Mindbox, StartupYard

Meet Mindbox: The Future of Sales Training is Virtual Reality

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Mindbox is every sales coach’s dream. It’s a Virtual Reality (VR) platform that allows sales trainers to create unique, repeatable, and data-enriched training activities in a virtual environment.

The team behind Mindbox, who join StartupYard as members of Batch 8, are Slovak entrepreneurs Peter Tomasovic, and Andrej Rybovic, old friends who have been VR geeks for many years. Originally, they began work on Mindbox as a tool for psychotherapists to treat anxiety disorders and phobias. Quickly they realized that anxiety and stress are widespread outside the clinical setting, and they set about looking for solutions to occupational challenges that many typical employees in large companies face every day.

Mindbox will pitch at StartupYard DemoDay Batch 8: Get Your Tickets!

I sat down with Peter to talk about how Mindbox became a toolkit for the sales trainer of tomorrow:

 

Hi Petr, tell us a bit about your team, and how you came up with the idea for Mindbox.

Hi Lloyd! Mindbox started out as something very different from what it has become over the course of StartupYard. It all got started two years ago, when I was just playing with VR (Virtual Reality) technology, and a few of my friends were finishing school in psychology. One of them is a clinical therapist now, and the other is a researcher at the Slovak Academy of Sciences.

We are childhood friends, so we started mixing our interests; I came up with some ideas on how to use VR in the context of therapy, and they provided a lot of insight into the kinds of problems that are hard to solve with classic talk therapy.

For example, one thing that’s very hard to treat by talking is a phobia. You need to experience the phobia in a controlled way, and it can be hard to do in a clinical setting. You can’t take a patient to the roof if they are afraid of heights. There is no way to do it in a controlled manner- at least not affordably.

Another thing was anxiety disorders. It’s the same problem: it is very hard to control the process of exposing someone to their anxieties so they can confront them. So MindBox grew from these conversations, and we decided to make it a real thing. We built several “phobia” modules, and even did some testing on real patients, where we found the therapies were really helpful, and sped up recovery.

 

You’ve pivoted away from therapy to sales training. Can you tell us about that shift?

The experience we gained helping people overcome fears is still at the core of what we do. However, we also realized after talking to mentors and industry experts at StartupYard, that staying within the medical context would be very limiting to our ability to have an impact on people in the real world.

With sales training, you can address many of the same issues as with psychotherapy, but you can help many more people overcome their personal limitations. The benefits of VR are still there: it is safe, controllable, easy to repeat, etc. That can work for a lot more than just a fear of heights.

Currently, sales training techniques are quite good, but they require a lot of setup. Role-playing and workshops with hands on feedback are time consuming, hard to repeat, and are likely to be forgotten over time.

An angry customer in Mindbox

 

Research shows that after several months, the effect of a training session mostly disappears. If you could follow up on that with controlled re-training and repetition, the insights could be preserved and the training would stick.

A big influence was our new colleague, Serge Dupaux, a former sales training director with a ton of industry experience, who has helped us see the impact VR can make on that kind of work.

So now, MindBox is platform, that allows sales trainers to create VR training modules without coding. Our aim is to make it so easy to do, that an experienced sales coach can let their imagination run wild, and construct really unique challenges that can be shared and repeated even in really large organizations. Mindbox will be the non-coder’s tool for creating those VR training experiences quickly, and getting necessary feedback in the form of analytics, scoring, and other data.

 

What about VR makes it ideal as an addition to in-person training? Why not simpler methods?

There are easier ways to follow up on training, such as with e-learning, and periodic testing. But these are mostly about knowledge, and not experience.

Typically a sales trainer spends a lot of time simulating situations with the salesperson, doing role playing, and rehearsing strategies. That is quite personal, and can be affected by relationships, the moods of the people, and even the weather or time of day.

If you can add VR as a supplement to this training, then you can eliminate some of these variables and reinforce the important elements of the training. All the salespeople have a chance to work at their best, and experience the same quality of feedback and the same sense of immersion.

With traditional testing, you check knowledge. Here VR can be used to check attitude, comfort levels, and other soft skills that don’t appear in other tests.

 

How do you see VR becoming a broader part of how we do skill acquisition in companies, or even in schools? What will things look like in 5 years?

Our vision for VR at MindBox is about making it a regular part of somebody’s work life. It’s not just about sales training, but also skill assessment, team building, and skill extension and retraining.

Lloyds Bank already uses VR to assess employees, for example. I think this will happen much more. Of course the benefits of VR assisted training are clear also in dangerous jobs, like firefighting and police work, or in medical training. Already we use very sophisticated flight simulators to assess and train pilots.

I see VR training being a fact of life in 5 years. Everyone will see the benefits and the impact it can have. It will not be everything, but it will be a common tool.

That is why it’s important to us today to create a platform where the most creative uses of this technology can be invented and put in practice quickly, to move VR out of the geek basement, to the mainstream.

Further Reading: StartupYard’s Recent post on why so many VR startups are applying to Accelerators in 2017

Read it Now

Short term, what are the biggest technical challenges facing MindBox, and how do you plan to solve them?

The big problem nowadays is finding  good people – technical people. We are looking for Unity3D developers, and it is very hard to find them. At MindBox, we are not looking for “just” an employee or someone who wants to try to work for startup. We are looking for a friend, team member, and a developer with ideas.

 

How has your experience been at StartupYard? What has surprised you, or particularly challenged you as a founder?

The experience at StartupYard was groundbreaking for us.

It has changed the life of MindBox and the whole team. First of all, we found not only mentors, but also friends, passionate people who are helping us and who are pushing us forward.

Most surprising for us was the team and mentors’ will to help. They don’t just introduce you to someone, they care about your progress and they are come up with ideas to help you as a business and a person. I have never seen something like this.

For us, StartupYard is something, like university and business school in 3 months. We definitely recommend it to every startup, because StartupYard can save you years of work.

 

How can people get in touch and see how MindBox works for themselves?

Right now, MindBox is in private beta. Trainers or companies can contact us and it would be pleasure for us to meet with them and talk more about VR and how VR can improve the effectiveness of their current sales training programs.

 

Mindbox will pitch at StartupYard DemoDay Batch 8: Get Your Tickets!

 

Applications are open for StartupYard Batch 9!

Are you a startup, or an entrepreneur with a great Deep Tech idea?
Applications are now open.

 

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Waymark, StartupYard

Introducing WayMark: AI for Regulatory Compliance

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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? 

 

Get Your Ticket for DemoDay

 

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.

Connect with Mark on LinkedIn

 

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? 

Get Your Ticket for DemoDay

StartupYard Presents Retino: Making Returns Great Again

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Retino, another of the Czech teams in StartupYard Batch 8, is changing the game for e-commerce customer service in Europe, and maybe elsewhere as well. Retino is a fully functional “reverse logistics” platform, that can integrate seamlessly with existing e-commerce platform software to make returns management a breeze, rather than a headache.

In the past, returns were a personalized experience. You took the goods back to the shop, and got your money back (or something in exchange). But today, with more shopping than ever occurring online, returns experiences are only getting harder to manage.

Why are returns so hard in e-commerce? Because each return has the potential to be unique, and require special attention. Moreover, a return process that works can significantly improve brand image for an e-shop, while a bad returns experience can spoil a customer relationship forever. Enter Petr Boros, Founder and CEO at Retino, the Czech tech company making returns great once again.

 

Retino

I sat down with Petr recently to discuss his journey to founding Retino, and why returns are a looming problem for e-commerce players here and across the world.

 

Hi Petr, how did you get the idea for Retino? Was it based on your previous experience in building a successful e-commerce company?

It happened in February earlier this year. I was still running the e-shop we had built with my partner Daniel Kšíkal, but we were already in the process of selling the company at the time, so I knew that I would be free in a couple of months and hungry to start another company.

I didn’t want to stop challenging myself in business.

Building software for e-commerce sounded good to me. I wanted to do something related to e-commerce, because I had experience in the field. I also I wanted to go more technical, because I was trained in computer science and, technology is where my heart is.

The original idea for Retino is actually not mine. I remember we were having lunch with my friend Peter Hajduček, CEO of Footshop, one of the fastest growing e-commerce companies in the region. We were discussing many business ideas and one of them was solving low customer satisfaction in returns and claims.

So that was the initial spark. Then I thought about it for about 3 more months until we sold our previous company. After the exit, I jumped right into Retino: market research, talking with prospective customers, developing the platform, hiring people, and applying to StartupYard…

 

Why are returns and reverse-logistics becoming an even bigger problem today than they were a few years ago?

There are two drivers. First, e-commerce grows by double digits every year. Five years ago, the total revenue of Czech e-commerce was about 40 billion CZK. This year, we are well over 100 billion CZK (€4 billion). So the magnitude of the problem is bigger simply because the market is bigger.

Second, return rates inside e-commerce grow by double digits as well. Five years ago, customers were not returning as much. If you ordered a hoodie and it was too small for you, you would probably just give it to your brother. That’s not the case today. Customers feel much more entitled to great service, and the right to return things that aren’t perfect.

For instance, after the emergence of ZOOT, more and more online shoppers are accepting returning as a new standard. The Czech market is an interesting case, because Amazon and big-box e-commerce players have not really penetrated as much. Our market is smaller, but these brands have still educated the market about the ideal customer experience, and people expect the same level of service as others enjoy in the U.S. or Germany.

 

 Many e-shops don’t think about returns as a problem. But what effect does a bad return policy and system have on a retailer?

I know this from my own experience. When you run an online shop, you focus 100% on the “forward.” That is, getting the people on your website, having them purchase your products, and delivering the goods to them.

In the beginning, this makes sense. The problem is that you will not be able to acquire more and more customers with reasonable cost. Particularly if you are regionally limited. You have to retain your customers.

Making returns is a critical spot in the customer journey. Not every customer reaches this point, but when they do, it matters very much how you solve their problem. The rules of retail still apply as they always have.

A customer satisfied with the return process will spend 4x as much in the next two years at your shop. This information alone should convince the e-shops to rethink their returns.

But there’s more. For example, did you know that 66% of customers check the return policy before placing the order? Yet, the majority of e-shops still “hide” the policy and word it in legal gibberish. These e-shops are pushing their customers out the door by refusing to give them vital information. Once again, trust matters more when anyone can run an e-shop.

Also important to consider is that 5 years ago, Facebook and other social media penetration was nowhere near what it is today.  Now almost half of the Czech population uses Facebook alone – and almost one third of the whole planet does. That gives customers a lot more leverage over online retailers than they had before, because bad news (or a bad review) travels fast.

 

Are there some examples of companies that have tackled the returns problem in a creative way?

Research shows that 60% of customers keep unwanted products because returns are too hard. At first sight, this might seem like a good news for e-shops, because they don’t have to process them and offer the refunds. But guess what? That customer who failed to return the product will likely never make another purchase on that same shop again. It doesn’t even matter if it isn’t the e-shop’s fault. The experience just sours the relationship.

I was talking with a director of another large fashion store recently, and he told me that their return rates doubled shortly after ZOOT came to the market with a great returns process. Think of that – this is how fast the customer landscape can shift. What ZOOT did was to introduce a mix of online/offline retail that suited their customers much better.

They started by providing pickup points for their products, where the customer could also quickly return a product if it didn’t fit. That made shipping faster, and returns much easier, because customers never had to deal with the post at all. More work for the company, but much less hassle for the consumer.

The guy I mentioned was very angry about this. My experience is that being angry is not the winning approach. The paradigm is shifting. You have to offer a super-nice return process (so that you acquire and retain customers) and you have to be able to process the returns with a very low overhead (so that you actually make some money).

If you have the capacity to do this yourself, go ahead. If not, go Retino!

So for you, this is more about the mentality the e-shops have, and not the technology they’re using?

The technology follows the mentality. If you haven’t built a good return system, it’s because you aren’t focused on it. If you don’t invest in your returns process, it will be a mess. If it is a mess, it is because you don’t care if it works or not. It all goes back to the mentality.

I’ll share a personal story with you: About 10 years ago, my family ordered a new computer from CZC, which as you may know was one of the early Czech e-commerce platforms, founded by Josef Matějka.

In that time, it was still more common to buy electronics from a local retailer, not e-shops, so this was a kind of a big deal. Anyway, something went wrong on their side, and they were unable to deliver the computer on the date they promised. That was a problem as we were leaving for abroad and would not be back for some time.

I bet this sounds like a familiar story to a lot of people. But the amazing part is what happened next. We called and told them the situation. Somebody from CZC, and I am not sure, but it could have been Matějka himself, drove over 400km to deliver that computer in person. I personally met them and got the computer at about 10pm that same day.

You see, this happened over 10 years ago and I still remember it. Back then, I told everyone what happened, and CZC was for a long time my first choice when buying electronics.

That says so much about who Matějka is, and about the company he was trying to build, that they would go so far to fix a mistake they made. It might not even have been their own fault, but they took our needs very seriously. They took responsibility for keeping their promises.

Obviously I can’t be the only person who had such a good experience with them, so their success over the years has never surprised me. That customer-first thinking is a principle that any business can adopt today, without changes in technology. Technology only helps us to do this, but it does not change our mentality.

 

Today you’re focusing on the local e-commerce market. What will be Retino’s focus for the future? WIll you explore different business models, or expand geographically?

Both. There are so many things to do in returns, but we have to prioritize. Right now we are focusing our salesforce on the Czech and Slovak markets.

That does not mean that we cover only the Czech and Slovak market. One of our pilots operates in 13 markets and we have to be able to run the return process in all of them, so we are very well technically prepared for the expansion. It’s just that our salesforce is limited for now, and there’s still much to do in the local market.

We have international ambitions, and I think our model can work very well in all EU countries. This is especially true when you consider the new GDPR regulations on privacy and data in Europe. You’ll just have to trust me on this: few e-commerce platforms are fully compliant yet, and they will struggle to be compliant if they don’t adopt new software like Retino, which is fully compliant.

We also have put a lot of thought into vertical scalability, and we have come with different business models and revenue streams. Some of them are for an even larger business than what we are doing at this moment. You’ll see…

A look at Retino’s Simple Returns Management Platform:

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Request a Demo of Retino

What would you say are the top 2-3 mistakes that most e-commerce companies make when it comes to their returns process and policies? How can they improve today?

An unhappy customer turned happy is more valuable than just a happy customer. We see large corporates in banking or telcos actually deliberately “doing a little wrong” to their customers so that later they can fix them and gain more loyalty. Consumers see apologies and mea-culpas as a humanizing thing, and they do appreciate a brand that is not afraid to be human, admit some mistakes and offer compensation.

I’m not telling you to do this intentionally, but the principle holds. If you have an e-shop, every time you see a customer unhappy with your product, try to convert him back. If the customer is nice, do whatever you can to achieve this, and don’t worry about how much it costs you. It will cost more not to do it.

I would say that this mindset shift has to occur before anything else, but if you want a couple of “quick fixes”, consider this:

1. A return policy should be clearly visible and not hidden in your general terms and conditions. The best shops actually show their policy on the product detail page next to price and delivery date.

2. When you physically get the goods back, always notify the customer that you received them. We see many shops not doing this, although it’s very important for the customer.

3. Never delegate your responsibility to your dealer or manufacturer. That is incredibly frustrating and trust-killing for customers. It is you who agreed with your customer and it is your reputation on the line. Take charge of it.

 

What kinds of early customers are you looking for, and how can they start working with Retino?

We are looking for customers who want to do their returns and claims right, and we’ll be happy to help them with that. More than that, we want customers who are seeking to differentiate themselves in terms of great service.

Our ideal customers understand intuitively that this is the way they should approach returns, but they don’t have the time or resources to do it themselves. Their current system may be a mess, or just not very efficient, but they are ready to do better. Retino represents thousands of man-hours of work and a lot of thought and care. To replicate it, much less maintain it, would cost an e-shop a lot of resources on an ongoing basis.

Our solution stack makes sense for most shops processing 20-2000 monthly returns. Integrating Retino is easy and can be done in one day, no developer needed in the process. With the largest shops, we also work on custom integrations to fully unleash the potential of our automation service.

We ship new features every week or so and all our customers benefit from that with no extra cost. This is a problem best solved by specialists.

The best way how to start with us is to fill our demo request form at www.retino.io or simply drop us a line at sales@retino.io. We’ll get in touch with you, discuss your process and issues, see if we can help and set up a demo.

 

Connect with Petr on LinkedIn

 

Tell us a bit about your experience with StartupYard so far. What have been the biggest surprises, or challenges you’ve faced since you started?

The StartupYard team is composed of excellent people who know what they’re doing. They also see personal fit as important measure. So, even though the acceleration program is very demanding, it is a happy place to work at and we are basically one large family.

I knew that StartupYard’s network of mentors is extensive (and it was the main reason why I applied for the program), but it actually exceeded my expectations. There is virtually everyone relevant for any business in this region in the +1 network of StartupYard’s mentors.

I found the mentoring sessions very important, because 1. mentors asked me questions that I didn’t really want to hear, but they were super important for steering the business in the right direction, and 2. we got a lot of good leads for our business that we would have hard time getting otherwise at this stage.

I’m  thankful for Retino being invited to StartupYard and I’m happy to work with the StartupYard team every day. If you have a strong team and a solid idea, I would very much recommend you applying for StartupYard.

Most importantly, I would like to thank my team – Karolína, Kryštof, Vojta and Radim – for bearing with me during the program. Acceleration is tough and time-consuming, but they all proved to be very self-sufficient. Even though I was not always available, they worked hard to push our story further every day. I’m very grateful for having such an awesome team. Thank you!

Retino and the Other Batch 8 Startups will Pitch at StartupYard’s DemoDay: November 22, in Prague

 

Get Your Ticket to DemoDay!
RentRocket

RentRocket: The New World of Renting

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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.

Get Your Ticket For Demo Day!

 

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.

Connect with Klara on LinkedIn

 

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!

 

Get Your Ticket For Demo Day!

Steel Mountain

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

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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.

rebelandglory

StartupYard Partners with Rebel & Glory for Post-Acceleration Marketing and Sales Program

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StartupYard now accelerates between 7-10 companies every 6 months. And yet our team has remained the same size.

Unlike other accelerators, which have often expanded quickly to cover more of the lifecycle of a tech startup, or more markets, StartupYard has chosen to focus primarily on what we do best, and to keep doing it better. We find promising startups, we accelerate them, and we help them navigate post-acceleration life, until they don’t need us anymore.

Bringing Big Guns to StartupYard Alumni

But we are not enough. Our startups are operating at the cutting edge, and need big guns when it comes to communicating and selling their new approaches to big problems. Even the best ideas don’t sell themselves: they have to be backed up with experience, with a network, and with a deep talent pool.

Imagine if every startup that deserved the help of a pro business partner actually got it. Today, a needless gap exists between those startups that deserve help and can’t afford it, and those who can.

At the same time, Rebel & Glory is eager to apply their talents and knowledge to cutting edge technologies, and cooperate with promising startups. As the CEE region continues to lag behind in terms of access to marketing and sales talent, companies like this can help bridge the gap between early/growth-stage startups, and those with the money and connections to attract top global talent.

Our startups are a special group, hand-picked and proven to be risk-taking, ambitious, hard-working, and smart. So to us, providing the opportunity for our startups to take advantage of the talent and experience at Rebel & Glory, something outside startups do not have the opportunity to do, is a natural step.

Rebel & Glory will give StartupYard companies access to talent that normally only big companies can afford.

Rebel & Glory’s Exclusive Post-Acceleration Program For SY Alumni

For these reasons, StartupYard is announcing an exclusive partnership with the cutting-edge creation group Rebel & Glory. The partnership will allow exclusive access for our portfolio companies to packaged services from Rebel & Glory, spanning every aspect of branding and marketing strategy, content creation, and advertising.

Rebel and Glory

Rebel & Glory will offer StartupYard companies 3 key services: product development, branding and digital marketing, and talent delivery. Thus, not only can a StartupYard company work with Rebel & Glory to build its brand, but it can also explore new product opportunities, and gain the talent necessary to execute ambitious plans.

“We Exist to Build A Bright Future for Brands”

Rebel & Glory’s special expertise is high tech digital content design and creation. They are deeply experienced in creating powerful, appealing brand and product stories supported by top-notch creative work. Some of their business partners have included Nissan, Lufthansa, KB Bank, and Regency.

The agency also does amazing post-production work for film and television, as well as online advertising. They have a showreel on their website.

What is Good Storytelling? (Part 1)

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First: What is Storytelling?

There’s no single compact definition that can cover every modern use of the word “story.” You may think of news articles, or children’s fairy tales. You may think of “user stories,” that product designers use to figure out what to build. You may think of a novel. In fact, most stories have common characteristics: characters, settings, plot, conflict, and an ending.

But in talking about a “brand story,” or a “cultural story,” or a “life story,” we are really discussing a specific kind of story: the “Mono-myth,” also commonly known as a “Hero’s Journey.” At the heart of what we call “storytelling” in the modern world, you find this core structure:

The world’s oldest documented story is The Epic of Gilgamesh, written 4000 years ago on clay tablets. It’s the story of Gilgamesh, a God King of the Sumerian state of Uruk. He begins as a restless and foolish young man, who leaves his city behind to explore the world, faces many challenges, becomes wise, and returns home a hero, ready to lead his people.

That ought to sound familiar. It’s the basis of every epic story from the Odyssey to Star Wars.

The Hero’s Journey works incredibly well at persuading audiences because it is a simple and flexible vehicle for conveying the human experience. It speaks to us about our experiences in life, by recreating those experiences, only with more flair, more danger, and bigger stakes.

The Hero’s Journey

Pick a big successful brand at random. Recall what you can about their “story.”

Chances are excellent that it is a “Hero’s Journey,” following the same pattern laid out 4 millennia ago in Gilgamesh. McDonalds has its Ray Krok, Apple has its Steve Jobs, and Microsoft its Bill Gates.

Not coincidentally, there are movies about all these characters, and they are all Hero’s Journey movies. The appeal of this story is so great that it is virtually synonymous with storytelling in film.

Within each of these stories is a familiar narrative: a misfit, naive and ambitious, confronts a cruel world, fails, grows, and finally succeeds. That is the simple core of every human story, and thus, every company story as well.

Qualities of a Great Story

Now we know what a story looks like. So which are the specific qualities of a really strong story? What makes this overall structure work best? Here are a few things I think are essential in a good story:

Great Stories Have Human (imperfect) Characters

Great stories appeal to the listener by being, essentially, about human nature. Great heroes are appealing because of their humanity, and not because of their power.

 

The 2010’s Most Popular Hero

Think about why people love Batman, or Iron Man: it’s because they are flawed human beings. It is the human experience to face moral tests and temptation. Thus, a story in which good and evil are too easy to separate is a story without any moral tension.

For Example:

You may have at some point spotted this meme making the rounds on Facebook. It’s got enormous viral potential, which is why it has been shared so widely (by both those who find it hilarious, and those who take it seriously)

It’s also a great example of bad storytelling.

In this story, we are presented with two characters in conflict: one entirely sympathetic and brave, the other entirely unsympathetic and cowardly. Thus, the point of the story, or the moral, is never in doubt. While the story creates suspense by making it unclear exactly what will happen, it creates no suspense over what the story thinks should happen.

No one in the story learns anything. No one changes as a person. One wins, and the other loses, but nothing is different at the end.

Great Stories Are About Change

I attended a panel on startups by the renowned actor Kevin Spacey this past weekend. One phrase above all stuck out to me as an example of how he sees storytelling. When asking a founder a question about his motivations in business, the founder responded: “Well, that’s complex.” To which Spacey responded: “Go ahead. Be complex.”

People are complex. So stories must also deal in moral complexity. They must give the heros and the villains an “arc.” As in Gilgamesh (or any epic story), the hero must fail to become wise. A villain must experience pride before the fall. Otherwise, nothing has changed.

Take, for example, this highly compelling commercial from none other than Budweiser, simultaneously America’s best selling, and worst tasting beer:

This is practically the definition of a Hero’s Journey. A young man with a romantic vision leaves home, only to find that the world is harsher than he expected. Enduring many trials, he finds help in unexpected places (the black man on the river boat). Having grown through his experience, he reaches his new home ready to accomplish great works: in this case, brewing beer.

This ad was seen as shockingly political (released weeks after the 2016 US Presidential Election), but it was also very successful. And that is because it is a real story, not just an ad.

It seeks to reframe the story of Budweiser, “America’s Beer,” into the story of Americans themselves, where they come from, and what they should believe in.

It also presents a coherent moral argument: that adversity makes us stronger, and that perseverance leads to success.

Importantly, neither of the two main characters in the story (America, and Budweiser himself), are either purely good or evil. Budweiser shows hints of arrogance from the beginning, before becoming wiser, and America shows signs of openness, even after initially seeming a cruel place indeed.

The story is about these characters changing together.

Great Stories Are About Conflict

As we’ve now seen, conflict is essential to a powerful story.

Conflicts in stories boil down to need. Human beings and societies have competing needs. How those needs are addressed, and which needs win out over others, are key elements of a story.

Convincing an audience that one need is greater than another is vital. Otherwise, why should a person pay attention to your story? It involves no consequences.

This is a video I often use to talk about bad storytelling. It’s a coca-cola ad from the early 1980s, when Coke was getting its ass kicked by Pepsi’s brilliant marketing.

But what’s not to love? Sunny day, happy people, soccer for some reason, and everyone having a “Coke and a smile.”

This ad was a failure, along with much of Coca-Cola’s marketing at the time. There is zero conflict in this story. And because there is no conflict, there is no identification of any urgent need. Do I need to have a coke on a nice day? It seems these people are having fun, regardless of what they’re drinking.

Brands routinely fail to introduce real conflict into their product and brand stories. Here’s a more recent example:

 

There’s a lot wrong with this ad, but the most important problem is that the conflict it presents is false. We see trials and struggles for the hero, but we are told at the end that there is no solution. And instead we should just buy a car. It’s insulting.

Cowardly marketing and bad storytelling happen when we refuse to acknowledge that our customers are people with their own problems. They aren’t just people out in a park having a perfect day, ready to jump at the chance to buy a coke.

They won’t automatically feel better about themselves just because someone tells them it’s ok to buy a car. Even if that car is the best car ever. They have other needs as well- more important ones.

Coke actually learned that lesson. Here is a typical ad from more recent years:

Here is conflict. Suspense! Competing needs and wants. And the brand in the story is associated with wisdom, with the setting aside of personal enmities in favor of love.

That’s a great story to tell. It appeals to people as they are: always in conflict with themselves, and always unsure of what is right.

Creating and Resolving Conflict

How do you make your story real to other people? You do it by making the conflict real to them. By showing them how the conflict in your story should matter to them.

This is also where a lot of startup stories fall apart. They make the mistake of thinking that making a good argument is the same as actually persuading someone. But it is never enough to just be right. The person has to believe you’re right.

In the next post in this series, I’m going to talk about how to identify parts of your story, as a founder, as a company, or as a person, and bring out the hidden conflicts that will help you relate that story, and make it matter to other people.

SY Alum Decissio Uses AI to Accurately Predict StartupYard Investments

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You may remember Decissio, a Batch 7 StartupYard alum that has been working on the “Jarvis for Investment Decision Making.” Earlier this year, the company announced its kick-off product, an intelligent dashboard for VC investors and Accelerators to evaluate and monitor companies they invest in.

Decissio aims to go beyond a typical investment dashboard by combining up-to-date company data with complex big-data based probability models and machine learning algorithms, helping investors to continuously evaluate their investment decisions.

As Decissio and founder Dite Gashi continues to gather data and build the company’s flagship SaaS product, they have focused on piloting their approach with small controlled experiments.

One such pilot has been in partnership with StartupYard. Decissio’s Mission: to process all of StartupYard’s applications for Batch 8, our latest batch starting next week, and deliver predictions on their success based on a variety of factors, including written applications, founder profiles, founder/market fit, and the current state of the company.  

Dite Gashi

Dite Gashi: Founder and CEO at Decissio

The numbers are in on this pilot, and they’re very promising. We’re not ready to stop reading applications or doing our own research just yet, but we’re now confident that Decissio can be a big part of making our application process better, fairer, and more efficient.

The following case-study is a co-production of Decissio and StartupYard, written by Dite Gashi, and Lloyd Waldo. A more detailed write up and analysis will appear shortly after publication at Decissio.com. For more info on the technology and related work, please visit Decissio.com.

Warning: This post is long and contains big words. Skip to the bottom for a bulleted Tl;Dr 

Good Small Decisions = Big Positive Outcomes

The StartupYard application process doesn’t happen all at once. It involves a long series of smaller decisions. Does a startup have a unique idea? Does it fit into our mentor group and experience? Do the founders have enough experience? Is there strong competition in the market?

Some decisions are even more granular: did the founder answer questions thoroughly and clearly? Were they responsive in detail?

Small details often reveal big trends. But a human mind isn’t set up to think in that direction. We aren’t programmed to carefully add up small decisions to make big ones. Enter Decissio, whose mission was to apply a machine-learning approach to small decisions we make in the application process, not to override the judgement and experience of our evaluators, but rather to augment it with important insights.

StartupYard Alum Decissio.com uses #AI to accurately predict future StartupYard startup investments... Click To Tweet

The Framework

An application to an accelerator consists of a relatively small data set. We have a written application, founder profiles (on LinkedIn), sometimes a website, and whatever has been written about the company online.

Rarely do we have hard financial data on the companies, in some cases because there is no company in existence, and so the founding team has no financial data to look at. Nor do we have much access to the IP teams are working on. We have to rely on what founders say, and what they have done in the past.

But a bunch of small data sets together make up a bigger data set. Decissio examined over 1300 previous applications to StartupYard, along with the rankings our evaluation committee has generated, and used that data as a benchmark for incoming applications.

They found a number of statistically significant trends in that data. Startups that were successful as applicants to StartupYard could be ranked point-by-point, according to the following framework:

  • A Completeness Score: how thoroughly the application is filled in, and with how much quality information.
  • Effort Score: The quality of the writing in the application, particularly the responsiveness of answers, and the scope and variety of detail provided.
  • Relatedness Score: how closely a founder’s profile and experience matches the content of the application
  • Founder Linkedin Score: The completeness and quality of a founder’s LinkedIn profile
  • Media Mentions: The number, quality, and sources of mentions of the company or product online, along with sentiment analysis
  • Money/Work/Revenue Generated: The ratio of previous investments and time spent on the project to real revenues (if any).
  • Spell Check

Believe it or not, Spell Check is powerfully predictive of application quality. Note to founders: always use Spell Check.

The Analysis

This is where the historical data from previous StartupYard applications comes in. While it’s not very useful to directly compare older applications to newer ones, because the topics and ideas in them are often so different, it is useful to weight the importance of the different factors in the framework according to their impact on previous decisions.

Furthermore, the final analysis includes proprietary algorithms by Decissio that can dynamically weight the outcomes for individual teams, based on cross-referencing between different data sets. For example: Decissio’s AI can adjust its expectations for the Effort Score, if the founders are experienced in marketing and sales, or have no such experience. Thus each team is examined according to its own merits, and not an evaluator’s less informed expectations.

As “calibration,” or maintaining consistency and fairness of scoring across a large number of applications is a significant problem with humans, Decissio can re-calibrate an evaluator’s judgement to keep them from penalizing teams for the wrong reasons. As the standardized testing field has long known, human scoring can be so inconsistent that a significant amount of scoring time (even up to half) must be devoted to calibration in some cases.

Since our evaluations involve multiple rounds with a Pass/Fail outcome, each examining more and more detailed information, highly predictive models can be built for an application that will make it through round 1. A less predictive but still strong model can be built for round 2, and a much less accurate, but still useful model can be built for round 3, and so on.

The chart below shows overall predictiveness of the approach over multiple rounds. StartupYard uses a “first past the post” system of ranking, where the ranking cutoff for each round is smaller. This means that in round one, 70-80% of applicants are rejected. In round two, just over 50% of the remaining applicants are rejected, and in round 3 (which are day-long in person interviews), only 20-30% are rejected.

Decissio False Negatives

None of Decissio’s bottom-ranked 63 startups were ultimately selected, meaning that virtually all of the first round of evaluations could be handed over to the AI, leaving a much smaller pool of applicants to evaluate, and allowing the human evaluators to use a much lower cutoff, in a smaller, better initial pool. In this scenario, only 20% of human evaluated startups would need to be rejected in the first round.

We would expect false negatives to rise, as Decissio gets only one pass at the data, and with each round, human evaluators gather more data, which causes their behavior to diverge from the model.

For example, if use of Spell Check is 90% predictive of the Pass/Fail rate for round 1, it may be only slightly predictive of the success rate of round 2, and by round 3, it may lose its predictive power altogether. By the time an application involves a detailed look at a founder’s CV, and personal interviews with that person, other factors can arise that vastly outweigh any minor inattention to detail, like spelling.

Or the predictiveness curve can go in the other direction as well, with certain data only gaining predictive power in later rounds. Media mentions may have a low predictive power in the earlier rounds, and become more powerful later on. This can be because a company with a low early round score for Relatedness or very high Money/Work/Revenue ratios, can have many mentions in the media, but also fatal problems in their business, team, or technology. Thus, hype is not strongly predictive in Round 1, but by Round 3, it becomes a major asset to an applicant. Once all other factors are examined, media exposure becomes an affirmation of market fit, demand, or interest.

How Well Does This Work?

Decissio’s Success rate in the first round of applications (the on-paper evaluations), was 73%, far exceeding random chance. The accuracy dropped as expected in subsequent rounds where evaluations focused on personal interviews, from 50% in the 2nd round, to 20% in the final round. Still, this means that exactly half the time, a startup that passed the first interview with our selection committee was predicted to do so by Decissio, based only on their written application and profile.

There are two ways in which this kind of analysis can be useful. Either it can be used to identify applications that have a high likelihood of success, or it can be used to filter out those with the lowest likelihood of success.

Decissio Picked the Top 2 Ranking Finalists

We don’t have enough data to be able to confidently say that an application will definitely fail. However, on the opposite side of the scale, the results from Decissio’s analysis did correctly identify StartupYard’s two highest human-ranked finalists, and placed both in its own independent top ten prediction.

Decissio Picked the 100 lowest-rated applications with 89% Accuracy.

Still, the most immediate benefit of Decissio’s approach is in the earliest rounds, where pass/fail decisions are by design based on less human-focused information than the pass/fail decisions in later rounds.

This theory holds up with Decissio’s results: their bottom 100 applicants in this pool of applications (out of around 130), was 89% accurate, meaning that only 11% of the time, we determined a startup to be worth advancing, while Decissio did not. Clearly, in terms of identifying a lack of potential, Decissio’s approach is already very effective.  

Further mining of the available data could produce a much more precise prediction. For example, by analysing co-founder and founder/investor fit according to the work histories and digital footprints of both can theoretically yield very reliable predictions of compatibility, which in turn raises the chances of success or failure for a startup.

These factors would require a different kind of data to solve; a kind of data we don’t collect systematically right now. But this kind of approach, which treats people as nodes in a system that has its own features beyond those of individuals, has been deeply developed already, particularly on the level of enterprise management consulting involving things like the Meyers-Briggs Type Indicator Test.

It may prove true in the future that a set of personality tests of some kind are more predictive of success in a particular accelerator program or industry, than the content of an application, though we don’t know what that test would look like, or how it would be used.

SY Alum Decissio.com predicts first round StartupYard application decisions with 89% accuracy, picks two finalists. Click To Tweet

 

Potential Applications:

Time Saving

Decissio was able to predict with strong accuracy (73%), the likelihood that a startup would make it through the first round. This means that evaluator’s mental resources can be focused more on rounds in which more human-level data is being examined, particularly personal interviews and meetings.

An evaluator can spend relatively less time making early-round decisions, because Decissio can compare cursory evaluator consensus to its own scores, and “call out” the circumstances in which these do not match for further study. There is less of a chance that a good application will be “overlooked” in this way– a constant fear among startup investors dealing with many applications.

Bias Reduction

While a human with experience can “skim” an application and be able to tell it isn’t strong, that subjective evaluation is highly prone to error and internal biases. Very poor spelling could cause a human evaluator to give up on an application, whereas an algorithm might see past this issue and find more value in the startup than a person would look for.

This process could also serve as a check against more latent biases, such as gender, age, nationality, and sexual orientation. While it’s difficult for a human to differentiate between their instinctive reactions to people based on conditioning, and their objective evaluations of people in a professional context, an algorithm can demonstrate more consistency in that regard. Biases can’t be eliminated even this way, but they can be better controlled.

Thus, Decissio can be a check against the human decision making process, enhancing it without replacing it.

Fighting the “Best Horse” Problem

Decissio’s approach can also serve to fight the “best horse” problem, whereby a candidate with a strong outward appearance can advance well into the selection process without revealing sometimes severe deficiencies.

The best horse problem is one of reinforced selection bias. Imagine you have 10 horses, and you send them all running around a track. Then judging by the outcome of the test, you give special care and attention to the fastest horse, believing that it above the others has greater potential as a champion.

In this way we sometimes pick winners for all the wrong reasons. The horse to finish first can finish first for a number of reasons not having to do with potential as a racehorse. Cheating for example, or luck. Likewise, the last horse around the track can be the one with the most future potential.

In our application process, a very strong written application or interview performance can mask a basic weakness in the founding team’s experience or ability. It’s only much later that these weaknesses reveal themselves in a lack of tangible results from the company.

Startups can and do advance very far in accelerator programs while still lacking the core abilities and disposition needed to thrive. It can take a long time to recognize a fraud or a fish out of water.

Creating More Useful Feedback

Another thing this big data approach can solve is the information problem. What happens frequently with accelerator applications, as we suspect happens in many fields, is that successful written applications contain a near-perfect mix of description and data. Something like the “golden ratio” often described in mathematical analyses of artworks and natural proportionality.

The human mind likes a certain level of balance in the information it receives. When a person writes, they tend to favor either information or analysis, but only experienced writers know how to mix the two into pleasing and easy to read narratives. It’s a problem even good writers frequently struggle with. 

Too much writing about ideas, and the application seems too “light.” Too much data, and it seems too dense or too technical. In formal writing analysis, this formula is often used to describe balance between facts and ideas, where the value a is descriptive and creative writing, while b is supporting data and factual information. Those familiar with the classic “5 paragraph essay” often taught in schools, will recall the same proportionality. About 3 parts of persuasive writing, for every 1 part of factual basis. 

This type of training is not universal even among professionals, which sets up an arbitrary test of writing skill that may not be as relevant to the outcome as we tend to believe. If our job is to train people how to be better entrepreneurs, then we fail at that mission from the beginning if we can’t differentiate between someone who deserves our help, and someone who doesn’t.

By offering feedback on the strength of an application according to the above mentioned metrics (Completeness, Effort, Spelling, etc), Decissio could potentially improve the chances of failing applications where the main problem is poor writing.

An opportunity to improve an application is also an opportunity for us to see value where it is hard to spot. Telling an applicant that their application is failing because of style and substance can help those applicants to better express themselves, and thus deliver us more opportunities to find quality teams.

Conclusions

StartupYard and Decissio pilot project shows that AI assisted investing can improve results quickly. Click To Tweet

The results of this pilot clearly show that there is great potential in enhancing our decision making process with machine learning and data analysis.

We are not at the point where we’re ready to let a machine determine our investment strategies on its own- the way machines already do some forms of investing without human inputs.

Unlike an investor in securities, or a high-frequency bond trader, an accelerator’s main advantages are as a first mover. We invest in companies that don’t exist yet, have limited information on their markets, and have a limited history, or no history. So we invest in people – and people are inherently hard to quantify.

Our anecdotal experience of meeting teams in person *before* evaluating their applications, consistently reveals that the application process cannot identify many important personality traits. For an accelerator, success comes only when we are right about a trend, and a particular person, at just the right time.

So employing an AI powered decision-making approach cannot mean abandoning the unique advantages we have: the ability to see things others don’t see. Expertise (and hard work) is still the core of sound early-stage investing, but AI can help us to focus that expertise on the “creme de la creme” of potential investments.

It can save us from becoming jaded by the junk applications that routinely swamp our inboxes.

A startup is not an individual, it’s a team. And it is not in our interest to arbitrarily eliminate applicants who are not good at writing applications, or have other deficiencies more visible on an application than in real life. However, it is in our interest to conserve and spend our resources (including our time and energy), where the potential for gain is highest. 

This approach can benefit higher-dollar investors too: later stage investors have many of the same problems accelerators have, but on a different scale. A Seed or Series A investor makes decisions involving 10-50x more money than any single investment from an accelerator, and they also receive more requests, on average, than a small accelerator does.

Currently the most obvious and most immediate advantage of using Decissio’s AI is for very early stage investors with many applicants, such as government innovation programs, and big accelerators like TechStars, Y-Combinator, and 500 Startups. 

Tl;dr:

  • StartupYard alum Decissio analyzed our past applications over a 6 year period.
  • Decissio used this data and their own AI to predict which applications to StartupYard would succeed.
  • Two of their top 10 picks were also StartupYard finalists
  • They accurately predicted the bottom ranked half of applicants.
  • This approach can be used by accelerators to:
    • Improve applications overall
    • Save time on the poorest applications
    • Reduce systemic biases
    • Get better information on applicants
  • Decissio’s AI could be applied to other early stage investors, such as Series A and Seed Investors, or to large accelerators, particularly Tech Stars, Y-C, and 500 Startups.
  • At the end of the day, AI will help early-stage investors to get better information, and spend more time focusing on the human-focused side of their work.

4 Ways to Never Fail a StartupYard Interview

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The 17th century French poet Boileau famously said: Ce que l’on conçoit bien s’énonce clairement, Et les mots pour le dire arrivent aisément. Or: “An idea well conceived presents itself clearly, and words to express it come readily.”

Or to put it bluntly: An idea isn’t any good unless it can be explained to someone else. If there were one piece of advice I could drill into the head of every brilliant startup founder I’ve met in my career, it would probably be just that.

But since we have some time, I’m going to go deeper. Here is:

How to Never Fail at A StartupYard Interview 

StartupYard will begin interviews for Batch 8 next week, and in the meantime, we thought we would share with them (and you), 4 key strategies that any startup can use in an interview with us, or any investor, that will help them never to fail.

Now, this advice is not going to win you an investment 100% of the time.

Investments are complicated, and they involve the needs and priorities of multiple parties. A perfect meeting might not produce an investment for a million valid reasons. But I can guarantee that if you follow this advice well, you will not fail to give your best possible impression to an investor.

Follow this advice, and you will not fail for stupid reasons.

1. Answer Questions As They are Asked

Simple and yet incredibly difficult for many people. Answer a question as it is asked, not as you would like it to be asked.

Did someone ask you a question to which you can say Yes or No? Then say Yes, or No. Then explain your answer. If you’ve never interviewed someone, I can let you in on a secret: it is very obvious when someone does not want to answer your question.

It is also very annoying.

And this produces the world’s most frustrating non-answers to simple questions. The below example is not fiction:

    • Are you making any revenue?
    • Well, we only launched about 6 months ago, and we have been focusing on making partnerships with relevant partners who are going to help us scale to our target market, and define the right sales strategy while getting early feedback from customers.
    • But are you making any revenue now?
    • Currently we are in beta and we are talking with a few clients who are ready to become paying customers once the features they need are fully implemented.
    • Are. You. Making. Any. Revenue?
    • No.
    • Thank you.

We don’t ask trick questions. What would be the point? And yet this behavior is widespread among startup founders. It is a learned behavior that must be slowly and painfully unlearned.

We want to know about what we’re asking about. So don’t try to give us the “right” answer. Just give us the real answer. What do you think is worse, us hearing that you aren’t making any revenue, or us leaving the meeting thinking you’re not even capable of answering simple questions?

And the real answer can contain the same information. Just in a slightly different format:

  • Are you making any revenue?
  • No. But we have a few customers who want to pay us as soon as we have the right features implemented. We only launched 6 months ago, and we’ve been focusing on partnerships.
  • Ok, who are these customers, and what features do they want?

Now we’re getting somewhere. And it was so easy! Now we can move to more important questions. This is a real conversation.

If the purpose of an interview is to exchange information and to assess a relationship, we would much rather spend our time doing that, than trying to decode cryptic phrases and hints.

So answer the question.

2. Win the Argument: Lose the Interview

It might be in school where people learn that an impressive, intelligent answer to a question is necessarily the longest and the most complicated one. It might also be in school where we learn that the one who speaks last has won the argument. We probably learn that from watching our teachers. But are these really good lessons?

Among the worst qualities we observe in some founders is the need to triumph, rather than to persuade. But winning an argument is different from convincing someone you may be right, or that you at least know what you’re talking about. Winning is not the goal here.

Trust your interviewers to see you as a human being, and they will like you for it. Treat them as human beings, and they will love you. But make the interview into some sort of contest for control of the subject matter and the upper ground, and they will end up wanting to get rid of you.

So communicate. Don’t argue.

What’s the best answer to a question you don’t know how to answer? Try: “I don’t know.”

You might be surprised how much investors will respect a founder who is not afraid to admit they don’t know everything. In a room full of smart people, there are always going to be things you don’t know that others do.

When answering a question, watch the interviewers, and if they seem ready to speak or unsure what you’re saying, ask them: “is this answering your question?”

So much of what we do at StartupYard involves unlearning and deconstructing the behaviors and impulses that stop founders from being great communicators and effective leaders. Most of that boils down to their motivations in any given situation. What do you want to accomplish here? Do you want to win, or do you want to be understood?

So start with this simple goal in mind: you want the investors to know you. You want to get to know them. If in the course of an interview, you can achieve this basic understanding, on a human level, then you will have succeeded.

3. Look Like You Belong Here: Because You Do

My father wore a suit and tie to work for 30 years. When I got a bit older and started working, I told him I’d never wear a suit and tie to work.

What he said sort of took me by surprise. He said: “we dress according to social customs, not just to show respect for others, but also to show self-respect. We dress to show that we feel we belong.”

I still don’t wear a suit to work, because I work with startups, and nobody does. But still, I notice when a person is poorly or inappropriately dressed for any given situation.

And that can swing both ways: a guy in an immaculate 3-piece suit who wants to talk about his startup is as out of place as the guy in the bathrobe with sleep in his eyes. Neither belong in that situation. Failure to dress like you belong can show that you don’t respect the social customs of your surroundings, but also that you don’t see yourself as belonging to them.

So think just a bit about how you look. Do you look like a startup founder? If you’re not sure, you may need to think more about this. Not too much. But a little.

4. Plan Ahead: Most Questions are Obvious

Here are three things any startup investor should ask you about:

  1. What is the problem you’re solving?
  2. What is the solution?
  3. Who are your customers?

If you can’t answer these three questions clearly, and succinctly, then perhaps you don’t know the answers well enough yet.

And when you sit down to answer these questions, try and imagine an investor hearing this for the first time. What is that person likely to ask you?

  • The problem we are solving is that X can’t Y when Z
  • Why does X want to Y when Z?
  • They just do…

Oops. Do you know why your problem is actually a problem? It might surprise you how frequently founders aren’t all that sure that the problem they’re solving is even a real problem at all.

Because “answering the question,” as in literally stating the problem, is not really answering the question. The object of the question is to get a useful answer: Why is it a problem? When is it a problem? How is it a problem? What is the result of the problem?

So be ready for a follow up. It will come.

Remember, a good investor, especially at an early stage, should be evaluating your ability to think clearly, as much as the idea you are describing to them. They can hate the idea, but be impressed with the clarity of your thinking. That happens to me all the time.

We have invested in companies whose ideas we didn’t fully agree with, because they showed they could think well and be receptive. That’s more valuable than an idea you love, and a founder who can’t answer simple questions about it. In assessing which of those two founders is likely to be a success, the one who can answer questions is the one we pick every time.