28 Lessons I Learned About Startups @ the #WebSummit

28 Lessons I Learned About Startups

 

The Web Summit, the annual orgy of startups, web entrepreneurs and “unicorns”, is a fantastic feat of the tech world’s brightest entrepreneurs. Almost 42,000 people from 134 countries flew to Dublin for three days to meet, mingle, invest and be inspired at conferences, workshops, presentations, pitches and exhibitions to find what could be the next Facebook, Airbnb or Amazon.

 

Here are my 28 take-aways:

 


1. Energy is contagious
: before anything else, I must confess that these three days were a breeze of fresh air, an event where the future was bright, where the energy was palpable, and the can-do attitude prevailed over everything else. It was a sharp contrast from the often frustrated, paralytic world of politics where everyone seems to be upset about something/someone and where progress is always incremental, never “disruptive”. This was an event where everyone thought that all problems were, after all, business opportunities.

 

2. The web is not about IT: the exhibitors and speakers were, for a large part, not IT experts or coders. At an event that ran 21 sub-conferences on topics like health, music, design, startups, engineering, security, enterprise, content, marketing and others, it was clear that computers, data, apps and digital solutions have entered all fields of life. No wonder that the Summit itself has seen such an exponential growth in attendance, having started just 5 years ago with 400 attendees, and likely reaching 50-60,000 participants next year in Lisbon.

 

its about what you do3. It’s about what you do: forget dress code – it took me until the end of the second day to spot a person wearing a tie. Billionaires in the Center stage would wear sneakers. Everyone was interested in your business, not in the way you were dressed or where you come from. A stark difference from the political world (and no wonder most politicians have hard time understanding the tech crowd).

 

the most clichéd gobbledygooks were “disruptive”,
“revolutionize”, “social”, “global”, “break things”

 

 

4. The BS Bingo: by all means, there was an overwhelming amount of startup-BS (just watch the series “Silicon Valley” and you’ll see what I mean). I was quite overwhelmed by the abundance of the most clichéd gobbledygooks such as “disruptive”, “revolutionize”, “social”, “global”, “break things”, “make the world a better place” and “exit strategy” – though you never know, some companies there did indeed have the potential to do all of the above.

 

5. The 33-33-33 rule: There were about a 1000 startups, each at various stages of their funding and development, exhibiting in a row, showcasing their “revolutionary” ideas from social networks for dogs to iPad apps for home designers. From the 50-word description of their business it was clear that 1/3 of them have a genuinely terrible idea, 1/3 have a decent idea though hundreds of others already offer such service”, but the remaining 1/3 had actually what seemed to be pretty good ideas.

 

6. The “other” 33-33-33 rule: those in the last tier of the 33 rule still were subject to a similar scrutiny. Even those with good ideas, 1/3 will fail because of bad management, poor execution, legal or personal troubles or other reasons. Another 1/3 will make it and have a few customers, but may never take off. The last tier, though, is going to be a major success. The reason why so many investors were out there was because nobody really knows who will be in this segment, so they take massive risks and hope for the best (more on this below).

 

7. The science of successful pitching: making a 3-minute (or 1-minute) pitch is an art, but there is some science to it. We are exposed to too much noise, and when you are given the privilege of someone’s attention, you must make the most of it. Especially if that someone is 100 people in the audience and 4 investors in the judges’ seat.

 

A good pitch must answer several questions that investors and customers will have.
Here are a few that I learned after listening to a few dozen of them

 

i. The problem you solve: very often, start-uppers think that the problem they are addressing needs technological solutions. A trashcan that identifies the bar code of the stuff you put in so it can automatically re-order them online may sound good, but it’s not a problem that most people think needs resolving. Even when there is a problem (just see for instance www.tapmyback.com and decide for yourself), the solution is probably not the way the entrepreneurs imagine it. If the product requires more effort than the solution I use now, it will fail.

 

ii. Market size: once the problem is there, how many customers would be interested in your solution? If too few and the pricing (or rather, the margin) is too low, it can fail. A pitch about performance tracking of horses for professional and hobby riders, connected with an app, sounded good. But for the jury, it still seemed like a small market. I disagree: a great niche market can be just as valuable – if done right.

 

you capture iii. What % you capture: in technical terms, your market penetration. It’s great to have a 100bn food market in South-East Asia if your food delivery or restaurant discovery website cannot reach more than 0.000001% of it. Having already competitors, while it validates the business idea, can massively decrease your ability to win, unless other factors are met (see below).

 

iv. Reaching local associates and customers: how do you plan to market your product, or if you need local help, how will you find them at an acceptable fee and to ensure smooth cooperation? Country managers, like the bike renting business present in over 14 European countries, uses the help of students in its key markets to identify bike shops that will sign up to their platform so customets can find them easier.

 

v. What are the growth channels: how can you put the word out to more potential clients or customers? Is it only via online channels (and within that, via ads, inbound traffic, partnerships, affiliates?), via direct sales on your own site or through traders, channel partners, or by using consultancies as multipliers?

 

vi. Revenue forecast: while “scale first, revenue second” is the mantra of many startups, there needs to be at least a basic idea about how much money your company will make at least sustain itself (even if you get 200,000 euros of seed funding or 2 millions euros of venture capital).

 

vii. Team’s credibility: you might be a great public speaker, but that’s not enough to have investors trust you. Presenting the business and subject matter expertise of your team is a vital element to convince investors that you can create an amazing, reliable, safe and superior product while delivering on the business aspects too. Apart from the team, you may wish to talk about an advisory board of experts and business(wo)men who can help with your development, connections and strategic guidance.

 

viii. Business model: freemium is great, as long as it’s not free-for-all (and ad supported). Pricing is a science in itself, but having at least a basic idea about how you will charge your customers and what fee you set for your service is crucial. The pitch about the lamp that can emit colorful lights and at different angles, operated via an app, is a competitor to Philips’ lights so the pricing had to consider that. Is it competing with luxury Italian lamps too? Positioning will determine the pricing.

 

ix. Why are you different (and do your customers trust you): is your product/website/service/app better than your competitors? That’s nice, but insufficient. You need to consider customers’ reluctance to change their existing preferences, let alone habits. Apple computers were considered much better than most PCs for decades, but it was only when the iPhone and tablets came along that customers decided to trust the iMac enough to switch. You are probably not Apple, so the barrier is even higher. Are you radically cheaper than your competition? The lack of trust is still your main challenge.

 

Scaling x. Scaling: one of the most important characteristics of a startup is that it is scalable on a regional or rather, global basis. Opening a new tax advisory firm is great, but it would normally not fit the definition of a [web] startup. Investors were looking for businesses that can spread around the globe because they solve problems that are present in all major markets. But then again, a good niche market (e.g. Belgium, or even Europe) may be just as valuable if you manage to be a key player there.

 

     xi. Product appeal: beauty is in the eye of the beholder, but ease of use is an objective criterion. If your product is too complex to understand even what it does, or it takes a PhD to start using it, the barrier to entry will be sky -high. Don’t add more features to your website – under-feature your competition and focus on clarity, simplicity and seamless transactions.

 

xii. Competitors and challenges: a good pitch also covers fears and doubts about why/how you will beat your competition, what challenges do you foresee, and what will you do to overcome it. Patent your invention? Be so fast in your product development that others cannot catch up? Whatever you do, make sure you figure it out from the start.

 

xiii. Infrastructure: does your product need an underlying infrastructure, e.g. high-speed internet (which may not be available in rural areas or in certain parts of the world), a car (one pitch was about a gadget that you can connect to your car’s dashboard computer outlet so it notifies emergency services in case of an accident), or another business (which is the case for all B2B ideas)? If so, how will you convince them to use your service, or perhaps licence your solution? Does your product need licencing from another patent or copyright holder?

 

xiv. Closed or open-source: Is your product compatible with 3rd party systems, and if it can connect, do you allow those other apps, websites (or living room lamps, for that matter) to use it for free? What are the legal and financial implications of such licencing?

 

xv. The pitch presentation: don’t start with talking about yourself, nobody cares about your background unless it is connected to the problem you are trying to solve, the credibility of your company or the story you are trying to tell. Put only 1 piece of information on a slide, and never, ever use bullet points – not the least because they are not visible from the end of the room. Please don’t show your hometown or your baby photo in the hope of making it more personal, unless your app is about baby products or a housing challenge your hometown faces.

 

xvi. Names: it seemed that 98% of the startups had one, or maximum three-word names (often merged into a single, unpronouncable word like twototango), such as Sqream, Whatzere or Aircall, often leaving their would-be customers wondering what in the world they might be offering as service. Naming, especially when it comes to trademarks, is awfully hard, but some startups could surely do a better job than that.

 

8. Speakers: apart from the pitch contest, there were several high profile presentations, including Evernote’s, Tinder’s, Dell Computer’s founders. Kickstarter’s co-founder almost got a standing ovation, not only because he very well underetood the power of storytelling but mostly because of his key takeaway message “F*ck monoculture”, ie crowdsourcing, social good and values matter more than making money for the sake of money (ie., beware of venture capital and banks). This was probably the best example of Silicon Valley’s religious zeal to “make the world a better place”.

 

9. Presentations: while most speakers were good, there were some big disappointments too. Facebook’s chief marketing guy talked about something that five minutes after leaving the room I had already forgotten. Some speakers, discussing the latest tech developments, started with a historical overview of mobile technology, which put the audience to sleep. Others did such a blatant product promotion (instead of a case study) that I wonder how they got away with it. An other failed speaker started his 15 minutes of fame by offering an agenda on his first slide (ha?!). On the other hand, there were many good ones too: Washington Post’s chief of online marketing walked us through their transformation into a data-driven news organization – a highly informative session.

 

10. Design: not just the aspiring startups but all presentations had one thing in common, and that was amazing design. Having a professional-looking page, app or physical product with flawless user experience has become an absolute must. It is no longer just a nice-to-have to make your website responsive and clutter-free, but no product can succeed without it. The bar has been set very high and we better endorse it ourselves.

 

11. The web is truly global: simply checking the startup exhibitors, it was clear that anyone, anywhere on the globe can come up with an amazing idea and line up, literally and figuratively, with another business from Brazil, Lebanon or Singapore. Their access to talent, finance or business know-how may differ, but the web has made it possible that they can compete on a fairly equal footing.

 

12. The financial roller coaster: according to the organizers, 40 startups that had a 1 m2 booth last year have secured an aggregate 1 billion (!) dollar in venture capital since then. No wonder Irish and international banks, companies like Audi and hundreds of individual investors were flooding the scene to look for high risk, high growth opportunities. This can be a true rags-to-riches story, with the major caveat that this is not your money and if investors no longer see the potential in your business, they can pull the plug just as easily. It was nevertheless my impression that getting funding is fairly easy for those who really want it. Question is whether or not that is really the best business decision for your startup.

 

It was busy three days in Dublin, but the Web Summit offered more than I had hoped for: it showed me that the future is bright, even if the startup world’s motto is ‘fail fast and fail often’: just don’t ever give up, and your venture will one day become the next ‘unicorn‘.

 

Posted in E-business, Public speaking

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