Профит Шоу 31: Alex Barrera, Press42, Tetuan Valley
Alex is a founder at Press42, co-founder at Europe first accelerator program Tetuan Valley, StartupDigest Madrid curator and a mentor at several accelerator programs around Europe.
Listen to Alex to learn why european accelerator are very different from US, how to choose an accelerator and why there are very few real startup accelerators in Europe.
2:35 Tetuan Valley — educational program for entrepreneurship
7:20 I really want to help you as a mentor
12:30 when choosing an accelerator look what happens after startups graduate
14:15 there are very few REAL accelerators
17:00 Press42 pitch: early-stage startups don’t understand cross-country PR
21:20 raw, unfiltered advice to entrepreneurs in Ukraine and Eastern Europe
23:50 there is incredible talent here; they don’t realise they can do their own startup
Текстовая версия выпуска
— So Alex, welcome to Kiev. It is a pleasure to have you here during the IDCEE conference. It is quite a long flight from Madrid. Right... Anyway, I’ve heard that start-ups are hard and you are CEO in the start-up and I don’t understand where you are doing all this hard work because every week you are somewhere around the country doing a talk, or mentoring or whatever other things you do. So what exactly do you do? How is your start-up going?
— Ok, no, the start-up is going good. I mean it is a little bit slow but when you do the start-up world, you can do several things at the same time and actually I’m not flying that much. It seems that I am travelling a lot but I don’t travel... I won’t say I don’t travel too much but these past two weeks have been very rare — normally I just go to one place every two weeks — so the rest of the time I am back at home working.
I didn’t come from Madrid, I came from Poland. So I did Madrid to Poland, Poland to Kiev, Kiev to Berlin and Berlin to London next week, so... But I do have time. These two weeks are insane but normally I go back, I’m in Spain and I can do things like... If you work by night, you are that kind of hacker style.
— I just wanted to talk briefly about your background history. You started this... How do you pronounce it? I’m not sure to pronounce it? Teuton Valley?
— Tetuan Valley.
— Tetuan Valley. So it was kind of what we are seeing now with ‘Wise Guys’, ‘East Labs’ and all other accelerators.
It wasn’t like that. It was more of a reaction to a problem we were seeing in Spain. So if you go to the U.S, most people that go to the U.S university have at least touched, or known or worked for some sort of entrepreneurial venture. Even if it is just selling lemonade or doing stuff like that — it is part of their society — part of their ecosystem. When you come to countries like Spain that is not the case, you have people who are 25 that have never done any start-ups. So we realise we really wanted to do a big community around start-ups and good ideas to invest in. We couldn’t start with the accelerator first because there were no good ideas, there weren’t good people doing stuff. So we said: ‘Why don’t we do something in between? Why don’t we do a bridging program that goes to universities and brings people that have never heard of start-ups and fast tracks them and teaches them what a start-up is and how to do it. So when they learn to do this, they can go to accelerators or they can talk to investors and stuff like that. So it was slightly different and it was kind of unique because no-one else was doing that. Actually, very few countries or cities I know are doing something like this. They try to replicate everything and they try to do the big accelerator thing but in many cases you just don’t have enough people to pull that off.
— Actually this is something I heard here... The programmers can’t get enough interesting ideas into the pipeline to accept into the program. So this was an educational program, sort of like promoting your own business?
Yeah. It was basically promotional stuff in terms that we did education with the idea of creating a community that in the future was capable of building stuff. After three years it started happening. After three years of doing this, people from different editions started joining and creating new companies. So for example, we have one company that works on developing Android Apps and their Apps is one of the most downloaded Apps in the Android store.
— Really, what is the name?
— The name is ‘Go Chat’. So basically they did a chat for Facebook and they got over 1 million downloads four or five months ago. So I mean there are some companies that are coming out of that stuff, so I mean it’s not people within the same program and the same edition.... But basically people that met through the community because they have the same mind-set, now they are doing something else. That was our goal that was our dream. It wasn’t just, ‘I’m going to teach’, no it was we’re going to teach people and bring them together so that after a while things happen.
— So it was like five years ago that you started this?
— This was like four years ago, February 2009, so three years and a half maybe.
— So what did you do before...? I mean when we first met, you were in Tallinn and you were mentoring the ‘Wise Guys’ program and I know that you mentor in a bunch of programs, so I know you must have had some experience to... What makes you a good mentor, what did you do?
— Well previous to that... I finished my studies in the U.S and had a lot of contacts there and I did my first company... Well I was doing a lot of freelance work too. I did my first company in Symantec Technologies and I got hired by the largest social network in Spain to help them and do stuff with them. I was very lucky because it wasn’t just a team... I was working within the company. So it wasn’t just the front end or the back end, I was working with all of them at the time and it was really interesting and I had a really great time. It was really interesting and had an incredible time. Saw some incredible architecture and some of my friends from there are now working on Facebook in the U.S. So it was really cool. And since then, I’ve been working on many different projects and after getting out of that company... I was really frustrated at not being able to find like-minded people to join my company. So I decided to do Tetuan Valley as more like a way of: Hey, if I do this, I can find more people to get into my company. So, from there, after a while, you start seeing a lot of projects and you start working with a lot of people. Not just on the technical side. I mean, the technical side is quite easy for a lot of people. It’s how to design the product, how do you market it and how do you put it out there and get people excited about what you are doing. And so I realised after doing Tetuan Valley that people really valued that. They said that, ‘Wow, you go on stage and you really reach people and you really know what people need to hear and how to fix it so that they don’t go out crying’ — hopefully. And then because we started that, we wound up doing a start-up boot camp and I started being involved with a lot of people and a lot of programs and they just called me and were like every start-up we meet they are like — ‘Hey, you need to talk to this guy’. I don’t know why people like talking to me. Maybe I’m very honest. I’m very transparent and I just like to say things how I feel them. I mean, while trying to keep it from... I don’t want to break you, that’s not my point. I want to make you better. Sadly, a lot of people mentoring is about them — I have all the knowledge, I am super cool and super awesome. I don’t give a shit about that. I really want to help you. I’m guessing that is what people see. I am extremely passionate about the ecosystem, I’m extremely passionate about helping start-ups become something really huge.
— This is actually like my next question. Since you mentor in different teams and different programs, it’s maybe a theme — the same setup advice you give to every?
— It depends. That is sort of the reason that I keep going East. Start-ups as you see here are very different and the problems you see are very different from the ones you see...
— Tell me more about that.
— No, it’s true. The first time that I did a purely product design talk, the first time I do it — I’ve talked a lot about this and I talk about design and simplicity — but the first time I actually do a talk about this... I think if there’s one place in Europe that requires this is Eastern Europe and not necessarily Ukraine but Eastern Europe because people are very technical and you need to push them into realising that the technical part is not the most important part. There are other things that need to be balanced to make a good product. So, I mean that is the... That’s actually what I really like. So, I keep changing, I keep learning new things and I keep seeing different things and I don’t know... Each start-up is different. I mean the more you know the country, the more you know what to tell them because mentoring is not about something specific. It is about knowing how to talk with someone from that country because some people take specific things very badly while others don’t. I mean, what can I say? I’m here to help you. How can I say something that will let me help you that will make you see things?
It’s funny. When you talk to someone that does marketing, they see things very clearly and the consumer part very clearly but when you talk about the technology shit they just block. If you talk to someone that is very technical and you talk about how this product should be easier to use and they say, „No, but you don’t see! The competition has this and that features!”
I don’t care, no one cares about this. I was actually having this talk with this really, really nerdy guy in Poland and he was like this hard-core tech guy and he was like, „We’re doing this App to receive recognition to analyse a price or something like that”. So, I was like... How are you different from something like Lemon? He was like, „We’re better. We do more recognition.”
So, I was like alright... But how are you different and he stated, „That is the difference.” So I told him that I don’t give a shit about things like that because I don’t use that. So he was like in shock, „But it’s better!”
And I told him that it is not about having the best technology, it’s about what people want. Which is a very different conception. Depending on the people, depending on the background and depending on your profession, you have to change. They register it very different.
— Alright, if you look at all these programs all around Europe. Let’s say I’m a start-up founder...
— We’ve been here before.
— Exactly. So, there seems like there are lots of programs. So how do I know which one is best for me? Do you think you can split them somewhere, like where I can get the most value depending on who I am, what kind of projects I have and whatever experience I have. How would you explain the whole European...?
— The whole European ecosystem?
— All the accelerators basically.
— It’s bullshit.
— None of it helps you. Nagh, I’m joking. I think it is fantastic that we have that many accelerators. The thing is that you have to realise that accelerators in Europe are more like places where people gather and think in the same way. They don’t really work in a way that is accelerating people but more in a way where people can meet other people and other start-ups and do things.
— You mean they are different than from the U.S.?
— Yeah, very different... Accelerators in the U.S don’t work like that. They’re more about accelerating and less about meeting with other start-ups. The problem with Europe in many countries it is very hard to meet people and likeminded start-ups and in the U.S. it is not the case and so they focus on different things. Even though they call it the same thing.
— They are morally copy it from TechStars and YC.
— They copy without realising what the real problems are. That is a copy-cat thing. They don’t see that our problems are very different from the ones you have in the U.S. For example, one of the things would recommend people, if you want to go to a good accelerator; I would look for the follow-up.
— One of the things that a lot of accelerators are failing at is that once the start-ups get out, what is happening? Are they wasting money or are they raising money? Who are they raising money from? How many times are they raising money? Are they getting a lot of customers or not?
— That is what a lot of them are failing at. This is not about them entering and going through a three month, six month program... It’s about what happens next. The whole part of this is that start-ups are capable of raising a lot of money and getting a lot of customers and if at the end they don’t achieve that. Or let’s put it this way: there are some people that are better at it than others. So I know a couple of accelerators and I won’t say the name, but I know a couple of accelerators that have people that are very good at it. So the start-ups that went through that were capable of raising a lot of money. That was the goal in the very first place.
But from what I know, if you use this filter, you wind up losing 99% of all accelerators, like you end up with Screen board and Seat Camp and maybe a couple of more. The rest are just... I don’t know.
Let’s rewind to what I said. When you said what do you think about accelerators, I said ‘bullshit’. The thing is that one thing is co-working space, incubation space were you basically group and give people the opportunity to do start-ups and a very different thing is the accelerator. An accelerator is about synchronising investment and about future investment. That is what they should be doing. That is why it accelerates. I mean, it takes you from A to B and B is bigger and so you answer yourself... How many real accelerators are in Europe — very few... Very, very few.
— So maybe instead of copying this model should instead setup a space where you can go to work and do not take equity and just give some of them lectures...
— No, no, no, no. I think what they are doing is good. They are taking equity and they are helping you and they are kind of really accelerating you because you are increasing you knowledge. So it is actually working and the thing is that the real accelerators that you see in the U.S is about investment and about future investment and connections and that’s what you get out of it. So if that is not happening, you can call it an accelerator but it is not really what it was intended to be called.
— So basically you can say... I think you already said that... Our European accelerators basically accelerate your knowledge and your experience but not the company or the business you are trying to build?
— Yes, that is it exactly. But it is logical. I mean, I’m not saying it is wrong — it is logical — because we never had that in Europe. You know, people that are 25 have never experienced that, so going through and accelerator gives you that part. Which is what the American’s have and in other places have but we don’t have. So you are gaining that part which is like the previous step to getting the investment. So the question is — who is helping with the next stage? Ok, so you know the stuff now... Now you know how to deal with a start-up. Now what? Now you need to go out and to talk to customers. I need someone that can give me the contacts; I need someone that can give me the brand awareness to reach out to people... I need someone that can European and International Contacts to raise $1 million — that’s what I mean. That is exactly what I mean and that second stage is what I’m not seeing in Europe. I’m seeing the first one and that is good. They call it accelerators and fair point, it is semantics... Whatever... It’s semantics.
— Ok. Let’s change subjects and talk a little about your own start-up, since you are a founder. So tell me, why are you doing this and what is the point?
— It is actually...
— What kind of hard problems are you trying to solve with this?
— I’m trying to fix a really hard problem, which is that people do not know how to communicate and we’re trying to help them out with that. No, it’s funny because this is not a change of subjects. It is basically an evolution of what I was saying. So one of the things I realised was that there was a real problem and that there was no one helping in the next stage.
I said that the number one thing that I am seeing with the start-ups is that when they get out of the acceleration programs, they do not know how to do PR. Before, they were using the accelerator brand to get themselves known but once you get out, you don’t have that. They don’t train you to do that and once you get out you go, ‘Now what? How do I reach people? Now how do I talk with the media and I decided that for me there were two things that were very important.... One was that start-ups need that and regular solutions like PR agencies are too expensive for start-ups to get and the other one was that I keep saying: if you really want to do this in Europe, you need to operate in more than one country. If you just stick to your country, you are going to fail because it is not big enough and investors are not going to put in a lot of money and you are not going to make a lot of money if you sell it. So if you really want to make it big, you have to operate in several countries, which is, let’s say the drawback of being in Europe. If you are in the U.S. your market is so huge that you don’t need to do that. But here you do need to do that and so I said — ‘Hey, I’m an engineer after all... Wouldn’t it be cool to have a system of where I basically say what I am doing and I want to broadcast this to all of Europe?’ You know, instead of going country by country, learning who is writing about this stuff and who I should talk to. The system already knows that and basically analyses what you are doing and says like you know... This company that I was talking with was talking about diets. They do a diet App. Ok; I’m going to put you in contact with maybe the bloggers or the journalists that talk about diet and health in these countries that you told me you want to be in.
So it is basically doing something automatic that right now we have to do by hand and it takes time and it takes money.
— Like a marketplace? You have start-ups, media, publishing houses and bloggers?
— Yeah, I would describe it more as a matchmaking platform. It is like dating. You have start-ups that are looking for a partner and bloggers that are looking for a partner and you are connecting them in a smart way. So instead of broadcasting to everyone, you are basically reaching the right person.
— So, how do you make sure that there are bloggers and press on the site? I mean, you can attract start-ups and that’s not really a problem...
— You would be surprised... Actually it is harder to attract start-ups than it is to attract bloggers. The thing is that there is a lot of start-ups that think they do not need PR There’s a lot of start-ups that especially don’t know how to write. So this is interesting because you were asking: What kind of problem are you solving? Actually, the real problem is not connecting both, that is kind of easy to do. The real problem is how do you ensure that the stories that the start-ups are putting out are good and that is hard. It requires you to teach people how to tell a story and that is why, my friend, it is fucking hard and why we are doing a lot of storytelling workshops and things like that... It is not easy. I believe it is hard to have a clear idea of what you want to say. A clear idea of what kind of message that you want to send and so, it is really a challenge to build a platform to help people with their writing. You essentially have to start with guiding them through the process that: this is too long, this doesn’t make sense, you’re using too many words that are useless and don’t convey any meaning. You know that is hard. How do you build that? It’s not easy. How do you make a platform that helps people to write better? So that is a challenge.
— Ok. I think we will wrap up the interview and on a closing note, I just want you to say something to our fellow entrepreneurs here in the Ukraine... I mean I know this is probably your first time here... Right?
— So, you probably don’t know much...
— I actually know quite a lot by now.
— So, tell me a little bit? What do you know?
— Well this is going to be... I’m going to be very unfiltered here.
— You can edit it after but the real issue that you have here right now is corruption. It’s the problem and I’m hearing this over and over and over again in start-ups here. It’s like, we get investment here from people here or in Russia and when we do it right and the company is successful, instead of getting our real cut, we are being squeezed out by investors and not getting anything.
— It’s not corruption; it’s just dishonest people isn’t it?
— No, but it’s corruption in the sense that even when you have a legal contract that says, ‘the other thing’, they are finding ways and loopholes to keep the money and I think that is really bad for the ecosystem because the thing is that the ecosystem grows when you have an entrepreneur that joins an investor. They make a good company, make money and the investor makes money so that he can keep investing. The entrepreneur makes money, so that he can not only start a new business but invest in other companies.
That is how you create a healthy ecosystem. If the entrepreneur doesn’t make something or any money, then he cannot invest in any companies and he cannot start another company. So basically you keep the money in the same investor loop and you need to break that at some point.
So my suggestion here would be that if you want to make a start-up here, make sure that you register or incorporate the company in a country that allows you to be protected by that. I’m suggesting that Ltd. in the UK is the new Delaware.
— Really? I mean like, I have some friends that are doing start-ups as you can imagine and most of them are using the Delaware Corporation in the U.S?
— Yeah, no, either U.S or if you are in Europe, Ltd in the UK. That is the thing, either way you are protected and no matter what they want to say, you will settle it in a court in London, so you can still screw me — there is shady things — but the thing is you are way more protected. You can live here and you can basically have the team here...
— Any bright words for the closing?
— No you tell me, I’m very unfiltered. No, Bright words. I think there has to be some investment to getting to the universities here and telling people that they are capable of doing something else than cloning something from someone else. I think there is not a lack of talent here, the talent is incredible here. You have a lot of people that are very talented and the problem is that most of them just think that their options are working for a big corporation or doing software at a software house. They don’t realise that they can do their own start-up.
This is just something that they don’t think about and so we need people going to university, fighting with academia and that is going to be a nice fight. Telling people that you can do something else and especially, I think you should move around. Moving around different countries, Ukraine is looking too much towards Russia and hey that is a massive market — don’t get me wrong. But there is a lot of interesting markets looking to the West. Especially very close to the Ukraine. You have Romania, you have Poland, you have Germany and instead of putting all your eggs in the same basket, if Russia goes down, then most of the companies here go down. That is the whole point. You need to diversify. So try and move a little bit more around Europe and learn English and hopefully that is pretty much straight forward and move around and you’ll see the opportunities.
I think a lot of people from around here, when they travel, they suddenly see that this ‘stupid project I did at university’ — no one else is using it in Europe and we can do an App that does this or we can build our whole company around this and really sell it.
Actually there are companies here that are using IP; they are using papers from the 80s and the 90s, mathematical theories that are being used now to deploy applications that come from 20 — 30 years old papers.