December 8, 2011 at 12:33

The story of a Ural startup



    I decided to write a detailed story (serious, despite the picture) about how our 9facts project appeared and developed , how we presented it to Steve Blanca , participated in the All-Russian innovation convention and two StartupPoints , as well as about all the problems with which faced our team. The story is still far from over - perhaps now we have the most difficult and dramatic period: it is already known what exactly does not work, and it is approximately clear which way we should move, but there is not much time for decision-making, since the first ones "our investment is coming to an end. I think this story is quite typical for a startup.

    Get ready - the story will be long, but I will try to make it interesting.

    Introduction


    9facts is a service that allows users to compare virtually any achievement among a wide variety of groups of people (friends, residents of a city or country, university students, and so on).


    Show the whole 9facts first page snapshot

    Using 9facts, you can find out who is in Yekaterinburg:
    I gave links to tops for Yekaterinburg only because our team is in this city. The service continuously updates achievement ratings for any cities, regions, countries, groups of people (for example, your university, employees of your company or group of your friends) and keywords.

    Achievements (or rather, facts) can be obtained from third-party services automatically, as well as manually add them. We have not yet opened an API that allows any sites and devices to send facts to 9facts, but made built-in support for the most popular services (Facebook, Twitter, Stack Overflow, LinkedIn, RescueTime, etc.).

    In addition, they will soon earn money on the service [removed the spoiler, since the whole section “Pivot” is devoted to this topic] - this is perhaps its most interesting feature.

    Idea


    The idea of ​​9facts arose in April this year - almost immediately after the end of Startup Weekend Ekaterinburg , where I presented my other idea - the Agile-fu project . Agile-fu became one of the winners of the weekend - IMO, it was the most elaborated project among others. As a result, I received an investment proposal from Arkady Moreynis , although it still seemed to me that this idea could be improved somewhat - I really wanted to turn the service into something really massive. Perhaps because on Sunday April 10th, noting this small victory in the company with a couple of classmates, we came to the conclusion that Agile-fu is a completely niche service.

    On Monday, breaking my head a bit, I came to understand that the key “trick” of Agile-fu is not at all that it collects data to evaluate effectiveness, but that it can show the results of evaluations in the way people would like to see them - i.e. show ratings to users for several independent parameters related to their effectiveness. It became clear that the emphasis should be precisely on this - people like to compare themselves with others, brag about achievements, etc. Moreover, it is interesting for companies - having a universal tool for comparing their employees, they could use it as a means for competitive motivation.

    So, it is interesting to compare not a specific set of indicators, but arbitrary achievements of people. It was April 11th - the very day after the end of Startup Weekend. I well remembered that after such an "insight" I literally immediately called a friend with whom we discussed the service on Sunday, and talked about a new idea. He liked everything (and he is a good critic) - so I received the first confirmation that the service for mass comparison of people using an absolutely arbitrary set of metrics is not such a crazy idea as it might seem at first glance.

    Search for an investor


    The most serious moment has come: the search for the first investor. My own company at that moment already financed one internal project, so we practically had no money for a good launch. I also did not want to work on a prototype for a long time: competition in the modern world is incredibly high. But the main reason was still that investors, as a rule, can give a more sober assessment of what is planned, and their real money is the most important indicator of what kind of project it is worth taking.

    On the same day I sent a presentation of a new project (it was clear that this was no longer Agile-fu) to Leonid Volkov.

    Natural question: "why not Arkady Moreinis?" - the answer to it is complex, but on the whole, this: I talked with Leonid much longer, and believed (as it turned out, true) that we had a trusting relationship, and therefore I can calmly forward the description to him, without fear that it will go away third hands, even if we fail to agree. I could only say good things about Arcadia - without a doubt, his reputation as an investor is an order of magnitude higher. But since we talked much less, in terms of mutual trust, Arkady lost to Leonid. Probably, I was slightly scared away by his “idea is not worth anything” (by the way, he is 99.99% right in that) and “why shouldn't I fund another team that comes to me with the same idea for the same money?” In addition, I approximately knew the parameters of the transactions of Arcadia,I'm not the only one who thinks this is not very good . On the other hand, for startups in Russia its conditions are completely adequate.

    Leonid was in the USA at that timebut answered the same day - he liked the idea right away. I liked both the scope (the whole world, not just Russia) and the novelty - by the way, at that time I still did not know for sure whether there was anything like that. I was almost completely sure that it wasn’t (“otherwise we would use it!”), But seriously, I haven’t checked it yet. In the first letter, I asked Leonid a direct question: is he ready to invest in such a project? He replied that he was ready to discuss this as soon as he returned to Yekaterinburg, which was a very positive signal that the idea should be worked through to the end - in other words, to describe everything in detail, and even better - to make a prototype UI (I use the free online for this -version Balsamiq ) and write the most important user stories.

    The key problem at that moment was: how to describe the most diverse achievements? I needed something simple that would allow me to do this. Soon a concept was born, very similar to that implemented on 9facts now: the description of achievement is a template that is filled with parameters (mainly with terms from a large taxonomy) and contains a metric that allows you to compare achievements parameterized in the same way. Later it turned out that the idea with keywords is also good because it allows us to select qualitatively templates according to the text of the fact, and moreover, to identify whole categories to which the fact relates. Knowing that the specific parameter of the template is the car brand, we can confidently say that it is not suitable for describing a fact in the text of which the car brand does not appear. The same applies to measures - template,

    "And the service should have a very simple API, allowing anyone to" fill in "almost arbitrary facts about people." - This opened up really fantastic opportunities.

    So, the outlines of 9facts gradually crystallized. Then I searched the entire Internet in search of something similar to what I invented. Nothing of this kind could be found. All that is is niche services that solve a similar problem for one or two types of facts. In addition, it turned out that no one is engaged in the construction of "local" ratings - there are practically none on the Web. There are global ratings (a typical example is the Stack Overflow user rating ), but it’s clear that people would be interested to know their place in a similar rating by country, city, school or university.

    Leonid left a preliminary description of this concept. I will quote his answer in full:
    The auto-assembly of positive facts about a person is a megaidea. I really like that in the end such a simple concept crystallized. In the end, almost any human activity is reflected in the form of facts that can be collected in one or another established format. "Has two dogs." "Flew more than 100 thousand miles in a year." "Published 10 articles." "Really appreciated by colleagues." And I agree that many of these facts about the modern "electronic" person can already be collected and confirmed automatically.
    Another day passed by active correspondence and communication on Skype, and I received a clear investment proposal from Leonid. There was no personal meeting - however, we met and communicated earlier, so in reality it was not very important. But still, it was awesome - the idea (April 11), two days, and - yes! - they offer me real money for its implementation (April 13)!

    Further events began to develop rapidly: we were negotiating with Leonid on investment conditions, at the same time I started looking for investors for a project in the USA(it is obvious that conditions can be improved only when there is competition among investors). It turned out that with investors in the United States everything is somewhat more complicated than it seemed to me at the very beginning: on the one hand, I received several indirect confirmations that the chances of finding money there are very high. On the other hand, in order to get them there, one must be there. And not just to be, but to do a project in the USA - otherwise they simply will not talk to us. It became clear that this would delay the start of work for at least 2-3 months.

    The situation was stalemate: on the one hand, I wanted to do everything as quickly as possible (above I wrote why); on the other hand, I wanted to improve the investment conditions, but for this I had to sacrifice speed. It seemed to have to choose one of two.

    Fortunately, everything was resolved very successfully: both I and Leonid made mutual concessions - as a result, we received more expensive, but also “quicker” money .

    It is worth saying that at that moment monetization did not seriously concern me or Leonid - it was clear that a service that stores key facts about people can be monetized in a lot of different ways, and the market for it in any of the options will be quite large. In the presentations, I gave at least 5 options for monetization, but we did not seriously discuss any of them.

    Prototype


    In May, I was engaged in three major tasks:
    • presentation materials and negotiations with potential investors
    • project development - in late April, Alexey Shtin joined the project . He also presented his project at Startup Weekend, and in the same place offered to participate in the creation of Agile-fu, if he is financed by Arkady. We started correspondence with him on April 9, and on April 20 we finally agreed on everything.
    • search for employees.
    The second investor was my own company. More precisely, founded by me - at that time I was one of its 3 co-founders. Thus, in total, we "raised" $ 70K:
    • $ 40K by Leonid Volkov
    • $ 30K from X-tensive.com.
    The original plan was this:
    • 09.09.2011 we are launching the prototype. The date was clearly related to the name of the project, but it is clear that no serious planning was done for this date. Nevertheless, she was good both in terms of motivation and in terms of intimacy (~ 3 months). 
    • I’m going to the United States to look for the following investors - it was thought that there would be plenty of people willing to give us money, since we are doing a completely new and unique service.
    • In December, we finally agree with the next investor, and we continue the project by sending part of the team to the USA.
    It is worth saying right away that everything went completely wrong. Details - later, but for now on how we quickly put together a good team:
    • At the end of May, Dima Maximov joined us - until that time he was responsible for promoting DataObjects.Net at X-tensive.com, and in the past he was one of the first developers (probably even the first) of Bank24.ru online banking. Thus, the third person in the project was an employee of my own company.
    • In June Alexey Katkov, Marat Faskhiev (also an employee of Extensive) and the Slovak Peter Šulek appeared on the team - he really liked the project itself; in addition, he is one of the most “advanced” users of DataObjects.Net - in the past he made a visual designer for him.
    • In July, my brother Sergey started working on the project - he was responsible for everything related to design. By the way, at the same time it was decided that we can’t spend a lot of resources on design (since there is relatively little money so far), and therefore it’s better to immediately take something famous for the sample, and largely focus on it. As a result, Twitter became a model for us. In addition, Evgeny Ganin joined us.
    Not all of these people worked on the project full time. However, key people worked almost round the clock, so I think on average 7-8 full-time developers really worked on a project.

    It would seem that 8 people is a large enough team to do everything very quickly. Nevertheless, everything did not go as smoothly as we would like: at the end of August (i.e., about 3 months after I started to participate in the development 100% myself) we had something that was very vaguely reminiscent of modern 9facts:
    • There was an input of facts. However, the template selection algorithm was such that it gave more or less adequate matches for only 10 out of the 70 available templates.
    • There were users, friends, fact lists, and settings. All.
    There were no ratings, no groups, no likes, no confirmations - in fact, there was nothing that made it clear why this thing was needed at all. Ah, yes - since there were many of us, the work was often parallelized, and therefore there were incomplete parts in the application - access to them was simply blocked at the time of release.

    About 2 weeks before 09.09, we stopped making new features, switching exclusively to testing and fixing problems. On September 9th, it became clear that they still could not be fixed in the remaining hours. As a result, we laid out everything “as is”, and the first entry appeared on the project’s blog stating that the release had taken place on the planned date. The publication time for this entry is two minutes to 2 minutes on September 10th. I joked that it’s good that the Yekaterinburg time.

    The next two days (i.e. all weekend), we fixed the remaining problems. The prototype 9facts, which did not fall out of the blue, was born closer to September 12th.

    Start-up Rocket and presentation to Steve Blank


    I learned about Start-up Rocket in August - it was clear that we really needed to get on it. And moreover, we have every chance for this:
    • We are doing a global project that has no analogues
    • By the time of the competition we will have a prototype, i.e. We satisfy all the conditions of the competition.
    I applied for participation in late August - then we still did not have a prototype. But nevertheless, by the time the commission, selecting projects, began to work, he appeared. In addition, for some reason, there was a delay on the side of the commission with the actual selection - it was completed only on Monday, September 12. That day, late at night, I received a call from a person from StartupPoint who told me that 9facts and I had passed the selection. Later, I learned that it was thanks to the guys from StartupPoint that we passed — they liked both the scale and the idea itself, and as a result, they somehow defended us in front of our colleagues.

    The next day, I flew to Moscow. On Thursday there was a trial presentation of the project at the PwC office - as it seemed to me, everything went smoothly there. Later I realized that everything was completely wrong - the fact is that I was not able to convey the essence of what we are doing in the allotted 5 minutes (real time for the presentation), but it turned out very well to do it in the next 25 minutes of talking with PwC representatives. By the way, the trial presentation was in English, but I somehow got out with my “I write well, but I speak noticeably worse”. I remember that there were no serious interruptions in communication then.

    On the day of the presentation, I was very nervous, although I rehearsed my speech for more than 6 hours, making more than 60 repetitions. In addition, I spoke first, i.e. I didn’t know what questions I should wait, and how everything would be, to be honest.

    In 5 minutes I told everything I planned - not too smoothly, but everything seemed to be quite acceptable. Steve at that time listened, wrote something, and occasionally looked up at the screen - it was clear that for the most part he was busy with something of his own. Nevertheless, at the end of the presentation, he reduced all my efforts to nothing by just two questions:
    - Do you already have users? - a five-second pause, and I say:
    - No, we don’t have them yet.

    In fact, at that moment we had about 150 users, and I should have said this, since not all participants could even boast of that. However, we didn’t yet draw conclusions from what these users are doing (as I understood later, the next question could be about this), so even if I said yes, the next question would in any case put me to a dead end.

    Steve's second question was:
    “ Do you know the Klout service ?” It seems to me that what you are doing is very similar to this project.
    - No, I’m hearing about him for the first time.

    I really could not answer this question better, because I did not know what was at stake. No more questions were asked - the public had the opinion that we were making a clone of some famous project that Steve knows about, and interest was gone.

    I immediately sat down to find out what Klout is, and how I could not know about the competitor. I found out that Klout has nothing to do with us - it’s a service that tries to evaluate your network influence by the way users respond to messages you post, and this estimate is more informative than, for example, the number of your followers on Twitter, as Many can follow you, but very few of you are really interesting. It is clear that these are not 9facts, although there is something in common with us. Probably, only that we also collect from the social networks different metrics that characterize you, and compare them. However, we do this for each of the metrics separately, and moreover, we are not limited to social networks at all - with the same success we can compare your reputation on Stack Overflow, your height, weight, or the amount of alcohol you drink today.

    Why did Steve decide that we look like Klout? Probably because the slide about what external services we already support was one of the most striking, or because during its discussion I said a lot of keywords that settled in Steve’s head. Or maybe he just listened to me exclusively at the moment of showing this slide - to say that it was actually difficult, but one thing was clear: I was not able to convey the essence of what we are doing, neither to Steve, nor to the audience.

    It was an epic file that had to be fixed somehow. I approached Steve one of the first already at the buffet after the event, and directly asked him if he would be ready to introduce us to investors in the USA if he liked our project in the next 5 minutes. Steve asked: “Ok, what is your startup?”, And I told everything in my own words, at the same time touching on the topic of Klout. It turned out that talking with him personally was much easier - he listened very carefully, pondered what he heard and asked very specific questions. Now it’s hard to remember everything, but the key questions were:
    - Why do you think that anyone needs this?
    - Give an example of your target audience?
    - Another example?
    - How do you plan to launch the product on the market?

    Finally, Steve asked:
    - Ok, how much money you're raising? - I started frantically thinking how to say $ 350K in English, but in the end I hurried up and said:
    - $ 40K
    - Really?
    - Oh, sorry, $ 400K
    - Ok, how much this is in Rubles?
    - About 10 millions - I was obviously not thinking very well then
    - I just want to know how fast you can calculate this :)

    After another couple of minutes of conversation, Steve suggested recording his e-mail. In addition, he said that he was ready to help us with introductions and talked about when and where he would be in the US in the near future, and also said that he did not mind meeting again - apparently, in response to my remark about that I plan to visit the United States in the coming month.

    It is clear that I was beside myself with delight - "Steve Blank promised to help us intro in the USA!" - then I thought that the next round of investing is sooo close. As it turned out, in vain - read more about this later.

    Presentations of all Start-up Rocket participants can be viewed here (there seems to be no SpeakToIt presentation only).

    Alpha Release, First Issues


    Our further actions seemed to me like this:
    • In early October, release an alpha version - with ratings, groups, etc.
    • Write about this to the maximum number of investors known to us
    • Start a campaign to attract the most important user categories for us
    • Wait for interesting offers, watching how quickly our user base is growing.
    However, the first trouble happened where we did not expect it at all: on September 23, Facebook announced the Open Graph API. It became clear that everything we did in terms of capturing the facts of users (or activities in terms of Facebook) has lost its uniqueness, since Facebook will make it all massive before. And accordingly, we will have to change both our far-reaching plans and presentation materials for investors.

    We decided that it makes sense to focus on:
    • Ratings - descriptions of Open Graph and the current positioning of Facebook left the full impression that they would not do this.
    • Entering the widest possible set of facts manually - again, on the assumption that this will not appear on Facebook in the near future. In addition, it was thought that this would allow us to attract maximum potential users.
    The development of all this took noticeably more time than planned - we released the update on November 10, although we planned to do it on October 10. This was very unpleasant - a rather large team worked on the project, and each month it cost us about $ 13K. The means at our disposal were drawing to a close.

    As soon as we did this, I wrote to Steve Blank, and I also asked to be friends with him on Facebook and LinkedIn. He answered only the third message - at that time he was giving lectures in New York, and, judging by the context, he could not immediately answer. However, all he promised was to read our Executive Summary and forward it if he found it interesting. Those. in fact, nothing concrete - I quickly realized that his answer means about the same as the famous "Don't call us, we'll call you". After that I did not write to him, although I think that I will write again after we have an obvious traction. I still have a 100% feeling that traction, as a result of analysis and adaptation to user actions, is exactly what it expects. He writes about this, says, and this is exactly what many other investors are waiting for.

    Ok, back to the service. The most important and unpleasant indicator for us was that a week after the launch of alpha, we did not have any significant growth in users, and moreover, there was a feeling that even if we put a lot of users there, the service would cease to be for each of them interesting quickly enough: ok, several times they will share their mega-ratings in social networks, call several friends, and what’s next is not clear. Of the fact providers that it makes sense to watch all the time, we only had RescueTime; It’s not very interesting to watch your and others’s reputation on Stack Overflow, since significant changes rarely occur there.

    However, it was clear that these problems would simply not exist if we had many users and applications that support our API (which did not exist yet). There was a feeling that we were faced with the classic problem of chicken and eggs.

    By the way, there were practically no virus features at the time of alpha launch - they are not there at the time of this writing. It would seem that you could just start adding them, evaluate the result, and move on, slightly adjusting the direction. A good option, given that we had a whole list of what should be implemented in this part:
    • The ability to fumble your achievements (see positions in ratings by city, country, etc.) in social networks - now we are doing this
    • Restrictions on the minimum group size, achievements within which you can fumble
    • Integration with social networks regarding invitations and contacts
    • Questions about friends on social networks similar to Badoo
    • An API that allows you to create facts for unregistered users - to create such a fact, it is enough to specify the user's e-mail.
    However, most of all I liked the other option for the development of the service, significantly changing its concept. I will talk about him in the "Pivot" section - first I want to talk about my experience in participating in Startuppoints.

    Startup Points


    I participated in two Startup Points - the 30th point in Moscow and the 4th point in Yekaterinburg , making two-minute presentations of 9facts. The conclusions in both cases are approximately the same:
    • You need to be able to state the essence of the project in the first 30-60 seconds. If this is not possible, or the audience has a too vague idea of ​​the project - this is a big minus. It seems to me that at Moscow Point I didn’t succeed - then I decided to talk about 9facts, giving examples of how it could be useful at such events, and as a result, most of those present formed the following opinion: “9facts are facts about people around "
    • The audience votes for the most understandable project for them, including from the point of view of monetization.The scientific component, competitors, market size - all this practically does not play a role. The audience of points is primarily startups, IT people and their sympathizers - respectively, if you want to attract her attention, you need to make a presentation based on them. In particular, the majority of those present do not know anything about the competitors of a particular product (i.e. both about their presence and their absence), cannot estimate market volumes, etc. As a result, the bulk of the people voted for what they understood 100% - for example, at the Yekaterinburg Point they voted for “Long-distance freight transportation” (the author said that they have only two competitors in the Russian Federation, although in reality there are more than 5) “Fantasy” (there is incredible competition in the application market for children, and to stand out on it, you need to do something incredible).
    • As a rule, there are few real investors at points - that is, those who came there in order to find a project in which to invest money. But there are plenty of people who are ready to give a very sober assessment and criticism, and this is extremely positive.
    I think the following rule applies to assessing the quality of your presentation:
    • maximum votes → excellent
    • maximum votes / 3 → average
    • maximum votes / 9 → this is a failure.
    Summary: I highly recommend you try to talk about your project at one of the points. If you are understood (that is, you will gain more than a third of the maximum votes cast by someone), the investor will probably also understand you. If not, you need to change something. Those presenters who gained a minimum, as a rule, made absolutely gross mistakes.

    Pivot, or a radical change in the concept of service


    At the end of November, I had a good idea about which way we should move. An approximately internal dialogue led to its appearance:
    - What is our biggest problem now?
    - Lack of users.
    - Is our service useful for users now?
    - Yes, although it cannot be said that this is obvious to every user right away. In addition, it is not obvious how useful it is to the user in the long run.
    - Why is its usefulness not immediately obvious?
    - All that he gives you now is local ratings, plus one more confirmation of your high results (at best). Our service also collects a lot of results in one place. This is interesting to someone, of course, but it is clear that not everyone is interested.
    - It turns out that we do not give a strong enough incentive to register and visit our service in the future?
    - Yes something like that. In this sense, we are very similar to the same Klout. Many other social services visited once a month have the same problem. We are an interesting option, but by no means something that we really would not want to refuse.
    - So, we need to think on a way to significantly increase the value of our service in the eyes of users?
    - Yes.

    So, what can significantly increase the value of the service in the eyes of new users? Obviously a direct benefit. More precisely, it is obvious when you already have an idea in your mind how exactly you can interest all parties in implementing the plan, which will lead, among other things, to the emergence of direct benefits for the users themselves. And this is not at all obvious when you do not know how to achieve this.

    Here is the updated 9facts concept:
    • "9 facts" - this is Groupon, allowing you to make a marketing campaign for a specific category of users that is interesting to you. For example, you can give a significant discount on your software only to 10% of developers who have a top reputation on Stack Overflow in your city. Or in any city in a country, in a particular state, in certain countries, and so on.
    • This policy allows sellers and producers of goods to get users who are interested in them, without depreciating the product in the eyes of others . 
    • Moreover, in this way, manufacturers get the opportunity to choose between the quality of the audience they are interested in and the size of the discount . For example, they can simply give a specific product to the top 0.1% of Twitter users (100% discount), the top 10% to give a 50% discount, and the top 20% in each city to give a 30% discount. If desired, you can specify several criteria in order to cut off falsifiers.
    • It is clear that all this is beneficial to the users themselves - primarily those who fall into the top 10%. They will receive incredible discounts for being exceptional. And the top 0.1%, perhaps, will generally begin to receive a mass of goods and services for free. This is the same as giving gifts to the stars, and we become a channel connecting manufacturers of goods with stars of various sizes.
    • If we agree with a dozen well-known companies to conduct such a marketing campaign, it will be beneficial for all parties : the announcement made by each of the companies will increase the overall audience of the marketing campaign, and the effect of this in the long term can hardly be overestimated.
    • We do not plan to hold contests that require you to perform a specific set of actions. Our goal is to enable suppliers of goods and services to reach the top users among their target audience, that is, those who already have confirmed achievements or facts. 

    Show the whole layout of the next version of 9facts

    This approach to the promotion and positioning of the service is also good because the steps for its implementation are completely transparent:
    • We need to immediately engage in negotiations with companies that would be interested in such a marketing channel.
    • At the same time, we must implement the missing functionality as quickly as possible (see the distribution of discounts and prizes to top users of the service).
    What struck me most in this situation was how strongly the issue of promoting the service is connected with the issue of monetization: until some point, we thought that monetization was absolutely not important for us in the next year or two - only the number of new users we could attract was important . And suddenly we realized that the number of users that we can attract is directly related to how much money those same users can save thanks to us! The more famous sellers and brands we attract, and the more interesting discounts and gifts they can offer, the more users we will have. No magic.

    Yes, for some time the service will be free for sellers and manufacturers of goods, but for us it does not change anything: the value of 9facts is determined solely by its audience and turnover. By the way, at this moment it became clear to us what the peak cost of such a service might be - probably we can very well expect 5-10% of the Groupon cost if we do everything really quickly and efficiently.

    And I could not help but pay attention to the following fact: judging by the Startup Genome reports, each startup on average 1 time significantly changes its concept. It was quite obvious that just such a moment had come for us - we had to change in order to turn into what users want to see. And I really hoped that we correctly guessed the direction of our transformation.

    With these positive thoughts, I went to bed on Monday November 28th. I did not manage to fall asleep that evening - His Majesty Chance turned over all my plans.

    All-Russian Innovation Convention - Dave McClure, Garry Tan (YC), Harj Tagger (YC), Peter Vesterbacka (Angry Birds) and other interesting people


    Before going to bed, I decided to look at Facebook, where I found this offer of Vitaly Akimov . It's funny that usually I do not follow Facebook continuously - I look there once or twice a day. But it so happened that I read Vitaly’s message at the very moment when it was published, and almost immediately sent him an answer in which he briefly described our new marketing strategy and my desire to participate in the convention.

    At that moment I had no idea what exactly I would need to do there, how the event would be held and whether I would have the opportunity to make a presentation at all. But the list of speakers and guestsI was immediately interested in it - we were registered on AngelList, and I knew that Dave McClure and Garry Tan are extremely famous investors. It was clear that the chance was very unique, and you should not miss it. In addition, I was already at Digital October, and I knew well that I would have time to get to it by the morning of Moscow (in Yekaterinburg it was about 23 hours then).

    Vitaly confirmed our participation quickly enough - probably as soon as he read my message. Probably, I was just the first of those who wrote to him - already in Digital October it turned out that he did not read my message carefully, i.e. it was pure luck.

    In the morning I was in Moscow. At the entrance to Digital October there was a rather long queue for registration - it became clear that there would be a lot of guests and participants. I checked in a little late - there was a hitch associated with the fact that they invited me only yesterday, and went wherever my eyes were. I didn’t have an event program - as I understood it, the organizers handed out its entire circulation the day before.

    In the great hall was the opening of the convention. Broadcast from this room(see the first entry) was conducted on many other screens located both in the lobby and in smaller rooms. The event was opened by Steve Wozniak and ... Vasily Yakemenko. I’m not much mistaken if I say that for me it is about the same as seeing the simultaneous performance of Henry Ford and Joseph Goebbels. By the way, in general, the event cannot be called politicized - everything that was said from the stage related to anything, but not to politics. The organizers made a lot of efforts in order to make it as interesting as possible for both participants and guests, for which many thanks to them.

    At the same time, I found that on the stage next to the bar are the very top investors from the United States - Dave McClure, Garry Tan and others. It turned out that they lead some very interesting sections in English, and they will all be held in this part of Digital October. And the funniest thing was that it was in this part that there were many empty seats, although there were only ~ 70 chairs near the stage. It seems that the majority of those present either did not imagine what kind of people they were or did not really understand lively English.

    As a result, I spent most of the time in this part of the hall, in breaks, talking with investors and startups, which seemed interesting to me. It turned out that all YC partners are completely friendly and pleasant people, no different from most people in appearance. If you spoke to them on the street, I bet 1000 to one that you would not recognize investors in them, evaluating several thousand startups a year, and investing in dozens.

    And the most colorful figure was, perhaps, Dave McClure - he was the only one who was not embarrassed, and periodically switched to mat. In general, he was simply the most emotional, and if he cursed, then it was fun and out of place. By the way, I never talked to him - he once said from the stage at the very beginning that all this would most likely not work: “Only recommendations will work, so don’t bother me with pitches. Just imagine how many I hear every day, and how much it bothers me sometimes "- if I remember correctly, the meaning of his words was something like this. And I decided that it would be no worse if I talk to everyone else - if we make a really worthwhile product, I will know about it anyway.

    Talking about everything that happened on stage makes no sense - you yourself can watchfull recording of this (see the second video; by the way, there is also a version with translation into Russian). And I will talk about the most important general conclusions from what I saw and heard in the next section.

    In the meantime, about what I managed to find out about our new idea during the breaks:
    • The most critical assessment I received from Harry Tan (YC). He said that in general, the idea of ​​rewarding people with real prizes for various kinds of virtual achievements is not new at all, but so far not a single startup in this field has taken off. The main problem is the limited market. If we can show that the market in this case can be made large - we can safely write to it. I had a feeling that I was not able to fully explain to Harry that we can reach both a very large and very small audience with our stocks - it all depends on the desire of the one who conducts it. Or maybe I didn’t understand him. In any case, now I can only fix the conclusions that have been drawn as a result of communication with him.
    • Most of the ratings were medium-positive - “funny, but you need to test.” This was said by Harjit Tagger (also YC) and a couple of investors. I think if you decipher such an answer, you get something like the following - "everything sounds logical, but to say that such a project will take off 100%, I would not - you need to check it with the market."
    • The most inspiring was the conversation with Peter Westerbaka (creator of Angry Birds). There was a feeling that he liked everything - both the service itself in its original form, and the idea of ​​turning it into a “Groupon with targeting". He literally said the following: “Everything sounds very logical, and therefore you just have to push your head and do exclusively promotion. As a rule, it’s difficult to say for what reason such a service can take off, and therefore you should just try all the options, starting with the most interesting "
    By the way, emails and contacts willingly gave everything. But I think that in the coming days it makes sense to send out an offer only to two investors from those with whom I spoke. In order to start communication with partners YC or Dave McClure, we need to move forward in the implementation of our plans a little further.

    In addition, I met with the authors of three interesting startups:
    • ostrovok.ru - a service for booking hotels. First of all, he interested me in the fact that its founders at the moment "raised" $ 13M. Here you can read about their first round of investment.
    • questli.com is a service for conducting real quests with real prizes (by the way, the new 9facts also has something in common with it). Its founder Danil Kozyatnikov is not only a talented entrepreneur, but also a master of self-presentation. Read how he represented questli.com on LeWeb, and for what it was he who received the Audience Choice Award at TechCrunch Disrupt 2011 - IMO, it's awesome. If you are too lazy to look, read this article and watch a video about how he got on LeWeb in 2010.
    • resumup.com is a service for quickly compiling and publishing your own resume. By the way, just 2 days ago they became the winners of TechCrunch Startup Battle.
    That's all. It is too early to write about any outcomes of visiting iConvention, but I think in a couple of months I will be able to tell in detail about everything.

    conclusions


    About planning, launching and promoting startups


    1. You must do everything to start as early as possible, and begin to analyze the real needs of your customers

    All your plans are based on hypotheses, most of which have not been tested by the market. And an early prototype release is often the best (and sometimes the only) way to test them.

    "There are no facts inside your building, so get outside!" - such a signature was left by Steve Blank on each copy of his Four Steps to Illumination , presented to the participants of Start-up Rocket. She is about that.

    2. It is very important that the money you “raised” during the first round is enough not only to develop and launch a prototype, but also to demonstrate that your product has a market. You simply have to show traction, otherwise the next investor will be very, very difficult to find.

    This is perhaps the most important conclusion I have received over the past couple of months of working on 9facts. We “raised” the amount, which was enough to develop and launch 9facts, but ... We had almost no reserves, and the original plan was too optimistic. This means that I will have to spend significantly more time searching for money right now, and probably pay more for it than I would like.

    I think in the future we need to keep in mind that in almost 100% of cases the original idea of ​​a startup degenerates into something else, but this “something else” cannot be obtained without seeing your potential customers and offering them something that they can start using. The first version of the product you created is the first step towards customers that is necessary in any case. But what’s important is that it’s not the last one: most likely you will not do what your customers want to use massively. So, you must have a supply of resources for adaptation.

    My recommendation is this: plan that the amount raised during the first round is enough for about 1 year of development (+ small advancement). But you should start as soon as possible. If it works out - after 1 month, if not - after 2, 3, 4 ... I think ~ 6 months after the start of work is the latest acceptable date.

    The longer you drag out with the launch, the more unnecessary functionality you run the risk of doing, and the less resources you have to adapt.

    3. “Give them a product and they will come” does not work for IT startups

    We checked this statement on our own skin. It seemed to us that we were doing a new and interesting thing, which means that there should be some proportion of users on the Web that will go to us right away. As a result, we haven’t practically been engaged in promotion to date: announcements in local network media and newsletters on the X-tensive.com client base are all that has been done.

    Now it’s clear to us that promoting the service was so pointless. It was worth considering at least the fact that so far there has not been a single English-language service that has become extremely popular in Russia. I already wrote that we found a solution, and now we are engaged in its implementation. But generally speaking, one could guess about this without tests. If we took such a path right away, probably in October we could launch what we plan to launch in January.

    So, a very simple, but very difficult piece of advice regarding implementation: consider how to attract users to your resource. You will have to do more than just an interesting product: you must ensure that everyone trumpets it, and especially those who can direct the users you need to you. And they will be ready to talk about you in only two cases:
    • Your product is already mega-known, and therefore everyone is talking about you. A great option, but if you have just started promoting your product, it is not for you.
    • They see a direct benefit from bringing new users to you. In this case, this is not about ordinary advertising - for a startup it is too expensive. You do not yet know what your sales funnel is, and therefore you will most likely spend more than earn. We are talking about options that allow your promotion partners to earn on your own users. The Apple AppStore is a typical example of such a means of promotion.
    If you find a working promotion channel in a few months, you will have excellent traction. If not, you will simply run out of money.

    4. It is important to believe in what you are doing, but by no means blindly

    Sooner or later, but you have to adapt. And if you do not do it on time, your startup will most likely die.

    On the other hand, at every moment in time, you should know exactly what you are doing now, and why. You should not adjust your goals too often, otherwise you simply will not come anywhere. And for this you need to believe that you have chosen the right path. But not blindly!

    5. Do whatever it takes to reach your customers and find your market. All that is required.

    I seriously thought about the significance of this statement when we decided to radically change the service.
    …Whenever you see a successful startup, you see one that has reached product/market fit – and usually along the way screwed up all kinds of other things, from channel model to pipeline development strategy to marketing plan to press relations to compensation policies to the CEO sleeping with the venture capitalist. And the startup is still successful.

    Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital – whatever is required.

    — Marc Andreessen, Founder, Netscape

    6. Критика бывает разной

    I already wrote that ordinary people and investors evaluate projects in completely different ways. You will have to learn to filter all criticism and ratings, highlighting the most important from the general flow.

    My filtering rule is very simple - attention to a specific critic should be proportionate:
    • the proximity of his field of activity or interests to the topic of startup
    • the value of his time.
    Finally, be prepared for the fact that there will always be people who are ready to spend incredible efforts to prove to you that nothing will work out for you - just to say again: "Well, I told you!". Most often this is not an expert assessment:
    • Большинство людей дают прогнозы, исходя из полной вероятности событий. Им приятно стоять на стороне, на которой вероятность успеха выше, так как давать прогнозы с хорошей точностью на этой стороне очень просто (кстати, как показывают выборы, в нашей стране это особенно актуально). Представьте врача, не способного отличить здорового человека от больного, но знающего, что почти все посетители в больнице чем-то больны, и потому каждый его диагноз — "Болен!".
    • Итак, прислушиваться нужно не к ним. Настоящий эксперт — это тот, кто способен давать прогнозы с точностью, которая заметно выше среднестатистической (см. теорему Байеса).

    Об инвесторах


    1. Traction — это практически все, что интересует "больших" инвесторов

    This has been said many times both from the iConvention scene and during communication during breaks. What is traction? These are strong indicators that your project will take off. Examples of such indicators are explosive growth in revenue or user base. But overall, traction is all that suggests that your startup is fast moving forward in the right direction. Signing a contract with a major player in the market ("if they need it, probably many need it"), attracting a famous investor is all a traction.

    If you do not have traction, only your track record, track co-founders' records, good references, etc. can help you.

    2. There are two types of startups: those that run after investors, and those that investors themselves run after. Traction is all that distinguishes the second type from the first.

    This is another formulation of the first paragraph, and most likely, it is somewhat closer to reality. Investors are ready to team up with each other to increase the amount of investment, go to a deal with a higher valuation and make a lot of other concessions for you if you have a traction.

    Conversely, you can spend all your time looking for them, but there will be no result until you show traction.

    3. The fact that "large" investors are interested exclusively in global projects is a myth.

    In fact, the size of the market share and its characteristics are important. If it’s clear that it’s big enough, and your chances to gain a foothold on it are very high, you will probably be able to interest the investor. But if the market is small, or there is high competition in it, you will most likely be told no.

    An example of a project confirming this conclusion is ostrovok.ru.

    4. They also do not care what country the founders of the project are in.

    Yes, that’s true, and this has been spoken about many times from the stage. The country in which the company is now located does not play any role, all else being equal, and the startup Danil Kozyatnikov (by the way, he is from Angarsk) is the most obvious confirmation of this.

    5. English!

    If you want to find investors outside of the Russian Federation, there is simply no way without it. Investors hate to communicate through an interpreter - it takes at least three times as much time, and in addition, there is no complete certainty that you hear exactly what the other side is saying. Imagine that you have only two minutes and estimate how much time the translation will “eat”.

    In addition, if you yourself can’t imagine your project, you probably won’t be able to communicate with customers - this is how investors look at it.

    Here is a real-life example: 3 projects on Start-up Rocket were presented by translators, and the main presentation went very smoothly with them. But over the next 5 minutes, their authors managed to answer only 2-3 questions; and the most unpleasant thing was that after the main part all the translators left, and as a result, the authors of the respective projects lost the opportunity to communicate with Steve and other interesting people. But the rest of the startupers enjoyed it with pleasure, due to which each of them had noticeably more than 10 minutes allotted for the presentation within the main part.

    6. Elevator pitch, made for the investor personally, often works better than presentation at the competition

    This is my personal experience. I think the fact is that with personal communication you can remove a lot of questions right away, and in addition, you can adjust the pitch, evaluating the emotional reaction of the interlocutor. For example, if you see that the last phrase you said was puzzling, you can give a more detailed explanation. Conversely, if everything goes smoothly, you can safely move on, skipping less important details. ^ ^ On the other hand, making great presentations is an incredibly useful skill.

    Conclusion


    I am grateful to everyone who read this opus to the end - it seems that I have never written such an amount of text before. I really wanted to write about everything briefly, but for some reason it didn’t work out - it’s still difficult to squeeze into several paragraphs for almost 8 months of my own life. Apparently, the additions will be short.

    In the end - a short instruction for those who decide to compare themselves with others on 9facts :
    • Indicate your city or country at registration, otherwise your facts will not get into the tops of the city and country. We are trying to determine the city or country by IP, but so far this option does not always give the correct result.
    • Turn on fact providers. In a few minutes, the service will collect facts from those services that you have connected, but they will get into the ratings within 4 hours.
    • Try adding the fact manually. If you don’t have any ideas, take a look at the global fact list or the list of recently added facts . In the context menu of each fact there is "Add fact like this".
    • Join a group, or create a new one. For each group, its own fact rating is also built.
    • Invite your friends. By the way, you can invite a friend (or several) in one action and create a fact about him - for this you need to enter an e-mail in the search field when selecting those to whom the created fact belongs. Facts created for friends will be kept private until they themselves make them public.
    I will be glad to any of your questions and comments. And interesting ideas regarding the improvement or promotion of 9facts - even more so.
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