The moral of the working weekend: the main focus are customers and sales, not product development!

Day 29. September 2014 posted Stanislava Vabšek
All start-up teams that participated in the working weekend for the tender SK50 and the accelerator Start:up Geek House found the work with mentors to be an educational and extremely valuable experience. Mentors think that all business ideas they helped develop have good potential for success, but they have to shift from product development to customer development, and start sales as soon as possible.
First, the mentors introduced themselves to the participating teams.
The first mentoring experience with Kristjan Pečanac from Hekovnik, who set 5 key questions for idea presentations.
After mentors introduced themselves, it was time for the teams to succinctly present their business ideas.

I live in Slovenia, but work all across the world

The working weekend for the tender SK50 and entrance to the accelerator Start:up Geek House took place at Technology Park Ljubljana from Friday afternoon to Sunday evening. 27 start-up teams who have successfully passed the first round of the pre-selection procedure were in attendance. Friday afternoon was mostly meant for presentations of teams, mentors and introducing the schedule for working on teams’ business ideas. The introductory motivational talk from the successful entrepreneur Mark Pleško from company Cosylab had made us roar with laughter and motivated us to the full, mostly because Mark had very explicitly explained why it is nice to live in Slovenia, but you have to work on the global market, as well as pointed out the critical phases that every start-up company goes through.

Kristjan Pečanac: answer 5 key questions

Presentations of the teams, slightly shy at the beginning, were additionally spiced up by the legendary mentor Kristjan Pečanac from Hekovnik, who demanded that each team answer five questions:
  1. who is your ideal client,
  2. what kind of a problem are they facing,
  3. what is the solution solving this problem,
  4. how will the company generate income and
  5. in what way will it guarantee its own growth. 

Matej Golob: be clear and exact

The also well-known and insightfully critical start-up mentor Matej Golob, leading the consulting company 30Lean, stayed loyal to his sharp and “don’t waste my time” approach: “Be clear and very specific – what you are doing exactly, why exactly you need money, and what precisely are you going to make better and faster with it.”
Mentor Rok Stritar initiated the participants into the MVP philosophy and quick prototyping.
Team of Borza terjatev while filling out their Business Canvas Model.
Matej Golob while mentoring the team BG Boatguard that developed the device for long-distance boat control.

Out of the building, out of Slovenia

Saturday morning was dedicated to lectures – starting with one on lean and agile companies, with Matej Golob who, as usual, urged start-uppers to go outside and out of Slovenia. Rok Stritar initiated them into the MVP philosophy and explained the necessity of quick prototyping, while Urban Lapajne pointed out that following the Business Model Generation methodology can help them quickly design a business model that they can later change, improve and expand by validating the written assumptions.

Personal consultations for finding the way to customers

Participants spent the entire Saturday afternoon, until the late evening hours, by actively working on the development of their business idea with mentors. There were numerous questions from start-up teams: from the wish for a “sanity check” for the chosen business model to the overview of apps’ functionality and the dilemma whether the company is already mature enough for private investors to enter and under what conditions. The joint denominator of all advice that start-up teams sought from mentors were questions about customer segmentation, access to key customers and purchase decision-makers, and actual steps that need to be taken for entering markets abroad.

What do investors want to hear?

Sunday was dedicated to preparing striking, attractive presentations for Tuesday’s Demo Day or, better said, the presentations for the investors’ committee. The morning lecture from Tomaž Frelih from Hekovnik revealed the key content of a good presentation that attracts investors’ attention. An attractive presentation usually consists of eleven slides that include:
  1. presentation of the company (vision, values, goals),
  2. problem (whose problem you are solving and how),
  3. solution (how your solution is improving the life quality of your potential client),
  4. why now (describe market trends and explain why your solution is topical right now),
  5. market size (list of competitors and advantages of your product compared to competitors),
  6. the product (functionality, look, intellectual property),
  7. business model (model of creating income, price policy, distribution and sales channel),
  8. team (founders and key staff),
  9. financial indicators (cash flow, key expected income, key expected expenses),
  10. offer (how much resources do you need and how exactly will you spend them).  
Business angel Branko Drobnak on how to approach investors and what they are actually interested in.
Members of the team NM Plus, that will market an electrically-powered longboard, have realized that merely a web store won’t suffice for successful sales.
Mentor Tomaž Frelih from Hekovnik on what kind of a presentation attracts the attention of investors.

A business angel isn’t a cash cow!

Branko Drobnak, one of the more known Slovenian business angels, was also sharp-tongued as always. After Frelih’s talk, he shared quite a lot of useful information about how to approach private investors, what they are actually interested in and what they really don’t like:  
  • Be specific: what exactly are you expecting from an investor – money only, or business connections and opening doors as well. How much money do you need exactly, and how precisely will you spend it.
  • An essential part of each presentation for an investor is a market analysis of markets abroad. Check the general price level, buying power, the usual sales channels in the industry. Don’t go to foreign countries alone, find an ally from the local environment, preferably one with a good network of connections and acquaintances.
  • How to come into contact with representatives of big corporations? Try to find contact or access to someone from company management, use your network of connections while actively also seeking contact with mentors, colleagues, co-workers… Most of the time, aiming at the biggest market leaders isn’t the smartest possible strategy. It is better to try to find someone who is growing and wants to take part of the market share away from the market leader.
  • How quickly do you assess other expenses in your start-up company? Ask a competitor for a drink and ask them a couple of key questions.
  • Don’t confuse the role of an investor with one of the bank, where you can take a loan. An investor expects a large – at least a 20 % annual – yield when exiting the company. His key role is controlling projects and maintaining the set goals, as well as making contact, transferring knowledge and sharing experience.
  • A business angel will enter the company in the phase when a start-up team knows exactly what the product is and what the distribution channels are like. At the same time, they are looking for teams that have energy, are 100 % focused and pledged to reaching the set goals. It’s great that each team has knowledge of the market, product and finances.
  • Instead of focusing on the patenting process, which is expensive and takes a couple of years, rather focus on aggressively conquering the market.
  • Learn the art of asking questions and remember: an investor isn’t a cash cow that finances start-up’s fun, but a person who expects a large yield when exiting.  

Breakthrough feedback from mentors

After both Sunday talks, it was the participants’ turn to prepare the drafts of their presentations. After lunch, they reviewed them with the mentors, and edited and supplemented them if needed. What followed were the final improvements and “live” practice of the presentations. According to the participants, the feedback they got from the mentors was very beneficial, useful and valuable, while many of them, who had been looking for answers to some of the questions for years, even found the feedback to be revolutionary and offering a breakthrough.

If we obtain an investment, we’re going to London

After two tireless days of working with the teams, listening to the presentations and giving intense suggestions for their improvements for an entire afternoon, the mentors were also able to create a pretty good mental picture about the quality of the ideas and the teams. As Matej Golob from 30Lean says, the teams are pretty far ahead with the development of their business ideas, but even those he assessed to be the furthest lacked the exactly defined and structured steps for selling on the global market. “In other words – when, when, with who and how will you start selling abroad, and how much money do you need for it. Most of them think that they need money for product development. Wrong! They need it for customer development and making the final choice, which should read as follows: if we obtain an investment, we will move the company’s headquarters to London and start intense customer development there,” was the summary of Matej Golob’s impressions and advice.

Don’t be afraid of sales

Mentor Rok Stritar, otherwise an assistant professor at the Faculty of Economics in Ljubljana and founder of the successful web store for mountaineering equipment Kibuba, sensed that participants hesitate too much before starting sales. “I think that all teams have relatively good potential for market success. But they lack courage for sales, which is why we minimized products together, as well as removed the fears and reasons for delaying the start of sales,” emphasised Stritar.

More interviews with customers and good stories

When listening to the presentations, Tomaž Frelih from Hekovnik realized that participants mostly lack a critical amount of interviews done with clients, from whom the participants could have learnt the most by now, consequently also improving their presentation. In his opinion, the best presentations are created when we start to delete slides and refine them. But it’s also crucial that we know how to boast when achieving first successes that a lot of participants had already had. “We should learn from Americans. And make a good story out of the presentation, instead of drily listing facts,” concluded Tomaž Frelih from his findings, visibly tired but satisfied.

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Communications and PR Start:up Slovenija
Izvedba: Mojdenar IT d.o.o.