What is it about startups that gets everybody so excited? Yes, the Lean Startup movement and fast prototyping is what makes it relevant for anyone involved with design and product development, but the whole business of incubators, investor relations and pitching seemed like something to ignore.
To have an opinion, Markko, one of our partners, tried it out. It started with signing up for DDVE, an master’s program for design and development of virtual environments. After a successful Garage 48 hack-a-thon, the newly formed Qminder startup team went after Seedcamp investment, participated in the Startup Sauna accelerator, pitched for AppCircus and spent weeks and months working with a smartphone application that will in the future, hopefully, eliminate waiting in line.
Screenshot from Seecamp US Trip feed
Off we go…
Seedcamp, an early stage mentoring and investment program, hosts a yearly US Tour. During this tour Qminder, among other Seedcamp funded companies, had a unique opportunity to meet the whole tech industry by visiting investors, companies, universities and other stakeholders from both the East and West coast. Being on the road for almost a month, it is probably the fastest way to learn, grow and make lasting friendships.
New York – Boston – Barcelona
The Seedcamp US Trip 2012 continues until March 13th, so there is a lot of upcoming activity in the Seedcamp US Trip Tumblr feed. I was able to join for the East coast program and then fly back to Barcelona to present Qminder at the Mobile Premier Awards, where we managed to be one of 20 startups making our case on stage. During one week in New York and Boston we had two full day mentoring sessions, visited companies like Google, AOL, Microsoft and had meetings with successful startups like Etsy, Tumblr, Erply, Zemanta and inspirational investors like Union Square Ventures and Highland Capital Partners. We also managed to visit the MIT Media Lab, Cambridge Innovation Centre, listened to presentations by Michael Geer, Boucoup and met people at the British Consulate in Boston, Dogpatch Labs, 500 Startups. All this interspersed with dozens of other small meetings along the way.
My sincere gratitude belongs to Philipp, Carlos, Kirsten and Reshma, the amazing Seedcamp team, that made everything possible. Thanks also to all the wonderful people in the twenty Seedcamp companies that were forced to work their asses off, and take everything out of each day on that trip. I woke up 4 a.m. each day (I had a 7-hour jet lag, but it’s still early) to practice my pitch, do background studies, plan the routes and do the tasks that I had no time to complete on previous day(s).
So, what is a startup?
A startup is (mostly) a company that provides virtual goods and services without a proven business case. The startup has a technological innovation or just an execution of an idea. This is launched, and if it attracts customers, may during the maturation process, completely change the main features, the business model, the name or even the original customer base. Compared with “business as usual”, the only valid measurement of a startup’s success is “validated learning about customers”.
“Tell me about yourself”
Most startup entrepreneurs go through the painstaking process of pitching: presenting the project in a short period of time. A good pitch consists of “validated arguments to attract attention”. This is also putting many (including myself) ouf of our normal context, where we are able to choose our words based on the previous conversation. Without any introduction, I had only one minute to tell my story. What to say? What is important? Actually, not as much as we think.
Boiling your business down to one sentence and feeling good about it is actually all you can do for your business. This, by definition, is an almost impossible task for an introvert Estonian, like me, with a strong tendency for perfectionism. Europeans share a reluctance to say what they are good at, which makes helping them really difficult.
The next difficult concept to grasp is the notion of investing into tech startups. The sums involved are huge and nobody in the tech community cares to explain, what makes startups and venture capitalists such a great couple. Borrowing from Allan Martinson’s great presentation, it seems that “Raising venture capital is the art of younger men seducing older men”. Business as usual mostly does not include huge investments for a start unless you are in real estate or infrastructure. Seeing the effort that goes into making one simple application I now fully understand the need for investment before you actually have built anything. If you compare virtual goods with physical goods, they have no size nor shape constraints, no mass nor inertia. The only limitation is entropy: you have to overcome indifference.
Snapshot from Premiere Mobile Awards 2012, Barcelona
Adapt or die?
There are many industries going through difficult times today. They are being replaced with better, faster and cheaper alternatives. What has changed is the value of planning and the value of a having production unit. As Andy Weissman from USV nicely put, “data takes you away from whiteboard”. The cycle between having an idea and testing it out has become an instant process. When developing a new product, the forecasting is being replaced with rapid prototyping, testing ideas not in the form of “what would people like to use in the future” but “would you buy this thing today?“. Knowing the reaction is a far more powerful development tool than any valid assumption. We learn best by doing and the lesson that startups are teaching established companies is that a clear goal, energy and ability to adapt beats any business plan.
The good news is that serving human needs is the only economic driver we have, and that will never change. What has to change is how much time and effort we are willing to spend on building things in order to learn what (other) people really want. And for these lessons, putting your money on a startup is the best you can do.