Every new entrepreneur should know that the road on which he is embarking is strewn with dilemmas, opportunities, meetings with important and unimportant people, disappointments and small successes, and that everything is - to tell the truth - chock full of clichés. It starts with the recommendation, “Go with your truth” and ends with, “First of all, be true to yourself.” But such advice is superfluous for entrepreneurs in the startup ecosystem, in which if you did not have this truth at the outset, let alone faith in the idea, you probably would not embark on this road, which is everything except comfortable.
Advice should be taken from people with experience. They might be gurus, who have chalked up some successes (or at least not failures), or they might equally be entrepreneurs still on the road who have learned a thing or two about it. It turns out that the greatest challenges are revealed to be simpler than you thought, and the things you thought would be easy become obstacles.
The winning entrepreneurs in the “Globes”-Bank Hapoalim (TASE: POLI) Smartup3 program have something to say about the road, even as they are on it, and they can allow themselves to offer some tips.
TapReason Ltd. helps app developers improve their going to market. Although CEO Nimrod Elias was pulling an all-nighter when I asked him to volunteer some advice, he put aside some time to offer some thoughts, commenting, “We just had beer and pizza.”
“I don’t want this to sound like a cliché,” he says, before backpedalling quickly, “but it is also important to create an experience, even though that can involve sacrifices, such as nights like the one we’re working through now. People are definitely not coming here for the money. People are what counts, because, in the end, this isn’t a technology business, but a people business. You might be in relations with investors, who even if they don’t actually invest in you, and you should remember that Israel is a small country. Israel is a place of backslapping and connections. Beyond that, Israel is an especially warm and affectionate place for entrepreneurs. That is why it is important to correctly pick the bodies who generate this chemistry. Just yesterday, we decided to work all night. My greatest asset is people, and with really good people you can do anything.”
“Globes”: What about common mistakes?
Elias: “This is not my first venture. I already had a shopping venture, and our biggest mistake there was that we rushed too fast to the technology. The apps weren’t bad, but we were less interested in the market. I only realized later that the most important thing to do first is to talk with your customers. A startup is risk management, and you must constantly prove or disprove hypotheses, and you have to know to fail fast, because it’s cheaper. In any event, I think that the tip that I feel strongest about is that if you take decisions within your comfort zone, it’s probably the wrong decision. I hope that doesn’t sound like a cliché, but when you’re told that this is a winding road, I always say that that is true, and you cannot be prepared. Someone who isn’t an entrepreneur won’t understand you. They immediately ask you if you’ve made an exit, while I am still excited by small steps. Another important thing that should be taken into account is your spouse - that is the person who will tell you when to stop. At some point, you realize that the person you married is also your partner.”
Win users’ trust
The Grid is a social platform for immediate deliveries. Co-founder Yuval Niv was able to spare a moment from his hectic schedule to share his experience. “One of the things I was surprised to discover is the difficulty in winning the initial trust of potential users,” he admits. “Even when you feel sure that will have a wonderful experience, an earlier memory causes them to doubt the trust that you think is a given. In the deliveries world, for example, people have had many bitter experiences, so it is hard for them to trust you. It is also related to the local character where people are looking for the catch when you offer them a paying, convenient, and cheaper deal.”
Have people asked you, ‘What is the catch?’
Niv: “Absolutely. For example, the Azrieli Group Ltd. (TASE: AZRG) generously allowed us to conduct a pilot in which we offered home deliveries of purchases, but people were in no hurry to agree. For its part, the Azrieli Group wanted to create a better shopping experience, but people reacted with suspicion.”
Nonetheless, Niv was very favorably surprised by the local supportive environment for startups. “When you’re driving the first stages of the venture, you discover how much the local arena helps. There are structures like accelerators, media, parties at interest and investors, the Office of the Chief Scientist, etc. I was favorably surprised at the willingness of people from every corner of the industry. It’s perfectly fine for the other side to have an interest, and it’s pleasing to know how much Israel has been able to create mechanisms and structures to support and drive forward ventures and entrepreneurs. I am sure that things in Paris, for example, are harder than here."
“Another tip I wish to share may sound banal, but people are afraid to talk about their venture. That’s a mistake. You must not think that if you talk about it, you’ll your comparative advantage. It’s actually very important to hear what people have to say, to ask, to test these are things that are important to do at the outset, because they help calibrate the optimal direction. It is always good to have someone from outside the venture in addition to your partner; someone to report progress to.”
Finupp Ltd. is a kind of computerized tax consultant for income tax refunds. CMO Lior Albeck has encountered some surprising things on the road. “As part of the process, we ask users to upload forms that are not necessarily in their possession, such as Form 106 (annual salary summary). At first, we thought that this would prevent users from completing the process and get their tax refund, because it should not be taken for granted that they will bother to take the offline effort to obtain and scan the forms. But we were surprised to discover that that was not the case. We were pleased to discover that most users actually took the effort, obtained the forms, and uploaded them on to the site.”
Have some difficulties caught you by surprise?
Albeck: “The most surprising difficulty for us was to find suitable employees. Whereas before we started we thought that hiring employees for a startup would be easy - after all, who doesn’t want to work at a startup? We very quickly discovered that things weren’t so simple. You have to find, hire, and retain talented workers who will be real partners on the road, which is a very, very difficult task. My tip for a new startup is to find a minimum viable product (MVP) as quickly as possible, because that will allow you to learn the market, understand its real difficulties, and to focus the work on the most important task.”
PayBox Ltd. offers a group bank account for share purchases. CEO Tal Grinberg also talks about things that favorably surprised him, despite worries about difficulties. “One of the basic elements for building our customer experience required building a special relationship with credit card and clearing companies. Happily, at the beginning, we found a sympathetic ear at Leumi Card Ltd., and we’ve established a wonderful relationship with it. Secondly, we chose to develop PayBox as a solution for end users. One of the key challenges for companies that seek to work directly with the end consumer is to reach a potential customer and persuade him to work with the new brand. This challenge is honed in the case of a payments product. After all, as consumers, the money it’s about money, the element of confidence in the brand is fundamental. Happily, we discovered that, even though we chose to work directly with the end consumer in a complicated market environment, we were able to persuade user to try and give trust.”
Where were you surprised by difficulties?
Grinberg: “PayBox’s pace of development depends on the number of developers. When we began hiring developers, we thought it would be straightforward, because who wouldn’t want to work for a cool company like ours? But we were surprised to discover that the process was complicated, requiring a lot of focus, energy, and connections, especially for skilled full stack developers. Even now, we still have not hired developers to man the important development positions at the company. Secondly, to continue supporting local growth, launch the product in the European market, and install new business models, we need money. We chose to raise money through outside investment. In this case, it was clear to us from the beginning that the process would be complicated, but over time we discovered that it was really complicated. Because this is a seed-stage investment with a very high risk level, investors sought clear or semi-clear indications that their investment would yield results in the future. These indications varied from investor to investor, and it is sometimes difficult to choose the measures that the company should achieve to persuade an investor that this is a clear indication, grow backbone, and build a clear strategy that will focus the company in one direction.”
Have you some tips for entrepreneurs?
“On one hand, take a deep breath, because it’s going to be a long and twisted journey. You’ll have to compromise on a lot of things, especially time and money. If you’re not ready for that, your team definitely won’t be ready to do it.”
Democracy is important, but never argue at a presentation
The incubator experts advising the entrepreneurs in the Smartup3 program also have some tips to offer. Battery Ventures LP general partner Itzik Parnafes is a member in the entrepreneurship program of 8200 EISP, which is advising PayBox. “Choose a good consultant, because that makes all the difference,” he advises new entrepreneurs, adding, “No one was born a CEO or entrepreneur. True, it’s a matter of character, but a lot of mistakes are made on the road, and a good adviser can avoid them. A second tip is that, ultimately, growing a big company is a process, and the result is never guaranteed; the road is the only sure thing. That is why I advise enjoying the drive. It is worthwhile working with someone with impact, and there are people’s lives. It must be something that you will be proud of. The third thing is more tactical take care in picking your partners and investors. It’s harder than a marriage. You should know the investor well and understand each investor’s area of investment and kind of expectations. It is important to verify that you and the investor on the same road.”
Nielsen Innovate is advising The Grid. CEO Esther Barak-Landes believes in the following rules for advising new entrepreneurs. “Continue gathering information at every stage of your product: about the market, your investors, about global market volatility, and about your competitors. Define the idea and try to find a real solution for an existing need in a dynamic market. Know the investors you’re going to meet to save everyone time, and try to fit your product with nature the investors’ previous investments. Invest in a polished and professional presentation appearance is critical. On the other hand, do not stick to just slides and text,” she says.
“There are also things to avoid. Do not bring in the whole family and friends to the team. A threesome is the magic number of a diverse and focused team. It is important that the entrepreneur team will include people with a business and technology background, and at least one woman. Democracy is an important value, but never debate or argue during presentations. A business plan is not merely a collection of information on which the paper suffers everything. Today, more than ever, it is important to define the venture’s objectives and vision, who is the clientele, who are the customers, what is the financial model, who are the competitors, a market overview, what are the entry barriers, and what are the development costs over time.”
Explore.Dream.Discover is advising TapReason. CEO Duby Lachovitz lists some common mistakes made by entrepreneurs he has met in the past. They include “starting work with an insufficient or unorganized team. Three is optimal number of members. There is a tendency to include friends on the road, even though they are professionally unsuitable. Another mistake is to raise capital that is unsuited for the company in both the amount raised and at valuation that is too high or too low.”
Lachovitz advises entrepreneurs, “Come prepared to meetings. That means knowing how to answer tough questions. Do not be afraid, and be ready to make changes where necessary. It is important to raise money when possible, not when you want.” He concludes, “The most important thing is your team.”
Published by Globes [online], Israel business news - www.globes-online.com - on December 17, 2015
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