„Do you know what is so special about this place? Almost the entire country is on Facebook!” Bala Kamallakharan

“How to build products users love – when you don’t have any money!”

&

“Doing things that don’t scale  – while thinking internationally!”

These were the two main statements of our latest lecture. Guest Lecture by Haukur Gudjonsson,

Founder of Bungalo.com and self-proclaimed “Viking Entrepreneur”. 

The startup Bungalo.com is probably one of the best examples when talking about building something from scratch. Haukur launched his company around the same time as Airbnb and both focus on “a house renting platform”. The substantial difference is the valuation which is probably related to the location of the company’s launch. Airbnb was founded in the Valley, full of entrepreneurial knowledge, incubators, high potential growth rates for startups and of course a lot of venture capital. The other one was launched in faraway Iceland, not very famous for its startup scene , barely experienced people in the venture business and not to mention no capital for these crazy ideas.

However, Haukur was smart and travelled to the US and Canada to explore the startup culture and learn about tools he could use. He got support from other experienced entrepreneurs so that he was even more motivated and focused on his project when he returned to Iceland.

“Wherever you see big problems, you’ll find opportunities for companies to improve it!”

Airbnb is a huge competitor, so he set his focus on places Airbnb would not go for. Remote places, bungalows in the middle of nowhere for people who like silence, natural landscape, being away from city life and mainstream places. Locations where you could meet the real locals and enjoy your vacation with family and friends. It took him a couple of years but he was persistent, believed in his startup. He learned programming within 3 months because he could not raise the money for an IT employee or web-designer. He took matters into his hands, started calling owners of a bungalows and asked them to join his project. He used Facebook as a marketing and feedback channel for customers.

He mentioned several times that you actually do not need money to launch your idea.

 “Just do it!”

was the lesson learned again! Grab the chance of the internet to connect with other experienced people, go to meetups  to ask for advice, work in co-working areas to meet other entrepreneurs or go to the Valley if you have the opportunity!

An inspiring lecture by Haukur with just one thing that was thought-provoking. When I asked him whether he would accept a takeover bid of let’s say $3 m he simply said “Yes!”. You probably ask yourself: Why not? Evan Spiegel, CEO of Snapshat, rejected a $3 BILLION offer from Facebook. Think about it and have a look at the interview with Bloomberg ;)

In the second half of the lecture, Bala talked about his vision of Iceland - a unique place on earth where you can test things in a way you could do nowhere else on this planet!

His post and the whole blog gave a new perspective on things by the end of 2011 for many entrepreneurs and interested people. He opened a door for visionaries who saw the future and believed in something. He couldn’t really quantify the outcome of his posts. Of course, he measured click rates and views on his blog. However, he did not get any revenues out of the post but he keeps doing it. His aim is to build sustainable entrepreneurial ecosystems in Iceland, providing a platform where people get support in form of mentoring and Venture Capital - simply something people were looking for!

He created a yearly event next to his blog which he describes as “A Woodstock For Startups”! Or in Paul Graham’s words:

“The recipe for great work is: very exactingtaste, plus the ability to gratify it."

“Almost every failed startup has a product. What failed startups don’t have are enough customers.” Gabriel Weinberg

When talking about early stage ventures the most important thing that matters is growth and growth requires customer traction. That was the major statement we talked about last lecture accompanied by Xiaochen, one of the co-founder of Guide to Iceland.

Guide to Iceland, a startup launched a year ago in August ’14, operates as the largest collaboration in the Icelandic travel industry. Based in Reykjavik, this startup is probably one of the best examples regarding the topic growth. It turned their business into profit after only four months, remember we are talking about Iceland, a population about 330.000 people and around 1.1 million visitors annually.

Xiaochen mentioned many things we have learned from Bala the last weeks already: “…look for a niche market…think about creating value, not about money…do not wait until everything is perfect…ask for the motivation when you hire people etc.”. Nevertheless, what have I took from her speech? It was interesting to see how she talked about the development and I felt already like an ‘advanced entrepreneur’ who knows some principles which matter for startups.
By far the most important and exciting part was the way Guide to Iceland is growing. They do it organically! They listen to their customers and they take their advices to improve their product. Good questions from the audience, which underline that statement like: “Are you planning to implement a booking platform for restaurants like you have for several tours?” Simple answer: “Yes, if the customer inquire that…”  This is what customer traction in conjunction with growth means.

During the second half of the lecture, we talked about the book “Traction: How Any Startup Can Achieve Rapid Customer Growth”. The authors identify 19 different traction channels a startup can access to achieve customer traction. Have a look here for the review; it is already in my reading list.

So what is this curve about? According to the quote, many startups end up at the “Uh-Oh!” point, even if they have a product and customers . Why does that happen? Better, how can I avoid this?

I would like to bring up the Guide to Iceland as an example. I don’t know if they got stuck at that point “Uh-Oh!” but a good solution they found to avoid that was translating their page into several languages – that’s smart! Think about it. Your business operates in the travel industry; your customers are coming from all over the world; what would happen if your website would be only Icelandic? You would not have the product market fit. So make your business accessible for more customers by giving them the choice of choosing from different languages. Conclusion: chance of more growth.
Another statement Bala mentioned:

“Are you growing 5% to 7% a week?”

Simple question and it’s all about the mathematics. Example:

“A company making $1000 a month (a typical number early in YC) and growing at 1% a week will 4 years later be making $7900 a month, which is less than a good programmer makes in salary in Silicon Valley. A startup that grows at 5% a week will in 4 years be making $25 million a month.”

Paul Graham

That means the more your weekly growth rate is the merrier you grow yearly! When tracking the rate week-by-week, you will recognize immediately if you are stuck at the “Uh-Oh!” – Point or if you hit the rate, you know you are climbing the right path towards the summit.

The time is running and our startup-project is in process, the pitch is going to be in a little bit more than a month. Next week I’ll give you further updates about the status and come up with some more details. 

“The way to learn how to do it is just to do it” Paul Graham

I worked my way through the first three weeks at the University of Reykjavik and I probably understand much better what studying really means for me now compared to the last 3 semester back at my university in Berlin. 

That doesn’t mean that I wasted any minute in my life or regret (almost) any decision. I will turn 25 next month, I’m in the second year of my Bachelor’s, I took around 1,5 years off before I got to the point to decide to start studying. And that’s what life is about, doing things you’ve never done before, making these unique experiences, building up your own vision of life and setting up all the adjustments to CHANGE the world to a better place.

So far so good, but how does that fit to a startup?

Let’s reflect the last couple of weeks to see what I’ve learned about startups so far and why I chose this obvious quote this time… 

“No school can teach you to be a good CEO.” 

Bala Kamallakharan

Of course a uni can teach you stuff like Management, Leadership or even Marketing and techniques how to become  what you want, but just listening to that doesn’t turn you into a good entrepreneur. What really matters is your enthusiasm, your faith in your idea, because that is what keeps you motivated and convinces investors and founders to join your startup. The 6 counter-intuitive beliefs about startups Bala mentioned, based on Paul Grahams’ talk a year ago in Stanford University, emphasize what I mean:  

#1 Startups are weird , don’t follow your instinct

#2 You don’t need expertise in startups to succeed

#3 Gaming the system in startups doesn’t work

#4 Startups are all-consuming

#5 You can’t tell if you succeed doing a startup

#6 Don’t consciously think of startup ideas to do a startup

Well, my conclusion out of the first part of the lecture and the last couple of weeks is that this fast growing business model is something special. Everybody can do it, but not everybody will do it the right way because there is no right way. There is a little guidance available and there might be a few people who are willing to support and join you. Nevertheless, to draw attention to your idea and your team you have to bring the idea to life and start talking to the people and networking.

“SomethingVentured” - the documentary film about the evolvement of the venture capitalism in the mid-20^th Century was a matching second part of the third lecture. It showed us how everything started. In this highly risky business, the focus is not on the money, it’s rather on whether the entrepreneur is able to lead a startup and reach his vision by using Venture Capitalists as mentors and experts as well as their business networks. For instance, many VCs didn’t see the capability of Apple (or Airbnb and Uber) as a unicorn and neglected to support Apple as a startup in their early ages. Now they are surprised at Apple’s success and regret not having invested in the first place.

Quote of the movie from Nolan Bushnell (founder of Atari) about an investment in Apple:

“He asked me if I would put $50,000 in and he would give me a third of the company. I was so smart, I said no. Big mistake! “ 

So it’s up to you if you wanna call it a mistake or learning for the future.

Like Professor Dave Valliere mentioned in the book "Startup Opportunities":

"... that most VC have a one to ten chance that investments become successful.  But most VC investors are unable to learn from it because they are caught in their own over-confidence."

Again, life is about making these experiences, going a rocky path includes detours towards the summit. This Reykjavik street art I discovered the other day visualizes the long and tough way to the summit very well.