This is the second article about Disrupt Start-up Malta conference, organized by the MCA, in collaboration with TAKEOFF business incubator and Start-UP weekend Malta. In the previous article we talked about startup ecosystem in Malta and how it could be improved, the second part is dedicated to advices for startups that were given by conference guests and speakers.
Right time to build a startup
The right time to build a startup is now. Mike Reiner – a keynote speaker from Amazon Web Services, started with this though and all the participants agreed. Development of shared economy, rise of common creatives and availability of open source technologies and cloud make it so much easier to start a business, time to scale is as short as it have never been before. You can work from anywhere and you have to travel around – as Angelika Lattner pointed out “ZIP code doesn’t matter” anymore.
Tools like Amazon AWS and Microsoft BizSpark allow startups to save money on software and spend it elsewhere – as Mike suggested, “invest in Marketing instead”.
Poor questions and useless answers
However, Mike Reiner has drawn attention to the fact that a lot of startups are building things that no one needs as a consequence of poor validation and asking wrong questions.
“Do you think this is a good idea? How much will you pay for this product?”
– this is a bad question with no validation whatsoever. By asking these types of questions startups won’t find any useful information in the answers and if they are persistent enough, they’ll most probably get answers that they want to hear (just leave me alone!).
Good questions and metrics
Startups have to think – who are their real customers and where to find them. It is better to be very focused and find niche segment and then ask about things one can make use from. Get to know as much as possible about real behaviour of your customer in the past and currently by asking right questions and “customer-watching”.
How do they solve their problem right now?
What tools are they using?
What budget they spend to solve the problem?
If your potential customer doesn’t spend any money or can solve the problem easily – you don’t have a market!
Mike’s advice is – “gather facts, not just opinions”.
Hot or not?
Ms. Lattner, whose mission is to connect innovation hubs across Europe, named industries that are hot right now on startups scene: Internet of Things (IoT), 3D printing, Big Data Analytics, Artificial Intelligence (AI)
Dave Haynes, business developer at Seedcamp argued that when one is thinking to start a business, looking in “what’s hot” might not be the best strategy, because it means that “someone already does it”. Better strategy is to work in the industry of interest regardless of it’s hotness until “you really see the problem and then – go and solve it”.
Mike Reiner added that today “every single industry is trying to move forward and disrupt”, his advice is not just “jump in what’s hot”, but look into the industry and “think what can be changed, apply hotness in another setting”.
Investors get thousand of pitches around the hype areas, the key is to be the best, or be different and as Mike argued, “show where you have a unique expertise”.
Investable startup: unique value & unique people
But how does investable startup looks like? For a serial entrepreneur, who worked with IBM and helped to bring Java and first cloud solutions out there – Mr Reinhold Karner it is:
- Idea with validation
- Team that has courage to become successful
Dave Haynes agreed, that teams are a very important component – in Seedcamp they do look into the team, how ambitious people are, whether they think globally and have open mind. Startup has to have a “unique insight or technology”, but the team must be also capable not only to start, but finish the journey. Dave said they are always looking beyond an idea into personal attributes – “for someone who is a good storyteller, a visionary”.
Mike Reiner added that he would look for a “tough founders with hustle mentality”. The vibe in the team is really important – how people engage with each other, where is “energy and synergy”.
To exit or not to exit
Is it important to have an exit strategy from day one? Mr. Karner argued “discussion around exit in the early stage is a poison. It creates wrong expectations and disappointment”. Mr Don Ross (Citrix, Symantec, PGP) added that “startups should be flexible with their exit strategy”. Dave Haynes stressed that one should build a business to solve a problem, not just because of the exit, but keeping exit strategy in mind is useful “to know which investors to approach”.
Prior to exit startups would find themselves going for investments and there is something else to keep in mind – valuation.
Valuation is a painful question for startups, but Mr. Karner pointed out that startup is actually going through a normal sales process where market determines the price. As Mike Reiner suggested – by the end of the day for investors it’s a question of “how long startup will last for the money”. That’s why, according to Andrei-Andy Linnas (Takeoff startup Incubator manager), startups have to think several steps in advance while planning their investment rounds, see “where you want to end up, what milestones will bring you there and then reverse engineer”.
Author: Anastasiia Linnas
- Coming soon: Disrupt Start-up Malta. Part 3: How to start-up in Malta.
- Read also: Disrupt Start-up Malta. Part 1: Becoming a leader in innovation – vision and building blocks.
- Please subscribe to receive Malta Startup Gateway updates.
- Download or print this article from Google Drive