gjirafa, Travelatus, Shoptsie, Trendlucid, and BudgetBakers, among others, whose technologies now together serve millions of users worldwide, are SaaS platforms that leverage big data sources to provide value to businesses, as well as end users.

At the same time, StartupYard is not afraid of entirely new ideas, and we have considered and accepted startups in the past that are in an earlier stage of development, even without a working proof of concept.

If your team is hard working and passionate enough about your ideas, there is no absolute minimum requirement, either in your level of experience, or in your progress on the project you want to pursue. We invest in people, even more than we do in their ideas. So if you believe in yourself and your ability to follow your passion, then you should definitely apply for StartupYard.

IoT: Big Data Gets Physical

Finally, this year, StartupYard will also be welcoming teams with products in the realm of Internet of Things (IoT). While we are not a device accelerator, and so will not be focusing on design and development of physical hardware, we will consider teams with fresh and interesting ideas about leveraging IoT data and devices to make life better for users, or to help enterprises find new efficiencies.

Conservative estimates, including those of Gartner, suggest that the Internet of Things will encompass at least 26 Billion connected devices by the year 2020. Higher estimates reach up to 10 times that amount.

Clearly then, with an order of magnitude more devices connected to the internet than people in the next decade, there will be an increasing need for platforms and applications which are able to manage, control, analyze and utilize these networks of devices for a universe of new purposes. StartupYard is interested in your take on the future of IoT, and so we will be considering applications from this field with increasing interest this year.

B2B, B2C, B2B2C, Human-Centered

At the same time, StartupYard is most interested in projects that are “human-centered.” Instead of abstract or academic exercises employing IoT, or big data, we prefer projects that speak directly to the human experience, and to human behavior. How can we make people’s daily lives better– either in the way we work or live, or in the way we accomplish the simplest or most complex private tasks?

We have no preference regarding the market for these ideas, whether it is a B2B or B2C idea, as long as that market is a global one.

With one exception: We are not particularly interested in startups whose primary business model is advertising. Startups are much more likely to interest us if they have a transaction-based business model in mind.

Is your startup reliant on the local market, or is it globally scalable? Is it advertising based, or transaction based? Is it just a cool feature, or does it solve a real problem?

These are the questions that any applicant to StartupYard should ask themselves about their product ideas, because they are certainly the first questions we will ask about them ourselves.

Sorry! Applications are now closed

TeskaLabs Co-Founder CEO Ales Teska On TechStars and StartupYard; London Vs. Prague

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I spoke this week with Ales Teska, Co-Founder and CEO of TeskaLabs, We talked about TeskaLabs’ acceptance to TechStars London, their move to the UK, and their recent successful fundraising. Here’s what Ales had to say:

Ales, it’s been a big summer for you and your team at TeskaLabs. What have you been doing since leaving the StartupYard program?

Well, we were selected for Techstars London immediately following StartupYard, so we’ve been quite busy. We’ve opened a new office in Prague, where our development operations are located, and we’ve moved to London for the Techstars accelerator program. We plan to maintain our sales operation here [in London]. We have also finalized negotiations with a few existing clients, helping us survive this move to London.

But despite all this, I still managed to take a few days off this summer, which is very exciting!

The TeskaLabs team in the UK.

The TeskaLabs team in the UK.

The move to London was a lot of work in itself. Finding accommodation here is not easy, especially if you are working with a startup budget. We had to go back to our student years a bit, but that’s the price you pay, and we are all focused on the future.

We managed to rent a few rooms in a house in East Ham, near a tube station, so I am quite satisfied with the results.

Can you give us your impression of the TechStars London Program. How did it differ from your experience at StartupYard?

At first glance, there are a lot of similarities. The model is generally the same: a 3 month program, in 3 sections. We start with mentoring and networking in the first month, then the “build phase,” which involves a lot of workshops and practical knowledge, and finally a month or so of preparation for the Demo Day. That will be sometime in October.

But the similarities really ended there. The programs are quite different, but they complement each other perfectly, at least in our case. We’ve discussed the differences quite a bit in our team, and I must say it was surprising how different the programs really are.

The TeskaLabs team with other startupers from TechStars London.

The TeskaLabs team with other startupers from TechStars London.

First, I have to emphasize that StartupYard is a world class program- and that’s as honest an appraisal as I can give. StartupYard gives you access to knowledge and people like yourself and Cedric, who can share a great depth of experience when you need it.

Techstars, on the other hand, throws you into the deep water and makes you swim. They just make sure you’re swimming well enough and fast enough. You do a lot more things on your own.  Here too, mentoring has been faster and more intense. Whereas 3-4 meetings with mentors a day in Prague felt fairly intense, here we had 6 or 7 in a half-day. That’s very tough, mentally and physically.

But it hasn’t been all grind. Techstars also treated us to a resort weekend in the mountains with hiking and relaxation.

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Ales Teska on the TechStars retreat hike.

That said, again I found that to be a lucky and nice combination for TeskaLabs. StartupYard has a “softer” environment, where things are a bit more personal and you get more individual help. We needed that at the beginning. Techstars is harsher, which suits the business environment here. That’s a transition we needed to make, but I don’t think we could have gotten here without going through StartupYard first. A lot of the skills we are using here, we learned at StartupYard.

How would you describe your experience so far with running TeskaLabs in London? What are some of the striking differences between doing business there instead of in Prague?

I have a nice example from yesterday that highlights the differences. We launched a campaign targeting nationwide transportation and logistics companies recently, and we have already had a meeting with a large international logistics outfit. The very first meeting was concerning a fairly massive project.

Anyway, in Prague, I think it’s fair to say that this first meeting would have involved some skepticism, and action would have been much slower, or possibly non-existent. But this company said to us right away: “we are not afraid of startups. We know they’re a necessary part of the economy.” That’s a striking difference with companies in the Czech Republic.

There, you have pretty high barriers when it comes to cooperating with large companies. To them, startups equal small companies, and not “startups,” which can become big and influential, or which may have novel new processes and ideas that can revolutionize a project. So in Prague, we relied on personal connections and our reputations to get us deals. There was no other way that clients would listen to us or take us too seriously.

But in London, we have been able to establish real relationships with big clients, even through cold-calling. That’s something I can’t imagine happening in Prague, frankly. And because of that, and I know it sounds crazy, but we’ve been converting 100% of our initial meetings so far. There is very little wasted time, no excuses, and more appetite for cooperation and experimentation here. There’s no fear that a startup won’t be able to deliver or will be unreliable- these big companies are willing to accept those risks.

Will you maintain operations in the Czech Republic?

We will absolutely stay in Prague, especially as concerns our R & D operations. We also have important clients there, and hope to have more in the future.

Our sales operation will shift to London for now, and we plan to expand to Germany, Switzerland, and Italy in the near future (possibly as early as the start of next year). In London, it’s been very easy to increase our sales pipeline, even with only one dedicated sales person.

My sense is that we will be concentrating on this market until the end of this year, and opening a seed investment round in at about the same time. By then, we will have validated our model and ability to market our products.

Let’s talk about investment. You’ve raised nearly 350,000 Euros. How did you put together that round so quickly?

There were a few contributing factors. First, mobile security as a market is very hot at the moment, both with clients and investors. There’s an awareness among clients that they are not secure enough, and need to offer more robust solutions to their own users and clients.

From the investor side, there is an awareness of that need that is growing. When you can deliver a product that really works, it’s easy to sell right now.

Our team is another factor, and I think that’s very important. We started as more than just a technical operation. Sales and Marketing have been baked into our team since the beginning, and that has shown investors, as well as clients, that this is not a purely technical operation, and that we are capable of handling business concerns as well as technology needs. You have to be able to do both. We’ve consistently heard from investors: “your team is amazing!”

We were also able to demonstrate quickly that there is a global market for our products, and that we have the aspiration to fulfill that need, and the necessary ambition to get there. We’ve communicated well, and clearly, thanks in no small part to StartupYard, who have been super supportive, and have contributed far more than we expected at the beginning- and we had high expectations I must say.

Credo Ventures, another investor, was considered very early on, partly because of their involvement with Cognitive Security (another security startup), and their relationship with StartupYard, obviously. We liked their team quite a bit, and we chased them from the beginning, making sure they saw that we understood how they could help us and contribute. I’m happy to have them as investors.

Techstars is also huge. We didn’t join because of money, but that came as part of the deal. It’s a validation for people who are looking to invest in us, that we are serious about going global, and using their network has been amazing. You just ask, and you get intros and contacts that are great. They’re very experienced and skilled in dealing with investors and startup challenges in terms of fundraising and hiring.

Are you looking to raise additional capital immediately?

This is a question for us right now. The plan is to open a seed round by the end of the year. We will be asking for 1-2 Million Euros. This will go, as I said, to expanding our success from the UK market to other European markets.

We are well funded for our plans in the UK, including for hiring sales people, but the seed fund will be about expanding on those operations abroad that I mentioned. If anyone reading this is a sales superstar in Europe, then please get in contact. We’re looking for the right people.

Have you faced serious challenges with hiring so far?

Well, I’m not calling it a challenge, but it’s difficult to hire people for startups by default. Particularly the caliber of talent we are looking for.

The Czech talentpool is not as ready for Startup offers as in the UK. We offer stock options for new employees, and people are not as familiar with the value in that, and they look for more traditional compensation. A monthly salary and benefits that we can’t necessarily offer right away.

We also offer participation in our success, which makes negotiations more difficult, but we have still attracted some great talent. When running a startup, a huge amount of your time is taken up seeking talent, so that has become a much bigger part of my role.

We aren’t hiring technical people in the UK, and we’re seeking a very specific profile, which takes time. The type of person we are looking for isn’t necessarily available (they are already employed) and that makes the process slower. But I think thanks to the attractiveness of our products and segment, we have had some initial talks, and it seems to be going well.

What is the state of your product offering to date? What are you currently selling, and what do you plan to provide in the near future?

Our flagship product is the mobile secure gateway, which we call SeaCat. The pricing structure has changed from a license based approach to a subscription model, which shifted us into a much more modern sales approach. I’m happy with the changes we’ve made. It makes us more flexible and more able to sell in different segments.

When you sell licenses, you lock yourself into B2B business, particularly enterprise sales. But with a multi-tier subscription model, you can talk to smaller companies, and find something to offer them as well. This allows us to scale much more smoothly from small to big business.

And from a partner perspective, the subscription model makes a lot more sense. Partners are able to secure recurring streams of revenue by selling our products along with theirs. When a mobile dev house develops something, that comes with a one-time fee. But if they can resell our solution, which is constantly updated and trouble-free for the end-client, the partner can see a monthly revenue stream, and deliver a much better and more secure product at the same time.

It’s a win for everyone, including end clients who don’t need to worry about constantly redeveloping their products to meet new security challenges.

I also have a fairly big announcement, and this is the first place I’m sharing it. We have agreed with Rackspace, Amazon, Microsoft, and Google, that we will cooperate on installing our mobile secure gateway to every data center in their cloud platforms.

This means that there will soon be 60 of our gateways across the globe, available to customers operating their backends on these cloud platforms. A huge win for us. We will cooperate on marketing this solution with the cloud providers. In addition, these providers have given us over 500K USD in services for building this solution into their services. The cost of the infrastructure is free for us.

We will be the only mobile secure gateway available on these platforms, and it will launch within the next few months. That’s a major step for us in bringing TeskaLabs’ solutions to a broad global userbase.