Last weekend my friends visited our house. Had not seen them for a year and was happy to meet again. In the evening Facebook autonomously proposed me to connect to these people also over Facebook. I haven’t ever been searching for these friends in Facebook and now that they visit our house, all of the sudden Facebook proposes them as my friends. Mildly creepy, I would say. How did Facebook know? This may have something to do with that we exchanged a couple of text messages before meeting and our smartphones spent some hours in the same geographical location.
Yesterday I received a LinkedIn invitation from a person that I’m expecting to get to know in a couple of weeks. I accepted the invitation but pulled the acceptance back as it turned out that it was sent from a fake profile having the same name and title as this real life person. A bit creepier as I’m positive that I have not touched any digital device at the location where I’m expecting to meet this person.
These incidents reminded me of a recent cyber security lecture at Aalto University. On Feb 9th Mikko Hyppönen, F-Secure’s famous cyber sheriff, brought cyber security as a part of our everyday lives under topic “The current situation in European Cyber Security”. You can view the recorded presentation in YouTube: link.
As Hyppönen demonstrated during his lecture, cyber security is not something that takes place only in highly protected data centers but it is part of our everyday lives. The internet services are seemingly free of charge but the thing is that the charge is not measured in currency but in privacy of the users. And this is how it goes with some illustrated examples:
We tell LinkedIn about our carrier achievements and colleagues.
We tell Facebook about the highlights of our lives and friends.
To Google we tell what we do not know and about what we would like to know more about. I’m mainly thinking of just the search engine in this simple visual illustration, though they offer plenty of other services as well.
I’ve been comforting myself thinking that the social services are profiling customers as larger groups and that no human intervention is involved in the analysis. After listening to Hyppönen’s lecture and these personal experiences I’m a bit less comfortable with the ever-cleverer cyber algorithms monitoring my life.
Kristo Ovaska, Founder and CEO, Smartly.io answered questions from the audience at Aalto Design Factory on Dec 16th 2015. The title for his presentation at Aalto Ventures Program was “Entrepreneurial Journey”. Kristo started with setting the frame for the discussion by introducing his background with two less successful and one very successful startup company providing software as a service for e-commerce customers. Then he casually requested the audience to ask him questions and spent the lecture hour answering them.
What did he learn from the first two startups that did not succeed?
- You cannot outsource coding.
- The founding team has to have a unified view on how to run and grow the company.
- Do not focus on pleasing potential funders but focus on pleasing the customers. The time spent with investors is away from the time learning from working with the customers.
- In order to understand customer needs you need end-to-end working prototypes and wireframes, slides are not enough.
- Secure frequent feedback from the customers. It does not pay off to develop products that the customers do not need or want.
How to get the startup’s founders’ targets aligned?
- This is most of the most challenging things and it has been said that 95% of startup failures happen because of this.
- It does not really help that the founders discuss the vision among themselves. The vision keeps changing as the customers and the market develop.
- The co-founders need to have aligned targets in life.
- For those wanting to become millionaires there are simpler ways to riches than running a startup.
- Those wanting there face in the headlines may find out that personal publicity does not result in a successful startup.
- If both or all the founders want either of these, the changes of succeeding are higher but not too high. Aalto Design Factory
- At Smartly.com the co-founders share motivation to learn new things. This, Kristo emphasized, gives them freedom to go always for the most challenging targets where they also can learn the most. The customers, investors and the team members should be selected according to from whom you can learn the fastest.
So what you should do when starting a company?
- Do not try it alone, get a partner.
- For a software company the essential aspects where you need to excel are R&D, marketing & sales and hiring. The founding team needs to have these competences.
- Lacking software development experience in the starting point will slow down feedback from the customers and the startup will not be able to scale.
- There are two camps on the competitive advantages that the founding team has to possess:
- Solve your own problems – this may work well for consumer businesses
- Customer development model by Steve Blank
- Compensate the weaknesses with a diverse skill-set of the founders, e.g. a coder and a salesman-recruiter.
The turning point at Kristo’s entrepreneurial carrier was
- Learning from the customers at the previous startup that there was a niche in the market opening new opportunities as Facebook advertising emerged alongside Google advertising and the existing vendors could not keep up with the phase of this change.
At this point, why did you start a new company instead of redirecting the focus of the existing compay Metrify?
- The core team of Metrify had differing views on what the company should focus on. The options were to go for rapid software development and customer consulting or to start with offering consultancy work to customers. At this point the best decision was to split up.
What would Kristo do differently if he would be starting Smartly.io now?
- Hire co-workers earlier. He had an extremely talented software developer who was risked to burn out because of the workload.
- Prepare for the amount of coding work to triple from the initial estimate.
- Early recruitment is an important cultural question. Problem solving, documentation, best practices, understandable syntaxes and processes will be developed more efficiently in a team.
- The easier the code is to understand the faster it is to take new developers on board.
What is the right time to get investors on board?
- [Never.] A quick smile on Kristo’s face.
- If you focus on developing a product that fits the market needs, they will come to you.
- The most important thing is not to waste time for getting funding.
How does Kristo take care of himself and the employees?
- The recommendation is to limit work to 8 hours a day.
- No working or e-mailing on weekends.
- Employees are forced to take holidays without reading e-mails.
- To remain as a creative problem solver you need to go away [from the work] from time to time.
- One-to-one walks and runs.
How about office arrangements?
- com is two years old, has six offices and international presence.
- All the physical things take time, virtual things are fast.
- It is important to have an office space to detach from work.
Getting back to financing the company…
- You should not burn anyone’s money as a company.
- On personal level you need to avoid bankruptcy. The changes of succeeding are low and if you go bankrupt, they are even lower. When you are sure that you will succeed, you can ask for financing to support the early stages.
There are three types of presentations. Some make you feel worse (as you think that you would have better use for the time), some do not change your status quo (as you are browsing and not listening the presenter) and then there is this third category that Kristo’s presentation fell into: the ones that make you feel better. Why was this? My subjective judgement is as follows:
- Kristo was invited as a speaker because of his success but he started off with openly discussing that he has made mistakes in this career, has learned from them and is willing to share the experiences and learnings. This made him easy to approach for the audience.
- He treated the audience as a customer inviting us to ask questions from him. Later on when he was telling that he has learned by listening to the customers, this was easy to believe as he was truly interested in the question’s from the audience instead of pushing a predetermined agenda.
- He gave only very positive comments on his partners, co-workers, customers, mentors and financiers.
Thank you Kristo, this presentation was worth attending!
Professor Luiz Moutinho Foundation Chair of Marketing Adam Smith Business School University of Glasgow, Scotland gave a guest lecture on neuroscience in marketing at Aalto University on March 21st.
This was a breathtaking joyride with the presenter’s hugely versatile stream of consciousness starting from how the world around us is changing at an accelerating speed
- Volatility – Uncertainty – Complexity – Ambiquity
followed by the ways to navigating in this environment that easily raises anxiety
- Forget about business as usual!
- Make meaningful business that benefits the society!
- Replace strategies with a portfolio of experiments!
with a word of warning
- Beware of (big) data destroying the insight!
continuing with scientific methods gearing towards almost philosophical discussion
- on whether science should stick to strict definitions or whether well grounded steps to non-rigorous knowledge can be occasionally accepted
and then diving deep into the actual topic
- Polymeasures combining different sources of information and different (technical) means to retrieve this information
- Biometrics – Neuroscience – Psychophysics
- and a wealth of future methods
concluding with thoughts for reflection
- Curiosity is an original characteristic for all humans.
- Advice to the audience to use social relevance as aid to direct the research to the right topics
During the lecture professor Moutinho raised a question on whether the participants would allow being monitored during a shopping tour. Some would, some would not – as yet. The lecture raised an idea that this is something that we may see in the future. Considering the hype around wearable electronics we have already taken the first steps towards being continuously monitored.
Full titles of the presenter and the presentation:
THE AGE OF ANXIETY AND METHODOLATRY From Business Colonies and the Meaningful Economy to Adductive Reasoning, Polymeasures, Neuroscience , Psychophysics and Futures Research.
By Professor Luiz Moutinho Foundation Chair of Marketing Adam Smith Business School University of Glasgow, Scotland
At Mobile World Congress exhibition in Barcelona on March 2nd-5th SK Telecom offered visitors an opportunity to take a balloon flight to virtual reality. The experience begun with equipping the four passengers with virtual reality headsets and earphones. Then we were all set to begin the journey.
How did it feel? Realistic and unrealistic on the same go. Realistic in the sense that viewing the 3D animated scenery and hearing the associated voice-over you became totally unaware of the surrounding real environment. The 3D animated environment swallowed the passengers up to the imaginary journey with the balloon. Turning my head up, down and the sides I saw just the virtual environment surrounding me. I felt being inside the virtual environment.
The unrealistic feeling came from the animated environment – the journey included viewing a volcanic eruption from a close distance, landing in the middle of a runaway drove and entering a futuristic space ship for rescue. The quality of the graphics was somewhat inaccurate but taking into account the amount of processing power needed to support the four passengers turning their heads in the 3D environment the system did a good job.
Described with only one word the experience was impressive!
Associate Professor of Management Practice, London Business School, John Mullins shared his ideas on customer funded business at Aalto Ventures Program Thought Leaders’ Talk in Otaniemi StartUp Sauna on January 26th 2015.
Mullins’ presentation title was asking “What entrepreneurs and angles should do before they dance?” He started the lecture with requesting the audience to have a short discussion on why the amount of money a start-up raised from investors often turns out to be inversely proportional to the success of the startup.
Audience and his own answers to the question included the following:
- Time spent with the investors is a distraction the the actual business development.
- Money makes you lazy.
- You cannot know what the customers want without talking to them.
- Investors want to see the plan being implemented – even though that there would be urgent need to modify the original plan.
So a start-up’s initial target should be to find customers to fund the business, not to run after investor money. Mullis presented five types of customer funded business models (illustrations here are my own associations):
Examples on matchmakers are Amazon and eBay who take their slice of each transaction but do not maintain own storage that would require investments.
Pay in advance model
Customers fund the business by paying before the services or the goods are delivered to them.
Loyal subscribers make the entrepreneurs’ life easier By considerably reducing the need for sales efforts. For example Netflix relies on a subscription model.
Scarcity based model
Scarcity based business model may work in fashion industry – but here the offering needs to be highly attractive.
Service to product model
Microsoft started with a service based business model and developed that to product sales.
Mullins’ concluding advice at the end of the lecture was not to avoid talking to investors but to talk to them at the right time. Start-up companies’ first priority should be to get paying customers. As the business is up and running, it’s time to talk to investors to grow. In this phase the customer funded business will also wake much more interest among the investors.
John Mullins’ lecture and other Aalto Ventures Program lectures can be viewed in Youtube at Aalto Ventures channel.
Peter Vesterbacka, Mighty Eagle at Rovio Entertainment Ltd. shared his thoughts on branding at Thought Leader’s Talk event at Startup Sauna on Dec 17th. Having recently celebrated the 5th bird’s day (hatched out Dec 11th 2009) Angry birds is probably the fastest growing consumer brand ever with 2,5 billion downloaded games. They are proud to continue the success of other cool, red brands like Coca-Cola and Santa Claus.
The Angry Birds Story started in game business where the challenge is to differentiate in the abundance of game offering. Peter’s advice is to do things differently. Difference can be in small details like red color that stands out. Creating impression with the brand is equally important. Angry Birds provokes a question on why the birds are angry. This leads to a compact answer that is a story in itself: because the pigs stole their eggs.
Staying focused is essential for the Angry Birds brand. Rovio has two key things: the fans and the brand. (Yes, just two is enough for them. Was I the only one waiting to hear about the third key thing because we are taught to hear three things, not just two?)
When the brand has been established, it also has to be leveraged. When launching Angry Birds animations Rovio leveraged their existing stronghold: the games that people had downloaded to their digital devices. By updating the game software to include a “View” button they had a ready-made distribution network in use.
Another example on leveraging the brand was Angry Binds branded soft drinks that create habits: drinking reminds of playing and the game reminds of the drink. In China Rovio had leveraged local Moon Festival by creating seasonal Angry Birds game around the theme and selling Angry Birds branded moon cakes. People around the world learned about the Moon Festival through the game and Rovio had again managed to do things differently by bringing a Chinese event to Europe rather than just taking a game to China.
There was a question from the audience on Rovio’s corporate social responsibility (CSR) activities. Peter regarded CSR as an integral part of making good business. Consumers make choices based on how the brands bear their responsibility. Making good business as part of everyday business is eventually much more sustainable than glued on top charity that does not match with company’s other values.
I asked about protecting the brand. As the value of Angry Birds brand increases, how do they keep up the exploring spirit and prevent from becoming overly protective. Peter’s answer was beautiful as it was so focused: creating great experiences for the fans makes the brand stronger. Stay focused and you will always know what to do.
Hilmar Veigar Petursson (CCP Games) was the first presenter for the Games track on Slush Black Stage today. He discussed how virtual reality will change gaming and much more. To start with he set an ambitious target to create virtual words that are more meaningful than life. He made a statement on games being more about emotions than about digital constructions and backed his claim with a slide full of different emotions and feelings that people have reported during gaming. Veigar also provided evidence on virtual reality having reflections in the real world:
- the value of virtual reality items (destroyed) in a game can be measured in real currency
- in the gamer communities the successful players are more important than the game developers
- people are inspired to change their looks to resemble a character or avatar in a game
- many couples originally met in a game
Olli Sinerma (Mindfield Games) took a technical viewpoint to virtual reality. His target setting was to develop a world that you can go in. Today graphics are no more an issue but the challenge is to manage simulator sickness that arises when the virtual reality projected to the eyes does not match the reality that the body is feeling.
Olli emphasized the importance of the feeling of presence and freedom in virtual reality games. All objects that are visible in the game should be possible to touch, move and operate as in real life. He used an example of throwing a basket ball in a virtual room. It is equally important that the virtual reality sounds real as it is that it looks real. A virtual basket ball needs to make different sound depending on what material it hits and from which height it is dropped.
After listening to the presentations, I spotted a game company’s stand where the rollup had a picture of a fox jumping in the forest. Under the roll-up they had brought some autumn leaves. This was my favorite marketing trick at the show today. Very simple, cost nothing and made a true difference by generating an association.
I participated ICT Innovation Tournament on Otaniemi, Espoo on Oct 21st – 22nd. The event was organized by Finnish Federation for Communications and Teleinformatics, FiCom and Innovaatiomestarit. The idea of the two-day tournament and the preceding pre-game was to come up with new ideas around the given tournament challenges.
The participants were provided with seven corporate initiated challenges to work with. Our team of two persons worked on the Ericsson’s Hypervoice challenge. Hypervoice means recorded voice that can be tagged, sampled. searched, shared and authenticated similarly to hypertext documents.
From innovation perspective the challenge had certain reverse engineering characteristics. The solution (hypervoice) was given and we were expected to come up with a problem with which this solution would fit. This must be somewhat familiar situation with everyone working with engineering solutions.
The combination of Ericsson and voice was interesting in the sense that both mobile and fixed operators have long ago focused on developing and providing data services whereas voice has become a smaller niche of the revenue pie.
To solve the challenge, we came up with a proposal on applying the hypervoice concept to university lectures, enhanced with social media communication. The expected benefit of the proposed solution is to decrease the student graduation times via more active participation at the lectures and thus decrease education costs.
The tournament says proceeded in a fast phase. We worked together with Ericsson’s coaches and judges who both provided us feedback and set new intermediate targets during the tournament days. Overall this was a positive and energizing experience, a two-day rush from rather vague idea to a five minute business pitch at the end of the tournament. As one of the participants said, a certain level of chaos is a mandatory ingredient in all innovation competitions. Looking back I agree with this. A drop of unclarity and inconsistency free the mind for new ideas much more efficiently that a strictly organized event would be able to do.
Startups are often pictured as sprouts.
But where are the seeds? The “Kiasma goes Kunsthalle” exhibition at Kunsthalle (Taidehalli), Helsinki presents Simryn Gill’s work Self-Seeds (1998).
Quoting the exhibition guide: “This work consists of over six hundred seeds, pods and cones that have tiny plastic toy car wheels under them. The materials refer both to the artist’s childhood environment in Malaysia, and to Australia where she moved as an adult. Gill’s art often challenges the way things are pigeonholed in everyday thinking. When a cone is furnished with a set of wheels, the boundary separating nature and culture is broken in a surprising and playful way. Natural objects establish a community, a culture of their own.”
Gill’s work is a marvelous parade of less than ankle sock high natural enclosures on wheels. And look at the growth potential that they are carrying, ready to grow plants and trees up to tens of meters high! I have pictured just two of them. You can experience all the 600+ at the expo until 16.11.2014.
Via a customer case I had an opportunity to attend Seed Forum International pitch training in Helsinki on Sept 5th. It was a tough yet rewarding day. The trainer, Steinar Korsmo, President & CEO Seed Forum Global together with the jury headed by Katri Liekkilä, Training Manager at Aalto Small Business Center walked the training participants through a learning path towards high quality investor pitching.
Have you ever wondered how investors can make even initial decisions on whether to investigate a company further based on a few minutes pitch presentation? They will be able to do this if the pitch has been constructed as Seed Forum advices to do. We were taught to present the key aspects of the company in a way that matches with the investor’s mindset.
If R&D means working in a laboratory whereas sales and marketing means reaching out to customers an investor pitch gets one major step further out from the cozy company home base. When pitching to potential investors the company business as a whole becomes the sales item that needs to be promoted. Compared to a traditional product or solution presentation, the scope an investor pitch is much wider reaching out to market potential, business model and budget figures.
Seed Forum has concluded through experiment and experience that seven minutes is an optimal length for an investor pitch. Given a three minutes slot the presenters tend to prolong the presentation over the admitted time and given ten to twelve minutes they tend to finish earlier than needed. So that’s why the seven minutes.
Back to the question in the heading of this post: how to analyze a company’s business opportunity and the team within 7 minutes? This is where the magic lies in Seed Forum training: they have defined the value drivers that the investors expect to be hearing and the order in which the facts need to be presented. A “scalable business model” is one of the mandatory requirements. Poor scalability would ruin the growth potential and thus make the company uninteresting for an investor having a rapid exit in mind. A global customer base, rapidly expanding global market, recurring revenues, patent protected innovation and the first mover’s advantage are also perfect additions to the pack.
Is this all easier to say than to implement? Surely yes, but the role of the Seed Forum training is to teach how to make the best possible pitch from the ingredients that are available in the company. Evolving from a startup to an investor ready company is a story to be written by each company by themselves.
Are you interested in attending? Check Seed Forum calendar at http://www.seedforum.org/calendar.