5 Questions To Ask Before Sending Any Marketing Email

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Recently, one of our startups got a big boost of incoming users. I asked the founder, “what did you do to take advantage of the situation?” “We increased promotion in our channels,” came the reply.

Alright. Well, as we discussed recently, there is a big difference between user acquisition, and user retention. If you suddenly find yourself with a big group of new users on your hands, you have to be focused on retaining them. Andrew Chen pegs the most vital period for activating and retaining users at just 7 days from app install, for mobile apps.

Chen is right when he says that customer lifecycle emails are not the end-all for customer retention or activation. But they can play an important supporting role, particularly if your product has anything like a learning curve involved- that is, if it takes users some time to understand how they can really use it.

Customer retention can be aided even within the first visit, if the onboarding process establishes behaviors and patterns that can be activated again later on. You can show users what life will be like with your product, and get them to “buy in,” by doing a few things right away.

But once you have established a relationship with a user through the product, you will probably want to make use of some smartly timed email marketing to further activate and convert that new user.

After talking with the founder, and sharing some typical email activation and conversion strategies that I have picked up over the years (which I think I will write about more in another post), I thought it might be a good opportunity to pose some important questions that startups should ask themselves before sending any marketing email.

No matter what kind of email you’re sending, these questions can force you to examine the purpose, the content, the goal, and the timing of any marketing email. They are as follows:

1. What Is the Goal?

Before hitting send, ask yourself what you hope to get out of this email. Do it not just in the sense of what your ideal reaction to the email is, like “I want the user to know about a specific feature we have,” but in terms of what the campaign as a whole is meant to do.

Make sure that the email has a goal that is trackable. “Informing our users about a new feature,” is not an easily trackable goal. But it is trackable if, for example, you give those users a way to show they know about the new features, or if you track user behavior before and after the email is sent and read.

This should lead to a few more questions: do I have a success benchmark for this email? Open rate? CTR? Conversions? Hits on a landing page? Engagement with the product? Do I have an easy way for the users to react to this email? Is there a clear CTA (more on that later)?

Try as much as possible to tie the email to some real data points, and to have some expectations for what it will accomplish. If you meet those goals, you can use the experience to replicate the good results. If you don’t, you can look for specific problems, or ask someone else for their input on where it all went wrong.

2. What is your Claim?

Every marketing email -in fact every email- has a basic “claim,” and often more than one. A claim is a statement of fact, or values, which you hope will be received by the person who receives the email. A claim doesn’t have to be said in words, but it has to be felt. It has to come out of reading the email, that this is the reason you are communicating with the user.

Try and spot the claims in this fictional marketing email:

Dear Lloyd,

It’s that time of year again! The leaves are turning, and the snows are inbound! And here at XYZ Inc, we’ve been working on an exciting new way to keep you warm during the coldest months.

Check it out here. Get a special discount of 25% if you purchase before Nov. 30th!

Bye!

XYZ Inc Team

Wow, well I’m definitely intrigued here. So what’s the claim? I can spot a few candidates:

1. You need this product for the winter.

2. We are a cool innovative company.

3. Our products are affordable.

All that was accomplished without directly saying any of those things. But these are very clearly communicated claims.

The claim can be many things. It can be something really simple, like “we care about you.” Or it can be “this new feature will make your experience better,” or “we understand you and your problems.” It can be very direct: “you have 6 days left before your plan expires.” It doesn’t ask users to do anything- that’s for later. Instead, it is simply the broader message of the email.

Try, as an exercise with yourself, to put your claim into clear and specific words, in your own thinking, before you send the email. Ask someone else to review the claim, and tell you what they think it is.

When we are writing community emails to mentors, teams and our community, StartupYard Director Cedric Maloux and I often start with that question: “What are we claiming here?” Then we make a bullet point list of claims we could be making, and we choose the one that is most clear and true to us. Then we make sure that our communication centers around that claim in some way.

So, what is your claim? Force yourself to answer that question clearly.

3. Where is the CTA?

The CTA, or Call To Action, is the thing you will ask your user to do, once they have seen your claim. There is a clear CTA in virtually every email I write- even personal emails. Marketing tricks are, after all, just systems for thinking about normal means of communication.

A CTA is usually directly tied to the goal of the email. What do you want the user to do now? Do you give them a foolproof way of doing it?

I don’t want to speak in absolutes, but it’s difficult to imagine an effective marketing email that doesn’t contain some kind of CTA. A CTA doesn’t strictly have to be a button or a link either. You can have a CTA that doesn’t even lead to your product or site (although the results of such a CTA are harder to track).

A common mistake is for a CTA to be too vague, or to be too complicated. “Please share this on Facebook.” Ok, but where’s the share button? Where’s a link to let me do that?

And another common mistake is to not inform the user of what will happen when the CTA is followed. This is a common reason why people don’t follow CTAs- because they don’t really understand what is being asked of them. Emails come in, and because the author was concentrated on getting the CTA out there, it appears at the top, possibly with several exclamation points:


“Dear User,

Click here right now it’s amazing!!!“

Not only is this a pretty good way of getting yourself caught in a spam filter, it also just doesn’t really work. People want to know what they’re really being asked to do before they decide to do it.

You need to set up a CTA with some context, and possibly follow it with some reassurance:


“Dear User,

You may be interested to know that we just added a really cool feature we think you’ll like!

Click here to check it out. It’s a way of sciencing your tech using tech science. Cool right? “

Very cool. I’ll check that out, because I know what I’m being asked to look at.

4. What Time Are you Sending this?

This is as much about understanding your own users, as following any specific rules. Will your users get your email at work or at home? How old are they? How late do they stay up? How early do they rise? What time of day are they likely to follow the CTA you send?

Anyone who’s ever received pornography and viagra spam emails knows that they come at night, because that’s when spammers think you’re just loose enough to give them a look. Well, they do that because it probably works.

So take a look at your user’s behaviors, engagement times with your product, and the data you’ve gathered in the past in order to time your emails to maximum effect. Don’t be afraid to experiment! There’s no rule about this. It’s whatever works.

5. Who are you sending this to?

Just as important as what, and when, is who. A really common problem with startups that are growing their marketing efforts via email is that they don’t pay enough attention to grouping and categorizing their users, and sending emails that are likely to have the highest impact for those user groups.

For example, do you ever wonder why so many online services ask for your birthday, despite the fact that there is no conceivable reason why they should need to know it?

Recently i was suggesting to one of our startups that they try a “Birthday Campaign,” which is an old favorite of email marketers, and it goes like this: On the user’s birthday, you send the user a limited time discount offer to upgrade/extend/buy your product, but only within the next 24-72 hours (the details depend on what your goal is, and how long it should take a person to make a buying decision).

It turned out the founder I was talking to was not collecting birthdays in his onboarding process. Too bad! He should start doing that, and see if he can do something with it.

But that’s not the only way to go about it. Companies collect birthday info because they know that people spend more on or around their birthdays and, crucially, they ask people for things they want. Parents give kids money on their birthdays, as do grandparents, and spouses drop hints to each other about what they might like.

And there are lots of personal details that can be taken into account. Should your Christmas campaign really include customers in Israel? Should your back to school discount reach users in their 30s? Should your valentine’s day campaign go to single people? You don’t have to collect an extensive survey on your users in order to learn at least a few things about them, but those valuable bits that you do know can make the difference between a successful campaign, and a flop.

Patrick Riley, of the GAN, visits StartupYard

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Last week, in a private meeting with StartupYard mentors and team members, Patrick “Pat” Riley, CEO of the GAN (Global Accelerator Network), hosted a Q and A, and presented GAN’s vision of the current and future landscape for tech accelerators worldwide.

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Riley presents to StartupYard Mentors

Riley, who began his startup career at a startup helping hospitals and medical centers to provide affordable medication to underserved communities, joined TechStars as Director of Business Development in 2011, launching the GAN the same year. Today, the GAN spans 6 continents, and includes over 70 selected accelerators in over 100 cities. The GAN is a selective network of accelerators, including the top 3-4% of accelerators worldwide, that together have accelerated 2500 companies in 4 years, together raising nearly $1 Billion in financing, and creating over 11,000 new jobs.

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Pat visited StartupYard’s homebase at Node5 Thursday, meeting with half a dozen StartupYard startups.

 

Here’s what he had to say about central Europe as a whole, and about the startups he met:


“Central European startups are incredibly unique. They have very strong technical skills, the wherewithal to think about other markets on Day 1, and a laser focus on building products that solve a personal problem. We’re also seeing groups like Microsoft set up their development shops in Central Europe because of how inexpensive salaries are in the area – and startups are taking advantage of that as well.  Because of all of this, we’re seeing the Central European startup scene evolve and develop in very positive ways.

At the same time, there are headwinds facing these startups. First of all, capital is scarce. In the entire Czech Republic there are just a few early stage venture capital firms [ 2 of which, Credo Ventures and Rockaway, are both StartupYard investors]. For a country of 10.5 million people, there is a giant opportunity for greater funding sources.

Secondly, cultural, linguistic, legal and market differences plague many Central European startups. Starting in another neighboring market isn’t anywhere as easy as doing business in another state in the United States. That neighboring market in Europe is a completely different country with different currencies and regulations – making it very difficult to set up shop easily.

Third, while not all Central Europeans are this way, many are missing the “sales” side of their business. I heard over and over again how a customer’s problem was going to be solved technically – when in reality the tech is amazing– it’s the presentation that is lacking.

What many European startups are missing is the ability to sell their product well. During my meetings with startups, I asked many of them what was the vision for their startup, with the answer typically being around how the product has some cool feature. To sell investors, customers and partners, Central European startups need a vision about how they’re going to change the world – and why anyone should care about their startup – because unless you sell me on your vision, no one else is going to.”

 

The Need for More Institutional Investors

During his presentation at Node5, Riley mentioned the increasing role that accelerators have played in recent years as drivers of investment. Considering that startups have an average lifespan, according to Riley, of a little less than 8 months, early stage investment is one of the most common points of failure for startups across the board.

Former SY Executive in Resident Phillip Staehelin

Former SY Executive in Resident Phillip Staehelin

Riley discussed efforts that other accelerators, like Y-Combinator and Techstars, have made to bridge this gap in early financing, either by increasing the availability of convertible notes for companies who attend their programs, or by creating follow-on funds for their own startups.

Shifting Roles of Accelerators

Riley also discussed the shifting roles of accelerators on an east to west axis. Accelerators in Eastern and Central Europe continue to function much as those in California and Western Europe have for over a decade, as nurturing environments for entrepreneurs to grow their networks and experience level, as they test out and perfect their products and go to market plans.

StartupYard mentor Amit Paunikar

StartupYard mentor Amit Paunikar

But as accelerators in the West have matured, and competition has become more fierce not only between startups, but also between accelerators (as well as now between accelerators and other early stage investors), they have also continually provided more funding, been more selective, and offered less and less in terms of the kind of support that accelerators had been known for offering. Workshops, training, and team building have been reduced in favor of more intensive mentoring, and more focus on pitching and business planning.

This confirmed the experiences that Ales Teska of TeskaLabs, one of our startups from 2015, described in making the transition between StartupYard, and TechStars London. Riley pointed out that in countries with fewer institutional investors, and less “startup IQ,” awareness of how to work with and deal with startups is still a major roadblock to success, for which more “hands on” accelerator programs are still needed.

The Role of Mentors

According to data the GAN collects, up to 90% of startups accepted at accelerators are recommended by members of the accelerator community, particularly by active mentors. This again confirms our experience at StartupYard, where many, but certainly not all of the standout applications have come from personal referrals.

Knowing Your Numbers

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Startups are all about numbers. Churn, burn, runway, ROI, CPC, ARPU, CAC, LTV, DAU, MAU, and so on.

There are a lot of metrics and KPIs that startup founders are expected to have at the tip of their tongue, every time they talk about their startups. But there’s a good reason. These numbers are meant to give you an unbiased view of your business. If you don’t know what they are at this exact second, well, don’t panic!

Here we won’t so much cover which numbers are most important. Each team, and each member of a team, should have their own metrics to watch. This post is going to be about how to keep and use your numbers in as productive and non-misleading a way as possible.

Focusing on the Right Numbers

Startups can easily fall into the habit of deceiving themselves, and inevitably others, with their own data, by only focusing on the data that sounds positive, and on positive ways of presenting it.

Startup founders will tend to hone in on the metrics that they know are improving over time, and ones that sound impressive without much thought or context. For example, I’ve seen startups ignore monthly active user numbers, but constantly talk about the number of their downloads in the app store or on Google play.

And no surprise- the cumulative number of downloads never goes down, so it always paints a sunny picture- even if that picture doesn’t mean anything. Savvy investors know this very well, and they’ll see through it in an instant.

So beware of vanity metrics: number of downloads, visits to your website, number of followers, number of likes, etc. These numbers rarely if ever go down, and they don’t give any useful information about present conditions. Much better are numbers that can change quickly.

First Things First

You have to focus on numbers that you can actually improve, and you should focus on improving one KPI at a time. Overall, there are really only a few indicators that matter most in the life of a young startup, and they are linked: user acquisition, user retention, and conversion.

If you don’t have a handle on these numbers, then fiddling with other metrics will make far less of a difference over time.

Acquisition -> Retention -> Conversion

When a VC or angel investor asks for your “traction,” while they might be interested in several data points, these are three numbers they’re definitely interested in first. How many users find your product (acquisition), how long do your users stay with your product (retention), and how many of the total users are willing to pay for it (conversion)?

Why in that order? First, the sales funnel starts with user acquisition. You need users in order to begin thinking about retention and conversion.

You can’t optimize your sales funnel without having some users in it already, so while acquisition comes first, it can’t be the first focus. Early user acquisition doesn’t have to be expensive. It can be organic and relatively low cost. You shouldn’t invest lots of money in a non-optimized sales funnel anyway.

Early users are often early adopters, or those who can reach in your own network. But over time, you will be looking for a wider market, and you may have to spend more at some points to get users.

Once you have users, you have to focus first on what you *can* optimize, which is your user retention. How many people leave your product after the first month? If they stay a month, how much longer are they likely to stay? Your retention rate has a huge impact on your ability to grow your userbase, and eventually revenue. 

User retention, more than conversion, is key to building an audience for your products that really lasts, and knowing these numbers in intricate detail is vital in making your case to investors. If user retention is very low, then the work of acquiring new users will not only never get easier, it will continually get more expensive.

Why? Because if you want to scale and grow your revenue, you’ll have to continually spend more and more to acquire new users, all while fresh users become rarer. Investors want to see the opposite trend: as your userbase grows, user acquisition, on average, should get cheaper and easier.

Keeping more of the users you acquire will, over time, provide a larger population of users to convert to paid products, or cross-sell to other products, or any other of a hundred monetization strategies.
Plus, with a higher population of users, you can find ways of driving down acquisition costs, and can achieve more positive word of mouth, better search ranking, more visibility on social media, and many other advantages.

Once you have optimized user retention, and you are keeping as many of your incoming users as you can, you can start working on both ends of your sales funnel, bring more users in, and converting more of them to paid products, like subscriptions.

But focusing on converting users, when your retention numbers are low, will yield few results, and over time, those results will diminish without strong retention numbers.

For a lot more on this kind of problem, you can check out AARRR by Dave McClure, which is an insightful and hilarious collection of tips on what metrics to look at, how to track them, and how to think about them in a startup.

Here is the core AARRR acronym he uses:

startup-metrics-for-pirates-aarrr-startonomics-sf-2008-7-728

Staying On Top of Things

I encourage startups to build a small “dashboard” of their basic metrics using Google sheets or charts, and keep it constantly updated. Over time, new metrics can be plugged in as they become a point of focus. An early stage startup might worry about user retention, whereas later on, the user engagement figures might be more important. It’s important to put an emphasis on the numbers you can actively improve, and to contextualize your work based on the numbers.

Don’t start tracking things only *after* you’ve made a change. Start tracking it before the change occurs. Progressions are far more important than numbers without any context: what was that number last month, compared to this month? How has it changed? What is the growth curve? Is it static? Is it dynamic? Those are things investors will want to know, and things you need to know to be sure that what you’re doing is having any effect at all.

And by keeping all your KPIs in one place, you can get a reasonable overview of the business whenever you need it, or whenever someone asks you a question about any particular KPI.

In the hierarchy of bad answers to investor questions “I don’t know,” is not the worst. You can’t know everything all at once. But once you give that answer more than once, consider making it a part of your overview from then on. There’s nothing more frustrating for an investor or a mentor than to ask a startup about the same metric over and over, and have the answer always be the same. If they’re asking, it’s probably important information for you too.

Giving Your Work Meaning

Focusing on how numbers change over time can affect the way you work. It can make you aware of weaknesses, and it can alert you to hidden strengths.

For example, a startup at StartupYard was planning to completely re-work the onboarding process for their mobile app. They planned to introduce a mandatory trial period for the product, and were trying to improve the conversion rate to their paid product.

So I asked the founders: “What have been the current conversion rates over the last few months?” Silence. Then, “well, they will be different once we introduce the new onboarding, so we’ll track the improvement from then.”

These are smart guys, definitely. But they were so focused on building the thing that was going to convert more users, that they didn’t even bother to check whether it actually would accomplish that goal.

But once they took a look at the data, they were able to see a clear, measurable improvement in the numbers they were targeting. When this startup’s team did start focusing on the conversion numbers, they used that focus to steadily improve their conversion rate over a longer period. Last we spoke to them, the conversion rate (and therefore revenue) was significantly higher than they had originally hoped- and that owed to how much focused work they had put into improving that metric.

I believe that if they hadn’t been focused on the conversion metric, they would have implemented those changes and moved on to something else. If their conversion rate had improved then, it would have been no better than a coincidence. But their focus on the numbers motivated them to keep improving over time.

Central Europe Accelerator

The 4 Ways Applications to StartupYard Fail, and How to Avoid Them

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With just 9 days left for Startups to apply to StartupYard 2016, we’re going to share a little secret with you.

One of the questions we often get from would-be applicants is: “what do you focus on in the application? What is going to make me stand out?” The answer is of course: “the team, and the problem you’re solving for customers.” That encompasses most of what we care about when looking at written applications to StartupYard.

Apply Now to StartupYard 2016

Aside from that, we’re looking for your sense of awareness. Who are your real competitors? Where could you be in a few years time? What is the grand design?

And here comes the secret: virtually *any* idea with a technology component and a global market could pass the first 3 rounds of our 7 round application process. That’s not to say that getting into StartupYard is easy. We ultimately accept fewer than 3% of applicants to the program. But the vast majority of applicants never get past the first 3 rounds.

Failing at the Easy Stuff

The fact is that if you’re asking us what you need to do to get to an interview with StartupYard’s selection committee, you’re well on your way to getting the interview anyway. We look for people who don’t wait in line patiently. We look for people who ping us via email and come to meet us in person, and treat this process the way we hope they treat everything: as a challenge that can be hacked and optimized, and overcome through hard work and critical thinking.

As part of the pre-screening process for StartupYard 2016, we have already begun reviewing submitted applications. As always, this process is a scary one. We have to make big decisions based on a small amount of data. And that only gets worse when applicants don’t bring their A game to the application process.

Most startups who apply fail at the easiest part of the process. The application takes, conservatively, 2 hours to fill in. But we know that if a person can’t muster the energy to project ambition, focus, and passion through such a broad set of questions, then they aren’t likely to be the kind of founder we are looking for in the first place.

Still, we know that some people just never shine on paper. There have been plenty of applications that have left us very unsure in the past, only to turn out to be from startups who, once the lights were on and the Skype camera rolling, blew us away with their energy and focus.

The sad truth is that there are undoubtedly those who never make it that far, but who probably deserve to be heard.

4 Ways Applicants Fail Before they Start

There are a handful of common failure points for written applications. Here are the ones that will get yours trashed the fastest:

  1. The Grocery list application

Many founders are engineers, and engineers think in peculiar ways. These applicants treat the application like a dumping ground for data, instead of a medium for communication.

So in response to, say, a question about traction, we’ll get a list of data points with no sense of what they are connected to: “50% growth in user acquisition via social media in first 3 months,”

That’s nice, I’m sure, but it doesn’t tell us much.  How much did they spend? What was the original number? A narrative response is helpful for reminding yourself that you’re not talking to somebody who knows anything about you, your product, or its history.

Treat the application as you would an email to an investor. That’s pretty much what it is. Introduce the concept, talk us through the basics, and establish an argument and a narrative as you answer the questions, as to why we should accept your team. If it’s a list of numbers, they may make sense to you, but they won’t mean anything to us.

2. N/A

If we asked the question, assume it means something. Assume it’s important to us, if not to you. But many applicants leave questions blank, or answer “N/A.”

None of our questions are inapplicable. If we ask whether your team has worked together, and you haven’t, then that doesn’t mean the question doesn’t have an answer longer than “no.” How about: “We haven’t worked together, but we know each other because we had mutual friends in X industry, or at Y club or community event.” Tell a story about how you know each other. It isn’t hard.

One of the worst questions not to answer is about traction. We simply don’t take companies that have no traction. That’s because “traction,” is really about more than revenue, users, or sales. It’s about the company as a whole, changing and growing from one month to the next.

Tell us what you’re doing, even if you’re not adding users or making any sales yet. Every company has traction of some kind: “talked to 50 target customers,” or “developed prototypes,” or “raised 5,000 Euros from friends.” That’s all traction. “6 Months ago I had an idea, 3 months ago I found a co-founder, and now we have a business plan and are working on a prototype.” Great. Each of those things move a company forward, and are a kind of traction we want to hear about.

3. The Non-Answer Answer

One of the biggest red flags for us on an application is an inability to connect with the questions being asked.

And I would say the most common question to get a “non answer answer” is the question: “What problem are you solving?” Out of 10 applications, I would estimate that about 3 answer this question in a remotely straightforward manner.

This is of course not a problem with just startups. It’s human nature to answer questions according to what one thinks the questioner really wants to know. Often startups spend a lot of energy justifying their idea by talking about the market, because they think that’s more interesting to us.

But this tendency can cause people to avoid answering the question that is being asked, which is about what problem customers actually have, that you will solve. Many applications jump into a sales pitch which states every benefit their product offers, without addressing the basic problem it is solving.

What problem are you solving? “Well, we allow customers to something something 5 times faster and 3 times cheaper than something something, and we do it using the latest something, which is 30% more efficient and better for the environment than something something.”

Fantastic, but what is the problem? Is the problem that the competition isn’t fast enough? Not cheap enough? Not good enough for the environment? The problem you’re solving says everything about what kind of company you are, and who you want to sell your product to. Is it for people looking for something cheaper? People looking for something more powerful? People looking to save the environment?

A litany of benefits is not a coherent argument in favor of your product. Nor is the size of the market. Those benefits have to be worth it, to someone, to pay for. If not, no matter how big the market is, you won’t be a part of it.

Consider the Consumer

Just consider yourself and your own behavior as a consumer. Do you use Uber, or DropBox, or Google? I’ll assume you use at least one of those services.

Now, some reading this may not remember the first time they used Google, because it’s been a part of the internet since they can remember. But I do remember my first time using it, in the 11th grade. It was just after 9/11, 2001, and I was looking at Yahoo news articles, trying to find information about the terrorist attacks.

“What happened to that 3rd plane they were talking about on the news?” I asked a friend on AIM (this was before the days of Skype). “I can’t find anything on Yahoo.” All my searches were returning bad results. It’s hard to remember now that a search engine couldn’t always be counted on to read your mind.  “Google it.” “Huh?” “Google it, with Google, it’s the best way to search stuff like that.”

And so I, like a few billion other people, typed in www.google.com, and 14 years later, I do more or less the same thing every day.

Consumers react to problems, and only then do they search for features. My problem, on that day in 2001, was that I didn’t have information I wanted, and I didn’t have an easy way to get it. Google solved that problem.

With every product you use, there is an initial reason you started using it. Even if it was a direct competitor for something you were already using, it did something the competition did not do, and you needed. I switched from Yahoo 14 years ago because it wasn’t allowing me to do one thing I wanted. Yahoo had many features that Google didn’t, in those days. But Google could do what I needed, and Yahoo couldn’t.

We are looking for that one thing that you offer, that makes you Google in 2001- the thing that makes someone who uses your product say: “oh, use this, it’s the best for that particular problem.”

Your problem doesn’t have to be a new one either. Google’s wasn’t solving a problem people didn’t know about. Neither is Uber, or DropBox, or many other hyper growth startups. It was just that the competitors weren’t doing a good enough job. There was room for a new solution.

4. Misidentifying the Competition

XKCD's Take on "new products."

XKCD’s Take on engineers and “new products.”

And this leads to the our last great failing. Ignoring or misidentifying the real competition.

I say, the “real competition,” because defining your competition as a startup is a very tricky business. Broadly, your competition should be whatever your target user currently does to solve the problem that your product is built to solve. That’s true as far as it goes.

But where many startups get into trouble is by picking companies that “look like” their own, and calling that the competition. That’s not wrong, per se, but it isn’t very insightful or helpful. It leads to a lot of applications where the competition listed is a handful of companies most people have never heard of, including us.

Think about that:  if your competitors aren’t expanding globally, is that a good argument that there is a strong market for your products?

And by picking competitors that are very similar to yourself, you undermine your ability to define yourself in a broader market. You are not really competing for the small number of users that these smaller direct competitors already have, after all. You ultimately want people who have never used any product in your category to start using yours.

If you’re a car company, you want to sell people their first car. You don’t want to spend your time convincing people to give up somebody else’s car, which is perfectly fine for them, and switch to yours. The arguments in favor of owning a car vs. not owning one are easier to win than an argument over which of 2 very similar cars a person should own, particular when they already own one of them.

When I’m working with startups on product positioning, I often use the example of Uber. Who are Uber’s competitors? The answer is more complex than you think. If Uber thought its competitors were other taxi companies, or other ride-hailing apps, then this would affect its behavior in specific ways. It would try to do just what taxi companies do, only somehow better. Or it would try to do what other ride-hailing apps do, only faster and cheaper. It would be competing for people it knows are in that market.

But Uber’s success has been tied to the fact that it doesn’t hold itself to these lowly ambitions. It wants to compete for much bigger markets- to replace a whole range of consumer behaviors. Uber wants to be an alternative to owning a car, to renting a car, to hailing a taxi or to taking a bus. It want’s to be an alternative to drivers for working for a taxi company, or even having a summer job. It wants to be an alternative to ordering take-out food, or picking your mom up at the airport. It wants to replace many common behaviors at once- not just one or two.

Would Uber say their main competitors are taxi companies? Or is their main competition found in modern car culture itself? Which market is ultimately the more promising one?

So expand your horizons, and pick competitors according to the customers you want; not the customers that you know are already in the market. It is perfectly fine to aim high. We don’t laugh at companies who name big competitors. Big competitors have many vulnerabilities, and the bigger they get, the harder it is for them to keep growing and changing.

Give us Your Big Vision

The real shame is how often we talk to a startup in person, and find out how much better they are than they look on paper. “I didn’t want to tell you the big vision yet, because it’s in the future.” We hear that surprisingly frequently. But why? Tell us your big vision; share your wild ambitions. That’s why we’re in this business!

Your big vision demonstrates your passion and the scope of your thinking, and you shouldn’t be afraid that it will make you seem ridiculous. To some, it will. But there is no highly successful startup that wasn’t laughed out of at least a few rooms before they struck gold. If people don’t buy your big vision, then keep working on it. If you work hard enough on it, it will eventually be realistic, and maybe even achievable.

SentiSquare: Big Data Means Big Mistakes for Brands

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Last week, I sat down with Founder and CEO of StartupYard 2014’s SentiSquare, Josef Steinberger, to talk about how the company took 3rd place among 72 challengers at the UPC: Ignite innovation competition, and what SentiSquare has been working on since leaving the accelerator last year.

sentisquare-logo Hi Josef, how have things been going with SentiSquare since you left StartupYard in 2014?

Wow, has it been 18 months already? We have been quite busy, and we’ve signed a few really high-profile clients, including Nestle and T-Mobile in the Czech Republic.

Our most exciting recent news is that we took 3rd place in the UPC competition: Project Ignite, which is for the best tech entrepreneurs in the country. We took 100,000 CZK (about 4,000 Euro), which we plan to use on further development of the SentiSquare service.

How did you get involved with the UPC contest?

Stanislav Rejthar, our financial director, is quite well connected to business in Prague, and he found out about the competition, so we decided to enter. There were 72 projects in the 1st round, with 30 semi-finalists, and 11 finalists. Five finalists passed to finals from the Facebook voting and 6 were selected by jury. And we took third place overall.

The first place winner, this is a bit funny, but they are actually working on turning pig-dung into water and other nutrients. So we got beat by pig shit :laughs:. But we were really happy with the results, and the upside is that UPC has expressed a lot of interest in working with us going forward.

Can you talk a bit about how you can help companies like Nestle, T-Mobile, or UPC, without talking about the specifics of those clients?

Sure. What we do, as you know, is a sentiment analysis across the whole web. This means that we are able to tell our clients in good detail, what their customers are talking about, and how they feel about those topics and specific things they discuss. We get this info from social media, forums, websites, and comment sections that number in the 100s of thousands and more.

So, for example, we are able to tell a large name brand that is about to launch a marketing campaign based on a specific topic, what people are already saying about that topic, and the feelings of consumers related to that topic. And we can give this analysis in much more detail than simply: “good or bad.”

In fact, one of the reasons we start working with the brands even before the campaign starts, is that we can help them to shape the nature of the campaign to get a better response. We can tell them what their consumers are likely to respond to, and it works.

Can you give me an example of how that works?

Yes. For one client, we worked with them on launching their company blog. This was a pretty large brand. They wanted to launch their blog in the new year, attracting people who were interested in new year’s resolutions and this kind of thing.

So, the company had a list of topics that they thought people would be searching for on Google, which they could take advantage of by writing about those topics, in relation to their own products. What we found, though, was that there were a number of topics being discussed quite a lot related to new year’s resolutions, but involving topics that were not included in the campaign’s key word targets. It happened, however, that these topics were very relevant to the company, and that PPC prices for these search terms were a very good value for the price.

So we were able to identify, among the company’s core demographic, a topic that was not being served, and allowed them to have a very good search position for those terms.

We did more than just help the company understand what people liked and didn’t like, but also things that the company had no idea they were talking about at all. That was a big advantage for them and they saw the results in their search traffic and ROI for that campaign.

Senti-CTA

Click to learn more about SentiSquare

Are big brands surprised by what you tell them?

All the time! Marketers and managers like to have very clear and precise information, that they can sort of divide into yes/no decision processes. So, for example, they want a clear yes/no answer to the question: “is my campaign working?” But what we are always showing them is that these questions are more complicated than they want to make them. And in that complexity lies a lot of opportunities that are not being taking advantage of.

For example, a big brand might say that a campaign is a “success,” if people are talking more about their brand after the campaign than before. That is easier to measure also. But campaign managers can’t tell whether people are talking about the actual messaging of the campaign. They have to assume that more people talking about the brand or product means the messaging is working, but it might not be. Even if they use simple positive/negative sentiment analysis, they can’t tell why people feel positively or negatively. They can’t tell if the message is working as intended.

We can help brands determine if people are talking about the messaging that the brand is using, and this can give a much better sense of whether the campaign is a success. We can also do pre-analysis to understand whether the intended audience will be receptive to that message, and if not, to what messages they might be more receptive.

How do big brands currently determine what their campaign messages should be?

It’s mostly about intuition. Some big companies literally have someone going through thousands of customer posts on social media and forums, and trying to glean some kind of insight about what customers are interested in. So it is possible to get a subjective, intuitive sense of what is important to your customers. But it is very difficult to get an objective, provable figure to support that intuition.

On the other side, it is relatively easy to analyze the sentiment of your brand’s audience in positive/negative terms, but that doesn’t help you at all to understand what your messaging should be. Even positive/negative terms are super-subjective. They are down to culture, to context, to the type of person talking, and the person they are talking to. A human can recognize sentiment when we see it, but it is much more complicated to see sentiment in the aggregate. It is very easy to think you understand it, when you really don’t.

We are providing a kind of intuition engine. It has the reach of a large scale data tool, but it can provide the subtlety in insights of a human.

So you help companies to avoid false positives in sentiment analysis?

False positives or also completely wrong assumptions about data.

There is a really funny example we experienced recently. We were doing analysis of the wine industry. The customer had already had another company scrape a large amount of data including basic search terms, such as the word “wine” and its variants in Czech. They wanted to see what kinds of wine people were talking about in a one month period. So far so good.

Now, you can do a broad sentiment analysis based on positive or negative keywords, and give some impression of whether people have good or bad associations with certain types of wine, right? Well, not in this case. Our analysis was able to show that a huge amount of this data (about 80% actually) was totally useless. Why? Because it wasn’t about wine! It was about cars.

Cars?

Yeah, cars. The data scraping had caught a lot of information about VIN numbers (vehicle identification numbers). It had also scraped a lot of information about Vin Diesel, the actor. Wine, in Czech, is written as vino, or vin, or some variation. So without our analysis of what the subjects actually being discussed really were, the client might have made a lot of really wrong assumptions about what people feel about different wines. You think a lot of people like red wine, but they really like red cars! Or maybe they say they love wine, but they are really fans of Vin Diesel movies.

The data would be worse than useless. It would cause you to make all kinds of wrong assumptions about your audience.

But we were able to pre-process that data, and make the final data set much more valuable for analysis.

You said earlier that you can give more than a black and white look at customer sentiments? How do you do that?

There are a few ways.

One of the problems with sentiment analysis for large amounts of written text, is that there are a lot of positive and negative keywords mixed together. It doesn’t make sense just to count them up, because the actual construction of thoughts is not so binary.

So what we can do is to provide a sense of the intensity of sentiments overall. Is a customer generally happy, or generally unhappy? A customer can use a lot of negative words, but still be mostly satisfied with a product. Some people just enjoy complaining, and a brand shouldn’t count that person as an unsatisfied customer. So we can provide this shading of sentiment by intensity.

There is also aspect based sentiment analysis. This is the analysis of not just a brand as a whole, but as related to specific aspects of the brand and its products. Maybe people love a brand, but they have negative sentiments about its prices. Or the opposite can happen. Maybe they love the functionalities, but hate the color. By combining these insights, we can present a much more realistic picture of a customer than simply: like/dislike.

How are you different from other monitoring services like BrandEmbassy (also a StartupYard Alum)?

BrandEmbassy provides monitoring of keywords, which allows service representatives to see live conversations on social media and elsewhere. The big advantage for them is that they can route those conversations to the appropriate person on their team and engage directly with the customers.

What we do is the eagle eye view of all those conversations- we can tell companies what the totality of all those conversations really means. So it has a bigger effect on a company’s overall communication and branding strategies, whereas a company like BrandEmbassy helps a company to improve its small-scale interactions with individuals.

What are your plans for the near future?

A big request is for our system to be available in real time. This is something that we really want to develop more in the near term. Having the ability to see the conversation changing online at every moment, and being able to understand how people feel about things from day to day, is an important thing for big brands.

As conversations online get only more numerous and also more specific, the job of keeping up with that volume is getting unmanagable for the biggest brands. SentiSquare can provide a pulse of conversation that really provides valuable insights, even in the day to day. Brands can use SentiSquare to get an evolving list of important keywords that are related to their brands.

That list changes every day, but currently it takes a long time for that information to filter into a brand’s messaging. Given the prioritization on the topic or opinion level, brands can quickly get a gist about the actual situation The speed is important, because all the brand managers are busy people. We can make them more responsive to the conversation of today.

We want to change the way people look at sentiment analysis. Things are not black and white, positive and negative. Somebody says something is “big.” What does that mean? It’s not good or bad in all cases. Nothing in discourse is cut and dried, and all sentiments have levels of intensity.

Our clients usually want black and white answers. We have to educate our customers about the danger of viewing their brands in this way. The magic answers that big data is supposed to provide can easily be very wrong. And we can help companies identify opportunities they are ignoring, because they have been addicted to this positive/negative polarity.

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

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

Hi Lloyd – sure, thanks for having me.

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

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

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

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

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

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

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

DSC03524

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Why You Need a Sales Oriented Co-Founder

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We already talk a lot about what Andrew Chen calls the product death cycle. The viral chart was created by David J. Bland, but the concept is familiar to many a startup mentor and investor alike. We see it all the time, and no matter how much we try to inoculate our startups against it, its pull is about as powerful as the dark side of the force. It looks like this:

product_death_cycle

Simply put, people like doing what they know. And engineers are good at solving engineering problems. The narrative for many successful startups also appeals to builders and tinkerers. Ultimately, we like to think of all the greatest startups and tech companies as successful because of their innovations, not because of timing or clever business decisions.

And it’s true that the most successful startups listen carefully to what their customers want. Slack has been a recent test case of a company that is totally focused on delivering exactly what its customers need, and innovating as fast as possible to provide it.

But that only works at the beginning. Early adopters know what they want, and can push you to create a product that is a killer app for them. Later, when more passive adopters are looking for the next obvious solution, your product isn’t necessarily going to be made for them as well. Great startups realize this, and begin the work of convincing a new market to use their products.

In the worst case scenario –and this is one we’ve seen personally more than once– a startup doesn’t even listen to the customers at all. When the product fails to sell or to increase its traction on the market, the founders just innovate new features anyway, hoping that the next feature set will magically do what none have done before, ignoring the fact that their market focus hasn’t really changed at all.

This is all to say, that the very best startups don’t just listen to what their customers want. The very best startups find out what their customers will pay for, and then provide it.

Customer Acquisition-Built In

Troy Henikoff, Director of TechStars Chicago, often says, loosely quoted: “If you hire a salesman to go out and sell something, and he can’t, you fire him. But if a founder goes out and tries to sell, and can’t, you change the product. It’s fundamentally different when the founders have customer acquisition built into their DNA.”

At StartupYard, we have continually had it reinforced to us, just how important this is. After taking on teams because we absolutely loved their vision, their products, and the team themselves, only to see them fail because they simply weren’t willing to be sales-oriented, we’ve learned to be wary of even those companies we are very attracted to initially. No product sells itself, and ultimately, we can’t be in this business for the love of products alone.

A team that is applying to StartupYard asked to meet with me this week. Aside from the fact that I love to see a team so keen, I could tell right away that this was a team that understood customer acquisition. They ostensibly wanted to meet with me to find out more about our program, but it became immediately clear that they were trying to figure out how to get into the program; what they needed to do to be sure they would be accepted.

I don’t mind that in the least bit. Of course, our job is to make sure the team isn’t just saying what we want to hear, but that is the job of any accelerator. The startup’s job is to say what we want to hear, *and* to have it be actually true. So I told them what they could do between now and the evaluation period, which is to prove that they can get customers.

They may not be able to sell anything right now, but traction with customers can come in a lot of ways. Will people sign up for a waiting list? Will they meet to discuss their needs? Will they consult on your product ahead of the launch? Will they recommend colleagues to do the same? There’s a good reason that “talk to 50 potential customers” is such oft-cited advice for startups. You can’t help but learn something by doing it.

And if the startup comes back and says: “well, we talked to 50 customers, but only a few said that this is something they would pay for,” then I would wait and see how they had reacted to that news. Did they find out what the customers were willing to pay for?

Having a Customer Acquisition Focused Co-Founder

Every startup is going to find one or two channels that work best for customer acquisition. The problem is that they will likely not be the first couple of channels the startup tries. An initial strategy may work, at first, for a while, but eventually, the startup is going to have to pivot to something else in order to grow.

Or even worse, a startup may have initial traction because it has a really great product. Then when that traction starts to flatten out, the startup thinks that the problem is that the product isn’t great anymore. In truth, that initial burst has just taken them as far as it can, and it’s time to try something new.

We often get the startups that don’t have a customer acquisition focus, but who did get lucky with some early traction, because the product is really fantastic.

I think back on one startup we worked with. They had a freemium SaaS product that was very popular in app stores, and they had had to do very little marketing to grow into the hundreds of thousands of downloads, and tens of thousands of active users. That’s fantastic. That’s part of why we took that team. And their product is really great. Truly.

But when that growth stalled, this was a team that had never even considered putting together a simple email marketing campaign. They hadn’t been concerned at all with customer acquisition or retention; they couldn’t even tell us their retention numbers. When growth slowed down, they started working on the product again- but lightning doesn’t always strike twice. The app’s initial popularity doesn’t ensure it can continue to grow beyond a certain number of users.

And what we often see is a founding team where nobody is responsible when that happens. This means that everyone on the team can take responsibility for their successes (and they do), but none have to take responsibility for the failures when the product stops selling.

There is little we can do to help startups like this one find religion in the form of focus on customer acquisition. It may not be in their DNA. But if you’re an entrepreneur who is just starting to get the idea that your awesome product may not be quite enough to take the world by storm, take heed: build your founding team, your company’s DNA, with customer acquisition as a focus.

If given the choice between two companies, one of which is comprised of engineers who have hired a sales or marketing manager, and the other with a sales oriented co-founder, we would nearly always choose the latter.

Engineers build. And they make So partner with a sales focused co-founder who will live and die by the numbers (users, engagement, sales, churn) that an engineer doesn’t want to focus on, and has the power in your organization to force changes when those numbers aren’t good. You can’t outsource something that needs to be central to your mission. You need customer acquisition at your core, and you need a sales oriented co-founder.

Are Startup Accelerators Useful?

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This is an abstract of the talk I gave during the last WebExpo Prague on how startup accelerators can be useful for entrepreneurs.

I have an idea!

This is how it always starts. You’re alone at the terrace of a cafe gazing into the void, thinking. You’re having a conversation with some friends or acquaintances. You’re reading an article about a current state of affairs and suddenly, out of nowhere, it hits you. Hard. You’ve just had the-best-idea-in-the-world. Ever.

This is going to make you rich and famous! How come nobody before you had thought about this? The more you think about it, the more excited you become and the more in awe you are of your own awesomeness. Congratulations. You’ve just joined the horde of entrepreneurs who have had that moment of grace… but what should you do first?

Forget about it.

You know the statistics: more than 80% of new companies fail in the first 12 months. Some might even argue that up to 95% of startups fail in the first 2 years. In other words, you have almost no chance of success.

Therefore, when that genius idea hits you, the first thing you need to do is to kill it. Convince yourself it is a bad idea. Yes this is hard. Obviously you’re a smart person, so it’s not like you expected to come up with a bad idea. Try harder.

If you really can’t convince yourself that your idea is a bad idea, then talk to your friends and beg them to convince you it is a bad idea. Don’t be defensive; on the contrary, listen to all their objections meticulously.

If you can’t convince yourself it’s a bad idea; if your friends can’t convince you it’s a bad idea; if your grandmother can’t convince you it’s a bad idea, then and only then, act on it. Obviously you don’t want to spend the next 5 to 10 years of your life pursuing a bad idea. That would be a total waste of your time and talent.

Positioning, Positioning, Positioning.

Now that the world is waiting to see your idea become reality, you are going to have to convince a few people (co-founders, first hires, investors), by explaining to them the why’s and who’s and how’s of your venture. You need to be able at any moment, under any circumstances, sober or drunk, to position your raison d’etre. The best way to do that is to spend some time working and polishing your product positioning statement. Make sure it flows and can only generate Wow’s in your audience’s mouth.

Should I apply for a startup accelerator?

At some stage, you’re going to have to ask yourself this question. Accelerators have now been around for 10 years and it’s very likely you will find one in a large metro area not far from where you are. Is it worth it? Should you apply to one of them, a few of them, all of them? I get asked this question often, and so far my answer has always been the same:

Should I maximise my chances of success?

Remember the statistics: you are more likely going to fail than succeed. Therefore instead of wondering if you should apply for an accelerator, try to figure out a strategy on how to beat the odds of going under. One of the ways is indeed to go through an acceleration program like the one we run here at StartupYard. So far 60% of the companies we have accelerated in 5 years are still running. Compare this with the previous statistic on failure.

So put that arrogant, know-it-all attitude away for a moment and think about what you would need to make your startup a success. As it turns out, your chances of success are much higher is you are accepted to an accelerator.

Nothing replaces experience.

Participating in an accelerator is not like attending a school. You won’t be treated like a kid- quite the opposite. By joining a mentor-driven accelerator like StartupYard, you will, in a very short time, meet with an impressive number of other entrepreneurs, corporate people, and professionals who not only are going to be excited about what you are doing (this is why they are mentoring you), but will also help you a lot by digging into their own experience. You can learn a lot by yourself, but you can apply more focused knowledge by relying on the experience other people have. For that an accelerator is extremely useful.

Nothing replaces personal contacts

Whether you will be looking for clients, partners, or investors, you are more likely going to succeed in meeting them if you are referred by someone else. Here again, an accelerator, armed with its network of partners and mentors, will help you meet the right person in the right organisation in less time than it takes to send a cold email. For that an accelerator is unbeatable.

We’re not called an accelerator for no reason

Ask any alumnus of a world-class accelerator, and they will tell you how invaluable the new contacts and knowledge they have gained in such a limited time are. 3 months is very short, but during these 3 months, you will be more exposed to the market than you could be when going it alone. This will help you to either fail faster, because if you are going to fail you better fail fast, or reach new KPIs faster. For that, an accelerator is where you should be.

Money is irrelevant.

Some startups I meet with are in the market for accelerators, comparing them based on the amount of funding they offer. This is probably the biggest mistake a startup can make when deciding on an accelerator, because the value of such a program is not in the amount of money they will give you. In fact, some of the best accelerators offer less cash than the less famous ones.

The value is in the network, the management team, and the calibre of the mentors, but certainly not in the tens of thousands of euros you will receive. Anyway, if your project and team are right, and the accelerator is doing its job, you’ll get the funding you need after the program. If you are only looking for cash for a few months, then an accelerator is not useful.

Married until the end.

In exchange for your participation in the program, you will most probably be asked to give up a small percentage (usually up to 10%) of your company. This is actually a good thing! Don’t view this as a loss. Making the accelerator a minority shareholder means that they now have a vested interest in your success. That’s not negligible.

In turn, this vested interest means they will probably do whatever is in their power to help you after the program is over. Down the line, they might be able to unblock a situation when you are stuck on a business deal, for example, and it’s in their best interest to do so. The success of early stage startups can depend on the influence of its investors. For that an accelerator is extremely useful even after the end of the program.

Don’t live in regrets.

“We would not be where we are now if it was not for StartupYard”. This is the typical feedback we hear from our most successful startups, and this could also be you. But don’t fool yourself. It is actually pretty hard to be accepted in an accelerator. Less than 3% of companies who apply are selected and, at a time when everybody wants to hear about your traction, being accepted to an accelerator is a clear sign of traction.

I meet tons of smart, seemingly ambitious entrepreneurs, with great ideas. Sometimes I invite them to apply to StartupYard. I even encourage them to join any accelerator, because I know what it can do for them and their young company. But when I hear “well, I’m just not sure right now,” I back off. I can’t sell a startup on its own chances of success. The drive to succeed, and the willingness to take a risk is a necessary part of your success as a startup. We can’t give you that, and we won’t try.

But I can tell you this: I’ve run successful (and unsuccessful), startups for 20 years, and I did it in a time when accelerators weren’t a thing. I would have killed for a chance to join one back then, so my advice to all those young Cedrics out there is this: go for it. As a founder, you will have a lot to lose (sleep, reputation, money, hair) but your startup has everything to gain.

StartupYard FastLanes 4 Companies from Bucharest

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

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

Energy And Atmosphere

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

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

“Cheaper,” is not the Pitch

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

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

It’s Still All About Communication

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

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

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

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

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

StartupYard FastLanes 2 Startups in Sofia, Bulgaria

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

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

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

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

What Pitching is Really About

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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