Startup Lessons from the States

I knew from the start that the market for Appticles (multi-channel mobile publishing platform) is in US and it was clear that establishing some sort of business presence there is key.

We previously had the accelerator experience in Europe, via Startupbootcamp and we knew that if we have to go through another accelerator, that would have to be a US one. We applied and have been accepted to some US accelerators, but rejected their offer because it didn’t really make sense for us at that time. We wanted to get to US, but we also wanted to be careful on the price we had to pay for it.

We read about Saint Louis having a 342.70% deal growth in 2015, 33.02% average growth since 2012 – in fact they are the fastest-growing city in US when it comes to the startup scene. Neither New York nor Silicon Valley made the top 10 in a recent study.

Alexandra applied to Prosper Women Accelerator – which, as the name implies, is an accelerator dedicated to women entrepreneurs. We got selected, the deal was a really fair one and we accepted.

Now, before actually taking the decision, we talked with our advisors, investors and also other Romanian entrepreneurs. And, obviously, like always, we got conflicting advices. Long story short, the decision was all ours to take and I don’t regret it. Actually it would have been a mistake not to take this opportunity just because it’s not Silicon Valley or New York.

What impressed you the most? What have you learned in US?

3 things:

1. The experience those guys have in creating and managing businesses (mind you, not necessarily tech).

One of the partners and mentors of Prosper is Maxine Clark, founder of Build-A-Bear. What is Build-A-Bear? Well, it’s a teddy-bear themed retail-entertainment experience. In other words, you’d go in with your kid, build a teddy-bear with heart and all, and of course buy that bear.

Today there are more than 400 Build-A-Bear Workshop stores worldwide, including company-owned stores in the U.S., Puerto Rico, Canada, the United Kingdom and Ireland, and franchise stores in Europe, Asia, Australia, Africa, Mexico and the Middle East.

What’s even more surprising is that Build-A-Bear went public in 2004. I think that’s the mind blowing thing and it shows just how powerful the US market can be.

2. The amount of money available – and I’m not talking about corporate money or investor money, but rather personal wealth.

It was the first time I heard about “old money” and I wanted to understand what’s that all about. It seems that we’re approaching an exchange of generations and the accumulated wealth of some people is being split among successors and that, apparently, is a money management problem – there are actually startups trying to solve it.

3. The need for technical talent

Just like we have a lot of technical in Easter Europe and in my opinion we lack business skills, they have a lot of business/sales skills but lack technical resources. We look up to Americans, in general, saying that they’re great business people, but the reality is that they have formal education on these subjects, just like we do on engineering.

From this point of view, I believe there’s definitely an opportunity in US, when it comes to the business side (wether we’re talking about marketing, sales or leadership) just like there’s a huge opportunity in Romania and in the region when it comes to tech talent.

And I kind of knew that’s the case in US, but I didn’t have a good understanding of the magnitude of these things.

What is the difference between US vs. EU startups/entrepreneurs?

I actually asked the same question, a few years back when Matt Mullenweg, CEO and CoFounder of Automattic – the company behind WordPress was in Sofia at WordCamp Europe. In front of around 1,000 developers he said: “Stop comparing yourself to US startups.” and everybody started clapping frantically.

Now, my question is: “Is he right? Is this the correct way of positioning ourselves?

I think that in a sense, he’s right: first of all, there are different markets. On the other hand, coming from Eastern Europe where we have a lot of technical talent, I would look at US startups and entrepreneurs and try to understand and learn the business aspect of building and managing a company. And by that, I mean really understand the business side, sales process and leadership.

I would meet with a lot of entrepreneurs and simply and genuinely ask for help and try to understand the decision making process. I would meet with sales people and try to understand their mindset and process. I would really try to understand how the US customers think, how the market works. Honestly, exaggerating a little bit, but just to prove a point: I would be like in school, viciously hunting for data.

In other words, I would go beyond the shiny story that’s build in the press, because that’s just smoking mirrors. The interesting stuff is behind the scene.

Now, don’t think that all US startups are like FB, Instagram or Twitter. And don’t think that all US is like SV or NY. However, more and more startups from NY and SV are moving their HQ in mid US (STL, Chicago, Austin and other city hubs). And the reason is pretty simple: the living costs in SV and NY are insane: the average AirBnB room for 1 guest is around $3,000 in SV. And to put things into perspective, we paid $1,000 per month, 2 people and a huge house in STL with all amenities. And 2 cats 😃

And in the same time, everybody realized the valuations are hyped in SV and there’s in fact a correction happening as we speak. In SaaS valuations used to be 10X years ago, now there’s about 3-4X. And this is a fact, it’s not just press. In other words, startups that can keep their burn rate under control are in a great advantage this days.

What do US investors or entrepreneurs think about EU startups? How do THEY see us?

What I like about most EU companies is their lower burn and more conservative business outlook. The fact that the company may already be seeing traction and then want to expand into the US with an already established product enhances the opportunity for success as they usually only need to build a US sales and support team. Valuations are more reasonable as well.

– OR –

The understanding of and access to less expensive tech talent seems to be knowledge you bring. I think the ability to manage it is the trickiest.

In other words, we need to be realistic and understand that, as a startup, to get to the next level, you’ll need US business knowledge which is not gained in a few months spent on a trip in US. That can be a start, but to get to the next level, as an Eastern European founder and CEO you might, today, need to think of the bigger picture and realize that it’ll be more beneficial for your company to find a successor, thus hiring a US based CEO.

There are startups in Romania that have done it, because that’s the mature way of thinking.

What do we have to do to be more like them? How can we improve our ecosystem?

I’ve seen a lot of Romanian entrepreneurs disputing developers that they mostly do outsourcing rather than starting their own companies. They go so far as to blame developers for not starting enough companies and going out of their comfort zone. On the other hand, nobody says anything about business graduates that prefer to get a job in a corporate and not start their own company.

I think that this is an unfair way of thinking, an opaque way of dealing with the bigger picture. And it’s a little bit hypocritical: if we look at companies that have gotten to a new level, we see that they keep their R&D head quarters in Romania and that’s a good thing. They get external business management and that, again, is a good thing. We simply have to deeply understand what’s going on, that we’re in a better position than we ever been and instead of throwing blames around I would look at what we can accomplish with what we poses – because we do have some advantages that others don’t.

The reality is that improving our entrepreneurial ecosystem will happen organically. The more entrepreneurs we’ll have (it doesn’t matter if they’re successful or not – we’re talking macro now; some will have to fail for other to succeed) the better and more attractive we’ll become as a region. You can’t gain or build experience over night, it takes time. We just need to realize that and act accordingly.

I think we have to try and be more assertive/proactive, but without revealing too much of that Easter European aggressiveness. Also, I think being humble but acting with confidence goes a long way. If that makes any sense.

My Week in Cluj

In the last year or so I heard a lot of things about Cluj, including being the Silicon Valley of Romania – enough to trigger my interest and make me want to experience firsthand Cluj’s entrepreneurial ecosystem. After finally finding the right excuse to spend an entire week in Cluj: Dev Talks conference that took place on the 13th of May, I packed my bags and off I went, joined by a good friend of mine activating in the IoT space, also intrigued by Cluj’s mirage.

I’m not going to insist on the fact that it took me more than 6 hours to drive from Bucharest to Cluj (450 KM), instead I’m going to concentrate on what I did in Cluj:

  • Networked with local entrepreneurs/startups at Cluj Hub and Cluj Cowork – this is how I found that CatWalk 15 (MVP Academy graduate and recently selected for Startupbootcamp Copenhagen) started in Cluj
  • It was great meeting Daniel Appelquist from Telefonica at Dev Talks conference, this time in my home country instead of UK/London :)
  • During Dev Talks I got to mingle with a lot of people and one thing became clear from day one: developers, entrepreneurs, managers, everybody basically was super excited about Cluj and how the IT&C evolved in the last few years. And when you keep hearing stories about developers in Bucharest being hired and relocated to Cluj you kind of understand that there’s a positive force driving all this magic forward.
  • At beers with Mircea Vadan, an experience startup guy, connected with everything breathing entrepreneurship in Cluj, I learned about – a product development fund, including go-to-market support and seed investment. Having a few years of experience at my previous company – providing software services to various customers across the world, I understood that outsourcing companies have to invest in products, not services. As Mircea put it: “the margin nowadays is so low that it’s no longer profitable to offer services like you used to“.
  • And speaking of beers, did you know that Joben Bistro is one of the most spectacular 20 bars in the world when it comes to interior design? It was Diana’s idea to meet there and catchup on things – this is how I found out that Diana had this amazing opportunity to personally interview Natalya Kaspersky. You can read the interview here:
  • Saturday was dedicated to Spherik Accelerator – a comprehensive and intense 4 months experience, dedicated to Romanian tech startups. Jennifer Austin, Managing Director of the program, invited me to mentor the startups back in February and I was excited to see their progress at the Demo Day.
  • Everything went smooth and for the untrained eyes it looked effortless, but let me tell you that a lot of work went into those presentations. Founders where well prepared and no matter the questions we threw at them they were prepared to knock them out of the park (literally, since the Demo Day took place at Liberty Technology Park in Cluj).
  • All my appreciation goes to Jennifer for doing such an amazing job at helping Romanian entrepreneurs acknowledge the opportunity that’s within our grasp. In her own words, referring to Cluj being (or not) the Silicon Valley of Romania:

    … it wont be Silicon Valley—and that is good. Cluj and Romania both have their own unique culture, history, strengths, challenges, and opportunities. We have to build on these, and dedicate ourselves to making us a better Cluj and a better Romania, rather than emulating another city as if it has all the answers for us. Be yourself—everyone else is already taken! No one achieves greatness trying to copy someone else.

Cluj is a vibrant city with amazingly open people full of initiative, a place filled with positive energy that hopefully I’ll be able to visit at least once every couple of months.

Growth Hacking

This is something I’ve been doing for that past few years and I’m going to deliver my first presentation on this topic at Bucharest WordPress Meetup on 10th of March.

Later edit: In the mean time I’ve also been invited to do a talk on Growth Hacking for Startups at Lean Startup Bucharest (April 7th).

It’s a vast subject but I’ll be mainly talking about:

  • Vanity vs. Actionable Metrics
  • Pirate Metrics, AARRRR!

A few resources helped me get a grasp on the concepts(, but everything else is just experimenting (failing and learning from it) because each business is different and there’s now way of telling what works and what doesn’t if it’s not correctly measured.

It’s all in the metrics. Thank God for Growth Hacking!

The book I’m reading now: How to Win Friends & Influence People by Dale Carnegie

This is a book that I wanted to read a long time ago and since it’s been recommended to me by so many people lately, it intrigued me to the point of actually reading it at last. Apparently, there are these principles that, when correctly followed, will make people like you:

  1. Become genuinely interested in other people.
  2. Smile.
  3. Remember that a person’s name is to that person the sweetest and most important sound in any language.
  4. Be a good listener. Encourage others to talk about themselves.
  5. Talk in terms of the other person’s interests.
  6. Make the other person feel important – and do it sincerely.

Although I’ve applied some of the above principles myself, mostly without even noticing, I’m not always in the “making people to like me” mood. On top of that, in the last few year, I have developed an internal filter (like a defense mechanism) that tells me what kind of people I want to attract into liking me and vice versa. I’m not proud of it, but I’m not making a secret out of it either: it works by simply being honest and open and this is not really the recipe for being people’s choice :)

Just recently I came across a sales person that tried to apply the above principle on me and it made me so furious cause I could tell she’s just faking it. It was so transparent and it hurt me seeing her struggle like that. I prefer to be the recipient of a natural interaction and base my buying decision on something that has substance rather than on an overdone smile. I don’t like kiss-asses. Period.

However, How to Win Friends & Influence People is not just about these 6 principles. Because human interaction is more complex than that, it continues with chapters on:

  • The only way to get the best of an argument is to avoid it
  • Show respect for the other person’s opinions. Never say, “You’re wrong”
  • If you’re wrong, admit it quickly and emphatically

and many others.

Read it and it will surely trigger an introspect that will hopefully lead to a better you.

Playing “Hunger Games” With Juniors In Your Team

As stated in one of my previous posts, I love working with intelligent and passionate people: interns, juniors or seniors, it really doesn’t matter. There was a time in our startup’s life when most of our colleagues were interns or juniors and you could actually tell that by the number of mistakes we were producing on a daily basis, much to the despair of our CTO who was tired of cleaning up the mess that seemed never ending.

That’s when we literally invented this game, inspired by The Hunger Games movie series, which we called: “The Hunter“. We presented it to the team and we all started playing it for the next couple of sprints. The purpose of the game was to induce responsibility to each and every member of our team by acknowledging mistakes, learning from them and hopefully growing into a trustworthy colleague the entire team can rely on.

I bet you’re dying to hear the game-play. Basically, there are two types of players: The Hunter and Rabbits. Initially, The Hunter is chosen randomly from within the team (we used a game of raffle) and the rest of the members are the Rabbits. Each rabbit starts off with 100 points and, during the sprint, each mistake that is spotted by The Hunter triggers a penalty in points for that rabbit. The game ends with the sprint and whoever is left with the biggest number of points on the board, gets to be The New Hunter and everything starts all over again.

Now, you might have a few questions, such us:

  • How many points should The Hunder deduct for each mistake?
  • What happens if a rabbit gets to 0 points?
  • What if there are two or more rabbits with the same number of points left on the board?
  • Is it fair for The Hunter to be replaced by a rabbit who is left with an extreme low number of points, but still the winner of the sprint?
  • Wouldn’t it be fair to award points when a good job is being done?

The beauty is that the rules can be whatever you feel is best for your team. In our case we started with the very basics and ended up adding new rules after each iteration:

  • We agreed on the value of penalty for each type of mistake: if it’s a bug, -5; if it’s a task that hasn’t been finished on time, -10; if you forgot to do something (like sending a certain e-mail), -1;
  • One time, we ended up with 3 rabbits with the same number of points at the end of the sprint. That’s when we used a game of raffle to decide The New Hunter.
  • After a few sprints we agreed that a New Hunter should be assigned only if he/she scored at least 75 points (as a rabbit) at the end of the sprint.
  • We also started awarding points for those rabbits that have proven to be truly efficient at doing their jobs.

We’ve played this 4 or 5 times and I was surprised to see my colleagues’ reactions, first to the idea of introducing such a game in our daily activity, then to contributing with rules to be applied in the next sprint. But by far one of the most unexpected and intriguing reactions was when a rabbit actually went to the board and penalized itself for the mistake that The Hunter didn’t even noticed.

Do you see your team playing this game? What do you think the reactions will be? Who do you think The Absolute Hunter will be?

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