Jernej Mirt, VIAR: »People vote with wallets best.«

/16.6.2017, Author: Majda Dodevska

At this year’s PODIM Conference, the young Slovenian startup VIAR won the Startup of the Year award, but before that they convinced renowned partners and investors with their product Viar360. We talked to Jernej Mirt, one of the founders and the CEO of VIAR, about the opportunities of the VR technology, and the importance of support by the startup ecosystem in the life of a young startup.

Congratulations again for the startup of the year title! In Maribor, Marko Munda, your CTO, accepted the award on the PODIM stage and said that it’s a confirmation of all your hard work so far. How do you assess this achievement?

The same. Awards come retrospectively, not for the future, they come for past results and that’s how we’re looking at it. Although this coin has two sides; on the one hand, it’s a great award, but on the other, you must then achieve a lot more because everyone’s expectations are higher.
But we are also very thankful for all the support we received during our existence, from the incubator in Celje, Startup Slovenia, PODIM … We wouldn’t be the startup of the year without them, because our paths were crossing all this time. We were growing because we were part of this environment, and the results we’re achieving today we also achieved because others helped us.
Part of the team watched the award ceremony from the other side of the pond. How did you experience the event?
We were watching the award ceremony over the stream. I think we were more nervous than Marko, who was there. Blaž, Dejan and I reserved a conference room, following the event on the screen and constantly “nagging” our team members that they have to live-stream over Facebook so that we saw it from more angles. It was an entire project. I think we were a lot, a lot more nervous than Marko, who was on the stage. We were also rather surprised to be chosen, because all the companies were really good, the ideas were very much on the level, and this year’s competition was rather sharp.
When I asked the jury members why they chose you as their favourite, their answers were rather uniform, since they were convinced by your product, market and your business model, as well as the team itself. What do you think is your X-Factor that helped you get the award and because of which you will be successful in the long run?
I don’t know if it’s just one factor, I’d say it’s a combination of several things. In the long run, the team is most important, not the money, not the product. The money can be obtained, the product can be built anew, but the team is what stays and leads it on. The team definitely comes first, we are of very different ages, we have different views on things, but at the same time we are very uniform and harmonious when it comes to achieving something. We have certain diversity in the organization, but we also have a single direction in which we walk. I think that compared to some other startups, we have more team spirit even though we’re very different.
And yet your team is stretched between Seattle and Celje. How do you coordinate, how do you make sure you’re all on the same page and walking in the same direction?
From the very beginning, we’ve had very well defined processes. We even started as a 100% virtual team, all of us working from home. Later we did have an office in the incubator in Celje, I was there a couple of days a week but that was it. Because we were rather virtual at the very beginning, we worked a lot on setting up processes very well, knowing how everything is progressing, who is responsible for what, that the positions were more or less defined … It also helps us a lot that we have two daily coordinations. When the Slovenian team starts working, the American team signs off and hands over the work, and when the Slovenian team is finishing work, the American one is waking up and then they hand the work back, and it continues. This is one of the things that really helped us a lot. A lot of people will say that four people don’t need processes, but you have to start when you’re small, because you’ll carry it forward. If we started doing this now, it would be chaos, because we couldn’t unanimously decide what’s good, what isn’t …
How many members does your team currently have? I know you’re expanding.

Now we first have to build the Slovenian team, so Dejan and I are both coming back to Slovenia over the summer and all of us will be in the same place. The Slovenian part of the company has to be constructed. Now we’re looking for another Unity developer. We have the intention to employ him in June, then we’re planning on finding a couple of additional team members. The team currently has thirteen people, but we’re working on attracting the highest quality staff into the team, not as many of them as possible. When we finish setting up the Slovenian team, we then need to build the entire American side of the company. We will also dedicate a part of our investment to that.
You recently closed an investment round, right?

Yes, in March we closed an investment in which several American angels, investment fund of Perkins Cue, and Slovenian Kolektor Ventures participated. Last summer we received an investment of the 9Mile Labs accelerator, and the year before that an investment by the Slovene Enterprise Fund.
You will dedicate the funds from the last investment to expanding on the American market?

Yes, we will partially dedicate the resources to product development and team expansion, but mostly on growing our sales income, in Europe as well as in the US.
European startups often think that it’s nearly impossible for them to get to certain big partners in the US. You stand out in such achievements, and you more than proved that this isn’t true. How should a startup tackle this if it isn’t in the US and doesn’t have direct access to investors and partners there? What does a certain startup need in order to come to an accelerator, reach certain international partners …?
Three things are important: team, team, and team. For accelerators, the team is very important because they are very much aware that things will change in the early development stage, the product will change, the only thing that will stay is the team. That’s why the people who invest dedicate the most time to the team. At this stage, no accelerator does a startup’s due diligence or financial data overview. They don’t invest into completely developed startups that have all the answers. You need to have something to show, definitely, but at the end, the key thing is who are the people who will come to the accelerator, whether this team is capable or will give up after a while.
As far as the market is concerned: it’s possible to work for the US market even from Slovenia. We made our first sale over Skype from the Celje incubator, and were sending the first software and glasses to San Francisco from a town that no one ever heard of, for example.  
Why does such a belief remain then?
In Slovenia, the problem is that we set certain limitations to ourselves and have certain things in our head that then prevent us from actually going after something bigger or going outside.
When I observe Slovenian or American startups, they’re on approximately the same level, teams in Slovenia are good teams, products made in Slovenia are well-made products. The problem is just in the fact that an American thinks he’s the king of the world, that he can do whatever he wants, while in Slovenia we tell ourselves: “First I’ll work for Slovenia, then for Austria, then I’ll try to work for Germany.” Instead, we should look for the best partners, wherever they are, because our product is the best.
How can one establish contact? Which steps would you suggest to startups, can you give them some advice?

If I created a new startup now, I’d first set up a blog to start talking about what you’ll be doing. It can bring you a lot of inbound traffic as well as contacts, potential customers. It’s the simplest thing to start with. The other thing is that you need to go out and try to sell something. We had this mentality from the very beginning, first trying to sell the thing and only then make it. People today vote most rationally with their wallets.
If we touch on your products a bit – when people think of the VR technology, they often imagine something abstract, something that is in the far future … Meanwhile your solution is meant for people who create content (teachers, journalists) and wish to include their users more. So, it’s a technology that is useful in completely everyday scenarios and accessible to everyone, right?
I completely agree. That was also our starting goal. What people might not know about us is that we spent six months creating custom VR apps. During the time when we were pivoting from solutions for architects to what we’re doing now, we had a period when we still had to create income, making tailor-made apps. Then we experienced, on our own skin, how difficult that can be and how this process of content creation is still very complicated, how many technological skills are still needed for it. On the other hand, we knew that VR has many uses in daily processes, including knowledge transfer inside companies, journalism is also very close to us. There are a lot of very useful areas but teachers, journalists, coaches, for example, aren’t technical people. They are good in other things. That’s why we made our platform in a way that it’s simple to use and can be used by such people, and virtual reality can serve their needs. When somebody looks at our platform today or in three years, it’ll be like comparing the first iPhone with iPhone 7.
So changes are happening rapidly?
Yes, the market is developing very quickly, even though this isn’t noticed that much on the surface. Just yesterday I was reading the new Microsoft’s study, for example, and now their HoloLens prototypes are minimized to the size of Ray Ban glasses, and they also look like it. Before, they had those big glasses, now the users will be able to put on glasses for which no one will even know they’re anything other than sunglasses, so think of how much this changes things for everyday users.
What needs to happen for everyone to start using this technology?

It’s already happening, we just don’t notice it. The point is that no technology is a revolution, no technology changes things from today to tomorrow. There are small, incremental changes that accumulate over time, so we suddenly say to ourselves how different life is now than it was two, three years ago. Smartphones and social networks, for example, have completely changed the ways of communication among people. Nobody noticed. I can remember that when I signed up for Facebook in 2007 or 2008, no Slovenian was on there. I closed it and left it alone for about two years, then I got an email that someone added me and I started using it again. Back then it was a random thing, while today I practically can’t leave Facebook because I have many contacts on there, even though I don’t use it as much as I used to. The same is with the VR and AR technology, we won’t notice gradual changes, but when we look back in two, three years, the changes will be more than obvious.
What are your plans for further development of the existing product and new products?

We’re still innovating on our glasses, we’re going into complete renovation during the summer. We will implement all feedback, all comments we received, but we also have to create new tools, update the manufacture … it’s a rather serious project. Meanwhile Viar360 is continuing to develop, we have guidelines for what will be done prepared for about a year in advance. So we won’t develop any new products, instead the products we have will become even better.
Which are the biggest problems you’re facing in your work?
What’s characteristic for VR is that there are many shiny objects that can take away your focus, they seem very sensible but they actually aren’t all that useful. There are many opportunities that we could tackle and it’s very hard to stay concentrated. If you’re a startup and have limited resources, you have to be very, very concentrated.
Other things include the price of hardware, which is falling, but the amount of content is increasing, the acceptability of the technology among users is growing … Last year, there was a big problem with VR, because there was a big hype around it. It benefited us and I think that if we were a year earlier, we would have gotten a bigger investment, because last year, the money was literally handed out. This year this calmed down a bit. The industry need to clean up a bit, certain companies need to die because they weren’t solving real problems, but renewed growth will follow soon.
How important for startup success is the support environment, such as accelerators, incubators, also investment funds like the Slovene Enterprise Fund?

I think very much. I consider us to be a pure product of this environment. We practically grew together with Startup Slovenia, with SK, Bootcamp, incubator in Celje. We were one of the three companies that moved there, we grew together with the community. This environment co-shapes you, so it’s important for you to be in it. It’s interesting that the first three companies from the Celje incubator were in an accelerator abroad. When you’re looking at other startups in such an environment, see how they work, you also become more impassioned, more ambitious … The Slovenian support environment is there for a reason. You can’t force anyone to use it, but I would definitely recommend it. I know that we would be at 30% of our current successfulness if we hadn’t been members of this environment.
Are startups in Slovenia aware of these possibilities?

I was very happy when I read how many startups attended this year’s PODIM Conference. More than 130 startups attended the conference, which I think is fantastic, it’s a nice size for a conference. I also liked that everyone was looking for realistic money, nobody came to the conference just to look around … In Slovenia, the situation is that you need approximately 50,000 euros at the beginning, which the government enables through P2, SK products, so no one has the excuse that there is no money here. Even when later looking at what startups are doing, what they’re looking for, I got the feeling that they are really working and looking for resources backed with concrete numbers.
Is Slovenia a startup-friendly country?

I also like that the Prime Minister got handed the initiatives for changing the entrepreneurship environment in Slovenia. But the fact is that most of the companies that attended the conference this year will have to open a company abroad sooner or later, just like we did. Legally speaking, Slovenia is ten years behind. I still don’t understand how we don’t have a single instrument that would enable options to be given to employees. It seems so illogical! In the Slovenian company, we wanted to enable employees to participate in the company’s share ownership structure with a vesting contract, but not even Deloitte could tell us how we could do this in Slovenia, because you can’t do it this way here. We got some information that you could do it through cooperatives … But who would make such complex machinations to come to a thing as simple as giving options and a vesting contract to an employee. They are rewarded if the company grows, these are the key employees. There practically isn’t such an instrument in Slovenia.
This is very bad for a startup environment such as the Slovenian one, which is incredibly lively, active, with many internationally very successful startups.

Of course. An investor can’t invest in Slovenia, for example. Why? Because no one will drive from the US to Slovenia to sign an investment. So it physically can’t be done. And then they wonder why Slovenian entrepreneurs open companies abroad. I’d prefer to be in Slovenia, because I’m Slovenian and VIAR is a Slovenian company. But legally speaking, we can’t be in Slovenia if we wish to grow and achieve set goals, so the government is legally preventing us from staying a Slovenian startup. They don’t give us enough support. Startups will always find solutions, but perhaps not everyone will like these solutions.
Where will VIAR be in 5 years?

That’s a good question. As founders of the company, we currently practically don’t earn anything. All our assets are in the company, in company shares, which is why selling the company is an important step in the future. That’s that basic thing you can’t go past. Generally, I think VIAR could become a synonym for business use of virtual reality. Our product is increasingly better, it’s getting more evident that it’s useful for certain business purposes. When we are talking to users and new customers, we can actually see the spark in their eyes. But the fact is also that we can’t tell the future, so we need to have flexible enough plans to adapt them to any market changes.
MATEJA LAVRIČ, managing director of Kolektor Ventures on what why she believes VIAR convinced the Startup of the year jury and also why Kolektor Ventures have formed a partnership  with VIAR.
Author of content: Majda Dodevska,
PR and communication, PODIM Conference
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