startup – my passion for startup and my experience in Poland vs USA

This is excellent event, organized by extraordinary, high energetic, so nice lady  Jeanette Marschner. The event is called EVM (European Venture Market) and take place in Berlin. Check here and apply. There will be hundreds of people investing million of green Euros !!!!!

I must say that I was participating EVM 2011 and it gives me whole bunch of business cards including the biggest VCs in Europe. Wanna be serious about your business, I think you should apply to EVM.

Besides the startup raising money thing there will be

1. Morten Lund the guy who invested in Skype and won….. accidentally

2. Carsten Sudhoff who will tell people stuff about leadership

Rock this event up and say hello to Jeanette !

This is quick post written on iPhone on a train in Tube, London.

I just has a thought that in startup important is to sell something that doesn’t exist. If u going 2 build a product – buy plane tickets and go around to sell it. Don’t develop or code first!!!!!!!! Sell. But don’t sign contract as selling indivisible is kind of lie.

Selling invisible gives:
1. Feedback, so u can avoid future mistake
2. People convinced by u, are your future customers (always nice to have)
3. People will tell u how to sell your product so you will have initial marketing strategy
4. People will tell when they are NOT going to use your product (the more people you visit the better pattern you will find)

So go and sell invisible, meet walls and hills. You should get pretty cool feedback.

But important, in my opinion, is to have that feeling in the heart that product is gr8. So before selling invisible you need to be sure that people might need your product. So it is kind of tricky as you must convince yourself to something that doesn’t exists. If you don’t believe in your product you probably won’t sell it.

I experienced above with itraff.pl/English and I believe it helped me to be more honest with investors, our team and myself.

Ivan made my day. I was sure what is a value for pitching, but couldn’t implement it during capital on stage conference. I came there to meet Balderton (http://www.balderton.com/). I didn’t know why, but I feel I had to. I didn’t have scheduled appointment (capital on stage only lets you to talk to people if u have appointment scheduled). I came in and grab 5 minutes of Charlotte – Anne Swerling. She listened to me and gave me last lesson – u should focus more on story telling than talking about technology. That killed me, and I was renewed the same time. Charlotte is excellent personality and she knows how to change people point of view quickly (we had 5 minutes). Then I realized why I felt we should talk (meet Balderton). Afterwards everything was clear, there is no future for me at this particular event. I came back to hotel and thought about my 35 minutes lessons I learned from Ivan and Charlotte. That shaped my startup experience forever. Exchanged few ideas with CEO of our seed investor SpeedUp, Bartek. After few beers, lonely and by myself I went to sleep, I went to airport in the morning and flew back to Poland (by the way with Polish Minister for Finance)

Pitching is selling you can lie easily. Pitching is only picking up girls. If you have muscles under your shirt is different story.

I was learned that story telling is important but this is just picking up girls. If you are healthy business or going to be healthy is completely different story. Ivan and Charlotte taught me that picking up by story telling is the best way. While everybody is always focused on the presentation pattern:

- problem

- solution

- product

- money

- team

story telling has all of these inside and is easy to digest. Problem, solution, product, money, team is boring, hard to digest and should be prohibited.

After capital on stage I had 20 business cards, so my future of pitching ventures was bright. At the end I found it was bullshit, next month was hard and full of rejection.

to be continued 

There is a huge difference in raising money for startup, between Poland (I guess all CEE region) and Western World.

There is a huge difference in business culture in CEE (excluding Russia) and Western World. There is no pink world in Silicon Valley (if you are from Europe and you are not hard geek coder).

What is high money and high valuation in Poland is “you are kidding me” in Western World.

All that I went through, iTraff Technology went through was really kicking brain experience.

After 8 months on looking, talking, flying we finally closed fund raising process and I will try to put my experience here to share my thoughts, mistakes, experience and happiness. Getting thoughts together I will start posting soon.

Where I started to raise money?

I made my first face to face pitch during capitalonstage2011 in Amsterdam, it was september 14th, 2011. My first pitch was awful, manager from Henq Ventures asked me 3 simple questions: what’s your numbers. My brain answered to me “what the f%#$# numbers he wants. You are startup from Poland, building tech and customers base and he wants numbers, numbers of what?”. I didn’t answered this questions, so honestly he knew I am nothing here. I went out of church (the conference was in church) and came back, I asked Henq manager “what numbers do you want?” He explained…. there was nothing to talk about. I logged in to our google analytics account, got some numbers ……. then I finally had a chance to talk to: Ivan Farneti - excellent, excellent brain, intelligent man with high class atitude. He gave me a feedback that numbers are important but story and numbers is even more. We talked for 30 minutes (I was lucky to have such a great time with him). He talked to me about storytelling, mixing numbers with story, passion and Doughty Hanson investing strategy. I was frozen, he open an ocean of pitching art.

to be continued (still 8 months to write about)

As I get more and more experience in raising money for business (itraff.pl/english). Sometimes, listening Fun Loving Criminals while I am doing this – I realize that relationship is the most important things which is being built during whole fund raising process. People invest in business and can lost their money faster ever (not only my opinion: Morten Lund)

Why they invest ? – because they feel business can boost, founders are great, business will be good. Relationship is only one important thing between investors and founders. If they both trust, there is a chance that when somebody will loose money, will not take AK47 and kill founders

Who can break relationships during fund raising process?

a)Everybody who is a jerk and don’t have empathy. This is not a special person, just everybody. When u have 4, 5, 6 investors who are going to give money for 2nd, 3rd investment round, there will be always a jerk. Somebody without empathy, who see only his nose end. That’s life. U can’t change as long as the jerk understands he is jerk (hello where is my internal voice). Good news, he will be muzzled by other investors as they feel uncomfortable with him / her too. Founder can be a jerk too (no deal then cause no trust)

b) Lawyers – there are 3 types of lawyers, from my experience.

– Question mark lawyer – he / she doesn’t understand technology, so they ask silly (from founders point of view) questions. Examples are: what it is API? what is App Store etc. These kind of lawyers are usually ok because they now what they don’t know.

– Free like a bird  lawyer – doesn’t care about process. He / she thinks that everything is fluent so we must predict a future. Writing procedure is his orgasm thing. He feels great when he has it.

– Cart blanche lawyer – normal man / woman who wants to close the deal. They know their job is only a tool to get things done. They don’t have a knowledge about tech but they usually don’t need it as they swim inside law pool.

Dinamite combination = question mark lawyer + free like a bird lawyer – these guys can break every relationship as their internal self – orgasm urgency will make them blind. I don’t know how to work with them as my character is too emotional too work rational with them. Using box slogan you can’t make them to take you to the corner.

Cart blanche lawyer – pay the every money they need / want as they will close the deal and make things done.

In September 2011 I started the first talks with investors who, for various reasons, were interested in iTraff Technology (in Poland and abroad). I had 32 meetings, 21 Skype, I mentioned a lot of emails, I made a valuation of the company, prepared to negotiate and so on and so forth (in the margin: nothing much I could not know what this whole process). Now I’m at the stage near the closing round of funding talks with the comfort with several potential investors in advanced negotiations.

Apart from foreign funds, I visited most of the Polish, spoke with their boards. Taking an overview of virtually all, or the vast majority of Polish investment funds (technology), I unfortunately (sorry, with a sad mouth) subjectively say:

Polish VC is not able in the near future to build a global exitu (I’m not talking here about seedowych fund whose purpose are generally not large (millions) exity, or the Business Angels’ach)

and in the field of mega utterly pregrywa of Western funds, below I will try to say why this is (based on my experiences and observations):

First Most ordinary anxiety.

Polish VC afraid of failure, to the extent of their fear that paralyzes their imagination. Their imagination is somehow shackled stress before failure, a failed investment. They try to predict the future, and freeze it, but not giving the chance of alternative thinking. On the one hand is stressful (understandable), but they can not attempt to predict the future except to find alternative thinking in which stimulation would lie to some imaginative, risk-saturated naive, bet poker return events.Fear tells them to choose from already proven business models, or models like the best. This hampers their imagination.

Second So you really do not believe that manages to build a multi-million dollar business.

Subjectively – I think that the Polish VC does not believe in big, multi-million dollar success and otherwise does not believe that he can build it. He would like to, but not around each other’s examples, stimulation, which utwierdziałyby him in the belief that it can build the next Google, Skype and Spotify. This is mental. If you have something big happens in its surroundings is rather Polish VC explains this fluke of that company, or specific conditions under which the company operated. Thus confirming the belief that building a big business is damn hard (he is) and I have a rather slim chances (I VC) to do so. Do not give God the VC is already on the account fail, it cedzi your chances even more. In addition, I have not found among the Polish investor faith in the 10,000% growth, we discussed many Polish startup’ach (not just iTraff) and the VC was very often in his opinion on the head startupie which ordered thinking “this and this startup has potential, but it and not allow him to be a multi-million, billionth success. ”

Third Excite the slogan gobalne, but global needs of global money and here begins with weakness.

Every VC wants to have a global startup, with people thinking globally, acting globally. The global success of the global money – gong! Polish VC live in ext. contradictions – I would like globally, but for local budgets. zonk! From what the thinking is clear – do not know 

4th Lack of time

Polish VC has developed the process (in the sense it is very rarely) the analysis of new investments or do not have the resources for such activities. Managers of businesses are busy and do not have time for lunch, coffee, meeting, do not have a team of analysts who have the time to study because they are busy with ongoing activity. In other words, most of the Polish VC live in the chaos of everyday life, which make it impossible for them to actively and systematically to analyze the emerging investment opportunities on the horizon. A new opportunity is a way to analyze a problem because this chance is like a chisel, you should stick to the daily earning.

5th What the hell is round the corner boy and not the end of the road?

A short investment time horizon that is today, I’ll give you money, but as soon as possible show me the profits. This thinking is not a precise implementation, but Excel with forecasts based business is watching. So far for the month, year, and why so little. How much is probably przestrzeliłeś uuuu?Generally, there is nothing wrong with that, but in most cases, apart from this short analysis overlooked, does not analyze the long-term impact that a startup can do. In my opinion this is due to a lack of knowledge, which nienagromadziła still in Polish ecosystemie startup’owym. It’s still not enough to be able to clearly, with confidence the VC he could look at the long-term period of time and it is not an extension of the planning period in excellu.

Summary:

First A little VCs understand such behavior, it helps me in the knowledge that communism in Poland was that the market and ecosystem for young technology companies is cosmically young, etc., but do not share this thinking.

Second As long as someone’s comments are motivating, I think they are super important, but if someone with your anxiety, fear, etc. pressure down, it makes no sense to stay with him.

Third Sorry for the negative tone of this material (it comes hard for me because I prefer the positive actions), but I felt that this could be useful for someone through what I experienced in the head enrolled.

I can give advice that is simplistic and two:

First Do not let himself lose to those things that you mentioned. Remember that VC is thinking and can not be your thinking (if you demotivate).

Second Search for funding outside of the Polish and the VC funds in Poland treat as an addition to your actions.

Council for Polish VC:

First Rise, and sing the song “I need a dollar,” and popłyńcie wyluzjcie in your dreams. Do not limit a!

Second It depends on you whether we will provide you an entrepreneur 100000% rate of return, you can give us a kick or shot wgniatający the ground.

I think that every startup man can learn something from Smith – last week I had the pleasure to become an expert in Adam Smith Center.

It is an interesting place, full of free market thinking on the border of disruptive thinking, so close to startups. Together with Andrzej Sadowski, having a cake and coffee we discussed the entrepreneurship in Poland, taxes, the European crisis, and Angela Merkel. I must admit that knowledge contained in such discussion allows me to open some areas of the brain, hitherto unknown to me.

We also talked about new investments in the innovation sector which have a chance to happen in Poland thanks to the American capital (keeping my fingers crossed).

I am worried about the EU, I think we’re witnessing something incredible, a breakthrough in the formation of Europe. We are looking at a certain process, which, as it is over, will take the form of a new order. I have the irresistible impression that no one knows this order. No one can define it.

What is the conclusion for me? One concrete – the future belongs to entrepreneurs because they are always doing great. The EU is the EU and I’m keeping my fingers crossed for it not to split. Let it last and get stronger. However, diving in the entrepreneurship is what protects us from the crises, bureaucrats and stagnation. More companies gentlemen!

On these gloomy autumn days someone sent me a link with a sentence underneath “He who fears, he is a slave” – Seneca. Let me add to the above what Marek Kondrat said once: We cannot be afraid because we lose too much. Therefore to all the startup people building their companies struggling with their visions and hallucinations:

„He who fears, he is a slave”
A friend of mine wrote to me yesterday that he would like to set up a company, but he is not ready yet and he will still wait. Damn, I was never ready and I’m not even ready today. There are so many guys smarter than me that it makes my hair stand on end when I think how much this one or the other one knows comparing to me. I think you cannot get yourself ready for chaos, risk and failure. One can think about them and try to accustom oneself while they bite your hand. However if the only reason holding us from entering the game is fear (not health, family situations etc.) we have to jump in, because:
„He who fears, he is a slave”

Several silly thoughts which I think I worth sharing.

a) only customers can decide if product is ok or not ok

Angry Birds simplicity could be a failure and is big success. Facebook founders didn’t want it to be a company. So…. can we realy decide what is good product. It looks like not, stupid ideas can be golden mountains, golden mountains (perceive) could be stupid ideas. The key is customers (with accent on “s”). MVP could not be developed under the startup office roof, it must be put on a market. I believe

b) lean startup methodology support customers centric approach, this is why it is interesting approach.

c) simplicity looks like key feature. I think it is a feature because it must be featured inside products. Corel Studio is worse than iLife not because it is expensive, more developed, better in options – is worse because of fuzziness. iLife is better because of its transparency. Better for me, simple user, not graphic man, a mass population.

d) churn rate is something important but it exists anyway. If somebody understand what is churn rate and how to calculate it using web/mobile analytic (I didn’t for a long time, what a shame) it looks like he / she pays attention and lean startup can grow.

e) Seth says cool words: “Inherent in the process of minimal viable product, then, is a trusting, large permission base that will eagerly listen to you, try your new work and let you know what they think. And you don’t have the option of building that audience once the product is ready–that’s too late.”

Hope it was worth your morning coffee. Have a cool week.

Arek

Yesterday I was watching Merchant of Venice movie, great example of Al Pacino’s work. Cool story, cool art wrote by great man! I was astonished by the story about merchant of venice who was stubborn man with material goods orientation. He was good at what he was doing. On the other side, there was a salesman, a man who was counting on his own venture, entrepreneur, startup man!

Finally he lost. Startup man lost and according to a contract with Jewish Merchant contract, startup had to give 1 pound of his body = death! He was scared. But he was ready to do it.

But life smiled to him and whole situation turned upside down. He won because he was ready to give everything away.

That made me think that life is sometimes like that, you need to be ready to give everything you love away so life will smile to your face and afterwards you will be rewarded!