On Thursday, June 24, 2021, founders of the start-ups Ava, GetYourGuide, Luckabox and Amorana shared their personal experiences from the entrepreneurial world and how they overcame obstacles – live on site at Impact Hub Zurich. The audience listened to the discussion fully concentrated. Anyone who wasn’t there, has missed something.
»start the talk« held for the second time
For the second time it was time to “start the talk” – a discussion format by Previon and Badertscher Attorneys at Law that presents insight stories from the world of entrepreneurship in a small, personal setting. What also makes the format special in these times: “start the talk” is a pure live event – without the possibility of remote participation. Angela Fioroni (Previon) and Piroska Poltera (Badertscher Attorneys at Law) hosted the evening.
Top-class guests from the start-up scene
The four guests are founders of start-ups that have become notable players in the Swiss start-up scene in recent years. Accordingly, the four were able to share very exciting insights with the audience:
The 12 biggest takeaways
1. The beginning: Addressing a real need
All four start-ups were founded by the motivation to solve a real problem that the founders have either experienced themselves or have encountered in the market. They see this outside-in perspective as an important cornerstone for building a successful start-up. Even if the original goal may have been an early exit, you should not make the success of your own company dependent on this alone and have patience if it takes one or two years longer than planned.
»A start-up must address a real need.«
2. Sharpening the focus again and again
Founders are often people with many ideas. Therefore, distraction is often not far away, Tobias Rein told us. An important learning here is to keep zooming in on the big picture and to sharpen the focus, Lukas Speiser told us. If you do take a direction that doesn’t pay off in terms of the overall vision, it pays to react quickly and correct course, said Aike Festini, founder of Luckabox. Pascal König confirmed that Ava had a strong technical focus, especially in the early stages, instead of focusing on the market need.
»At the moment of launch, you still have to be a little ashamed of your product, otherwise you’re too slow.«
3. Being fast on the market is more important than having a perfect product
Pascal König went on to talk about a problem that many of us probably know: It is part of the Swiss mentality to first want to develop a great, perfect product before testing it in the market: »At the moment of launch, you still have to be a little ashamed of your product, otherwise you are too slow.« The proven »fail fast« approach applies here.
»Founders have lots of ideas and get distracted easily. Laser-focus is something you have to learn.«
4. The right founding team is essential
Having the right co-founders on board sounds logical, but it is especially important because it is difficult to change later. According to Pascal König, one should take a lot of time for this and rather do the vesting* over six years instead of four. He added here that technical, personal and gender diversity are great assets – combined with maintaining trust and shared core values at the same time. The panel guests emphasized that pragmatic problem-solving behavior within the founding team is very important.
*Vesting: Vesting is a mechanism by which the company can withdraw a portion of a founder’s shares if he or she leaves the start-up early. This is intended to prevent the founder from participating fully in a successful exit years later, even though he or she has not contributed to the success over the entire period.
»Different types of diversity in the founding team are an advantage: technical as well as gender diversity.«
5. The right incentives bring the right talents
Finding the right employees is a challenge for any company. Although employees in start-ups often want company shares, this is usually reserved for a few who are central to the start-up. Employees should therefore be intrinsically motivated and not put salary at the top of their list. »Too long salary negotiations usually show that there is no match,« commented Aike Festini. However, she pointed out at the same time that the start-up must also offer something in return: For example, healthy company values and an environment where people enjoy working. Tobias Rein’s experience is that GetYourGuide already has to pay higher wages because they are no longer really considered a start-up. Ava moved part of the business to San Francisco in the US a few years ago. There, entry-level wages are lower than in Switzerland, but the wages of highly qualified professionals are far above the Swiss average. Two panelists pointed out that tech specialists who accept lower wages because they think it’s »cool« to work in a start-up, don’t always have the necessary willingness to perform.
»Some want to work in a start-up because it’s cool, but don’t want to put in the work required.«
6. Financing rounds I: Working longer with angel investors
A particularly large number of learnings were exchanged on the topic of financing rounds. For example, it can be worthwhile to work with business angels for a little longer, as the entry of a venture capital firm changes a lot in the company: the day-to-day business becomes more serious and there are more structural requirements. Angel investors often bring »smart« money to the start-up and are motivated to build something together with the founding team. Similar to the selection of co-founders, a careful selection is also important here.
»An investor chooses you, but in the same way, you choose the investor.«
7. Financing rounds II: The focus varies from round to round
Tech companies in particular often have six to seven investment rounds. However, the focus of investors varies from round to round: sometimes it is technical aspects, other times product market fit. According to Ava, preparation should begin at least nine months before the next planned financing.
»You have to be able to feel comfortable with investors. Go for a beer together once in a while.«
8. Financing rounds III: Thinking in B2B funnels
Pascal König introduced a particularly exciting argument: He views financing rounds today like a B2B marketing funnel: At the beginning, you have to talk to many potential investors. The conversation then deepens with some of them, but the term sheet is only sent to a few at the end. Most of the time, due diligence does not take place, so you have to fill the funnel at the beginning of the process and have as many conversations as possible.
9. Company valuation: Trend towards smaller rounds
Just 10 years ago, often large financing rounds with complex conditions were conducted. Now there is a trend towards smaller rounds with leaner conditions. Another learning is that good investors have no interest in founders having to give up too to many shares of the company. Amorana, for example, has a very good relationship of trust with lead investor Cédric Waldburger.
10. Control the narrative even with negative headlines
Negative headlines are also part of the business and shape the experiences of founders. Aike Festini advised to absolutely control the narrative. This means: for the media, it is better to make a comment than none, to think it through well in advance and, if possible, to read the article again before it is published. However, even with some experience, this is still a balancing act, because you never know how the readership will react.
11. The pandemic brought opportunities and risks
The panel experienced industry-related opportunities and risks in particular: While the Corona pandemic gave e-commerce-focused companies like Luckabox and Amorana a real boost, the travel industry struggled with enormous drops, which GetYourGuide felt particularly strongly. The short-time work and subsequent layoffs were painful for the employees, but also for the founders. Ava also had to stop a financing round and cut costs. But then again this time allowed them to sharpen their focus and once more become aware that Ava should become a profitable company.
»After people bought pasta and toilet paper during the pandemic, orders exploded at the Amorana sex store.«
12. Every mistake is a great opportunity to learn
The closing words came from Aike Festini: »Every mistake is a great opportunity to learn. Even if it hits you hard, don’t be too hard on yourself. You will come out of the situation stronger. And ideally, don’t make the same mistake twice.« and Lukas Speiser: »If you have everything under control, you’re not fast enough. Adjust things along the way, because at the end of the day you haven’t failed, but you know what the next step is.«
»Every mistake is a great opportunity to learn.«
A sincere »Thank you«
On behalf of Badertscher Attorneys at Law, we would like to thank our guests Aike Festini, Tobias Rein, Lukas Speiser and Pascal König for the lively discussion and the many personal insights into their wealth of experience. Thanks also go to our partner Previon for the cooperation. The next date for »start the talk« will be announced shortly.
Follow us on Linkedin and become the first to hear about our events and more insights from the world of Badertscher Attorneys at Law.