The past few weeks, we’ve introduced the StartupYard Batch X companies in a series of in-depth interviews. Last but certainly not last on our list is the one Czech company in our 10th accelerator round: Vistag, the visual e-commerce platform that is making images shopable, and re-inventing product placement and branded content for the modern day.
I caught up with Premysl Koudela this week to talk about Vistag, and his vision for a more visually engaging e-commerce future.
As the one Czech team in Batch X, you probably knew more about the program than your fellow participants. How has the experience of the accelerator matched up with your expectations so far?
Well yes. StartupYard is well known among Czech tech people, and I know a lot of the alumni personally or at least by reputation. I had nothing but positive recommendations, so the quality was not a concern for me at all. You can tell from the mentor group and the investors that this is a community that knows a few things.
The harder question for us was whether or not it was the right time to join StartupYard for acceleration. That is something you are never sure about, so we went into the interview process with this question in our minds. The SY evaluators thought we were ready, and looking back on it, I agree it was the right time. As I have seen now, it’s rarely too early for an accelerator like SY. If what you need is to expand your immediate network and get a lot of feedback on your ideas as quickly as possible, then it’s something you should start looking at from the first moment.
I am glad we did it, and yes it met my expectations.
It might surprise people to learn that you were originally a filmmaker, before getting into the tech industry and founding Vistag. Can you tell us about that journey?
I always loved films, even as a little kid. What some people don’t know about Czechs is that we are very serious about cinema, and have a strong tradition of great directors and groundbreaking films. Milos Forman, Jiri Menzel, and Jan Sverak are just a few examples. This tradition goes back to before communism, but we were also known as the autuer filmmakers of the former Eastern Bloc as well.
My father is a film director, and so naturally I also was attracted to the same field from a young age, and got work experience at Czech Television doing some of my own projects. In fact, this is the experience that brought me to founding Vistag.
In modern cinema and TV, product placement has become a necessary part of the economic model, and thus directors and producers have to look for ways of incorporating brand messages into their work without making undue artistic and narrative sacrifices. As in any medium, the economics will always have an effect on the final product, because someone is paying for a series or a film to be made, and very often that is advertisers.
Some people in film are quite ambivalent about that fact, but to me, if something is unnavoidable or necessary to get films and shows made, I would rather work within those confines and try to produce the best possible experience for the audience. We must keep in mind that art has never been free of commerce.
One of the problems with product placement is that it frequently runs counter to the storytelling process: it interrupts the story or distracts from it. So I began thinking how to make visual storytelling more interactive, and in doing so, offer more authentic opportunities to put brands and products into visual content.
It is not a new idea, to make visual content interactive and “buyable.” You can see this concept played with in films like the Truman Show, where in the fictional world of the film, the audience can buy anything they see on the TV just by calling a phone number. Television shopping is even older than this, but the more immediate, more e-commerce version of this kind of shopping was not really ready for the mainstream until very recently.
Today I think the market is ready for it. We are more used to brands acting as content producers on platforms like Instagram and Pinterest. We have a different relationship with the content they produce. People watch and share advertisements today as a form of entertainment. I don’t say whether this is a good or bad thing, it is simply true. So making those ads more useful by making them interactive and shoppable is a natural extension of this trend.
I also believe that ultimately this will allow creatives and brands to focus on higher quality content, because the interest of viewers should be driven by the stories being told. Right now, with the one-way communication style of TV adverts, people are well trained to ignore and skip advertising when they see it. That makes ads of less value, and in turn means you need to show people even more ads to monetize content properly.
But what if you could only show ads that are super-relevant to what a person is watching? An add that can say to you: this character’s watch that you noticed, which you admired, you can buy right now, for a special discount. Well, to me that’s a positive experience, if it is helping content creators to focus on telling a story, and still serving consumers with things they actually want to see.
Vistag is what some people would call “ad tech,” as an artist as well as a businessperson, how do you feel about the current role of advertising in shaping the direction of the modern internet?
As I said, I think modern ad tech solutions can and should bring audiences better experiences than in the past. We often see ad-tech as only becoming more invasive and more “dystopian” in the future. However I think this tendency to view advertising negatively causes us to forget the ways in which advertising and brand messaging have improved a lot in recent times.
No longer can brands shout at us from the television, because we have so many choices of what to watch and where to watch it. Now advertisers must be more focused on their core audiences, and they must be careful not to overstep or annoy customers. I think that is the countervaling effect of new digital media, which is that advertising does not have to become increasingly aggressive in order to work.
One reason is that digital advertising is not just about performance and retargeting only, it’s also about content and offer personalization. Knowing much better what a person enjoys, and what kinds of stories interest them, we can much better craft a branded experience around that, which focuses on the viewer, and not so much on the needs of the brand.
Ultimately, when you see an advertisement, it is either helping you in some way (to make a decision that will benefit you), or it is wasting your time. So why not have ads that people can choose to engage with? If I’m watching something, and I say to myself: oh, I like that car, what is it? I can click on it and find out more. If it goes right over my head and I don’t notice it, then I’m not in the audience for an ad about that car.
More efficient advertising is better for customers and better for brands. Ultimately the goal should be to only ever show ads to people who are truly engaged with something. Ads shouldn’t function as mass behavior manipulation; they should help people make appropriate decisions, in a perfect world. Having more awareness of context and of user priorities helps us to waste less of your time as a viewer and consumer of content.
This also bleeds into the way we imagine E-commerce working. From my perspective it’s better to have an offer of personalised and curated products than hundreds of products on a grid. We should build e-commerce experiences around content which people are looking for, not on the merely chance-driven economics of a shop browsing session.
I don’t see Vistag as just a tool for e-commerce. I see it as a new way to approach e-commerce. A way to ditch the grid approach, and sell in the language of the customer. Go to them instead of making them go to you.
What are some ways that customers or mentors have envisioned using your technology that were surprising to you?
There is always somebody who reveals some blindness we have about our technology. That’s a really important part of the mentoring process I really enjoy.
Surprisingly, I was not prepared to hear that there would be significant behavioral differences in the way different people of different cultures would interact with Vistag enabled content. That seems elemental, but when you are building the technology, you are thinking about how to design the interactions so that they seem to work for you. What you can easily forget is that for someone with a totally different consumer culture and context, these ways of working may not translate at all.
Therefore it is really important that we design ad products that help content creators integrate ads into their content. These are the people who understand their audience best, so making sure they are in control of how the ad experience works is important. Often the ad-experience is not in the control of the creatives, and this can create a jarring experience for viewers, who are good at noticing when something is not done according to the “rules” of the show or film they’re watching.
Basically, people can spot inconsistency very easily.
Is there something you think most e-commerce platforms or brands get wrong about product placement and content focused marketing?
The worst mistake, in my view, is to show customers something in a piece of content, like a picture or a video, but to try and sell them something that is only similar to that. No! That’s wrong! When you promise a customer one experience, and then try to sell them a different one, this errodes trust and kills the joy of the interaction and the discovery process.
So please, dont play games with us and give us what we see, and what we react to. Don’t try to cross-sell me when you haven’t closed the deal already. If I see a watch in the shop window, I want to try that watch. I don’t want to be shown 10 variants of that watch. I want the one I saw.
The concept of context aware advertising is older than the internet. Why do you think this has still not become a ubiquitous form of content monetization or ad placement?
I think its matter of time and technology. Six years ago, when I started thinking about Vistag, the market and technology weren’t prepared for such a thing. Still, whole advertising businesses were built around a different model.
Now, when internet connections are so fast you can download high res visual content in a blink of an eye on any device, now interactivity becomes more feasible. Context awarness is one thing, but you actually have to very smoothly integrate ads with content in order to make it work. That has always been the challenge.
Up until now, a tool to do this easily, which doesn’t rely on developers and custom technologies, was really not possible. Creatives really need a plug and play solution that just works, the first time. Otherwise it’s always going to be a gimmick that brands and advertisers are not keen to risk trying.
What prompted you to start developing Vistag? What did you see as fundamentally wrong with the way advertising and content marketing work online right now?
Actually the reason was my girlfriend. I told her about the Vistag idea and she said I am an idiot that I didn’t do it yet.
I dont want to judge current approach/market situation. I think its about quality and relevancy of content. “Content as king” is not as relevant as it used to be. There is so much content around us everyday that brands have to listen better to what their audience wants to and produce something special, unique, interesting that will distinguish the brand and attract an audience.
It’s not only about amount of content, but also about the volume of products on offer. When I shop, I dont want to be in the position when I have to decide between hundreds or thousands of products and variants. When I want to buy a blue shirt, I don’t have to have 10 or 20 very similar versions of one product, I dont want to suffer decision paralysis, because of something as simple as buying a shirt. Yet this is what e-commerce increasingly offers us.
I want my own curator. I want somebody, who will show me the right product for me from different perspectives.
How can an e-commerce platform or e-shop start using Vistag to sell their products? How can brands and content producers benefit from Vistag?
The tool itself is very easy to use. Implementation takes just a minute or two. “Vistagging,” which means actually making your content interactive, is the work of 10 seconds.
The harder work is making content that is very relevant to the intended audience. If you have a great idea of what content is hyper-relevant to your online audience, then Vistag
is a perfect solution for boosting user experience and driving conversions from your content. We cannot save you from having the wrong content or the wrong products, but if you know your audience and you know they like your products, Vistag is an ideal way to connect the two.
Give us a try!
When I was getting into marketing, we used to say “content is king.” And this was before content focused platforms like Instagram became really dominant. Do you think there has been a fundamental shift in the way products are marketed in the mobile age?
Our generation could be described as mobile friendly, so its a legit way how to sell products or communicate brands benefits, but is Instagram the right place to sell? Do the numbers of conversions on Instagram, FB or Snapchat affirm this is what consumers want to do? Current form/approach of Instagram isnt something what we can call ideal selling channel. People wants to see nice picture at a first place and only few of them wants to buy it there. Highly likely Im total wrong, but answer and possible solution could be close – Instagram announced their new shopping app.
But i think the real shift will come in next few years with AR, it will be fun and vistags will be there!:)
In our continuing series of up-close, in-depth interviews with the founders of the StartupYard Batch X companies, we come to Payowallet, a Slovak startup founded by Klaudia Drabikova, and Gabriel Cegledi. Payowallet helps small retail businesses graft world class customer loyalty and rewards programs using their mobile-first application and payment platform. Unlike the loyalty programs of major retailers, Payowallet is accessible to any small business, and can be set up in minutes.
For this interview, both Co-founders chose to speak with me, so you will read answers from both Klaudia and Gabriel.
Klaudia Drabikova, the CEO, Has worked for 15 years in international non-banking and banking financial companies, specialized in consumer lending as Head of Direct business. Her working experience wass enriched in operations matters as a former COO and member of the Board of Cetelem Slovakia.
Gabriel Cegledi, the CTO, also has 15 years of experience, implementing loyalty rewards and payment cards programs for leading merchants and banks across Europe. Gabriel previously worked as Loyalty Products Owner at EMEA and International levels for First Data.
Here is what they had to say:
Hi Klaudia,you come to building a startup from a position of more experience than a typical founder. You spent 15 years in banking, and you were COO and a member of the board at Cetelem in Slovakia. Why found a startup focused on small retail businesses?
Klaudia: That’s an interesting question, because in some ways it is a big leap. Still in another way, I see this move as a natural extension of my career long interests. At Cetelem, I learned that it is increasingly difficult to differentiate a retail brand according to pricing, or even the number and location of branches. Those may be the first things you think about when it comes to a retail bank, and these factors matter, however they matter much less in proportion to the impact that good customer experiences can have on brand loyalty.
One of the ironies for a big brand is that as you scale larger over time, you focus increasingly on these marginal factors such as price and location, because they are easier to quantify and manage using a data centered approach. However, customer experience remains a huge factor in creating loyalty among your userbase. That is harder to do as a company gets bigger, because the ways you execute customer experiences at scale are different from those of a smaller company.
What I found over time was that big companies are investing a lot into large-scale customer experience solutions, such as loyalty programs, apps, messenger bots, and such things. Still, these investments are really trying to mirror what smaller businesses do as a matter of day-to-day practice in customer service. The result is that big retail brands have very sophisticated technology, but still many of the best practices in retail come from smaller brands that are more free to innovate on a smaller scale. So, small retailers have great ideas, but no way to support them with technology. It’s too expensive, and too de-focusing for them to develop their own apps or programs.
So Payowallet is trying to provide that technology basis for excellent customer experiences. I believe, and I have seen it, that better customer experience can create customer engagement, which is more important today than ever to differentiate from competition. Small businesses only lack the technology to execute on their customer knowledge and ideas. They don’t lack for either knowledge or ideas. So we want to make customer loyalty programs and digital payment systems available to retailers of any size, in a format simple enough for anyone to use without a major investment of time or resources.
Why found a startup focused on small retail businesses?
Gabriel: There are two questions in this sentence actually. First question – why did we want to found a startup? Well, we both worked in big companies – each of us in a different one – which grew from quite small firms to large corporations. From companies, where you knew all the employees – your colleagues, you all work together, you all work hard to get things done, all were personally responsible for every action, every success and mistake.
You had to find solutions despite different opinions, attitudes and varying personal characters within the team. The results and then also the joy and feeling of success from having done a great job were very tangible and personal, thanks to the real cooperation of all colleagues in the team and/or particular projects. We had really good times – both of us in our own companies. Now those companies have gotten very big, and these aspects naturally change to accommodate the new scale. We both felt it was time to search for something new, and begin again from the small scale.
Second question: Why focus on small retail businesses? The technology all retailers can now benefit from has progressed dramatically over the past few years. A few years ago, only large retailers, such as Tesco or Starbucks could have their own credit cards, loyalty programmes, analytics and proper full-stack marketing to end-customers.
Now, new technologies and new programming languages allow anyone to build marketing and payment systems in a fraction of the time for very little money. We saw these technologies evolving, we saw them coming, we were part of the process, we saw what impact they can have. And, these technologies small brands to be more relevant and personal when it comes to appealing to their customers. On the other hand, the end-customers have become more demanding – new generations (Y and Z) require more comfortable, easy-to-use and relevant products and personalized experiences when shopping.
Meeting all these new trends and requirements is not easy – but it is thrilling. It is extremely interesting to be able to help these small retailers who don’t really have the resources to keep up with all these new communications methods (e.g. Facebook, instagram, chatbots, messengers etc) and technologies (e.g. analytics) – not because they can’t or don’t want to – but simply they don’t have time and money for it (as they are doing all the hard work around their core products)…
To me it is a shame if a big retailer beats a smaller one only because they can outspend them on technology to reach the customers. That does not encourage a true vibrant competition between small and large players in the retail world. Democratizing the technology used for marketing and customer experience means better experiences for everyone.
Q: How did you two begin working together? Why are you a good match for this project?
Klaudia: First of all we know each other from the past, when Gabriel was working for a company delivering payments and loyalty services. Both of us left our companies, and were looking for new opportunities. When we met, of course there were discussions what to do, and because we have seen the trends in other developed countries in areas we had a knowledge in, we started to be hungry to do something similar in this region. Why we are a good match? In my opinion it’s like this: Gabriel has many, many ideas, and me, I like them to get them done! Gabriel always has many questions, like when a kid ask you why, why, why? All the the time, so he forces me to think and to be more prepared. We fit together in that way: by being opposites.
Gabriel: I saw these new technologies and opportunities coming, I saw them hitting and scratching the surface of the corporation I was working in as well – but months passed and none of the promising new technologies was being realized. None of them took off in the corporation really. It was not easy – to quit a good and safe salary, but couldn’t do it differently.
When we both quit – literally at the same time – despite the fact that it was not coordinated, we started to look at a couple of new opportunities, potential startup projects and technologies together – with some other friends of ours and our former colleagues.
We tested a couple of projects over a period of 7 months or so, and then decided on Payowallet – digital loyalty and marketing, including payments with mobile and sophisticated analytics. Very cool.
Why are we a good match? Well, the thing is that we are quite different, we have a different nature, we have different ideas, we have a different style of work – I like to work alone, closed in a basement in a cellar. But Klaudia needs plenty of people around her all the time. But when it’s time to get things done, we alighn. Obviously, we share a common vision and strategy. The differences help us look at the same thing from different angles, and so we are able to see new and more opportunities and options that would be overlooked otherwise – if we were the same or similar. This is a very good thing indeed. Obviously, different natures come with some disagreements, fights, arguments etc. But we respect each other well enough to overcome these in order to achieve a better outcome and result.
Q: Most people probably have some loyalty and membership cards. Why is it so hard for small businesses to run their own loyalty programs, and what are the benefits of doing so?
Klaudia: There has been research recently showing, that 44% of small businesses are focusing their marketing activities on acquiring new customers, but only 16% of them spend as much on existing ones. And there is other research showing, that 67% from existing customers are likely to buy another product from a retailer they go to regularly. These are not huge new discoveries in retail. It is an axiom of sales that an existing customer has ten times the value of a new customer.
So, why do they not focus on existing customers? I believe it is partly because in this technological age, they are not sure where their customers are, or how to reach them. It may often be as simple as not really understanding which of your customers is even a loyal customer, and past that, how to actually reward that person. Keeping track of these things as a small business is difficult to do. Loyalty programmes play a big part in customer retention and not all retailers see the value in that, because they don’t know how to measure it.
The second thing is, that old-school style loyalty programmes, like paper or plastic cards don’t tell you that much. They don’t provide any data, or statistics. Much of the effort that goes into them is wasted. It’s hard to know their impact, or even know how many rewards you’ve given away. Plus, today another issue is privacy and GDPR. You now need informed consent to store customer data, and you need to justify its use.
This all sums up to a situation where small retailers can’t justify the cost and now the legal risk of initiating their own programs, particularly not being able to identify a clear return on the investment. New technologies make that decision a bit easier. We help retailers bring loyalty programs direct to the mobile number of each customer, opening up a new marketing channel, and a direct link with a loyal customer.
Gabriel: It is not only about rewarding my customers (as a retailer). It’s about the whole approach to communication with them. It’s also about a customers’ shopping experience. Small retailers have a massive disadvantage compared to large players in terms of marketing budgets. And then – what will be the customer’s choice if she is bombarded with more than 4500 marketing messages per day – as one marketing professional/specialist confirmed to us?
it is easy to guess. So, being able to “stay on the customer’s mind,” by choosing the right communication channels, being able to handle them all – so called omni-channel communication – FB, insta etc, providing relevant and personalized messages and communication to the customers – this is deeply challenging to a small coffee shop or burger-bar owner. They don’t have the resources of a nationwide brand or chain.
On the other hand, the retailers now really can benefit from the technologies – technologies provide them data insights – about customer’s purchase behavior, and technologies enable delivering the messages and communication right to the customers and in a manner that doesn’t annoy them and doesn’t spam them.
And as regards customers’ shopping experiences – you can see all those trends – order ahead and pay cashless – Uber, shared economies, buy online, get products delivered to your home, fine-tuned and sophisticated online shopping experience, after-sale care and services, in-store marketing and merchandising. All of these are available thank to progress in technologies, and the new generations take full advantage of these, grew up with these technologies, so they can’t even imagine doing any different. Keeping up with all of these opportunities and options is challenging for small retailers. That is where Payowallet is aimed at helping them out.
Practically speaking, what does it take to get set up as a retailer on PayoWallet?
Klaudia: PayoWallet is a mobile marketing platform, which consist fof components like digital loyalty, mobile payments, and data insights. For every retailer who is busy with their own activities and duties, but is looking for ways to engage with his customers better, we are the right solution. We help him to motivate his customers to come back more often, by providing technology to manage his loyalty program in a fully digital way.
Customers love it. Retailer gets statistics and insights, which can tell them much more about their customers, comparing with paper or plastic cards. Imagine, that you can easily set up your next marketing campaign to the right person and send it straight to her phone within a few minutes. If you are a retailer, with no time, or skills to manage campaigns by yourself, we can do it for you as a managed service too. Mobile payments will be the feature which will complete our brand name (the wallet part) and will make the experience much more convenient. Payment and loyalty will be just one transaction, which will deliver new data about customer purchase behaviour to the retailer.
Imagine being able to conceive and sell a new offer to the right set of customers within moments. Have an idea? Test it out on a group of your customers, and see the results instantly. Get people to come into your store or restaurant at just the right time.
What are some of the ways you would like your users to change their relationships with their customers using PayoWallet?
Klaudia: For the moment, first thing is that retailers start to think more about existing customers; because this is the target group you can rely on and you can sell more. Remember the statistic I told you earlier, 67% of existing customers will buy another product from you. Imagine having a tool to delight your customers individually and invite them for a specific, contextual reason to come again and to spend in your shop.
We can see many validated products in other markets, like the US, or UK, where it’s important for retailers to start to think about mobile strategy, which will help them to engage with their customers. This will become a standard. And small retailers can be even more happy that there will be such a SaaS technology they can use afforably.
Gabriel: We help the retailers to analyze what is happening at their stores. We help them understand they have top customers – who are returning to them often – and WHO they are! Now, the retailers are able to thank them, stay in touch and delight these customers with special perks, treatment and personalized messages. They couldn’t do this before (except a very few small exclusive shops, where they know all their customers by name).
On the other hand, we can help them understand other customers who haven’t returned for a while. How could the retailers have a chance to reach out to these customers and re-engage with them? No chance! Now, we can tell who they are, how long they’ve been away, and enable the retailer to send offers to motivate the customers to come back.
Another thing – imagine announcing and sharing news about what is happening in my store with the customers – what options do the retailers have now? Posts on Facebook reach a fraction of their customers. But their regular customers, who shop with them quite often may really want to know if there is a new flavor of their favorite coffee, a new type of burger or a wine-tasting event. They would love to hear this. We help span all these missed opportunities.
What do you hope PayoWallet is going to be in 5 years, as a business, or as a technology. What would be your ideal scenario?
Klaudia: I would love to see a PayoWallet sticker on as many shops as possible. That means, that retailers are open to using mobile technologies. Their customers spend pm avg. more than 3 hours looking at their phones every day, so retailers have to adjust to be present there. Our goal right now is to increase the numbers of our partners, ideally in the Czech Republic and other countries of CEE and SEE that we find a good match with.
At the same time, we are working on the technology, which will combine mobile payments and loyalty in one simple transaction, which will deliver insights to retailers to help them make sales. In 5 years it will be a standard to pay with mobile, but our standard will be to pay with mobile and deliver added value for both: a retailer – having more data on who is his customer, and for the customer to enjoy all the benefits of one click payments and targeted communications they actually want.
Gabriel: I see this from two perspectives: regional and technological. Technological – as Klaudia said – retailers heavily using the advantages of the technologies and services provided and all parts of it, reward programmes, analytics, and mobile communication. And end-users benefiting from the ease of use of payments and of being rewarded.
What has been the biggest challenge for you, personally or professionally, in transitioning to the role of Startup CEO? How has the StartupYard experience affected that transition?
Klaudia: For me as a person it was like entering a completely different environment comparing to the corporate world. I had to overcome the fear of not knowing many things. In a startup you do so many different things on your own, in most of them you are not an expert, or you have no idea “how to”, but definitely “you have to”, because it is your company. Sometimes it takes you really far out of your comfort zone.
Startupyard is helping us to focus on what is important and whe,n and showing how to make each next step. And of course the people here are willing to share and give us courage, when needed. You don’t feel that alone though.
Gabriel: Running a startup is really completely different to working in a corporation. Obviously, this has been said many times, but just to confirm – in a corporation, there is a distinct and limited and defined set of tasks and content you are responsible for. In a startup, you do everything on your own. From marketing, through product, technology, infrastructure, wording on your facebook and on your web page. Obviously, you have colleagues working on this with you, but it is your call. So, yes, it is about overcoming the fear of unknown waters, and about trying to learn as much as possible and as quickly as possible.
How can businesses start taking advantage of PayoWallet right now? How do they get started?
Klaudia: First of all, very easily. If a retailer has decided to become our partner, we just give him set of easy questions to be able to manage his offer towards customers, which will be displayed in our app. From loyalty rules, exclusive offers, or products, which can be sold in advance. We do the rest, set up in the system takes a few minutes. The retailer can start to create their own database of customers from Day one. No complicated integrations, no GDPR issues, just one smartphone and that’s it.
“I would like offer you rewards, use our app” is the only sentence they might use in the checkout process to create the engagement. The rest is on us.
You both have children. What is it like to be a mother or a father and founding your own company?
Klaudia: I feel good, because as a founder you are the owner of your time and you can adjust to the needs of your child. But I am not the mother with fashion bags anymore, because I need to carry my notebook everywhere, using every opportunity while waiting for my son at his guitar classes, or sport activities. My time is calculated to every minute. To watch another movie, is today a task for time management! As a co-founder of such a company it is very much about networking and this is a part you are quite often limited, but we are trying to manage and to share with Gabriel if needed.
Gabriel: Frankly, it’s extremely challenging and really not an easy thing. A friend of mine once told me: your first children will eat 90% of your free time. The second kid, she will require the remaining 60% of your free time! I fully agree. And now – I have 3 kids. And I’m telling you – a startup will eat through the remaining 200% of your free time. And it comes with so many uncertainties and unexpected situations. So, juggling with time, that’s priority number one for me. I’m dealing with it every day, and I’m considering every ten minutes of my time – where and how I’m going to spend it. But running your startup is so interesting – it’s worth all the hassle.
In our continuing series of up-close, in-depth interviews with the founders of the StartupYard Batch X companies, we come to another of the 3 companies that join us this round are working in the field of crypto asset trading. ShufflUp is working to make the growing world of crypto-currencies and crypto asset markets available to regular people. It’s a fully automated trading platform that uses techniques from electrical engineering and high-frequency trading to generate steady profits for small-time investors. The team comes from India, and has decided to locate its operations in Europe, incorporating in Estonia.
Shufflup Co-Founder and CEO Shilpa Mitra is a data researcher with 5 years experience in statistical data analysis. During her engineering career she has focused on building software, and in the process got into close proximity with many programming languages. She was part of a collaborative research project with Tokyo Electron Limited during her Ph.D. studies which culminated into a full length academic research paper, published in one of the esteemed peer-reviewed journals. She is captivated by the possibilities of blockchain transforming the current inefficient financial system. I spoke with her this week about Shufflup
Hi Shilpa, first of all I want to highlight your career so far, because at 26 you’ve accomplished a lot of amazing things, including studying for a PHD in electronic engineering. Can you tell us how you got to where you are?
First of all, I want to clear this that I am not a PhD.
My Co-Founder Sromana Mukhopadhyay and I went to the US with the vision of changing the world through our love for maths and technology, like any other PhD student might think during their first year of study. By the end of the first year, we had published two research papers in two esteemed peer-reviewed journals, completed almost all the courses, taught a bunch of undergrad students, cleared the dreaded PhD qualifying exam but still somewhere the creative soul within me was not satisfied.
I realized that I can better utilize my data-processing skills to develop something which is useful for the people I care about and this realization brought me back to India. The tech-lover within me got fascinated by the revolutionary concept of digital currencies and the more I learnt about them the more I realized that they possess the power to change the future economy.
Going from electronic engineering to blockchain technology seems like a big leap. What got you interested in working on blockchain and cryptocurrencies?
You can say it began as an academic sort of curiousity. There are interesting mathematical concepts in blockchain technology, and the idea of distributed databases and trustless networks.
I started reading the whitepapers of various cryptocurrencies in order to understand the underlying blockchain technology. I started trading with crypto-coins on various exchanges but soon enough spotted the obvious inefficiencies of the crypto market. I realized these inefficiencies provided the potential of being even larger than the inefficiencies of the current unbalanced financial system. Upon researching more and after some days of digging deeper, my calculations proved that the inefficiencies that prevail in more than 15,000 crypto markets and 500 exchanges are capable of creating 440 thousand arbitrage opportunities per second, which are capable of producing 8-10% profit each month.
Now let’s dig deeper into how two electrical engineers have done it, considering we have always dealt with electrical signals and currents coming out of transistors. As electrical engineers we have used time series analysis to predict the useful lifespan of transistors. We realized that the data coming out of exchanges is also time-series data and the same time-series analysis tools can be applied to exchanges’ data as well. It is simply the source of the data that has changed, not the nature of it. Hence is not a ‘big leap’. It is because of our backgrounds that we are able to build everything we are building today.
Just imagine the global currency system as a series of outlets and inlets, just like an electrical grid. You have a peak flow that is predictable. You have a directionality in the system that can be modeled and observed. You can see that money and transactions flow across the system in a certain way, based on the capacity of the various parts of the network to manage the traffic, as well as the actual needs on the side of the users of these systems.
Now, whether it is crypto-currency or forex or electrical grid systems, the same type of statistical analysis can be applied to predict movements and to design the ideal way of managing those movements. What we do is called “currency arbitrage,” but it resembles electrical grid arbitrage as well. Providing liquidity where it is low, and sucking up liquidity where it is high, in order to keep the whole system stable, is the same whether you’re dealing with crypto tokens or energy itself.
Q: What are you trying to accomplish with Shufflup that you think no other platform has been able or willing to do?
Arbitrage and automated trading are not new concepts in the least. Our approaches to these activities I believe are unique, however I want to be clear why we have chosen this direction for our company.
Unlike other complex crypto platforms, which try to serve more sophisticated and more liquid investors, at ShufflUp we are trying to help that section of people in society who are neglected and not taken into consideration by other crypto trading platforms. There are 25 million crypto wallets in the world and out of which only 3- 5 million are in active use, whereas the world’s population is 7.44 billion.
Other algorithmic trading platforms are making their tools available to this bracket of tech-savvy and the so-called ‘accredited’ investors who are already in the business of crypto trading. At ShufflUp we will initially target the rest of the 20 Million passive wallets of ‘HODL’ers who have bitcoins sitting in their wallets and doing nothing. Then we will move forward to target retail users. We are primarily focused on small investors and the minimum deposit is 0.025 BTC. At present in order to use ShufflUp, a user only needs to have bitcoins in his wallet, deposit them to our platform, sit back and relax to see his profit steadily moving up.
With ShufflUp, no complex setup or figuring out innovative trading strategies or 24/7 monitoring is required, ours is a no-brainer and hands-off platform. We want to be a sensible bet for the average low income person who wants to profit from a dynamic, changing economy.
Can you tell us a bit more about how your technology really works?
At ShufflUp, our mission is to bring cryptocurrency profit to the masses because we believe digital currency is the future. A part of making that future work is distributing the gains of growth in the crypto market, and getting more people engaged with it. Through our technology, we have been able to eliminate the long-standing issues of arbitrage crypto trading. To realize significant profit through this form of trading by a single trader, huge funds are normally required upfront. A person also requires his/her funds to be properly distributed among several exchanges and the right coin-pairs where the opportunities are occurring. Basically, you need a large reach and high liquidity to profit from helping to maintain the balance of the system.
ShufflUp aggregates data from several exchanges, analyses them based on historical data patterns to understand where the next arbitrage opportunities are going to happen and distributes the funds in those coin-pairs. As of now, our system processes 40,000 datasets/sec to identify the next set of arbitrage opportunities. Needless to say, this will go on increasing as we scale.
Identifying the opportunities is one thing, but not all of them are executable for various reasons, such as network latency, high associated fees and volume associated with the trade. In order to avoid order slippage our technology determines the exact quantity at which to place the order based on statistical correlation and then executes only those trades which it predicts to be executable.
So far our algorithm has correctly predicted and executed 99.62% of all the arbitrage opportunities that have occurred during the last 3 months in the integrated coin-pairs. One of the things that few of you who are familiar with crypto arbitrage trading must be wondering is the transaction time and transaction fees associated with the arbitrage trading. Our smart system distributes the funds in such a way that it reduces the transaction time & fee by 90%. Also it is important to mention that all the profit that our system has made during the last 3 months is after taking into account the maker, taker, deposit and the withdrawal fees in the exchanges.
We have been organizing our private beta for the past 3 months with 12 investors – 2.5BTC and generated 55.2% profit for them. Also 250 users are in the pipeline eagerly waiting for our product to go public.
Many people including many mentors of SY have asked us, ’what if these opportunities gradually diminish in numbers as the market matures?’ That is a valid concern, because as a market matures technically and in scale, arbitrage becomes more common, and so less profitable.
But here I would beg to argue that even after so many years discrepancies still exist in the traditional market. Arbitrage always becomes more complex, but it does not go away. We will have to continue to evolve and learn from existing datasets. In that sense, our early mover advantage will be increasingly important, as we will have more data than others who attempt to enter the market later.
Having said that we have two very different trading strategies currently under simulation which will drive us forward in the path of our broader vision. One of them is based on complex predictive trend line analysis coupled with a few technical indicators which we know only the top experienced, disciplined, dedicated and the rich bracket of traders can take advantage of. The other strategy is based on analyzing market psychology because ultimately, market prices are created by the constantly fluctuating perceptions of market participants.
Here too, you can take some clues from understanding the flow of an electrical circuit or grid. The needs of a system can be understood through outside indicators. For example, famously, electrical grid operators must study television schedules to understand when consumer are likely to turn off their televisions at night, in order to ramp down the supply quickly enough not to over-power the grid. They must understand the upcoming weather patterns in order to provide enough power to the grid to run cooling systems.
You can apply the same macro forces analysis to crypto trading as well, which is something we don’t believe is common in this market yet.
Q: What do you hope that Shufflup will be able to do for its users in the next few years that they can’t do now?
As we are targeting the masses, or in other words retail investors, we will have our focus in developing an end-to-end solution for our users where they will be able to buy not only Bitcoin but also other cryptocurrencies because with arbitrage we will have an umbrella of cryptocurrencies. They will be able to buy these at a much lower commission than what is available at other exchanges/platforms.
We will also have two different schemes for our users based on a long-term and a short-term approach. If someone prefers to keep their crypto with us on a short-term basis, we would take a 20% cut from their profit, on the other hand if they stay with us on a long-term basis, we would take an even smaller cut from their profit. We are planning to go into partnerships with different companies which would enable our users to pay for their rent or coffee or pizza directly from our platform at a discounted price. Again, this is helping to spread the use of the currencies, and make them more attractive as a real utility to more parties. At ShufflUp, we are dedicated to expediting the mass adoption of cryptocurrencies.
Why do you believe so strong that blockchain technology can make the financial system more efficient, or more fair?
I firmly believe that blockchain is the future of finance, and this technology will do to the financial system what email did to the postal system. Remember, the postal system is not dead because of email. It’s bigger than it was when email came along. But we use it very differently now. We use it for much more important things. The use cases that migrated to email did so because the electronic form made so much more sense than the physical, in almost every way. I believe the same will occur around blockchain.
Blockchain will have a profound impact on the consumers who will hugely benefit from greater efficiency, greater security and greater transparency. A new decentralized financial system would remove the intervention and complexity that exists in the existing financial system and would lower the barrier to entry for those people who are currently denied entry (the unbanked population).
Yes the financial system would also become more fair as blockchain’s underlying protocols support stronger identity management thus helping regulators combat illegal money laundering and terrorist activities. The truth is that the financial system as it exists today is not technologically backwards, but it is built largely to the benefit of the wealthy nations, the rich, and the powerful. It has few real incentives to provide tools for smaller investors and for the poor and unempowered to use modern financial tools. That is a growing problem that I believe blockchain technology can work to counterbalance, and help to democratize access to finance.
What other things can blockchain be used for that most people have been ignoring?
I think in the areas of e-voting by bringing more transparency so that election results are honest and accurate, coming from a country like India I believe a fair electoral system can bring much needed socio-economic change to developing countries.
I also think the sharing and gig economy can strongly benefit from decentralization, as many of the existing systems are designed to benefit a relative few at the top of organizations, and are not equitable to the people who use the system. You can see this with companies such as Uber, where the drivers are being pushed to work for the minimum amount possible, while the company itself needs to take a larger portion of their earnings to stay solvent as prices continue to drop. If this system were mediated by a cryptocurrency where the economics were more transparent, I believe consumers could make better decisions, and those working in the gig economy would get access to fair compensation for their work.
As it is, these markets today work on a “black-box” basis, meaning that you simply have to believe that a company like Uber understands its own economic model, and that the driver understands the cost/benefit of working for them, and that the price you pay is fair and equitable. You must take the word of the company on faith, without proof. However, in a black box model, the company at the center is incentivized to change the rules in its own favor, and to profit from a lack of information from the parties it transacts with. That is not a system in which the good of ordinary people is the focus.
Decentralization means that the ability of the rich and powerful to take advantage of your lack of information in everyday economic decisions is neutralized. That is the ultimate promise of cryptocurrencies, and what we should all hope for in the future.
How did you start working as a team? What makes you the right people to build Shufflup?
Sromana and I know each other since our undergrad days (about 8 years). We initially started preparing for several competitive exams together, cracked all of them, and got admission to the PH.D. program in the USA together. In that way, we became a team before we had a mission. We noticed the loopholes of crypto trading world in a joint effort and wanted to solve it together.
Data analysis and data processing, dealing with different statistical tools like Wavelet and Fourier Transform has been our forte and this project requires deep digging of data.
We are each other’s best critics, and constantly pushing one another to perform better. For all the above reasons we felt uniquely qualified to work as a team and solve the problems that we are solving now at ShufflUp.
How has your experience been at StartupYard, and in Europe generally? Did it match with your expectations, or did it surprise you in some way?
A: Prague is a beautiful place to live, extremely peaceful with an extremely systematic and well-connected transportation system. These are the kinds of things that I notice as an engineer by training: that this is a society that understands organization of public spaces very well. Europe in general has wonderful advantages for quality of life.
StartupYard has been great so far, I love the people here at SY as you let us be ourselves yet push us at the right time in the right direction. We can’t thank you enough for accepting us into this program as it was a huge validation as well as support for us that we are moving in the right direction. We got to learn a lot from some of the mentors, actually formed a lot of ideas that we are working on now, which would never have been possible without SY.
Being in SY and attending the workshops helped us ‘know’ about different core metrics of building a business about which we did not have any idea even a few months ago. The most important thing which I learnt is finding like-minded investors who will push your company in the right direction and not just crave to get manifold returns. Basically I can go on and on, on how being at SY has been such a learning experience and a much-needed one for us.
When we announced StartupYard Batch X last week, we noted that 3 of the 7 companies that join us this round are working in the field of crypto asset trading. Yanda is one of them, providing cryptocurrency trading novices and pros the opportunity to create and share trading strategies, and control their crypto assets from a single platform, without having to deposit their funds into a single exchange.
Founder and CEO Mario Stumpo is a LUISS Guido Carli University graduate, where he obtained two Master’s degrees, in Law and Economics. He also studied at London School of Business and Finance, where he achieved a PGC in Finance. Mario started his career in Rome, working as a tax adviser for some of the leading Italian firms. After discovering cryptocurrencies in 2012, he developed several algorithms for trading and predicting the value of currencies.
I sat down with Mario this week to talk about why he got interested in crypto assets and cryptocurrencies, and what the future of Yanda looks like.
Hi Mario, tell us a bit about your personal journey towards founding Yanda. How did you get here?
I started really paying attention to cryptocurrencies while working as a tax advisor in Italy, and attending my second masters in economics. At the time, I was cooperating with law firms, chiefly as a tax advisor. I was investigating mechanisms of money laundering (not to help them launder money!), and in this way I came across Bitcoin in the early days of 2012.
I was particularly looking at the Maradona case. I wanted to understand how these tax avoidance and laundering schemes were evolving in the football industry. I was advising football teams on how to avoid these issues and to avoid even the appearance of impropriety. Working with the financial authority of Italy and with private law firms, we helped football teams to structure their finances correctly, as there were many poor practices in the industry and surrounding it.
Bitcoin was then as now a target for money laundering. I started to see that there was a decreasing interest in the US Dollar as a target for laundered money. Money laundering is as old as money. It never goes away, so I knew that if there was going to be financial activity happening on the blockchain, then money laundering would be at the core of that from the beginning. That’s what drives many new financial technologies and assets. But I was thrilled by the idea around blockchain, to decentralize the monetary and economy system is to fundamentally change the way things work.
Everyone was talking about cutting out 3rd parties that are a huge cost center in the financial world. Particularly in Italy, middle-men institutions can kill deals by adding so much overhead cost to them. Fees are the name of the game. With decentralization, this power to tax the system on the part of central players would be at risk.
So I decided my studies weren’t done, and I moved to London where I had been in 2011 after doing a masters in law. London seemed like the right place to start my journey. I got a uni scholarship to study finance, and between 2012-2014 I got involved with bitcoin, making my first trades. I had started working as a trustee for a Tax and Finance firm, then moved on to working in the forex business. I built a lot of lasting relationships there that still come in handy today. As I began to understand the forex market, I saw that there were two sides to it: two ways of making money. Either you are in execution, or profit seeking. Either you help people execute their trades, or you try to outsmart everyone else with your trades.
All the money the forex traders make is based on volatility. And I realized that cryptocurrencies have the same qualities. I began coming up with some econometric models of the crypto markets, lots of predictive analysis, and started looking at patterns, all starting in 2014. I began trading with this approach, and making some money. In January 2015, I got to know Jonathan Price as a lecturer of mine. Everyone in the academic community was talking about Bitcoin being a pure bubble, and they weren’t interested. But Jonathan heard me out, and kept an open mind.
I showed him my results, and my system which was just Excel at the time. I pitched him the idea of a fully automated trading platform. I hadn’t even learned Python yet. He gave me 200 quid and said, “come back in month.” When I came back, I gave him 350 quid, which was the principle and profits. Ok, it could have been luck as far as he knew, but I convinced him that my approach was just based on consistent thinking and econometric analysis. It’s nothing fancy like machine learning. It’s not magic. It’s just math.
Jonathan opened up his network at London School of Business and Finance and Imperial College London. I gave some lectures, got to know the dean, and eventually Steve Bailey joined my team. He was an investor in startups going back to the early 2000s. By the end of 2015, we had a prototype, and Jonathan came into my office and said: “ok, quit your job, and let’s build this.” Since then I’ve been building Yanda, the team and the products.
Samir Allous joined Yanda as our CTO in early 2016, and together we have been able to go from prototype to registered users without a hitch. His approach and ability to solve problems efficiently is the perfect match with me, and let us achieve great technology results.
We have a couple thousands users already using the platform, and we’re working on new things all the time.
What do you think is the biggest problem right now in the cryptocurrency market, and how does Yanda help solve that issue?
The main problem is not just the wild volatility that you see in prices and across exchanges. It’s really, sorry to say, the fact that the market is full of crooks. It’s full of people in it for all the wrong reasons, and it’s just become a big messy bubble.
Whenever you say that, lots of people react and say “you don’t know anything, you don’t understand what we’re doing.” Ok, maybe not. Or maybe I do know something. On the other side, I believe that there are lots of researchers and people like myself trying to nurture an environment where cryptocurrencies are really useful and play a needed role in the economy.
Then on the other side, you have people who are mostly interested in creating that volatility which is going to allow them to squeeze money out of unsophisticated investors. Over the Counter exchanges, totally unregulated, mean that the more money you have, the better infrastructure you have, and so you can make more money. That’s really just the way traditional forex works anyway. The ones who own the systems make the money.
So what we see now is a huge bait and switch. People bring a nice optimistic idea to the market, they promise investors to get rich quick, then they find out building value is just as hard as it always was. At the end of the day, having a coin is meaningless if you cannot build great products on top of that. Then you’re just selling tickets to a party that has no music. People think the coin has value, but when they eventually try to use it, they find out it doesn’t.
Our knowledge space is polluted right now, and people don’t understand what is really driving the market. That’s why we want to provide a tool for approaching the market, and sharing real working knowledge about cryptocurrencies. That’s what Yanda is all about: fighting disinformation, and cracking the wall of lies and promises that get built around a lot of cryptocurrencies.
Let’s also talk about Yanda coin. How does having your own token help Yanda execute its mission of helping retail investors to make crypto profits?
That’s a great question. Because I just got done saying how coins are being used all wrong – to sell something before it is even built. Well, we did Yandacoin the other way. We built a system and a set of tools for people to automate their crypto trading the traditional way.
We built this essentially as a SaaS service, however to distinguish it from any other such service, we realized that we needed to have a transactional model. We needed to charge users for the volume of their use, because otherwise you are not providing the right incentives for trading only at the right times. Unlimited use allows people to game the system, perform front-runs, pumps, etc. Pay-per-use is much more honest.
However, the cryptocurrency system is expensive to use in this way. Pay-per-trade costs users quite a bit of money over the long term, because not only do they have to pay us, they have to pay the cost inherent in the coins they are trading as well. So we came up with Yandacoin, which is a way for us to allow users to pay for our services on a per-use basis, and at the same time to batch their transactions with those of others, and save on the execution of their trades as well.
The main reason for running our blockchain on the multi-chain protocol is because we can cut all the expenses related to third parties when it comes to transferring funds from one wallet to another. The major value comes out of our blockchain, intended as a fully auditable ledger where we store all the data related to trader performance across multiple exchanges. Storing these data within our blockchain guarantees enhanced transparency about the performance of Yanda traders.
We can do this because we are built on the open source Multichain stack. Our platform is a real database: and it can be decentralized, distributed, or private. That provides complete transparency to our users about how their transactions are processed. We have nothing to hide from anyone, and it will always be abundantly clear how and how much we profit from our activities. All data we collect is accessible to anyone with the blockchain.
We began to realize that we can function as a layer on top of the exchanges, which creates fully transparent and auditable databases for our users, who access exchanges through our platform. We serve to provide visibility to our users, and helps them to maintain auditable records for themselves as well.
Tell us a bit more about how your platform works, and why people should use it instead of others.
The way you use the platform really depends on your experience level. Our main tool is dubbed PATS, which si the Personal Automated Trading System. That is aimed at experienced traders who know what they’re doing, and are setting up strategies they would like to automate and use more often.
The advantage of using our platform to do that is that it’s completely safe. We never have withdrawal permissions from the exchange APIs, so we cannot move our customers’ funds out of exchanges. We don’t take a deposit, and we have no access to customer funds. Traders can create custom strategies from scratch, and we don’t offer strategies ourselves.
However, we want to provide the opportunity for experienced traders to leverage their strategies and help less experienced members take advantage of them as well. So the social trading feature allows novices to copy strategies of successful traders, for which a commission could be earned. We let them establish a relationship and talk to each other, explore each other’s profiles and compare different traders to learn about common practices.
In order to activate an account with Yanda, traders must provide their API keys (with no withdrawal permissions) from at least one of the available exchanges. Once they are settled with their keys, traders can opt for three solutions: Copy the trading strategies created and shared by other traders, Manage their crypto portfolio across multiple exchanges, or create their own trading bot with no coding needed.
We plan to offer a more comprehensive portfolio management tool as well, so that our users can see past trends and how they may affect the future. These are all standard analysis practices. There’s no secret sauce to doing it, it’s just being applied to crypto instead of to more traditional assets.
How to explain my approach? I’m a big fan of Bill Gates. I try to follow his example. What he did was catch great ideas from open source, and offered tools that were accessible to everyone. Like Excel: a tool to let you do whatever you want. From a simple calculation to a complex program. We have the same aim with Yanda: from trading a few coins, to having a comprehensive portfolio strategy, we want to provide that scalability to our users.
Where do you see the project in 5 years time? Do you see crypto and traditional stock investments each playing a role in Yanda’s future?
It may sound surprising, but we want to be a bank, more or less. We want to compete with companies like Revolut and Wirex, which are approaching the market from a different set of core values. Revolut is all about convenience of payments in real life and between individuals. Wirex is about foreign exchange and sending money. We will be about trading, but each of us will function as banks.
We have the right infrastructure, the ambition, and the right team to build the bank of the future. We will become a regular licensed broker, and wealth manager, but we will also offer, as Revolut has in its own way, a new conception of finance. The main difference is that we will be a “bank” that doesn’t hold the funds our members trade. We will create a bridge between their wallets and funds on multiple exchanges.
In some way, it’s almost the reverse of Revolut: they offer the advantages of having one account but being able to access dozens of different countries and currencies with that account. We offer the ability to take a bunch of accounts, and to localize them in one account. Where they help you spread out, we help you collocate.
I believe that the banking system ought to go back more to the way it was in the 80s and 90s. That is to say, more along the lines of the European socialist model of savings banks. Banks should just hold money. They shouldn’t function as “financial product” providers or investors. Those tasks should be taken up by someone who does not have your money in hand. The combination is a dangerous one, as we have seen in recent history. Centralized power and vertical integration doesn’t lead to broad social benefits. We seek horizontal integration instead: the services of a bank but with lower overhead and higher security.
Yanda is an ambitious project that aims to offer other services that includes wallets for Bitcoin and other cryptos, a wealth management system, and a debit card for traders. Currently, one of our main focus is regulation. We still don’t know how all governments will react on the long run, but after the latest report from the FCA we foresee opportunities we would like to catch. Regarding the inclusion of traditional stocks within Yanda’s services, we are open to it but our current focus is on cryptocurrencies and is going be like this until we will obtain the necessary licenses to operate with other assets.
What do you think the cryptocurrency market has to accomplish before it can become a really reliable and stable part of the financial system?
The forces that might influence the future of cryptocurrencies are various and hostile, but the recent trend of issuing so-called “stable coins” (cryptocurrencies backed by fiat currencies) such as the USDC is an encouraging measure of success of the blockchain technology. Whether Bitcoin is going to succeed as a global currency or not, the worldwide adoption of the blockchain as a distributed ledger will follow a separate path that seems more realistic and feasible to me (especially in the short term).
How can people get involved with Yanda and start using the services today?
The steps are very easy, actually. Traders can register for free on Yanda.io and start trading immediately after they connect their account with exchanges via API keys. We are now working on improving the usability of the platform and on the production of video tutorials that will help users with their journey on Yanda.
You’re among the first startups that have joined StartupYard from the cryptocurrency world. Have there been any big surprises coming through the mentoring process at SY?
It is an honor to me and to all the members of the team at Yanda to be part of SY. The biggest surprise is to see so many top managers with a more traditional financial background getting closer to our world. Having the opportunity to share our vision with them and receive their feedback is definitely a major opportunity for understanding how we might fit in this evolving industry.
For you, which of the StartupYard mentors have been the most influential, and why?
It is very difficult to determine that because every mentor brought her/his own point of view and are all very different and valuable. If I need to choose, Gustavo Vizcardo, Yann Bouvier and Philip Staehelin have been sharing their expertise with us since we met and helped us drawing a solid plan of expansion and growth.
Printsyst co-founders Itamar and Eitan Yona are brothers, and they represent our first startup from Israel as members of Batch X. They are also the 3rd generation in a family of a printers, carrying their family tradition into the realm of 3d printing. Their startup, Printsyst, is for companies that use 3D printing, but don’t have internal expertise. PrintSYSt is an AI-powered management solution that provides a complete automated 3D printing workflow. Unlike standard existing solutions, PrintSYSt requires no expertise, allowing users to focus on design instead of production.
Itamar, the older brother at 34, plays the role of CEO, and has a degree in Electrical Engineering. He provides professional engineering advice, lectures, and workshops about additive manufacturing worldwide. His articles being published on well-known industry magazines and blogs. Eitan on the other hand focuses his attention on marketing and communication, and can be found frequently on the team’s YouTube channel, connecting with experts and educating his audience on 3D manufacturing.
Hi Eitan and Itamar. You are not actually our first pair of siblings at StartupYard, but I think people will be interested to know how it is you both came to make 3d printing your focus in life. What’s it like to do this together?
We will answer these questions in one voice, because that’s really the way we are as a team. We know each other so well, it’s like one hand working with the other. It’s muscle memory.
Working with family is unlike anything else. You can have colleagues, and you can have people whom you rely on and you trust, but these are not your family. We are a 3rd generation family in this business. Our grandfather was a printer, our father is a printer. We are carrying that tradition forward, and in that sense we see ourselves as a part of that tradition, just bringing it forward.
Our father taught us growing up that individually, we would never have the strength that we have together. Perhaps you can tie this in with the history of our country and people as well. We have to cooperate as one to get things done. As brothers we are able to learn collectively, and to multiply our strengths.
That is the secret sauce in a family business, which is that you are building upon a foundation that is rock solid. In most tech startups, we think this is missing. That sense of belonging to the industry and the sense that you are born to do what you do is very appealing. Our family is not just in the printing business, but rather we are in the technology business, and always have been. The technology just changes. The business part is not so different.
It’s fun as well. We can laugh at and scream at each other, and change directions in 10 seconds. We don’t have to forgive each other for every mistake. We can be angry, and we can share our feelings with each other. One can rely on the other.
Is there a downside to the family dynamic?
Sure. We are very monomaniacal about our work. It can be hard to stop talking about work and switch to other topics. How are your kids? What did you do this weekend? We get very comfortable talking about work topics, to the point where the separation of work and life is a bit blurry.
But again, this is in the family for generations. Our parents worked together all our lives, with our grandparents too. Life and family is business. There is no distinction sometimes. I don’t know if you consider that healthy. Maybe it’s good for some people and not good for others. We make it work. We are happy with what we do now.
Do you think that family background, being a 3rd generation printing family, gives you an advantage over others who come into this business from a different background, such as in computer science or manufacturing? What are the intangibles of a printer’s life experience?
So, it’s important to emphasize that we are technologists, by tradition. Printing is just the technology we know. A family business is not something that should stay the same for all time. That is not progress. Instead, a family business gives you the roots you need and the stable base you need to grow with much higher confidence and the right connections from the beginning.
It may seem like we are departing from tradition. Our father and grandfather were in 2D printing (Printing Press). We are in 3D. It’s a different world. However, our father made the switch from offset to digital printing. That was equally difficult, and equally transformative in its own time. The needs of customers change continually, and having a deep empathy and respect for people is something that takes a lot of life experience.
In that sense, what you do in 3D printing is no different at all from any other kind of printing. People always have the same flaws and the same needs from you. You are the person helping them to take advantage of the technology and see what is possible for them. If 50 years ago it was that they could print a photo or a book, today it’s that they can print something like a pair of glasses. Still, you serve a human need: to start a small business, to realize a creative dream.
That human level is where everything important is happening. The business that can get down to really sharing a bond with the customer and understanding and appreciating them for what they are, is going to be successful. The money will follow. That’s our view.
It seems rare to me in technology to see people follow their parents as role models and mentors
Yes, it is more rare than it used to be. Technology is no longer seen as a trade, but rather as a skillset. So you are not a craftsman or a journeyman, but an engineer. That brings the focus out of customer-minded, traditional practices, and toward institutional ideas and practices. The engineer thinks as the university teaches him to think. Not as his father teaches him to think.
That is not always bad of course, but there is a reason that trades have been passed down from
parent to child for all of time. In the formalization of some knowledge, you will lose that which cannot be written down. I can teach you to code out of a book. I cannot teach you to run a business out of a book. I cannot tell you what use that code will be once you know how to do it. That is experiential, and it is something people can get from their parents, and should get from them.
So in a sense you would like to see the tech business be more conservative?
Maybe. What does this mean, conservative? There is simply a great deal of value in growing up in an industry, just as there is value in coming into an industry fresh with a new perspective. Both approaches must always be considered.
In the “entrepreneur industry” today, ego is heavily monetized. Right? It is all about the founder and the singularity of them and their vision, and how no one else is the same as they are. No one can do what they do. But this is nonsense. This is not how knowledge is gained in the real world or passed on for our shared benefit. We are not islands to ourselves. If you build to last, then what you build is more than you are.
When you look to the great fortunes of the 21st century, it is sad in a way that they belong to people who are in many ways isolated in time and place. They have no sense of their past or future. Disruption in the sense that the technology industry means is often just an ego trip. Technology always changes. It is a question of whether we are better as people, or worse. Do we do good for people, or not?
What attracts you to working on 3d printing in Europe? Why not somewhere else?
Well, of course we were attracted to StartupYard! But also the fact that Europe is a really fertile ground for change and innovation in 3D printing. We see it as somewhere that we can bring a lot of value, and where businesses and people are ready to take advantage of our technology.
We love Israel as well, so we will always be home there. However, 3D printing is not like the old printing business. It is language independent. It is global and digital. So we must be where other companies are doing this work. The business may be global, but being physically present is still very important. We have to make ourselves unavoidable and inescapable for the future of 3d printing.
Let’s talk about the technology because I think most people see 3d printing in a really simplistic way. What is the current state of 3d printing, if you can provide some analogy to traditional printing technology? Are we in the Gutenberg days? The Franklin era?
Yeah, that’s a good question. So decades ago, when our father was taking over the family business, there was no really good software drivers available for professional, quality printing. People who were going digital were doing this stuff on their own. You had to have a very good reason to do that, because the change was very drastic. It was essentially taking everything that you know about printing, and changing all of it.
You want to print digitally? Ok. You need a team of developers, hardware engineers, you need a lot of money to research and test. You basically have to start from zero. People cannot imagine this now, because today you don’t think about PostScript and print drivers, and these things that were hell on people in the printing business for many years.
You have to consider that digital transformation is not a new phenomenon in 2018. It has been going on for decades already. The journey from an offset press, with physical plates printing pages, to a digital laser printer is an enormous change. It is like going from steam power to electric. Everything must change.
Now we face the same level of challenges in 3D printing. To digitize the making of 3D objects. If you will, I think we are in the offset printing era right now of 3D objects. You have injection molds. You have industrial processes that take huge investment and planning to work. You do have 3D printing happening on a small scale, but you lack all the hardware and the essential drivers between the finished object, and the technology itself. And if you are lucky enough and have access to 3D printing, you still need to follow a long learning curve.
That is the problem we are solving at the end of the day. The ease with which you print a page of paper today should be, maybe 15years from now, the same ease you experience printing a pair of glasses or a new doorknob. Whatever you need. Remember printing evolved from handwriting to the printing press, to the digital laser printer in more than 500 years. Manufacturing also is taking a journey from the handmade to the ubiquitously available object in a similar space of time.
Obviously there have been some hype bubbles surrounding 3D printing in the last few years. Do you think we are poised for a major step in the adoption of these technologies now?
It’s true, particularly maybe 10 years ago, that there have been some hype and disappointment around 3D printing. This is necessary to the process, And predictable in a way.
This is a normal thing for new technologies on the adoption curve.
There were lots of ideas, and people doing very cool things with 3D printers, but the technology has not jumped to mainstream adoption for a few specific reasons.
One of them is the materials being used, and that is changing very quickly. People found pretty quickly that the variety of objects and functionalities was limited by the material. Color, strength, consistently, etc. There are many new approaches coming to the physical printing process that will make this much easier.
On the side of software, this is what we are trying to solve. One of the problems that emerged very quickly was that there are many physical parameters to consider when you are printing an object of any size.
Unlike on a piece of paper, you have an object in 3 axis, and you must consider the 4th dimension as well: in which orientation should parts be printed, and even more, what should the internal structure of the parts be?
So that is where AI comes in?
Yes, precisely. AI is needed to run through all these potential variations in the way a thing can be printed, and select the best one for the purpose at hand. That can save a very lengthy process of having to manually determine these factors, or just guess and check to see if it works, which is what people are doing today.
Many hobbyists quickly found out that they could not move from imagining a new object to simply printing it, because the technology required more detail than the imagination supplies. You need hundreds or more parameters to print a 3D object. You must know the thickness of each component. You need to choose internal structures (honeycomb, swiss cheese?) you must know in what orientation to print, and where the piece will be separated from the printer. How fast will it be printed?
So the process of iterating these tiny details in a physical printer is very expensive and time consuming. There were many cases in which people just couldn’t produce prototypes because they couldn’t get the printer to follow a process that created a stable object. That’s a big problem in 3D printing. That’s not a physical obstacle, it’s a software obstacle.
We are using AI to sort that problem out. You have to virtually simulate the infinite combinations of possible approaches to printing an object, and find that ideal process, which is going to be absolutely unique for every single thing you print. One small change to the thickness or the length of something, and a 3D printer must be completely reconfigured to allow for printing a stable version of this new design.
That really destroys your ability to iterate, unless you can be sure that each time you print, you are getting the best version of the object you are trying to make. You can make quite complex parts in 3D printers, and in some cases these parts can serve to replace dozens of other components that were formerly separate pieces in a machine or a piece of furniture. But if you can’t figure out how to stabily print that object, then the 3D rendering is useless. It’s just an idea.
Printsyst is taking that rendering, and making it printable and stable, and useful from the first try. That’s the objective. Break the expertise barrier that stops people from using 3D printing for whatever reason. Democratize manufacturing and make it something accessible to small businesses, entrepreneurs, and individuals.
We know that 3D printing has huge applications for manufacturing and design (such as being able to rapidly build custom parts and eliminate assembly steps). But what kind of impact do you see on consumer lives in the next decade or so?
Much of the impact may go unseen for the near future, to the end user. Many things that were formerly very complex to assemble may begin to be 3D printed, such as electronic components and even parts for cars, furniture, and things like that. But you may not know the difference if you don’t know how to look for it. It will simply allow businesses to deliver these goods cheaper, faster, and in more variety.
Later on, as this technology is further democratized, it can have the same effect that widespread printing had on the spread of literature and businesses around the world. The ability to create something fast, cheap and in good quality with minimal equipment also means you can take a lot of creative risks, and many microbusinesses may be born. Already you see this among some designers, using 3d printing as a bit of a gimmick. It will not be a gimmick forever.
Ultimately, we probably get to the point where an individual is able to order or print parts and object themselves that are customized to their exact needs or the needs of a situation. You know what size shoe you wear, but I bet you don’t know the distance between your temples. So why don’t you? Because knowing that, you can create a pair of glasses that fit you perfectly.
3D printing will mean “mass customization.” This means less waste of energy and materials, less cost to transportation, and ultimately we believe a better environment in which fewer resources are ultimately wasted by overproduction and under-customization.
How can companies who are employing 3D printing start to take advantage of your technology? Where do they get started?
Right now, we are working with small and medium sized enterprises who are using 3D printing to develop and produce new products. These companies don’t have a lot of internal 3d printing expertise, but can bridge that gap with Printsyst.
We also are interested in working with designers, and other entrepreneurs or engineers who want to use 3D printing, but again, don’t want to lose a lot of time learning how to get the most out of a printer or a particular design. We would love to support efforts to build low cost housing, and there are currently many needs from many different types of printers to get them to run more efficiently, and to optimize designs on the go, making each printed part perfect for its exact position and purpose.
Some industries we see getting interested are especially interior designers, architects, and automotive repair as well. 3D printing is great for refurbishing cars or making customized components, so we should see a lot more interest in that direction. Replacement parts, particularly, can be made much faster and exactly to fit.
In the long term, we really believe this technology is going to penetrate everywhere. Eitan spent his military service on a submarine in the Israeli Navy, working mostly on repairs. Imagine having a 3D printer in a submarine so print the exact parts you need. Stock becomes a much easier logistical issue.
With each new batch of startups at StartupYard, we run a series of detailed interviews with the founders to give our community a sense of who they are, and how they see the world they’re trying to change. Last week we announced 7 new companies in StartupYard Batch X. Today, we jump in with an interview of Anja Varnicic, CEO and Co-founder of Urbigo, the urban smart garden company that promises to “Bring nature closer to you.”
Urbigo is a system including a small modular garden with grow lights, and cylinders for plants containing nutrients and water. The garden is controlled via an interactive mobile app, and users can get the latest advice on how to tend to their mini gardens, as well as order new plants, nutrients, and soil packs from Urbigo.
Hi Anja, coming from a plant biology background, what made you want to turn your passion for the science into a business, helping people grow plants at home?
So, as an environmental scientist, I have long asked the question: “what role do plants really play in our lives?” The truth is that we are entirely dependant on them. For oxygen. For nutrients. For flavor, and for our wellbeing. Yet modern society has moved off the farm, and now treats plants and spices as commodities that are easily fungible between one brand and another. If not from Spain, then from Brazil. If not from Turkey, then from California.
We don’t understand where our food and our air comes from anymore, and I think that is a problem for people living in cities. Of course, we can’t expect people all to live in hydroponic greenhouses in their flats, but we should get ourselves closer to the foods that we eat and the flavors that we taste.
The way of doing that for us at UrbiGo has been to bring just a little bit of green into people’s lives, and to show them the immediate benefits of tending to plants that we depend on for everything. We came up with a focus on spices that can be grown in the urban kitchen, because not only do fresh coriander or mint taste better than dried and packaged versions, but also getting something to eat directly from a plant in your home reminds you of the life behind the things that you eat, and the natural world you depend on.
As with any other true love story, the startup idea happened unexpectedly and accidentally. I wanted to make these ideas into a real business. Luckily enough, I had a chance to share my business idea with Alex, our now CTO, who had previous startup experiences. We shared our thoughts, he loved it, and boom – UrbiGo was born!
How do you think incorporating gardening into one’s everyday life can affect positive change for somebody living in a city?
They say plants are the friends that always listen. And they really do. Indoor plants and urban gardening has become madly popular in the past few years because it reduces stress, make our air cleaner and our bodies healthier. And those are the thing we usually forget about or take for granted.
Having and growing fresh ingredients from your own garden is a creative activity. It brings us the same feelings we have as in making a sculpture or a painting, or writing a song. Gardening is viewed in Eastern cultures as almost poetic in nature.
For the millenial generation, we want to feel that connection to the Earth, and doing so makes us feel more responsible and more connected to nature. It makes us feel like grownups to be able to make life in an urban area where nature has seemingly little control.
I also believe that the millennial generation regrets the excessive commoditization of food. We yearn for the experience of knowing how our food is made, what it is, and how it makes its journey to our plates. So you see many different ways this is expressed in the modern consumer culture. Farm to kitchen restaurants. Farmer’s markets. Home gardens, and smart mini-gardens like Urbigo, that will help people to get back some of the control that we have lost over our diets and our environment.
]What would you say are the biggest mistakes we make when it comes to designing urban homes, and thinking about our living environment?
]Today, a larger share of younger urban residents live in rented flats or flatshares than have ever done in the past. What we see happening in cities is interior spaces being divided into smaller and smaller parts, and unless the presence of plants is part of the planning for those spaces, it ends up as a kind of afterthought.
Take a walk for example through an Ikea, which is where a lot of young people are going to get a sense of how to use their personal space… the plants are the last thing you see there. They are the afterthought. They are what you add when you have everything done.
This is backwards, I think. We need to plan more around plants, and plan to live with more plants in our personal spaces. That can affect the placement of windows, or the whole design of a building. The use of light must be reconsidered. In some cities such as Paris or Berlin now, whole buildings are being constructed with plants on their walls and rooftops. This is a good start.
Do not treat plants as a pleasant addition to your home. If you do, you will not have room for them when you decide they are the thing missing for you.
Let’s talk more about Urbigo’s products. What would you say distinguishes you from other indoor gardening solutions? What is your “killer app?”
UrbiGo isn’t just a fancy smart garden that grows fresh herbs for you – it is a community of plant lovers and enthusiasts that are changing urban gardening as we know it.
UrbiGo gardeners get to control their UrbiGo mini smart garden from their phones and learn how to grow their own fresh and nutritious ingredients in a fun and simple way through a gamified app. By completing daily challenges in the app we want to motivate and empower people to become successful urban gardeners and live more sustainably.
We take some cues from products such as FitBit, or Calm, an App for managing stress and relaxation. The way they engage millions of users into doing something good for their body and mind is something we can learn from. Tending to your garden should be a small but integral part of your daily ritual, and with UrbiGo app we want to make the process learning and enjoyable even for those who could kill a cactus.
Now is an interesting time for home gardening, because today urban millennials are becoming used to healthy lifestyle daily rituals using technologies like smartphones and watches. We don’t want to suck people into paying attention to their phones, but rather to use the medium of the smartphone to help people live a healthier and more satisfying life, and live in a better environment.
Suppose that urban gardening becomes the norm for people living in cities 10 or 20 years from now. How else would you like to change the way we design our lives around food, cooking, and living spaces in the future?
Since we tend to spend most of our days in offices and indoor spaces, I believe it will be essential to stay connected with things that matter most like family, friends and nature. Plants and greenery have this power to gather people, especially in urban areas where those are scarce. And we wanted to make this values approachable and simple for our users which inspired us to create product and a network of like minded plant lovers and untaped enthusiasts.
Many people living in cities rarely if ever buy fresh spices and ingredients for cooking. What are they missing out on? What are some of the concrete benefits of growing at home?Besides improving your overall health, growing and consuming your own fresh ingredients makes you connected with nature and origin of your food, that obviously doesn’t grow on market shelves and from plastic packaging.
We’ve heard lots of complaints from our customers, that store-bought herbs dry out in a matter of a few days and don’t have the fresh and intense tastes they’ve come to expect. Once you have something fresh, it can be very striking to taste the difference between that, and something not fresh. So I think people should have more choice about what to consume and when to consume it – this is why the UrbiGo app educates consumers about the benefits of “growing your own ingredients” so you can make proper decisions about your health and wellbeing. Be better informed, and make more informed decisions.
Food gardening is most of all a local and sustainable way of producing fresh ingredients and educating your family on where your food comes from. As cities transform into concrete jungles, this kind of relationship with nature will become crucial for us future generations’ well-being.
As a business, where would you like Urbigo to be 5 years from now? What will be your metric for having accomplished your mission?
We go where our customers needs are, and thus we are experimenting with the ways to include smart indoor gardening into every future home. The next logical long term step would be to incorporate UrbiGo into the smart home device network because there is a space and interest in companies for the next gen “plant device” that would improve urban health and connect with their low-friction lifestyles.
For now our goal is to get a smart garden into every home, and turn that into a network of people who are thinking much more about their well-being, health and importance of food gardening.
Imagine, using smart home technology to, in a way, bring us back to an earlier age when you would ask your neighbors for an egg or a cup of sugar. Maybe in 5 years you will be able to use UrbiGo to compete in urban gardening skills with your neighbor, grow chillies in your office desk or have a “green pet” for your kids. Maybe it will lead to people sharing much more of their domestic lives and spaces with each other, and helping each other to live better.
I think these very locally focused changes will be a very important part of the smart-home of the future. Not that you are one home connected to the whole planet, but that you are one home connected to the homes around you as well. We all share one environment, and the best way to improve it is to connect and learn together.
You’re employing a number of new technologies in Urbigo’s gardens already, like 3d printing, and LED lighting. How do you see technology making urban gardening even easier in the future?
New technologies have allowed urban gardening become more “smart” and resilient to climate change effects we are experiencing. So you don’t have to be dependent 100% on sunlight, ever changing weather conditions or your personal skills and knowledge .
But, still, people don’t want technology to do everything for them, because growing and tending plants can be part of a soothing ritual as well. I see technology as a tool to make your everyday life greener, easier but also to empower you to learn and share your urban gardening experience with others. We cannot stop urbanization, but with technology we can help people stay connected with nature.
Has there been a major surprise for you since joining the StartupYard program? Did you learn something you weren’t expecting to?
I’m not sure if it was a surprise, but we have certainly noted that the interest in smart gardening in the corporate and business spheres are also growing very fast. I think as millennials begin to move higher in large organizations, this is going to become an area where we can have a big impact with our product.
People spend up to half their time in offices, and in many cases, these spaces are poorly adapted to keeping people healthy and happy. Companies are understanding more and more that the total wellbeing of their employees is a vital consideration, and that if they cannot provide a better environment for people, then workers will go to those who can. I think this is very positive, and I hope to continue to raise people’s standards for their immediate environment, and inspire people to demand greener workplaces.
What have been your team’s biggest personal or professional challenges in making this project a reality?
We’ve been able to grow the waitlist for UrbiGo to over 500 people and we got major interest not just from individuals but also corporates. One of the challenges for us, as we are engineers, was to let go of some of our ideas about what people should like, and really listen to what our customers are saying about what they want.
You can come up with great ideas, but if you can’t get your ego out of the way, you will miss the experiences and stories that really define who your customers are, and how they see your products fitting into their lives. Learning this at the beginning of our startup journey was crucial to get first sales, traction and investments.
We cannot stop the technology and urbanization, but we have to design a product that accommodates our customer’s fast paced life and needs and also engages them into doing something little everyday that is good for themselves. This is an ongoing process but we are happy that so many people help us do that and share our vision.
What do people need to get started with their own urban gardens? How can they get their hands on an UrbiGo smart garden?
Since UrbiGo does not require big space, plant knowledge or time but accommodates to your lifestyle, you are basically one click away from starting to grow your mini indoor garden.
We have had testers out in the field for a whole, and we’re ready to go live. Right now, we are taking signups for a special, limited first batch of Urbigo gardens for those real enthusiasts who are ready to join our smart urban gardening community. This exclusive run will start delivery in December 2018, and the wider public will be able to order from Urbigo during the next year.
SThis week as part of our ongoing series of talks with alumni, I sat down with Szymon Dwonzczyk, CEO at Turtle Rover to talk about his company’s transition from a pre-product academic startup, to a Kickstarter funded project, and eventually a post-acceleration StartupYard company.
Szymon focused on providing some insights into running a hardware focused tech startup, and shared his experiences with crowdfunding, venture capital negotiations, and his philosophy of customer-led product development. In particular, Szymon talked about the process of a small company building its confidence and sense of self through exposure to customers, advisors, and investors.
Here’s what he had to say:
Hi Szymon, as you know, this series is about giving advice to our current members and your fellow alumni. What do you think you’ve learned in the past year that you didn’t know before?
It can sound a bit formulaic, actually, but I think since joining StartupYard, I have realized that self-confidence is probably the most important quality that a founder can have. You have to be focused on building up your self-confidence and self-esteem. Without that, you can’t get anywhere.
So why are you so much more self-confident today?
I think in a year the Turtle team have grown enormously in our confidence about our ideas. We are able to see more clearly that the best way forward is the way that we believe in most. I think today I am much better able to say that I can adapt and learn how to grow the company in a way that makes sense for us.
I would like to point to three ways that I think anyone can build that kind of confidence, and explain why they have been important to me.
Number one, being forced to speak and perform in public. I can say I was not afraid of speaking in public before joining StartupYard. However I always had issues getting my point across to people. It was not hard for me to speak to people, but hard for me to express how I felt, and not only what I thought. The mentoring process and prepping for the Demo Day is an emotional experience, and it made me much more open.
I can say this changed for me a lot, leading up to, and after our Demo Day. It turned out that I really enjoyed the experience of refining our company’s story, and getting the pitch exactly right. I found I enjoyed expressing my feelings more. I liked seeing in people’s faces that they understood and were suddenly excited about this crazy robotics guy from Poland. I was excited too.
If people can see the same thing you can see, this is enormously good for your self-image. You can be sure you’re doing something valuable.
Number two, I think is talking to a lot of people who may disagree with you. Talking to people often, and early on in your thought process, is really important as well. I realized I think that because of the mentoring process, we probably made as much progress in product development in 1 month as we had done in the previous year.
That is not even because mentors gave us new ideas. Just because they confirmed many things that we initially believed, and helped us to dismiss other things that we were not sure about. Mentoring strengthens your ability to fight for what is naturally right for you. You lose this fear of making mistakes and going against your instincts, because everything you believe has been tested with over 100 experienced people.
Talking to people early and often about your ideas helps you to see them more clearly and take action. Talk to a lot of people.
Lastly, I think being forced to think more about our competitors has helped us to understand ourselves, and to value what we do even more. As you say yourself Lloyd, your competitor can be anything your customer is doing. Your customer themselves can be your competitor, especially in our case because we provide a product that is targeted at makers and robotics people.
I think we saw our competition as always these companies we wanted to be like. Like Boston Dynamics for example, or even companies like Tesla- if they started to make autonomous rovers, we would be screwed!
That’s the way we were thinking, but we saw increasingly that our true competition is not as strong or as well-defined. We compete with behaviors and ways of thinking; what is possible, and what is not possible. If we can convince you that it is possible to create your own robot, with a never-before-seen set of abilities, from scratch, then we have won against our competition in that way. If you decide to build on top of our platform, then it’s a success for us.
You mentioned that your understanding of competition changed quite a bit. How did your understanding of your product change in the last year?
:laughs: It’s funny because the product, just looking at it, changed very little. It is still Turtle Rover. It looks the same, essentially. What changed was our understanding of the product and who it is for.
When we first were making Turtle, of course it was just for us. We are robotics engineers. Then we thought as you always do, that it must be for people who are like us. This assumption we held for way, way too long without any real feedback.
Then two things happened: first we successfully ran a kickstarter campaign, and then we were accepted at StartupYard. In that space of time, we started to see that our customers were not like us, actually. They were photographers, teachers, engineers, makers. All kinds of different people actually.
It was this sudden realization: “oh… this product isn’t a robot to you, it’s a way to do what you really wanted to do.” Maybe it sounds obvious, but it wasn’t.
Then we were suddenly hearing from a lot of mentors and investors, and again they were telling us, “there’s something here for these people, there’s something for them.” There are suddenly many more possibilities.
What I learned, most importantly, is to make assumptions and test those assumptions more quickly, and more consistently. We had many ideas over the years like: “you can use Turtle to do X,” but we would just think about it. Then actually working with live customers and mentors, we decided “ok, if someone says we should do X, let’s try it.” We actually saw them how complicated it might be to sell that idea, or to make it work. Or we can see how easy and natural the idea actually is.
I think this is something I have learned: do less planning, and do more doing, in general. If you have ideas, get feedback, and get that idea to the MVP stage as fast as you can to get the right kind of feedback from the right people.
So basically, you’re following the Tesla approach to product development…
Yes, I think that’s fair. We are not doing anything at scale like Tesla, so we don’t face the downsides of this approach.
There is a big advantage in shipping a product to the right people even before it is ready. For example, we had a case recently where we were delaying shipping a bunch of rovers to customers because of an issue with Android/iOS compatibility. FInally I just said: “screw it guys, ship it and tell the customers about the issue.” And we shipped it, and you know what? The issue was with our own systems, not with the product. The rovers we shipped worked fine for the customers.
There are many cases like this, where you allow something internally to become a big deal, and actually to customers it maybe isn’t a big deal. Particularly since we have these early adopters, and we are still in the test phases, we have learned you have to have more faith in these people to help you and to solve problems themselves.
The result for us is that many times our customers show us how to do things because we have given them that opportunity. One customer ordered the rover for a museum exhibit, for example, to demonstrate the technology. I found I was almost trying to talk him out of this idea, because I saw that there were going to be some connectivity issues that would be hard to solve. I wanted to help him set this up so it would not fail.
I needn’t have worried because the museum guy is also a tech guy, and he anticipated these issues, and had his own solutions. Actually his network solution was better than ours, so it’s something we benefit from. I had to trust him to do that, and trust that we were sending him something that would not be embarrassing to us when he tried to use it.
Do you think this strategy is something startups should do more, generally?
Yes. Totally. I didn’t realize to what extent early stage companies really ignore their customer feedback and don’t trust their customers to understand them as a small company, and accept errors.
You end up basically fearing the power users of your products because they are the ones who will cause the most “problems” for you in customer support etc. That’s wrong, because these people help to build your knowledge base, and discover a lot of problems before anyone else does. You can use them to make you stronger.
You see so often these small startups that try to act as if they are big corporations. That is a shame to me, because they are missing a once-in-a-lifetime opportunity to have a different relationship with customers. Later on this is not going to be possible so today, we really choose to open up and be transparent with our users as much as possible.
Do you have any concrete advice for a hardware startup in a similar position to Turtle?
Yes. If you are thinking about crowdfunding, such as Kickstarter, then do your research on the most common failures. Don’t believe every catchy bulletpointed list of “tips & tricks.” The people you want on Kickstarter are the ones supporting you, not just the product.
Most importantly: do not outsource your development from the beginning. That is my view, particularly if you are crowdfunding, you will be tempted if the campaign is successful to outsource more and more, and depend on more and more others. This is where most kickstarters tend to fail: they get a lot of traction, and then they try to outsource too much.
If you outsource too much, you don’t gain enough experience. You get the job done, but it doesn’t help you to streamline or improve your processes. It doesn’t help you understand what you are capable of on your own.
We intentionally kept our campaign limited in size, and only accepted true first adopters. This is because if you fail to deliver on one project on Kickstarter, basically you can never do it again. That failure will follow you everywhere. People will think you’re a scammer, and you can’t even prove them wrong if you’ve outsourced the failure, and don’t have anything to show for it. That’s why we were very conservative in our goal, and we are still today working on completing it. If we go back to crowdfunding, we have to have that good history of delivering.
The other thing I want to say is that if you are talking with VC investors, you really need to understand the Venture Capital approach to business. You have to decide if that is the right way for your business to grow. I am open about not being convinced of this today. I believe it may be better for us as a company not to raise money. Startup founders need to be open to this possibility, that it can be better to leave money on the table.
That’s just my feeling. I’m a very Slavic guy, and VC culture is very American I guess. I see VC money as a way to scale, not a way to survive. If I had something I was absolutely sure would scale tomorrow with more money, ok, VC is a good idea. However if you are thinking VC money will save your business or help you to develop a product that is not proven yet… well I think you will have a harder time.
To me, it is a lot easier to build a business model not counting on the investment, and simulate where can you be in 2, 3, 5 years from now. Then use the VC money to speed that up – instead of 5 yrs of development, be there in 2. But anyway, don’t underestimate the power of time – you’ll always need time to learn all the processes in your company, learn how to run the team and prepare the product – it’s not about money, not about finding the right mentors, it’s about gaining the experience that most probably you don’t have – and it needs time, and time only.
At the end of the day, you can speed things up but you can’t skip anything.
Waymark Tech, a Startupyard Batch 8 alum, is a London based AI regulation intelligence company, with clients among the top accounting and consultancy firms in the world. Waymark helps big enterprises to stay on top of regulatory changes, and bring alerts and guidance about regulation compliance to the right places in the organization, at the right time.
You can read more about Waymark’s story and its Founder and CEO Mark Holmes in our last in-depth interview. This week I connected with Mark for a one on one chat about his journey since StartupYard. Since he left us nearly a year ago, Mark has managed to raise a seed fund for his young company, and now has a team of 5 working on Waymark Tech, as well as a growing list of clients either actively using, or testing their technology.
We decided to focus our discussion on the challenges for a first time founder raising seed capital. From hiring the right team, to picking the right investors, we took a detailed look at the process, and what Mark learned from it. Here is a version of our conversation – edited for clarity and length.
Hi Mark! We’re gonna talk today about the process of going from a one-man-show startup, to being CEO of a small startup team that has raised seed investment, and gained a lot of traction with their product. Sound good?
Looking forward to it. Lots to tell. Lots of ground to cover since then. As you know, we’re now a team of 5, we have a bunch of customers in our pipeline, and the product is out in the world being used by companies today. We also had Credo ventures join with StartupYard and Seismic Foundry as our seed round investors in March.
That’s where I want to start. Can you tell us a bit about how that process worked for you? What’s it like to negotiate a deal like that for a first time founder?
Well, I did just about everything wrong at the beginning, but you learn as you go. You figure out what investors are looking for, what they need to see from you to feel comfortable. You have to figure out also what you’re looking for, and what kind of an investor you really want. It’s just a big learning process for everyone, and I think we got the result we really needed. That’s the important thing.
What did you get wrong?
There were thankfully no big mistakes in the process, but rather I found out that many of the things that investors look at are just very different from the things I thought would be most important.
I’m a product guy, and that’s where I come from. Going into the process of raising funds, I also had some customers who were ready to work with me. You think from your own perspective, this is enough to justify an investment. Of course it isn’t, because a VC investor like Credo are looking for more than this. They want to see the big picture in 5 years. They want to see it down the road, and how this thing you do can become really essential and irreplaceable for the customer.
The fact that you have this customer ready to buy is great, but the investor wants to know how you are going to make that a growth relationship, and how you’re going to repeat it everywhere you can.
To demonstrate you are doing something that people are not going to be able to get on without, that’s not the same as having a great product. It’s having a sticky product, that can’t just be replaced tomorrow. Especially for the early stage investors, they want to see that this will be at the heart of your industry in the future, which people will depend on. I did find this helped me to make some critical product decisions as well.
You made more scaling focused decisions?
Yeah, definitely. More importantly, I made more customer focused decisions, that were not necessarily about the product features. You have to get over this fear of rejection, which is very big for a product person. It’s maybe the worst thing I can imagine, to be told someone doesn’t like my product. You fear they’ll dismiss you, and you will lose your chance with them.
Now that I’m selling and not just building, I see that this doesn’t happen. Actually the opposite, because you aren’t selling the idea only, you’re selling the relationship you’re going to have with the client. They have something to react to and to give you feedback, which makes the product even better, and makes the relationship even better.
I found out when you show your product to a customer, even if it doesn’t completely work yet, that actually builds a lot of trust, because they can see what you’re doing is real, and it’s not so big a risk for them to start trying it. I felt this surge of confidence from getting all this feedback, positive or negative, because people are showing that it matters to them. You are doing something that matters.
Knowing that now, what would you tell yourself to do differently when approaching an investor?
Maybe this: that they are “technology” investors, but they are investing in you at the end of the day. The product can be the best, or just good enough. I want my product to be the best, but the investor needs your team to be the best, your traction to be the best, and your technology to be unbeatable. At the end of the day, the product is a small part of that mission. A critical, but ultimately small part of it.
One thing I didn’t do, which I honestly should have before talking with investors, is to know more about their portfolios and their history. Focusing more on how the investor’s portfolio and the team they have is going to be a help in scaling and really in growing your business. Do they have the existing clients and companies in the industry you’re targeting, and can they open these doors for you that can’t be opened otherwise?
You always say at StartupYard that it isn’t just the money. That’s really, really true. The wrong money is not a blessing, if you aren’t also getting the right network and the right support to use it.
I didn’t read enough about investors before talking with them, because obviously it feels like they are the ones interviewing you. It’s not like that though; you have to interview them too, and figure out if the relationship really makes sense, apart from the financial consideration. That goes both ways too: how do they enhance your ability to scale, but also how do you enhance their portfolio? Are you going to be of value to the investor in the future? If you are, that is a good sign you will get the support you need, because they also need you.
It ended up that investors started to sort of pitch me on their ability to help the company grow, and this is when I started to pay more attention to an investor’s history, their other investments, and the decisions that the individuals you are working with have been a part of in the past.
As a result of this growing awareness, I did end up stepping away from the table with some investors who were interested in a cooperation. I saw that if you can’t see how you’re going to enhance each other, and have more of a marriage than a business relationship, then it might not be the right move. That’s particularly true in an early stage investment. These people are going to be around for a while. They will maybe have board seats. They will have opinions. You want them to compliment what you’re doing, not make your life harder unnecessarily.
I am ultimately happy with my choices, so I think I managed it ok.
What were some of the harder topics for you in the initial discussions with the VC investors you talked to? What did you need more preparation for?
There are obviously some things I wasn’t familiar with, that I had to study up on. Liquidation preferences, and preferred shares, shareholder rights, and other legal and technical things. These are really important to get your head around, so you know that the goals you are setting together make sense from everyone’s perspective. You want to have your expectations be aligned as much as possible.
I found I had to get used to this idea, that for a VC investor, they are really expecting most of their investments not to produce much in the long run. Just a few will pay back the fund, and maybe one will be that unicorn that will change everything. That being said, this is the kind of mindset they have when they are making decisions about who to talk to. Can you be the unicorn for us? Can you pay back our fund?
That is much less about your product than about your ability to scale, and to be sticky. I know that having a great shiny new product isn’t enough if it isn’t used by anybody, but I’m still a product guy. Still the focus on scaling and traction is really powerful from investors.
I also struggled with this, and we worked on this together a lot at StartupYard, which is that you have to have a story that someone can understand and relate to. These are really smart people, but generalists, and usually not as involved with your industry as you are. They are fast learners, but you have to give them something to work with, and that was something that was a challenge for me.
I’m doing regtech. Even just a year ago, this was not something being talked about much. Nobody knew what the stakes were for this industry. How important will this be, right? If you remember, at our DemoDay for my batch, we came up with this great story about a vineyard in the UK that made this wine, and then come to find out they can’t call it “wine,” because of some EU regulation they had no idea about. So they call it a “fruit-based alcoholic beverage,” which is just a crap thing for selling a good wine.
That was a story that early investors could really see very clearly. You can sense the frustration when you tell that story, and people get it immediately, that it’s this real problem, and it can effect them too. Once you can do that for people, you can get them to start seeing what you do as something that matters. This was a new discovery for me, just how powerful these little stories are in helping people to just “get it.”
You said the focus on the team was also a surprise for you. Why is that?
I knew they would want to know about my team, but it was something that went deeper than I thought. It’s not just having talent, which any company can find.
The investors are focused on your team because that is where the value is really being built in the company. With just a technology you have something that potentially anyone can do. There can be other ways to solve the problem. You are not likely to be so unique that nobody could ever replicate that technology.
I had grown the business through outsourcing, which is cheaper. Well, anyway it seems cheaper, particularly when I was trying to get a lot of things done very quickly. The investors look at this as a bigger risk in the long run, than slowing down a bit and building a great team that is going to continue to grow your product in-house and bring that organizational knowledge and experience that makes you viable in the long run.
There are other things like security concerns, IP concerns. However, I think it’s mainly that the investors do recognize that the team is going to be critical in building the company’s value, and reduces your risks.
It makes sense, for sure. If you are one founder, and it’s all in your head, that’s a big risk for someone to invest in. To gain trust, you have to also trust people, and bring people in, so I took that very seriously, and thought hard about how I was going to grow my team, and what kind of team we were going to be.
What is important to you about your team members? How did you pick them?
I got this I think from an old boss of mine in the finance industry, a long time ago. He said you can hire the best person for the task, but that isn’t always the best person for the job. There is talent, and there is fit, and you have to balance them.
Being with StartupYard was a good experience in this regard as well. In the program you’re with other companies that are struggling sometimes to find the right fit for themselves. Founders or employees come and go, and I saw some examples of what I wanted, and some of what I did not want. That gave me something a little more concrete, and made it easier to make these decisions.
When I was growing my team, to be frank I did not always choose the people with the most experience or the most skills in their area. I looked at their fit in the team, and their long-term vision for themselves, and tried to pick the best people for the job. I let some people pass with very impressive skills, which I think in the long run is the right thing to do. I couldn’t imagine how to work with them every day. We need that sense of belonging in the team, to be our best.
Also, I want to build a team that lasts beyond me individually. I am the “get it started” guy. I’m a builder and an idea guy, and I want to make something that I can pass to the next person to really grow it and nurture it. When we reach a size and a state where I feel I can hand this over to a great team that can take it to the next phase, I will probably step back and think about my next step personally. Since this is my nature, I am planning for that to happen eventually.
Ok, so more personally, is this something you can see yourself doing again in the future? Are you going to start another startup, if and when that time comes?
Look, never say never. Ok? I didn’t think I would even found one company, but there was just this moment that all of us know who found companies, that I knew I had to do it. It was just something I couldn’t let go. So here I am, and that’s the journey.
And by the way, I now see why some people do it over and over. I didn’t know this before, but the more I work with our customers and the more I solve their problems, I just keep finding even more mind boggling problems that I could fix, so my ideas are still growing. Your confidence grows, and your ideas just come faster, so maybe one day I will have to do it again. I don’t know.
I have spent 15 years in financial services and I do have other interests, so I want to explore them too. It might be a business, but it could be angel investing instead. I think the entrepreneur spirit is something that comes from having your eyes really open to what is possible, and what is not being done, that could, and should.
So to cap this off, can you give me maybe a bullet point list of the things you wish you knew a few years ago, that you know now? What would you tell young Mark of 2 years ago?
So many things. Ok, I’ll try and give you a simple list:
- Know what kind of founder you are, and let yourself be that to some extent. Don’t try to be somebody else completely. I am a product guy, but this doesn’t mean I can’t focus on scaling and selling. I am selling now maybe 70% of the time. Still I spend time on the product, where I get inspired to keep going. Don’t lose that.
- Remember that investors want to commercialize, scale, and grow. If you aren’t ready or you don’t want to go at their pace, you can choose not to. If you do, understand what it means for you.
- You have to sell. You have to sell! You have to overcome this fear of rejection, and sell what you have, as soon as you can. That is so valuable to the creative process, and it will make your product better.
- See clients as an advisor, and not a buyer. The old saying is “ask for advice, and you get money. Ask for money, and you get advice.” That’s it. If you are looking at your customers as the best source of insight, you are going to be rewarded in so many ways. Keep that focus where it should be, on listening and responding to clients.
- Think about how your company is going to become essential, and how it is going to become impossible to replace. Whatever this is that makes you stick, you focus on that and you don’t lose focus. You don’t want to be one of many alternatives. You want to be the one that the customer has to have. That’s how you raise investment, and that’s how you get deep into solving customer problems.