<!–:en–>How to Get Your Start-up Idea Funded by Venture Capitalists?<!–:–>

Below you will find the transcript of a video you need to watch if you are interested in start-up companies and becoming an entrepreneur. gogoexam

Hello! Hello everyone!

Thank you for coming! Last session of the day, of the two day conference. I hope you've had a great time and thanks for hanging in there with us.
We've saved the best for last. This is gonna be the best session of the conference. We have some superstar…

-No pressure!

We have superstar panelists here who have started companies, started multiple companies and invest and get more companies going. These three here. So we've got some great panelists.
A few things to start: there are two microphones out here and we want you to ask questions throughout. So I'm gonna start with a few questions. I'll be looking at the mikes to see if you're up there to ask questions, and we want to do that throughout the session. OK? So don't make me ask all the questions!

All right, let me ask you all a question: how many of you are not from Silicon Valley? Oh, awesome! How many of you are not from the United States? Awesome, that's great! OK. Great.

First let me introduce our panelists: Paul Buchheit, the inventor of Gmail, left Google and started FriendFeed. FriendFeed was acquired by Facebook. He stayed at Facebook for a while, then left and now he's a venture capitalist at Y Combinator, one of the premier start-up incubators in Silicon Valley. Joe Kraus, founder of Excite, one of the very first search engine portals on the web, very successful, merged with At Home so it became Excite At Home. Later the founder of JotSpot, really cool start-up that was acquired by Google. He stayed with Google for several years and now is a venture capitalist at Google Ventures. And to my right here, Seth Priebatsch. He's the founder of SCVNGR. He'll tell you a little bit more about that, but it's a really cool game that you can play based on location and go around and find things like a scavenger hunt — it's a really cool game! And SCVNGR is a portfolio company of Google Ventures. So, he's in the family!

So this session is about how to take an idea from a nights and weekends kind of project that you're hacking on, to a founded start-up and how you get there. All three of these guys have done it several times. So, I think that's the first question: tell us how you did that! How did you go from idea stage to hacking something, to finding another co-founder, to getting some angel investment, to getting venture capital? Let's start with Seth!

-Cool! Just want to make sure that I'm doing this right — can everyone hear me OK? Cool! So I started SCVNGR when I was a freshman at Princeton and started working on it while doing math and computer science and basically the lineage of the idea was about taking game mechanics and moving them into the real world trying to play a game literally everywhere. And taking it from that to actually being something that looked a bit more like a company was a sort of a messy process. I brought it to my computer science professor, this guy named Adam Finkelstein, I said: “Hey, I have this cool idea, there is a Princeton Business Plan Competition coming up, would you help me put together just enough to make it look like the product sort of works?” And we did that, we hacked together a few scripts and […3.53] and it was literally running on a server underneath my bed in my dorm room which if we had ever vacuumed, the circuit would have blown and the whole thing would have gone down. But I ended up winning the Business Plan Competition and that was sort of a key turning point for us and then I sort of made a leap of faith and decided to drop out of school 'cause that's what all the cool kids were doing at that point and I figured I should follow along and I think that's probably the best short answer I have to it. I found a couple of friends at college, I found one professor, I got into one Business Plan Competition which –you know– gave us some credibility and sort of took a leap of faith to jump into one of the incubator programs, we went with DreamIT Ventures and sort of started it from there.

- Great! Joe?

- For me… I'll talk about my first company, which was Excite back a while ago, in 1993 — I started it right out of college. We did the […4.47] we borrowed money from each of… We had six co-founders, we borrowed money from our parents. We borrowed fifteen thousand dollars total, and basically set up our shop in our garage. And the kind of two things that I would basically say… One is that persistence played a huge role for us in moving from nights and weekends to a founded company; and then, we just never gave up trying to get money. And the second is that opportunities create opportunities in ways that are hard to predict. Our founding cycle literally went like this: I got a book when I graduated, from my then college girlfriend, which was by a guy named Bob Cringely –still writes an online column– and it was called “Accidental Empires” and it was about a gossip history of Silicon Valley. In the book it said: “Tips from entrepreneurs, call me, I'm a cheap date”. I call him, we go out to lunch, he's interested in what we are doing, he says: “I want to join the company!” I said: “Great!” And we didn't know anything at this point, it was all brand-new, and we thought:

“Oh, this author wants to join our company, we've made it!” He eventually doesn't join, but he introduces us to his parent company which was IDG, big publishing company at the time, and they gave us our first hundred thousand dollars contract back in 1994, to put all of their archives on line. One of the people that I met there said: “If you do a good job, we'll introduce you to our board!” And so we did a good job, and they introduced us to their board and one of their board members happened to be a venture capitalist named Steve Quaid out in Boston at Charles River Ventures. Steve said:

“I'm kind of interested in what you guys are doing, but I need a west coast partner!” So he introduced us to a guy named Jeff Yang who was then at IDP, now at Red Point. Jeff said: “Yeah, I don't really know what to do with you…” But he introduced us to Vinod Khosla. We met with Vinod and his first question, unlike everybody else's, which was: “How are you going to make money?” his first question was: “Does your technology scale?” We said: “We don't know, we can't afford a hard drive big enough to test.” He buys us right then, 5 minutes later, a ten thousand dollar hard drive –which by the way in 1999 was ten gigs– and basically, that led to us getting a three million dollars financing from Kleiner Perkins in that case without a business plan. And the reason I tell that story is you could not predict from a book that I received from my college girlfriend, to a three million dollar financing from Kleiner Perkins, how that chain of events would have happened. But one thing led to another, opportunities created opportunities in ways I couldn't predict, and the fact was that we were persistent — to me it's the number one characteristic of amazing entrepreneurs: they persist! So that would be my nights and weekends transition!

- Alright, so… That's a great answer! My story… is a little different. It makes noise. Alright, so I was very interested in start-ups when I moved up here but I didn't know anything about them or anything like that so I did the only thing I could. Then again the idea being that you don't really know where the path leads, I decided I would simply join a start-up and then hopefully learn in that way. So, luckily the start-up I joined was Google! So that's just a simple matter of…

- Good choosing!

- Yeah! Joining Google as a start-up…

- Nice dart!
- And –you know– I was there for a really long time obviously, a lot longer than I expected. I never thought Google would really last, it seemed like a…

- A flash in the pan!
- I mean with AlterVista out there it was hard to see how Google could really make it.

– I was at AlterVista at that same time and look where I ended up!

- AlterVista was huge!

- I got you all beat there: I had the opportunity to buy Google and I failed to do so! So how about that?! How was that for an egg in the face?!

- Anyway, so I mean, that was obviously a great experience for me and –you know– I achieved my goal learning something about start-ups and also just meeting a lot of great people. So, some time after I left FriendFeed, I was getting together with friends from Google, first Sanjeev Singh who is the second person from Gmail, and started talking about start-ups ideas and also other people who we might be interested in –you know– having come on board with us on the start-up as well so we kept an eye on who else might be coming out of Google because there were lots of good people at Google. And ultimately ended up talking with Bret Taylor and Jim Norris who were also interested in doing a start-up and the four of us together finally formed FriendFeed some time later and so… Yeah, at that point I think that our story differs quite a bit from most start-ups because of our history which is a little bit unusual. You know, Bret had started –more or less started– Google Maps and Sanjeev and I had done Gmail. So we had an advantage over most start-ups in terms of being able to raise money and such. We actually tried to avoid raising money. And… But still just the idea of never knowing where the road leads and you always kind of have to go forward and –you know– certainly the idea of selling the company to Facebook was a surprise because they were always trying to buy us and we always said: “No, never!” And then one day we sold, kind of by surprise. And again, where I am now, in terms of Y Combinator, just kind of happened spontaneously out of that same process. Just meeting people, talking to people, in the case of YC I've actually been involved since 2006, initially just investing in the companies and then every batch I would invest in more and more companies and at some point I was already invested in so many of the companies that they just asked me to join full time and that's how I got to where I am now.

- So, Paul, you had four founders in FriendFeed; Joe, you had six co-founders in Excite; Seth, you did it by yourself! Why didn’t you have a co-founder?

- No one liked me! It was… No… Well, maybe! But I'm not sure that was totally relevant! For me, SCVNGR was by far the most successful, the most interesting start-up that I've done, but I had done two previous ones […10.53] when I was much, much younger and it failed gloriously. The thing just totally blew up. But I'd sort of been used to doing things by myself on that, and I think that a lot of the stories that you hear are about founders looking for founding partners and that's one very successful modeling, there's obviously a huge amount of data, a huge amount of stories to showcase the success doing that. For myself personally, I sort of wanted to get it to a stage where I knew at least what I was doing and had some level of proof of concept, and then went looking for really solid advisers and looking to build out a team really quickly. So by the time I started building out a team, we had…

You know, I knew what the product was gonna be, I knew what was sort of going to look like. It's obviously evolved a tremendous amount and continues to evolve, but for me the founding of […11.45] was something that I'm much more comfortable doing myself and then realizing what I'm being weak at –sales was a big thing I was weak at, marketing was a big thing I was weak at– and finding the right people to help me do that but at a slightly later stage than looking for a founding partner.

- Actually for anybody who is out there starting companies, I talked to somebody about this last night… The data actually suggests and supports the notion that there's a positive increase in successful outcome as you add numbers of co-founders up 'til about four — there's just no data past four. So you are more likely to succeed as you add co-founders to your business. I don't know exactly… Nobody knows exactly why, but there is that positive correlation.

- We've surely noticed this at Y Combinator 'cause we have at this point –I don't know– three or four hundred start-ups and two to three co-founders seems to be the sweet spot. One is just very difficult at a lot of times because ultimately, start-ups end up having really difficult times and it's easier if you're not all alone when things are awful. And we are not really sure why –you know– going up –four, five, six– is bad but our sort of theory is that it's sort of an indication that there is no… That there is almost like a little bit of fear in the group. I mean, obviously, like, now I'm talking about both of our companies which worked out OK but we've seen that sometimes if there are that many people, it kind of indicates that none of them is quite as committed; they don't have what it takes to make it with two or three, and so they kind of get more and more people, almost out of fear.

- Paul, I believe Y Combinator doesn't accept companies that have one founder.

- Oh, no. We have some that do!

-You do?

- In fact, probably one of the most successful Y Combinator companies of all times, which was called Dropbox, was originally a single founder, and then he found a co-founder. So he was accepted as a single founder but he found a co-founder later on. But we have several single founders in every group.

- Joe, as a venture capitalist, when you look at investments, do you like it when there are co-founders, or several co-founders? How do you look at that?

- Well, obviously depends on stage but if we're talking about something early stage, the things that we definitely look for and that… We have a pretty broad analysis of a lot, a lot of companies and data and have found that, one, yes, there's a positive correlation between the number of co-founders. The second is that having worked together in the past is really important as a kind of predictive indicator of likely success. And that's just primarily: have you gone to battle together before, do you like each other at the end of it, can you communicate honestly with one another, do you resolve disagreements without just striking the middle ground and having the easy answer…

But often times, somebody winning an argument is actually more important than trying to kind of thread the middle. So, having worked together… And then the last thing that is positively correlated to success is –you know, this is obvious– but like, do you actually know the domain that you're pursuing? You know, start-up founders who would do their second start-up are actually no more likely to succeed in their second start-up if they're in a brand-new domain. So, like, for me, I did a consumer internet start-up in Excite and when I went to Jot Spot which was really focused on small domain size business, by the numbers I was at no greater an advantage having done a start-up before. Mainly because the market strategy is so much different — the way you sell, the way you market, how you understand your customer are so much different! But bottom line, in early stage companies, the stuff that we like to see: obviously, if you've done it before — that's great, multiple co-founders — is good, having worked together in the past and hopefully in a domain… operating in a domain that you understand and have some deep expertise in — those are all kind of obvious things but some of the stuff that we certainly look for.

- I look at co-founders as validation. If there are several co-founders, that means that more than one crazy person agreed that this is a great thing to do…

- And you cast a good reality distortion field over a large number of people, and that can be helpful.

- 'Cause there's lots of crazy people –myself included– who have ideas every day. But I think the validation of an idea is when you can convince someone else to drop what they are doing and join you in your idea… If you can get two or three people to do that, then that's pretty good validation that you might be on to something! And if you can't convince two or three people to drop what they are doing and join you, you should think really hard about what you're doing! And Seth and others are exceptions to that, but as an investor, I weigh that pretty heavily!
So we have questions here, so let's start over here!

- Quick question: so, any ballpark information as far as adding co-founders is increasing your chances by ten percent, five hundred percent? Also, you said there's no data past four, is there any drop-off sort of leveling off so adding one co-founder quadruples your chances but adding your fourth one is only a ten percent increase?

- Yeah, I don't know that data explicitly, this is actually a public research that's been done. Academic research has been done on this particular point… I don't know the name of the paper, but… And I don't know how to get you the name of the paper… Maybe out of the Google Ventures Twitter account you can tweet that particular paper that details the answers to that. And the reason there's nothing past four is that there just aren't many companies that start out with five co-founders or six or whatever.

- Hi! Today, what do you think is more important, traction or product?

- In my opinion? Traction, for sure! I mean, look, there's always the internal debate in a company: what matters more? Does the team matter most, does the product matter most, does the market matter most? And often times, I think, most people understand that it's an interplay of the three and that often times it's heavily dependent upon what stage you're actually making that evaluation. So a company that it's doing two hundred million dollars in revenue and fifty million dollars in free cash flow, well, their market matters a lot because there is an ongoing concern and you want to know how much expansion there's going to be in the company… Sorry! How much expansion of the revenue out of the market of the company there can be! Way down back to the early stage… What's really interesting… Has anybody read a book called the “The checklist manifesto”? No? I don't recommend it actually! But… 'Cause I can summarize it in a word, in like a few sentences — which is: people who are really expert at something are great at telling other people how to do it and really bad at following their own advice. So the classic example here is medical doctors, let’s say a pulmonologist! I can tell Don here: “Here's how I screen to see whether someone has lung cancer.” And when you watch what that doctor actually does, nothing related to what they actually told Don to do! And that's why pilots have checklists, right, so there is no notion of expertise bias. Well, the thing here is that if you actually ask and survey wide lots of venture capitalists especially in the early stages what's the most important thing? In the very early stages they'll all say “team”. And when you watch what they spend their time doing due diligence on — they do due diligence on the product and the market! So there's a mismatch between what people say is important and what they actually do. So the question as an investor is how do you create a system or a bias towards doing what you know to be important. So, sorry, longer kind of answer but in my opinion in the early stage, for me, it's all team.

- Thank you very much!

- So this is mostly, I think, an ethical question: how do you know when your product is too big for your current company? Like… We talked about Gmail specifically, how did you know that was right for Google versus striking it out on your own, whereas with FriendFeed that was something that… Social networking has always been kind of something that Google might do… How did you have the clarity to know that was right to do on your own?

- I think doing Gmail as a start-up would've been a lot harder — the resources required, I mean just in terms of all of the hardware and everything else, not to mention the brand value at Google. You know, are you going to trust your email to some company you've never heard of? I think that's less likely. By the time we'd lunched Gmail, Google was pretty well known and pretty well respected and people trusted it — people trusted switching over. If it was FriendFeed mail people would've been like: “Oh, I’ll give it a few years, all right?” So… And obviously, I mean there are other examples. Hotmail was a start-up but at the time they didn't really have any competition. So I think it would've been a lot harder to do that as a start-up because it benefited a lot from Google's brand and technology and everything else. Other start-ups, I think the… Having an attachment like coming from Google could even be a hindrance. You know, again, maybe… I don't know, I'm not going to go into the Google's social experimentation but certainly you can see where people might actually be more comfortable thinking this is like a new product and the ability to move very quickly and take unusual directions and not be hindered by a lot of the big company apparatus and Facebook –you know– might be a good example of that, you know, it's written in PHP which would've never been allowed at Google! But, you know, it's very successful! And I think if they were subjected to a big company process they wouldn't have been able to take the big bets, take the big gambles, you know, anger millions of people and whatever else it took for them to become number one.

Hi! Can you give your views on working with archangels versus working with the early stage VCs?

-Archangels are like super angels, is that…? You know –I don’t know– I think the lines have gotten pretty blurred. I don’t know that there is any simple answering. It really depends on how much money you’re meaning to raise, if you’re going to do a large series A or something like that, you’re probably going to end up with a standard VC. Also, in terms of how much you would have to give up if you’re going to do a series A, typically you will give away a board seat or maybe two board seats, you’re going to give away twenty to thirty percent of your company… If you’re doing a seed round with regular angels or super angels you might be giving away much less, and only sell off five or ten percent of your company. But typically you’re getting a lot less money that probably won’t last you until profitability or even maybe more than six to twelve months.

-I view it as: who do you fundamentally believe can help you build your business? Like, it’s… It comes down to your choice of who you want to help fund you. Should… In my opinion, not to base it all on firm, on position, on whether they fit super angel, angel, early stage VC. It’s fundamentally about having a good relation with that person and I’ve always used the “Caller ID test” which is: if that person calls you and you look at the caller ID, are you excited to pick up the phone? Or are you like: “Oh, crap!” And the investments that I’ve always kicked myself for, failed the “Caller ID test” but then I get greedy, I’m like: “Oh, it’s gonna be an awesome business!” And then invariably, stuff changes but I’m still getting the calls! And you know… So it really is fundamentally can people… Do you believe that you’ve got the people that can help you, give you advice and kind of steer you right? More than –you know– one bucker or another.

-So, Seth, you raised angel capital money and venture capital money — so you’ve gone through both processes. What kind of decisions did you go through choosing your investors? Or did you just take any money that would come, or how did you go through that?

-Sure, so, from our perspective we –you know– we went through an incubator Dream IT Ventures which was based in Philadelphia, is now based in Philadelphia New York and they are sort of… They are structured like a VC but they are really an angel. You know, there’s a tiny round, they give you 35K, they take 6 percent — sort of the standard model: you sleep on the floor, eat Raman noodles, build as fast as you possibly can. And then we basically had a choice to –you know– sort of what to figure out after that. I decided I wasn’t going back to school at that point. And we looked at the angels versus VC […24.16] our initial reaction was to go with an angel round and we were looking to raise about three quarters of a million dollars and we figured that was probably more of an angel size thing than a VC thing. But we went out, we talked to a bunch of VCs and what we found was… You know, we went the unusual round. I think, at this point, a lot of people are gone with the super angel round. We ended up going with Highland Capital, which is a large VC — they’ve got two or three billion dollars under management, and they agreed to do a tiny round! You know, they are not used to writing checks for that small amount of money — they’ve actually gotten into it a little bit more know. But we figured that if a company or a venture firm that is used to investing in businesses that are much, much bigger, was willing to spend their time with us, even if they weren’t putting that much money to work, that was probably a very good bet to us. And so we ended up going with them and they’ve since participated in our two follow-on rounds and they’ve been hugely helpful and we’ve now raised about twenty million dollars from Google Ventures and also Balderton Capital. And, you know, from our perspective, obviously, SCVNGR is the only serious company that I’ve really done but my recommendation would be that if you can get a large VC to put a small amount of money in you, the real value betting is the time, as you can get a lot of leverage for that, if they’ll do terms that are reasonably equivalent with what an angel might do.

-Hello! Question across the board: I was curious if you could speak a bit about what has kept you motivated over the years, both before and after your success — other than massive amounts of money!

-You know, when I did my second start-up, almost every employee that I was trying to hire, asked me this question! And the truth doesn’t sound… It is the truth, it’s just not satisfying for most people, but it is what it is! Which is: I love the personal relationships that you form in a start-up, when you get a group of people trying to do the impossible! It is the closest… I’m now married, with three kids, and like, I just don’t get to spend a lot of time with people that aren’t in my family and the kind of closest to that collision experience when you are spending a ton of time with people, there is this crucible moment — that’s what I get out of start-ups! And so, all of my closest relationships really come from the companies that I’ve done — because you go through these experiences where, like, literally you don’t have… We have this at Excite: you literally don’t have the next payroll in the bank and you try to figure out what to do! You go through these ups where celebratory experiences where something great happens, or something bad, horrible happens… So, for me at least, it’s the relationships that you form when you try to do these things.

- How about you, Paul?

- Yeah, I mean, I think that’s actually one of the things that’s in my mind — the big differentiator from start-ups versus some other environment is the extent to which you’re really close to the team and you’re kind of choosing the people you are around. Especially as the starter of the company, you literally choose the people you’re working with. But also, just the creative aspect of launching new things all the time and –I mean, I don’t know– that’s just fun for some people! And it’s certainly something that I think I enjoy most is that at FriendFeed, every day I’d go in, I’d write something new and launch it and just being able to get things out there that quickly… To have an idea and move from idea to implementation to like, having it out to the world where people tell me that they hate it or they love it or whatever in such a short period it’s kind of intoxicating! It’s just a lot more fun than most of the things that people… It’s more fun than –I don’t know– whatever it is that people pay to have fun! It’s more fun than most of vacations! You know, actually build things and lunch them, and that’s a big part… Obviously, there’s the flip-side — you know, like, at four A.M. you get called because a server is broken and you have to wake up and fix it! I never really cared for that part so much! So, there’s a balance, and… But even what I’m doing now, I get to be involved in the creative side of things because people come to me with problems, or –you know– we’re looking at a product and kind of explore solutions and the next time I talk to people a week later, they’ve tried it out and tell me it didn’t work or it did work or whatever, but it gets that same creative cycle of exploring the world and trying out new ideas.

-So, I’ve got a totally unconventional and not likely to be popular response to this one but SCVNGR is a company all about game mechanics and we’ve certainly… We’ve still gotten a lot of work to do but we’ve certainly done well. We’re two years in and we raised our last round in north of one hundred millions. So, we’re doing well! But we, and I very explicitly, try and manage my own motivation using mechanics and the way I do is lack of alternatives. Realistically! You know, you take out everything else that could possibly make you excited or successful or happy and you replace that with what you’re doing at your company! And if you’ve got…
-I love you!
-And if you’ve gotten… No, you’re not going to like this one, and it’s not popular, and it’s probably not recommended if you want to be happy, but it’s recommended if you want to be… If you want to build your company to be –you know– as big as you can possibly make it! You know, I build my own incentive structure, so I don’t draw a salary, I don’t have a super active social life, I left Princeton and I decided I was going to do SCVNGR! And that was it! And it’s the sort of thing that if you want your troops to fight hard, you burn their ships and they’ve got nowhere to go. And if you build yourself to have only that, then that is the thing you are doing and then you’re absolutely motivated to do it ‘cause there’s nothing else! And it sounds a little stark, and it sounds a little cruel –you know– almost masochistic but it’s really not! It’s almost like a zen-like state when you wake up in the morning and you know that there is absolutely nothing else in your life that you have to do, except build a company! And I’m in a weird state: I sleep at the office, I don’t have an apartment, I hand loads of laundry to my parents — like it’s a wonderful, blessed, bizarre life! But if you can do that, if you can convince the office to bring in breakfast and lunch and dinner so you don’t have to worry about making food, and you can remove all alternatives and everything else you have to focus on, then you will keep yourself motivated in what you’re building! And that is not going to be a super popular one, not going to get in a book anywhere but it definitely works!

- Great, thank you for taking the time to talk with us!

- Motivation is incredibly important in starting a company — it is everything! Motivation and competition! If you remember –you know– when you were kids and you played sports, team sports, and the adrenaline rush that you get form a band of brothers out there trying to defeat their enemy, and just practicing so hard and getting so committed to doing something, and then the thrill of victory when you actually win… Well, when you’re adults, you don’t have an opportunity to do that! The sports are gone, and for me, start-ups are like adults’ sports: you build a team, you go against the competition, you wake up every morning and you can’t wait to get there and to beat the competition. There’s nothing else like it! Once it’s in your blood, you can’t get away from it! Question over here!

-When you find a company that you’re looking to invest in, how do you come up with a number of what you think that company is worth? Do you listen to the seller or do you come in with a number and is a ten time sales, one time sales, value it on EBITDA?

-It’s obviously heavily dependent upon stage. So, again, if you’re investing in a late stage company with serious public comparable, it’s a much easier evaluation exercise. You might value it on a multiple of free cash flow, you might value it on a multiple of EBITDA, even value it on a relative of those things relative to its growth rate… But most investing by VCs is not that style of investing. Most investing by VCs is investing at a much earlier stage, with much less perfect information. Actually, I think that the… It is, in my opinion at least, more art than science evaluation team. And it’s subjected hugely to human dynamics — like, I’m a big poker player, I love playing poker, and it’s clear that, obviously, competitive dynamics increase evaluation pretty dramatically. Sadly, I think that most venture investors are subject to a huge set of hurt behavior and what I would call “FOMO” — fear of missing out. So, I think if you want to play the game against the investor, you’ve got to realize that investors have a –for some reason– a much greater fear of missing out on a great deal than a worry about striking out on a deal that they see in front of them. That’s very anti Warn Buffet — Warren Buffett’s view is there are no called strikes in investing; only hit pitches that you think you can knock out of the park. But it’s very hard in a kind of competitive environment for most investors to stay true to that! So… And then the last thing that I would say is that often times, investors through… I don’t know who’s read “Predictably irrational” but the notion of an anchor price… Often times, oddly, conversations around evaluations revolve around what the entrepreneur said that they wanted instead of an independent, like: “What do we think it’s worth?” And it takes some discipline inside investing rooms to actually create an evaluation from scratch without being anchored by what the entrepreneur said. So, to kind of flip that around: I would, if I were you, I’d mention a price!
-The second thing is just recognize the psychology and how competition plays into it. You got to be careful in a game in the sense that you don’t over optimize — if you find someone you really want to work with, then it’s really not worth jerking around because a ten percent premium relative to the chance of losing the person that you think will make the difference, isn’t worth it to the long run of the business. So, hopefully some of that was helpful!

-So, my friend always asks me to come up with a business plan and he will give it to some of his investor friends to see if anything would happen, but say you don’t know how to make a business plan and also that your idea is kind of out there and you don’t really… There’s no statistics to back your idea up, how would you go about getting your idea funded without a business plan? If it’s possible!

-So, no company that YC funds ever has a business plan! We basically get that the team is a big part of it, we just look at the idea and specifically does the team understand the idea? But at an early stage for kind of high-tech start-ups, there usually aren’t any numbers that you can look at. You can’t say: “This is going to be our revenue in year five!” When people do that, it’s all fiction; some people do that because they think it’s an obligation! But when you look at it, no one could’ve ever predicted what Google’s revenue was going to be in whatever year, right? So that kind of… Any time spent on that sort of a thing — that makes sense for a sandwich shop or something like that where the business is kind of predictable. If you’re starting something like Facebook, you’re not… There is no way you can predict any of those numbers! And so, ultimately just invest in people, at an early stage. Which isn’t to say that the idea doesn’t really matter, because if someone comes to you with a really bad idea, that kind of reflects on the person! Or, it might just be a very brilliant idea — which is always intriguing with bad ideas because they’re either bad or brilliant! That’s why you want to really talk to the team and find out — have they thought through the kind of the obvious pause? If your plan is give away free golf bars and you ask where they will get the money to get the free golf bars, and you get “Oho, I didn't think of that!” that would be a bad sign! But –you know– maybe they have a machine that makes golf bars, and then you can go: “Oh, this we can work with!” So, really, at the early stage, you don’t worry about a business plan – you just build a product and that’s really the most compelling thing: if you can demonstrate that you have something that’s useful, that people like. So, don’t spend any time on that, just build something, get users –you know– get traction if that’s possible and that will make you stand out!

- To jump into that: we wrote a business plan for the Business Plan Competition and never used it again! Highland never asked for it, Google Ventures never asked for it, Balderton never asked for it… I still have it and it’s really good looking and sounds super professional and it’s totally wrong, but –you know– I would say you should never write a business plan except for a Business Plan Competition! ‘Cause winning though it is useful, but they are the ones who really care!

-Over here!

-Hi! I’m interested in the field of intellectual property and the view of the founding, the part of intellectual property, patterns, trademarks, all these stuff. Should I walk into it… Do you consider it a plus, considering founding?

-You know, there are different views on this. My personal view is — no. Here’s why: I think that it’s really only valuable to any company that will acquire you because small companies have no ability to prosecute their patterns. Most of the time you’re walking in with pattern applications and you’ve got multi years before it grants – you don’t even know if the company is going to survive to that stage. And then last thing: most patterns aren’t actually foundational or fundamental in some way – they are implemental. And so they’re usually used more for defense than for offense: somebody sues you, you basically counter-sue, you’ve got that kind of competing claims, you do a free cross license. They’re rarely used to effectively… They are rarely used to affect the outcomes of competitors or other companies as a start-up. Now, Google, Facebook, Microsoft, somebody big buys you and you have something foundational — that will improve your valuation. But I think the chances for the most part are slim, relative to the ability of actually making a business of substance. So, it’s not a high focus. There are certain areas or it is more of a focus, but in kind of traditional, and certainly, kind of consumer internet businesses, no.

-Over here!

-My question is especially for Paul and Joe: I’m the founder of a small enterprise software company and need a lot of traction in a small niche and getting it going on a large market that is going really fast. When you look at a company like that, what are some things that turn you on and what are some things that turn you off?
-Well, at the stage that I invest is usually a very early stage and so, again, it comes down to team. And if the team believes in the idea, and if the team seems good, I just go with it! Because the assumption is you know better than we do! That said, enterprise sale is notoriously difficult. But I think the question you’re asking might be at a little later stage and more to Joe.

-Yeah, it’s tough at that level of pitch, it’s hard to give you kind of specific advice but my sense is… Where I would quickly dive in in that conversation is just — one: I want to understand the dynamics of the market that you’re selling into today; how are you selling into it: is it direct sales, is it indirect, is it over the phone, is it field sales; how you compensate the people; what’s the title of the people that you’re selling to. And then I would want to understand: is that pattern relevant to the pattern into this larger market? Or is it a new pattern? And I would also want to understand: is this going to require heavy lift with regard to upgrading the team? So, suddenly, the people who are really good at this niche market — are they the right people or are we going to hire a bunch of new people to attack this bigger market? So that’s the line of questioning that I would start going down at the level of detail that you've given me.

-Thank you!


Hi! I have a two bar question: it seems like the team is very important and also seems like a lot of the Google adage where the hardware is becoming less important and it seems start-ups are actually getting cheaper to start at this point — easier to take a risk. I’d like your views on outsourcing, basically –you know– now that we don’t have to pay the money on hardware, I’d rather invest in local talent and keep the team together and I’m just wondering how you guys feel about the cost of start-ups and how outsourcing affects that? Or shouldn’t it affect it?

-Outsourcing of what?

-Coding, in particular!

-Well, in the field of technology companies, if you outsource the coding, you’re basically outsourcing the thing that you do!

-The know-how machine!


-You see, a lot of the CTO will be someone local and then outsource the dirty work. You don’t agree with that? Is it an ethical…

-No, it’s not an ethical thing! It’s just that… I mean, sometimes that works, but I haven’t really seen a lot of examples of that! I’ve seen a lot of people try, and it can sometimes work if you’re really on them all. But the fact is that it’s very hard to get top quality developers, even when you’re carefully screening them, you go through a long interview process and you’re managing them locally. When you’re just picking up people off of –you know– a website, I think the quality that you’re gonna get just isn’t as high. Now, if the actual technology that you’re building is just something very basic, and that’s not at all fundamental –you just need to customize your WordPress temp or something– I think that can work fine. But if you’re building something where technology is the core part of the business, I think that you’re going to run into a lot of trouble.

-It’s a general rule — I don’t like it at all, early stage. There are always exceptions to the rule, in particular if this entrepreneur has a longstanding, previous working relationship with this group that happens to be offshore and they’ve developed multiple products together… The thing you’re dealing with at an early stage is you want a mind-melt between the team. And you want very high band with low latency communication between the team, and that is just really hard to achieve telephonically or over VC, or any of this things where you’ve just got time and distance… And no matter how good the technology may be today, it is really, really hard to get that kind of communication going. So, again, the only exception that I will see is somebody has worked with this team for ten years and they have developed multiple things together — then I’d consider it. Otherwise, I wouldn’t do it at all!

-Yeah, it answers that point actually — of the team being together. You know, at Google, if something became really important, we’d actually put all the people in the same room. Because actually having people be in separate rooms turned out to be a huge disadvantage in communication. And that’s because they are like, twenty feet apart! Right. If you put them on the opposite sides of the planet, it’s a whole other game — there is latency with time zone… It just mocks up the whole communication.

-I agree that’s…

- This is a little orthogonal perhaps but I’d be very interested to hear from each of you that, aside from your own companies, who do you think are the really hot start-ups to be working for, today?

-You’re talking to people who start companies — they don’t work for other people!

-I guess that actually the ones that look like they have –you know– big potential or are really solid, or whatever.

-So –you know– to throw in the plug here: if you weren’t going to apply at SCVNGR –you know– jobs at SCVNGR.com, then, I think the companies that are really interesting are probably the ones that you hear about a lot — but companies like Square, that are doing things in mobile payments… You know, we are a location based company, I think that mobile payments are going to be one of the things that tie –you know– social to making it actually work on offline commerce, and so, any company in that space –obviously Square is kind of the leader– I think it would be fascinating… I don’t know if you guys have any other…

-You know, it’s funny — and thank you Seth for giving me my thirty seconds to think! Because, again, as a VC you’re spending most of your time selecting what you hope are the best companies and then trying to assist them to make them successful, so mentioning something outside the portfolio, actually takes a lot of synapses firing. But there’s a company downstairs that I admire from afar — they’ve raised their money… It’s a mobile gaming company. I do some mobile gaming investing. And it’s called “Pocket Gems” and I just think they are on fire, I think they’re great. That category monetizes well. It’s a company that I happen to like — I don’t know whether anybody has ever heard of them but they are quite successful!

-So I think anything to do with mobile, location, social or games — those four things…
-I get that picture a lot — so, there’s a first slide: it’s mobile, social, gaming and location.
-So if you can come up with an idea that integrates mobile, social and games, go for it!
-And college!
-College, yes, that too!
-Another question?

-Unless the last panelist has any ideas?

-Yeah, I mean, I can name off the obvious companies, depending on stage –you’ve got Facebook and Twitter and Foursquare and those are all obviously really hot companies — but if you want earlier stage things, I actually don’t spend that much time thinking about the early stage companies that aren’t YC. I mean, I already mentioned Dropbox earlier — I think they are gonna be huge, as well as quite other few companies. But I don’t have any other examples that come to mind for you, unfortunately.

-As someone who views themselves as a young entrepreneur and has many, many ideas every week at least — what are some tips that you guys have for like, self-regulating your ideas and junking the ones that… ‘Cause often I’d be very idealistic and optimistic about — just because I’m in the moment of thinking about the idea. So, what are some tips about weeding out just completely obviously bad ones?

-I can answer this one — at least first. ‘Cause people come to me all the time and ask me exactly that question! And I tell them: it’s sort of like if it’s the only thing you can think of, if you wake up every morning and that’s all you can think about – then that’s the one to go with! If you have ten ideas and you think they are all kind of pretty good but not sure, or I’m not going to leave my existing job to go do this — forget it, don’t do it! It’s got to be an idea that you just cannot stop thinking about and you have to do it! When you have that feeling — that’s the one!

-I would actually argue with this — I don’t mean to sound rude! That, the profile of the personality that you’re talking about, that you have, is not complete as a successful entrepreneur! It’s not the idea factory! It’s paring yourself with somebody who is really good at focusing and getting a co-founder is incredibly important for your personality type! Most of the people that I know that are idea factories, are not the guys that are great at starting and executing their own companies, because they can’t stay focused on making an idea happen. And, again, persistence is one of those key things that makes entrepreneurs successful because, look: start-ups go through deserts, big deserts where nothing feels repeatable and easy. And maybe you’re getting a little bit of sales but it doesn’t feel like you’ve really figured out the real formula. An idea person like yourself immediately jumps to “What other ideas might we do?” And sometimes that’s good, but most of the time, that’s actually bad! Most of the time persistence does carry the day with a combination of exploring. And it’s that balance that is really important and the art of it. So, what I would say to you: get a co-founder that’s different from you, that can help kind of shape and pare down those ideas and kind of tamp down the factory.

-Yeah, thank you very much, that’s excellent!

-Just wondering like, how do you guys see about health, just like, your own health, in terms of doing start-ups? Do you sacrifice your health to I mean like…?

-Yeah, I mean, this is a huge deal. I mean, I don’t mean to jump in there already, but I’ll tell a personal story. I don’t want… I tell this only because I regret it. I had… I was a competitor ski in college, I had a huge ski accident and I fell three hundred feet down — a shoot through the rocks. I was lucky to be alive, and I blew up my knee. And I had reconstructive knee surgery and I had the surgery a week before we started pitching Jot Spot on a VC, Rocho — essentially we were going with the Rocho. And instead of delaying it, I did all the pitches and we got the company going and we kind of went, and I put all of my health stuff on hold. It took me seven years as a result, to recover from this fully! And so I made a commitment like, never again am I doing that! And it’s really tough because for me, what motivates me is my commitment to my team when I’m doing these start-ups, and so I did a thing I shouldn’t have done — I kind of sacrificed my own health in that particular case, because I felt so obligated to show up for the team. And that was just a bad choice!

-Yeah, I agree, I think it’s a very short term optimization to sacrifice your health, because you have to recognize all your abilities, your mental capacity, your emotional capacity to handle things is going to come from your health. So, if you’re extremely unhealthy, I don’t think you’re going to be able to persevere, which –as Joe’s pointed out– it’s kind of the key thing that you need to do. Are you going to be able to make it through that desert if you’re half dead? And it’s bad for the team too — I think you’re setting a bad example for everyone else, you’re kind of implicitly telling them that they should be also sacrificing their health, right? So one of the few pieces of advice that we give at the YC company for the summer… Not “few pieces of advice”… Few activities that they are allowed to do instead of spending all of the time working… I forgot what the other thing is! And then, go outside — get exercise, basically! It’s crucial I think — if you’re indoors the whole time you’re just going to get insane and feel terrible!

-I buy into the physical activity thing a ton. I would recommend if you’re doing a start-up, put yourself on a running regimen –or swimming, or biking, or whatever– partially to stay healthy, but partially because physical activity is an awesome time to be thinking about things or not thinking about anything and letting your mind reset. But also expanding that to your team — you know, at SCVNGR we have team hikes, we’re doing a two hundred mile running race next weekend with six of us. We are all hoping in a van and do a sort of relay from the mountains to the beach, two hundred miles and twenty four hours. And if you can keep the entire team active and healthy — you know, it’s no surprise, there’s a lot of data out there to show that people that are happy and healthy happier and more productive. And you want people to be healthy, and you want them to be focused and dedicated, but definitely healthy — and physical activities is a great way to help make that happen.

-Well, two good friends of mine in college… We created a product line for Nexgen, this golfing accessories and we actually won first place in the Business Concept Contest — so my question is, who should we talk to to get founding? What are good companies to… Like you! Who to talk to? I mean, we try to get funding to get it to the next step — manufacturing, prototyping, shipping, all that.

-One of the things you’ll find –at least at the firm level– is firms like to invest and the old adage is like, invest in what you know. And so, if you look through all these funds, all the angels — most of them have big portfolio pages. I would spend some time looking through and see if you see anything that is at least approximately similar. Like for example, Google Ventures has nothing in something that involves retail sales, or something that involves – broadly speaking, something non-technical. They are probably not a good fit in that particular case because you’re just going to be swimming heavily uphill, because –you know– VCs –like it or not– are pattern matchers based upon the limited amount of time that they have. Like, is this a pattern that feels familiar, where I can apply learnings from one experience to another to help accelerate the progress of the company? And so, for me… If I were you, I would basically spend time looking through the portfolio pages of a lot of different founders and narrow it down to approaching those that basically have something that’s an […53.54] in some way.

-The other thing you might try is just building the business on your own. I mean, I don’t know much about this golf space but I can imagine that it would be a lot easier to raise funding if you already had an established online business where you’ve demonstrated –you know, just running it out of your apartment or something– that you have a market.

-Yeah, we’ve made a prototype of the backpack, we’ve taken it out to markets and stuff, and we’ve estimated about fifty grand to complete the first thousand of backpacks after shipment. And we can’t do that on our own, so…

-This is actually… This is…

- You might be able to do it with friends or whatever.

- I actually… I would think there’s a broader point here, which I feel like is: often times we get pitches for businesses that are interesting lifestyle businesses, where people I think would make a great lifestyle business — but probably isn't a venture backed business. Where a venture backed business, again, you gonna want to see a return on your money and the high likelihood that there’s a multitude of buyers at almost every stage of the company.

-We know there is!
-But the thing is –you know– the question is, you also have to believe that the business has a chance of being huge. So, a lot of the times we run into big companies that would be our great businesses, if the person’s motivation wasn’t getting on the front page of TechCrunch. And instead the motivation was: I want to draw as large a salary as I possibly can and just have a business that throws off a ton of cash, but I don’t need to be –you know– on the cover of TechCrunch, I just want to have a great business! And so, often times… You know, there’s some counseling around like: look I like your business, it’s just not the right one to invest in, but make it a lifestyle business and I think it would be generating a bunch of cash.

-OK, so we have five minutes left, so we’re going into lightening round now. That means the questions are like fifteen seconds and the answers are like forty five seconds.
-How about only one person answers?
-Yes, only one person answers, forty five seconds, go!

-OK, so, Seth, you took money from Highland Ventures and you kind of closed with saying if you’re going to take money from a big venture fund –you know– a couple of billion dollars, you’ve taken like 250K from a couple of billion dollar fund and that’s a good way to go, but there’s a whole new side to this where if you’re putting yourself in a position where Highland isn’t interested or, potentially, one partner in that firm isn’t interested in doing follow-on round, then –you know– it can kind of kill your company. So, like, Paul, you guys, as I understand, you have a policy where you don’t do follow-on rounds — if you guys don’t mind just talking about that other side of that kind of investment.

- Right, that’s certainly part of the reason we do that, is because there is this issue if you do get one round from a VC and then they don’t join in the second round and then that sends a negative signal to other VCs because the people that know you best, don’t want to invest. YCombinator is… I mean, we give a small amount of money but the real value is actually the advice and connections and network and everything else. And so, yeah, as far as that, we don’t have any follow-on funding activities, so that there is no conflict of interest there, there’s no negative signal like: oh, we didn't choose to join in in that round; and we are able to help connect people with the best VCs.

- Over here!

- This might help this golf gentleman, but when do you know to look for investors and when do you know to throw your idea on kick-starter, and what are some pros and cons of each?

- So, I’ll jump in in this one: start looking for an investor as soon as one of them will give you money! That would be my general advice. There’s a continuing trend to bootstrap and to try and not take money and I’m totally in the opposite camp! If you can get money on good terms, it’s gonna make your life easier, the help it’s gonna give you is great, the credibility is awesome, and if you can bootstrap, then take the money and just don’t spend it on the things you would've been able to bootstrap — spend it on something else. So, as soon as is humanly possible and start trying right away!

- Hi! My new work in nights and weekends and putting some more to work… At what part do you worry about infringing some obscure IP and things like that?

- Never! Don’t waste your time! You are infringing an IP, there is no question!

- So, let me reiterate because the gentleman in front of me asked a question about bootstrapping but that was my question so I’m gonna ask it again: do we always have to raise money, because lately there is a trend about bootstrapping. Is it for real or is just a factor of the tough economic times?

- I think bootstrapping is for real. As an entrepreneur, look: I think the kind of macro trends out there, you've got large-cap tech companies, like Google, like Microsoft, like Facebook, like Yahoo, Apple — who've accumulated a massive amount of cash on their balance sheets, so, small acquisitions are things which those companies are likely to continue doing over the next two, three years. So bootstrapping really… The benefit of bootstrapping is it allows for relatively small acquisitions where you own the majority of the company to be really beneficial for you, and cheap for the company. So, they preserve a wide range of early exit options. Taking money definitely narrows the range of exit options because there is a higher hurdle now that you have to be bought at. So, I’m still a big fan of bootstrapping as an investor, because it lowers the risk of the investor investing, because you usually have more data to invest on.

- Last question, over here!

- I’m currently looking for one more co-founder. So, right now, it’s just myself and to be brutally honest about my skills, I think I excel most at product designs, and a product manager type of role. I do have a technical background and I can do the technical stuff but I feel I have more to do with product design and features. Do you recommend I look more for a person with a business background or a technical background?

-I think — I mean, it’s tricky to find anyone, right? But I think, improving your own technical skills is the thing to do right away and then probably… I mean, depends on what you’re building, obviously, depends on the market, depends on what are the needs that are going to make your business successful, but if there is a big technology component, I think that it is pretty important that your co-founder be also technical.

- Thank you!

- OK, we are out of time, thank you so much for staying with us and taking part!


&lt;!–:en–&gt;VOOMY IT-Park to open by end of 2013&lt;!–:–&gt;

In Kharkov, a business incubator for IT-specialists will be created. This was announced on September 7, 2012 at the closure of the international economic forum “Innovations. Investment. Kharkov Initiative” by the chairman of the Kharkov Regional State Administrator Mykhail Dobkin.

According to him, it has already been found and restored the building area of 14 thousand square meters for the business incubator, including all support services for the employees of IT-sphere and for programmers. “The building with its private area is under reconstruction to create infrastructure for the employees of IT-sphere There are all necessary conditions for work, commencing from very powerful computers and finishing with the baby-sitters, who will take care of children. Due to specific nature of their work the programmers can not pay enough attention to the children, “- said the governor. According to him, the project will be the first one of this kind in Ukraine. “At the beginning of the next year we’ll launch the campaign. Kharkov is famous for lots of highly skilled programmers who work for many companies, but unfortunately they do it in uncivilized manner, actually being not in business, but in the shade. I think that

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our software to be developed in Kharkov already in civilized conditions, will be in demand with all major companies “, – said Mikhail Dobkin. As was reported in the course of the forum by Vitaly Stavropolskiy, the project manager of “Voomy IT-park”, for the business incubator a building on pr. Moskovsky is under reconstruction. For a few decades there was located a research institute. The building will contain approximately 50 zones corresponding to lifestyle of programmers. The work area will take no more than 60% of IT-park – it will be not only for work, but for learning and having fun as well. In particular, there will be functioning classes and interactive conference room. “It is necessary to bring a creative environment, which promotes the formation of new ideas”, – said Vitaly Stavropolskiy. The building has already been purchased. Now, a reconstruction project is being developed. “Upon repair and construction work we will continue to communicate with potential partners, with those organizations that will order services in our park, as well as investors and venture capital funds that will finance projects”, – said Vitaly Stavropolskiy. A mini version of VOOMY-IT Park starts on March 1 already: VOOMY-IT Park to launch on March 1 Here you can read an Interview with VOOMY IT Park CEO, Vitaliy Stavropolskiy.


&amp;lt;!–:en–&amp;gt;What is the most hidden SEO secret?&amp;lt;!–:–&amp;gt;

Anyone who thinks that SEO is important should change their perspective. SEO stands for ‘search engine optimization’ and the question is: Are you trying to optimize your web pages for search engines or for people? Your users are human beings, not software robots so you need to spend your time, energy and money on optimizing your pages for your users rather than the search engines.

If you run or own a website you certainly know what SEO is all about. It’s a billion dollar industry that has been growing tremendously ever since search engines emerged and this trend continues. Google, Bing and other search engines index millions of new web pages every week so the space for top search rankings is getting more and more crowded. Many website project managers think that the most viable strategy for beating the competition is to invest a certain amount of money into SEO services. So called ‘SEO experts’ claim that they can guarantee top search positions for predefined key words and phrases provided you pay them enough money for their work. The truth is that nobody knows for sure which variables and criteria Google bases its current search algorithm on. As a matter of fact, you actually don’t even need to know how exactly Google indexes and ranks your webpages because Google constantly improves its algorithm to produce search results that more and more closely reflect the opinion of your website’s users. Google invented a system called ‘PageRank’ which functions like a huge voting system. With it, users can better evaluate how useful a certain webpage is.

Google uses a number of criteria to interpret the opinion of a user: How long does the user stay on a page, how often and how frequently does he return, does he put any backlinks to the page, does he share the URL on social networks or through email, does the user enter or leave a site through that page, etc. What most SEO companies don’t tell you is that Google doesn’t decide whether a webpage is popular or not. Your user does. So, instead of spending thousands of dollars on having your webpage code tweaked by an ‘SEO expert’, you should rather invest in creating fresh and useful content which should be 90% of your SEO activies. The remaining 10% is making sure that your website meets the latest accessibilty standards which are clearly defined and frequently updated by such organizations as the World Wide Web Consoritum (W3). Yes, your website needs to be easily accessible by both human beings as well as machines. The question is, what happens once a potential user finds your site? Will he stay? Will he find what he was looking for? If not, he will leave and never come back to your site, which means you have wasted all the money you spent on SEO.

So, the next time you plan or review your SEO strategy, think about whom you are creating your webpages for and what your users might expect.


<!–:en–>Why is Typo3 so popular in Germany?<!–:–><!–:de–>Warum ist Typo3 so pouplär in Deutschland?<!–:–>

Typo3 is an open source content management system that has been developed by a group of programmers whose native language is German. Why exactly they choose the word ‘typo’ as the name for their product eludes me and I think they were simply not aware of its negative connotation. The interesting thing is that quite a large number of German companies use Typo3 while its total market share on an international level is just below 2%.

The only explanation I have for this phenomena is that a lot of IT specialists in Germany still get most of their information from sources that are written in German. I have often met German programmers and developers who read and write their documentation in German only, thereby limiting their reach tremendously since English is the language of IT, eCommerce and cloud computing, not German.

This is probably one of the major differences between German and Ukrainian IT companies: In Ukraine almost all IT specialists get their information from English sources while in Germany a lot of professionals use German materials most of the time.


<!–:en–>English language training through video messaging <!–:–><!–:de–>Englisch lernen mit Video Nachrichten <!–:–>

If you want to improve your English while saving time and costs, you can use our new English language training services which will increase your self-confidence. Here is how the program works. First, your English-Team trainer records a personalized video message for you. The message contains a task and can look like this for example:

You can watch and listen to the message whenever you have time and as often as you like. In addition, you can use the transcript function available from YouTube (it allows you to see the text of the audio message).

Once you have listened to the video message, you should then record a response using a video recording program such as Debut Video Capture Software. You can either send us your video via email or upload it to you YouTube in which case you can email us the URL of the video. Your English-Team trainer then analyzes your video message, evaluating your pronunciation, grammar, intonation and your body language. You will receive the assessment of your performance via video message which comes with a written text.

The video message you receive will also contain your next task. So you gradually start exchanging video messages with your English-Team trainer while practicing and improving your listening as well as your speaking skills. This approach has a lot of advantages over conventional English learning courses:

  • You can listen to the video as often as you like.
  • You can watch and listen to the video whenever you have time.
  • You can use the YouTube transcript button to read the text of the audio content.
  • In addition to learning new words and phrases, you also see examples of positive body language.
  • You can practice your speaking skills by recording your own video message.
  • You receive a detailed analysis of your speaking skills, your grammar, your pronunciation and intonation, your tone of voice, your choice of words and your body language.
  • You instantly start boosting your self-confidence.
  • You can ask your trainer to help you with specific tasks, such as preparing for a job interview, a company presentation, contract negotiations, etc.

At any point during this process, you can schedule an online meeting session with your trainer using Skype, Google Hangout or another video conference system. If you are interested in this service, please post some information about yourself here: English Training via Video Messaging


<!–:en–>TOEIC apps: Business Case Study<!–:–>

Dear [FRIEND],

You all know what an app is — on average we each have about 25 apps installed on our mobile device, out of which we use 5 to 7 actively. Most of the apps available for Android and many iOS apps are free, only a few are paid. So the question is, how do app developers make money? The truth of the matter is that the vast majority of all apps never make any money for a number of reasons, the most important being the fact that nobody ever finds them, let alone downloads and installs them. You can apply the Long Tail Principle to the app market too: a few paid apps account for the vast majority of the total app revenue worldwide while there is a myriad of free apps, most of which are never used by anyone. Now you can download the first TOEIC iOS app here: TOEIC iPhone/iPad app

When we talk about revenue, it would be interesting to have some figures. According to CNET, the total app turnover in 2012 was about $8.4Bn worldwide. CNET also estimates that the total revenue generated by app sales and mobile advertising will increase to $46Bn by 2016. Without a doubt, the mobile app market is growing faster than any other industry and there are many stakeholders who want a piece of the pie. English-Team is one of them. Our entry into the mobile app market is the world's first iOS app that features 5 full length TOEIC tests (Reading and Listening).

What is the market potential of an iOS TOEIC app? The TOEIC (Test of English For International Communication) by ETS is by far the most popular English language test. About 5 million people take the TOEIC every year and most international corporations use and recognize the TOEIC test. At the same time, the number of business executives and professional people using a smartphone is rising constantly. Already today the vast majority of all successful business professionals use an iPhone, iPad or an Android device. So, the target market for our TOEIC app is any person with an iOS device who either wants to evaluate their level of English or prepare for the TOEIC test or both.

In addition to individual test takers, the iOS TOEIC app by English-Team will also be used by organizations such as TOEIC Test Centers, language schools, universities and other educational institutions and of course, international corporations such as Allianz, Siemens, Renault and Intel who have already been actively using the TOEIC test. Our TOEIC app comes with a lot of useful features. One of them is a back-end content management system that allows TOEIC test centers and companies to edit existing tests as well as add new tests. The app can also be white labeled so TOEIC Test Centers and companies can put their own logo and corporate identity on the app and market it as their own.

Any app is only as good as the marketing and promotion activities behind it. So what is the most important ingredient to a successful app marketing campaign? Very simple: A great app! The commercial success of any app largely depends on how its users and customers perceive and evaluate it. If the app comes with a lot of valuable features that make the lives of lots of people easier, it soon will attract an online community which will start promoting the app through various social media platforms such as Twitter, Facebook, Google Plus, Youtube and many others.

A question that has come up a lot over the past couple of weeks is this: Why is the TOEIC app available only for iOS devices and not for Android? Well, although there is a free version of our TOEIC app, the TOEIC is still a test for business people and business is all about commercial transactions. The TOEIC itself costs about $130 and most TOEIC prep books are priced above $50, so of course our app is primarily a paid one. You can purchase the 5 TOEIC tests separately or as a bundle, with substantial savings. When it comes to selling apps, the Apple app store and iTunes still outperform Android apps by a ratio of 4 to 1. That is, their revenue generated through iOS apps is about 4 times higher than through Android.

Of course our goal is to develop and offer an Android version of our TOEIC app as soon as possible and that's where you come in, [FRIEND].

Dear [FRIEND],

If you want to learn more about the first TOEIC app featuring 5 complete TOEIC tests or even become a beta tester, please read this: iPhone/iPad users wanted as beta testers for TOEIC app


<!–:en–>Do you know the power of donating? <!–:–>

Dear [FRIEND], You know that most of the materials and services we offer on our sites are free. That's important because the vast majority of our users live in emerging countries in Africa, Asia or the Middle East where resources are scarce and credit cards and PayPal rare. I'm convinced that by providing free services to those users now, we are helping them to get better jobs, raise their families and create a better future for their country. In a few years, the children of the people we are supporting now will pay us back for our efforts in one way or another.

We are not at all worried about that because we believe in the 'law of increasing returns' which says that whatever you do for or to another person comes back to you compounded. This law applies regardless of whether you do something good or bad. Usually, you receive the result of your action not from the person you did something for or to. You receive it from others and in most cases the reaction is several times removed from your initial deed.

For example, if you donate some money to a charity organization today, you won't get your money back from that charity organization. But mother nature will see to it that you are compensated for your act of kindness. If you donate money because you really want to help somebody and not because you want to get something back, you actually are paid back multiple times the amount you gave.

That's why I have always donated some money to somebody who had much less than me and it always gave me a good feeling. Here is just one example: Charity Event at Zfort Group.

I know that there are many children in Ukraine who would give everything for a loving pair of parents and a peaceful home. They don't have anything but for some strange reason they often are much happier and content than all those kids from rich countries who have virtually everything. The saying 'you can't buy happiness' is so true!

A couple of months ago one of our forum users from Pakistan asked me if he could donate just one dollar to our site to express his gratitude for the support he had been receiving from us. Up until that point, I hadn't thought about the fact that there actually might be some people who want to donate a few dollars to us so we can create even better materials and offer more services for free. So, Untaught from Pakistan became our first and only forum user who has tithed to us. You can see his profile here: I have donated to english-test.net!

Dear [FRIEND], if you feel like making a donation or tithing to english-test.net too, you can give any amount of money — no matter how small – by using this PayPal Donate Button.

Everyone who donates at least $1 gets a special forum badge and will be listed in our list of sponsors. We will also publish the amount that is being collected and share some of it with the kids in Kharkov.

Many thanks for your support.



&amp;lt;!–:en–&amp;gt;The Newsletter is back online&amp;lt;!–:–&amp;gt;

The Zfort developer team lead by Ivan Kriuchkov (Иван Крючков) have brought the newsletter system back to life. They have been creating a new module in Yii framework and as a result our blog has been receiving more traffic as of yesterday and the trend continues. As you can see from the stats below more people have been visiting the blog now although many of our users are on Christmas vacation. blog_statsEnglish-Team Blog Stats.

Two days ago we started sending out an email to more than 200.000 English learners from around the world featuring Alan Townend’s essay Going French, Part 1. The screenshot below shows what countries our users are primarily from: blog_countriesCountries Blog

Yes, we do have a strong following from Ukraine, Europe’s IT outsourcing destination number one.


&amp;lt;!–:en–&amp;gt;A work day at Zfort Group — a top IT company &amp;lt;!–:–&amp;gt;&amp;lt;!–:de–&amp;gt;Ein Arbeitstag bei Zfort Group, einem der besten IT Unternehmen weltweit&amp;lt;!–:–&amp;gt;

In this video you can see what it

Dries experience wearable detoxifier less gentle Note can softer will and.

feels like to be part of the Zfort team. The video has been professionally created and it portraits exactly what Zfort is all about: dynamics, high quality service, positive vibes and atmosphere, innovation, competition and competitiveness and of course: fun