5 Observations About European Startups

For the past 5 months, I’ve been living in Italy starting my company, FlowsBy, at the Techpeaks Accelerator. I’ve had the chance to work with some amazing people from 19 different countries, right here in Trento. During August, I also had the chance to visit iCatapult’s accelerator in Hungary to speak to their new class of startups.

There was no end to the shock when I told people I was going to start a company in Italy. “So you’re leaving the second biggest startup hub in the US to go to the middle of nowhere Italy to build a company. Makes sense…” “Does anybody even work in Italy?” There was also lots of encouragement, but I also think those people saw this as more of a sweet 6 months “working” vacation and told me to have fun and “YOLO”. Not quite what’s been happening.

For me, a major reason I chose to come here was to get out of my comfort zone. We are incredibly innovative in the US, we have lots of things going for us. But, at a certain point you forgot there is anything else in the world but the US. I got very wrapped up in my own way of living and working, and I got complacent. I hate being complacent. It doesn’t force you to work harder. It doesn’t force you to be creative. So I came here not only to work, but also to learn how other countries work and think and live.

After 5 months, a few things have stood out to me about the startup community in the countries I’ve been familiar with here. Most of this relates to Italy and southern Europe, since that is what I know best. None of this relates to Germany, Switzerland, Austria or any countries up near Sweden, Finland, etc since I haven’t had the pleasure of meeting them yet. 

Europeans are great problem solvers

When I was in Hungary at the iCatapult accelerator, one of the participants asked Zoli Piroska, a question.

“What’s the difference between entrepreneurs in Hungary and entrepreneurs in the US?”

Zoli’s answer hit it on the head for me. He responded that Hungarians are great problem solvers, but Americans were great executors. I’ve also seen this in Italy and other countries as well. Europeans are used to dealing with terrible bureaucracy, people not wanting to do their jobs, and everything being closed on Sunday (this still gets my goat). They have been problem solving their entire lives. Every time I got a bit stressed out from some bureaucratic BS at Techpeaks, my cofounders from Rome would be calm as ever. “Don’t worry, we’ll take care of it.” As mafia as that statement sounds, that’s what Europeans do. They work around the problems with a calm and grace we don’t have in the US. We’re used to things working, and when they don’t we get stressed out or pissed off. Europeans on the other hand, are used to almost nothing working, so they’re immediate reaction is to go into problem solving mode. This is a wonderful trait to have in cofounders, and I’m really lucky that both of mine have it.

On the other side of Zoli’s statement, he said Americans are better executors. I have to agree with this. In the US, we have the motto of “get shit done”. We’re incredibly efficient so that we can get more done in less time, and we know how to prioritize. I’ve seen quite a few startuppers here get hung up on things that just don’t need to be done now, or are a lower priority. Some of this is just lack of experience, and some of it is the environment they live in. I was standing in line at the grocery store the other day as the checkout lady slowly read every one of the 200 items in front of me and then commented on them to the purchasers. It was my own personal hell. Life tends to move at a slower pace in Europe, and it’s a wonderful pace if you want to relax, but it takes a toll on the work that European startuppers can get done. When the services you need to operate are closed, or people don’t care if it takes 3 weeks to get you a document, you are forced to move at that pace.

There is a different way of speaking

On the topic of inefficiency, one of the biggest challenges for me working with Italians has been learning their way of speaking. Not the Italian language, but the manner in which people speak. In Italian, there are a lot of pleasantries that are common practices. Some of these pleasantries don’t even exist in English, for example the formal “you”. For the others, we have similar ways of speaking in English, but most people would never talk like that. We prefer to get to the point quicker and be direct (without being an asshole). It’s something we’re taught in writing and speaking from an early age. Unfortunately, this can be seen as incredibly rude to any latin language speaker. I’ve run into this problem a few times here, which has made incredible strains on working relationships. Worried that I was being incredibly rude (because I know I can be short sometimes) I talked to people who worked regularly between the US and Europe. They experienced the same problems I have about the language differences, and told me I need to learn to adapt. So everytime I’m about to say something I normally would, I take a breath and really think about what I’m going to say. It’s hard. It’s not natural to me. I find it really inefficient to take 20 minutes to say something I could in 2 minutes. But it works and it’s something you have to do if you want to do business with people in latin speaking countries.

On my team, we’ve come up with our own working language. We all speak English, sometimes there’s Roman thrown in (and sometimes I understand it), and every once in while my cofounders will speak Italian and I’ll answer very slowly in Italian. But the most important thing is, after a lot of conversations, that we found a way of communication that we can all respect, knowing that we come from different backgrounds. That’s critical.

There are fewer women in startups than the US

One of the more disappointing things I’ve found about European startups is that there seems to be fewer women here than in the US. Out of the 65 people in Techpeaks, only 6 of us are female. That’s a damn low number. I’ve met a handful of other women cofounders around Europe. One I met at the Mind The Bridge Bootcamp, where she was pitching her first startup with another female cofounder. She is originally from the US and lived in Milan for the past 7 years. She asked me why I think there are not more women founders or women even working in startups. I’ve also heard this question from 2 really great women cofounders in Hungary. It’s a hard question to answer.

One of the reasons is that we don’t tell our young girls it’s a possibility for them. But, when you’re older and you’re thinking of entering the field, it’s not easy. I’ve heard it said “misogyny is a full time job” for developers in the US, but it’s doubly so here. I don’t think Europeans intend it with as much malice as some of the brogrammers in the US, but they’re not used to working with women. I’ve heard so many conversations here which would end up as an HR nightmare at home. Also, a lot of things that I’ve heard developers say at home in general about women, have been directed solely to me by peers here. It takes it to another level, that is incredibly uncomfortable.

One of the advantages we have in the states (which shocked the Hungarian founders) is that we have groups like New York Tech Women and Girl Develop It, that were driving initiatives to get more women into the field and also support them. That support would do women well here. In order to include more women in the startup world (which can help you be more successful) I think many European cultures need to first recognize this as a problem, then learn to be more open to women in the industry, and definitely women leaders.

The Startup camaraderie needs some help

One of the things I love most about working in NYC, is that I know there are so many people out there who support me and want to see my succeed. We go to events together regularly, we run into eachother at meetups, and we always ask “What are you working on? How can I help?” This camaraderie makes work enjoyable and motivating at home. I think this is what makes us a powerful nation for starting companies. That’s one thing I’ve seen missing from Italy. Silicon Valley got to where it is today because of the community. When I first visited San Francisco, the whole community was buzzing with startup events, meetups, and people who were doing interesting things. Everyone I talked to was willing to sit down to have a coffee with me, introduce me to someone, or invite me to an event. It’s a magnetic place, and if you are in startups, you finally feel like you’re home, surrounded by likeminded people.

Italy, and Trento, has a long way to go to get to this place. Bringing in startups and entrepreneurial people is a great way to get started, but a true community has not formed yet. One contentious debate we got into with a community of startuppers in this area was on Facebook. We had been asking people in “Startup Spritz” to help us out with sharing surveys, giving us feedback, and just telling them what we’re working on. Some of the members of the group (not everyone) went on a rant that they shouldn’t help us and we weren’t “contributing” to the community so we don’t have the right to post. Meanwhile, one of the Techpeaks requirements is that each one of us does 40 hours of work in the startup community to help leave some knowledge and work in Trento. So the reaction in the group shocked me, as we had talked to these people and exchanged ideas before.

I’ve always been of the mindset of pay it forward, and if someone asks me for help, I will help. Then, when I need their help at a future date, I don’t hesitate to ask for it. This mindset just isn’t dominant here yet. I was really happy to see after this incident a lot of Techpeakers felt the same as me. We help each other out, we don’t expect things in return. We know that we’re a community that will support each other, and that lets us thrive.

It is expensive to start a company here

I am certain that the entrepreneurs in Italy are doing everything they can to make their companies happen. To some extent, I think they are also more driven and passionate about what they’re doing than some people in the US. Why? Because it’s damn expensive to start a company here. You have to shell out so much money, jump through so many bureaucratic hoops to incorporate in Italy, that you better be passionate or crazy to start a company here. Let’s compare:

USA: In the US, you can incorporate in Delaware for $239. If you make no revenue, you pay no taxes. If you do not personally get a salary, you do not pay any taxes. So for these costs, you pay about $239 to start a company, and $225 to maintain your company while it’s not making money.

Italy: In Italy, you have to go to the notary public with lawyer’s documents to incorporate. The fee for the notary was €1700, the fee for the lawyer is about €1500. You also need to contribute share capital, which was just lowered from a minimum of €2500 to €0, thankfully. If your company makes no revenues every year, you have to pay a flat tax determined by the gov’t, which we believe will be around €4000. If you are a shareholder for a company, but you make €0 a year, you need to pay €4500 a year in taxes. So for these costs, you pay about €3200 to start a company, and €8500 a year to maintain your company while it’s not making money.

Many people who want to start a company in Italy, are asked to fork over their life savings to do it, so you better believe they are going to work their ass off to make it succeed.

 

I’m really happy I decided to come to Italy to work. Although it’s been nothing but a rocky ride, to say I’ve learned a lot would be an understatement. Entrepreneurs in Europe may be few and far between right now, but they are driven. The government and cultures make doing their jobs hard, and most of them want to come to the US where they can raise money and do good work. I hope that we reform a lot of our immigration laws so they can do just that.

For the US people reading this, don’t underestimate the European startuppers. I have met some really amazing, hard working people here. For the Europeans reading this, keep chugging, don’t be too proud to accept help, and learn about American culture if you want to go there. There is a budding startup community here, a few years behind the US, but give it some time and the right mix of people, I think we’ll see it grow.

Why You Should Wait to Pitch for Money

Pitching for money too early can distract you from creating the best product. I know mine is sort of an unorthodox situation, but let me tell you a story:

When arrived at Techpeaks our goal for the first month was to form a team, come up with an idea, and then pitch for 25K euro.  We had one month to do this. Just remembering everyone’s name was a challenge, especially with 3 Riccardos and 4 Alessandros.

Having done Lean many times before, I thought this month would be plenty of time. My attitude was “I can validate anything in a weekend, no big deal.” And it’s true – you can validate a problem rather quickly. The hard part is creating a business that solves that problem.

When you pitch to investors, they care about your business. How do you make money? How many people pay you money? We learned exactly what to put in pitch decks: problem, solution, business model, traction, team. If you look at these middle 3 parts of a pitch deck, you can see they take time. They take iteration to get right.

Pitching too soon doesn’t allow you the time to get traction and figure out what business model your customers respond to. In this early stage of a company, you should be creating or testing great product ideas. Pitching is a distraction. You can spend so much time saying “No that won’t work because we can’t make money” and pass on an opportunity to engage thousands, even millions of users.

After being together with my team less than a month, we created a pitch deck and got the 25K in the first shot, something not too common at Techpeaks. We had all the right materials: a strong problem, companies who agreed to test us, and a solid business model. After a month of creating tests and getting companies to agree to add us to their websites, we realized we were missing something: validation of our users. We spent a good amount of time before the pitch talking to one side of our market: the buyers. We needed this validation for pitching – it was the middle three parts of our slides. The response from them was really good, so we were encouraged to keep going. We received our funding and started building our MVP.

It wasn’t until a month later that we realized we neglected the most important part of our market: the users. These people were not the same as the ecommerce companies that would buy us. They had different problems. After interviewing tons of potential users, we found they did not have the problem we thought they did. We pivoted and found a different problem in the same area and we’re proceeding with that.

Techpeaks is unconventional to say the least. I know this can’t even be possible for most people, but if you think that you are far along enough to raise money, take a step back. Have you validated all parts of your idea? Do you have users? Are they coming back to your site often? Are you making money? If the answer is no, then this should be your focus. Don’t get distracted by money. Focus on your product, make sure users love it, and then find the money. Had we not been scrambling to make a presentation that sounded good to investors, we would have been validating and learning much earlier in our process. Just wait.

My Team Got Funded at Techpeaks!

I’m very excited to announce that my team, FlowsBy, was selected to receive the 25,000 euro funding from TechPeaks! We are tackling the problem of how to keep shoppers on your ecommerce site longer. My teammates include:

Riccardo Osti is from Rome, and has founded 2 Italian startups before, Naroomi and Startify.it. He is skilled in sales, business development, and cooking awesome food.

Alessandro Marchesini is originally from Verona area, but spent the past 13 years traveling and working outside of Italy. He’s adept at sales and marketing, specializing in international markets. He also loves squirrels.

Giovanni Gaglione is our star programmer from Rome. His expertise lay in Big Data, Sentiment Analysis, and not hearing the alarm clock ring.

If you’re wondering how the TechPeaks program works, let me explain for some background. Techpeaks is different from most accelerators because it’s a “people accelerator”. 68 of us were chosen from 40 different countries to travel to Italy and build companies. Most of us came as individuals. Once we arrived in Trento, we spent the first month mixing and mingling. We got to know each other, formed teams, broke teams, and came up with ideas of what to build. Once you have a team in place of 3-5 people, you can pitch to a panel of VCs and entrepreneurs who help Techpeaks select which teams get the grant. If you receive the 25,000 euro no equity grant, you can use it to build your company over the next 6 months.

So how did I get wrapped up with these three Italians? Well, you have to remember that Riccardo and Alessandro are excellent sales men – excellent. Picture this – it’s about 98 degrees in Trento. There is no air conditioning anywhere. When I walked out the door in the morning, I thought I was going to turn into a puddle right there on the street. After about 12 hours of dying in the heat, Ale asked if I wanted to escape the heat for dinner. HELLS YES I DO. So the three of them picked me up and whisked me away to Andalo, where it was a beautiful 70 degrees. We ate great food, chatted, and cooled down. They told me how they invalidated 3 of their previous ideas the day before by scheduling interviews and learning that their problems didn’t exist – the Lean in me was intrigued.

Then they told me about the ecommerce idea they had been thinking about. I was sold. I could see that this was a problem from my experience at OpenSky, and I thought it had great potential and presented an interesting UX challenge. We agreed to team up and flush out the idea more.

Over the next week, we called 25 different ecommerce sites and validated the problem existed. They were itching for a solution, and most wanted to sign up for Beta right there and then. We didn’t pitch at the next Pitch Day because we wanted to start crafting our MVP first. So we did more validation and set up our test. Two weeks later we pitched for the 25K and received it on our first attempt. The judges said out of the 9 teams they had funded so far, we had the highest score.

Other teams that have been funded at Techpeaks include: CiceroosMemeoirsMapNaut, Sparks, Rabid Fish, Genialis, and LearnPeaks.

I’m very excited to work with these guys, and am proud of how much we’ve accomplished over this short three weeks together. Within the next few days, we’ll be launching our MVP on a few websites to test our concepts and validate it. We’re committed to using lean methodologies to excel our business as fast as possible. If you’re interested in what we’re doing, I’m happy to chat and I can’t wait to post more information as our product evolves.

Why You Should Talk About Your Ideas

“Can you please help me figure out how to prove my idea with Lean?”

“Sure, what are you working on.”

“Oh, I can’t tell you. It’s confidential.”

I’ve had this conversation at least 10 times in the past year with an aspiring entrepreneur. They wanted advice and guidance on how to use lean with their idea, then refused to share what they were working on. One person wanted me to sign an NDA before we chatted… at a bar… at midnight. What??

People who do not talk about their ideas are at a sore disadvantage. Now I’m not talking about broadcasting your grand plan to a million people, but picking a few connections that you trust and respect can yield helpful advice and feedback.

I am currently validating an idea with my team here at Techpeaks. I’ve reached out to a few people back in NYC to receive their feedback and do a few interviews. Their insights have been inspiring and helpful.

Tim introduced me to the Jobs to Be Done framework and to help me align my idea around it.

Tohm shared his experience at his company and helped me think through the challenges and benefits of our current idea for selling to the potential customers.

Adam helped us streamline our goals and tests so we could focus on the technical feasibility of the project and not get bogged down by going too broad, too fast.

Jon and Pamela gave us a great way to test our idea very lean so we can begin starting experiments this week.

Some of my assumptions have been squashed. Some of them have been validated (so far!). It feels good to get the feedback, “Oh that’s a good idea”, but it’s been more helpful and constructive when people say, “Stop. The first part of that sounds interesting. The rest is crap. Focus on the beginning.” I find myself eagerly waiting for those moments to come up in the conversation.

So to those of you out there saying, “I can’t tell you what I’m working on, but it’s going to be awesome”… is it? Who is going to buy it? Have you asked your potential customers what they think? My advice to you is:

  • Do interviews.
  • Ask for advice.
  • Don’t broadcast your idea to the entire world, but tell someone.
  • Once you ask for advice, shut up.
  • Listen to what the person has to say.
  • Don’t get defensive, just explain your thoughts.
  • Expect criticism, it can only help you.

I’m overwhelmed by just how smart the people I know are. Thank you to everyone who has helped me, guided me, and have been truly interested in what I’m doing. I can’t wait to return the favor one day.

How to get a Permesso di Soggiorno in Trento

  1. Get told at 12pm that you need to pick up papers and go to the office in North Trento before it closes at 3pm.
  2. Panic.
  3. Grab said papers and figure out how to get there. Look up bus route. Decide to take bus.
  4. Get talked out of bus decision by two friends who say that it’s faster if we bike.
  5. Agree to take said bike even though you haven’t ridden one in 10 years. Convince yourself that it will be a piece of cake.
  6. Get on bike. Panic.
  7. Wobble a lot and get scared of cars.
  8. After 10 minutes, acknowledge this was a terrible idea and you’ll never bike again.
  9. Follow one friend the wrong way onto a big ass hill. Say “Are you serious, we have to go up that thing?” Get laughed at.
  10. Get off bike and walk it up hill.
  11. Start to go down one way street as mercedes benzes start flying up the other way. Run into a few buildings. Straighten up. Finish down the hill.
  12. You start to feel a little sunburnt. Take your hand off the handlebars to check. Almost fall. Grab onto handle bars like your life depends on it… because it does.
  13. After 35 minutes of hell in 95 degree heat, end up on street somewhere near the office. Check google maps for address. Have google maps tell you it doesn’t exist.
  14. Ask a stranger for directions in Italian. Feel proud of yourself for not screwing up that many words. Find out the street has 2 names. Wonder who the fuck named the streets in Italy.
  15. Arrive at office. Get into elevator that more closely resembles a death trap.
  16. End up at front desk at 1:45pm. Find no one there. Go ask someone if they can help you. They say no and that everyone else is at lunch. Wonder if they are going to come back before 3pm.
  17. Someone finally shows up in office. Get a piece of paper and told you need to wait for the person to get back from lunch. Wander over to the vending machine. Admire all the flavors of croissants it carries.
  18. Get called into get your papers. Have lady look at your papers once and then not talk to you again. Sign your life away. Get your papers and realize they put your first name as your last name. Have her draw a diagram and tell you in Italian “well we’ll see if they accept it or not…”
  19. Bang head against wall.
  20. Figure out you need to mail these things somewhere else. Get confused because you were told this was a final document. Curse all of bureaucracy.
  21. Wait for friends.
  22. Get back on bike and take different route.
  23. Route is completely flat and you get home in 15 minutes, quick enough to get a kebab and admire your sunburn. Figure you might give this bike thing a shot another time.

I promise to write things more relevant soon. I could have also title this “Why Melissa should not bike ever”