How to Keep European Talent from Going Abroad

Paul Chen

Ladies and gentlemen, meet Jacek Karpinslki.

He was a Polish pioneer in computer science. During WW2 he was a soldier of Batalion Zośka of Polish Home Army, awarded multiple times with a Cross of Valour. Later he became a developer of one of the first machine learning algorithms, techniques for character and imagerecognition. In 1960, he studied  at Massachusetts Institute of Technology and Harvard University for 2 years. He also founded the Laboratory for Artificial Intelligence of the Polish Academy of Sciences in the early 1960s. In 1971 he designed one of the first minicomputers, the K-202.

This is the K-202 minicomputer.

• 16-bit word, modular architecture (with room for extension boards)
• memory addressing up to 8 MB, some of K-202′s had 144 kB (Mac 1 in 1985  had 128 kB)
• implemented languages:
• ASKK (assembler)
• BASIC (Beginner’s All-purpose Symbolic Instruction Code )
• FORTAN (numeric computation)’
• ALGOL(nice procedural lanugage)
• CSL (Computer Similutation Language)
• BICEPS (we don’t know what exactly it is, but we like the name)
• etc…
• price: ~3000 $ (IBM PC 5150 in 1981: 8bit, 16 kb RAM: $1,995.00)
• total number sold: 30, incl. one for CERN

As you can see the K-202 was a decade or two ahead of its time. So you are wondering to yourself, why haven’t I heard of this dude? Unlike the two Steves in California, the political situation in Poland was different. At the time, the development of high technology was managed by Comecon, a communist bureaucracy with the decision makers in Moscow. Because the development of such a piece of technology was seen as being threatening, all further developments were halted. Only 30 machines were produced.

What happened to Jacek? He disappeared into obscurity and became a pig farmer and left Poland later on. He died in 2010 with financial problems in Wroclaw.

Do you think things would be different in 2015, Poland?

Not necessarily. Right now, the best way for a super promising Polish startup to scale and grow quickly is still going abroad. They will have to keep the engineering in Poland to keep costs down but take their business development to either Silicon Valley, London, or New York City. Sometimes, they might even relocate to the US.

I am an American. I love my country. I would love to see some promising talent go to the US and develop there and become a great American company. However, with so many unicorns being developed in the US already, it would be a nice thing is some CEE company and country would get a shot at it. In 2014, Avast software from the Czech Republic achieved their $1 Billion valuation. Poland is still waiting for theirs.

On the one hand, we want to Polish companies have become increasingly innovative, but we do not encourage them to "make something new." In a report from the World Economic Forum, Poland ranks 72 in terms of innovation. Poland ranks 98 in terms of businesses spending money for R&D, and 89 for government tenders for high tech solutions. The governmental tenders are often bogged down by red tape.

A lot of research is indeed done on major university campuses. Many of it funded by the EU. However, there is a very low amount of transfer of technology from the campus to the market. Some of it is due to ignorance, others are the lack of knowledge of business professionals in how to use the new technology efficiently. Many Polish businesses are very reluctant to invest in new technologies such as iBeacons because of thin margins and the lack of vision.

It is not very easy to invest in Polish startups either. It is very difficult for foreign investors to invest in Polish enterprises because it's not worth it for them to invest low sums (like <$1m) as the legal costs for them are huge (getting to know the law, hiring a legal firm, taking the risk of investing in a foreign market) and the whole thing about getting a notary. For the Polish VCs, it isn’t any easier. The costs of investing in an early stage startup is expensive, the market is over-regulated, the terms are not flexible, and there is a double taxation of capital gains.

Recently, there were much talk in the popular media about politicians support the development of a fertile environment for the growth of innovative enterprises. However, right after the Presidential election of Andrzej Duda, all the energy inside the Parliament quickly subsided.  

Currently, there are many promising Polish startups like Estimote, Base, UxPin, and Azimo doing well internationally. In May, MIT Technology Review awarded some young Polish entrepreneurs their Innovators Under 35 Awards.  What if they all left Poland for greener pastures abroad?

How to fix it?

THE STARTUP POLAND FOUNDATION PROPOSES:

1. Promotion of startup investing culture.

2. Consultations with public sector regarding legislative changes that improve growth of the startup ecosystem.

3. Increase of the data’s availability gathered in public offices, at every level of the government administration.

4. The position of Chief Technology Officer (CTO) at various levels of the administration – from the central government to local governments.

5. Increase of the attractiveness of Polish market to specialists from outside the EU.

6. Entrepreneurship education in schools from an early age, conducted by trained teachers with the support of practitioners.

7. Better and more effective incentives for the creation of ”startup schools”.

8. Simple procedures for the transfer of public funds.

9. Tax mechanisms friendly to business angels.

10. Creating a complex support system and procedures for startup investors.

These 10 points are explained in depth in this PDF.

Thank you for reading another one of my posts done just for you!  If you liked what you read please share it by using one of the buttons up top and check out other posts in this blog.  I don’t want you to miss out on future posts so please follow me on Twitter @Eurodude23.  If you haven’t done it already, please like my Facebook fan page by clicking here!  See you next time!

What I learned about Krakow and Poland after two years of Blogging

Paul Chen

Two years ago, I posted a report about the Hive 53 swarm. However, it wasn’t the first time I had written a blog entry. I wrote something for Centrum Studiów Polska-Azja about the Sino-Japanese conflict. It’s funny how that situation has come back into consciousness as the Japanese government is in the process of authorizing their troops to take on military exercises outside Japan.  This has people in China thinking 1937 all over again.  

Well after two years of blogging about the startup ecosystem in Poland and the CEE region, there are some things that I can report.

Small Pond Problem

Despite a population of 40 Million, the startup ecosystem in Poland is still like a small village. Everyone knows everyone else and gossip spreads quickly. Recently, the foundation Startup Poland has submitted a manifesto to the guys in Warsaw in the effort to get the government to pass legislation to streamline certain bureaucratic processes and make investing easier in Poland. Visas for foreign startups and educational programs were also included for future consideration. In many separate communities similar manifestos has also been submitted to the local governments.

From day one, I felt that governmental lobbying is essential for the success of the startup ecosystem. I approve of their efforts. And I would love to get in on the conversations, even if I am not Polish. In the EU, they are in the process of implementing different programs like the Horizon 2020, and Digital Single Market to make it easier for entrepreneurial activities easier in Europe. Despite their efforts and honorable intentions, I believe their roads will be a hard one.

Their main problem is money and popular support. A BPO such as KPMG, DHL, or Shell can come to a city and almost get the keys to the city right away because the city knows that this company will be able to employ a vast amount of jobs and investment to its population right away and help the mayors and governors look really good. The startup ecosystem can’t boast the jobs numbers nor the investment capabilities yet.  

Lack of recognition from the locals

As far as popular support, they aren’t anywhere close yet. If you go to Milwaukee or Prague and ask the locals what is the city known for they will say beer. If you go to Detroit, 20 years ago, they will say cars. If you go to an average Krakowian, they will not say beacons, even though Estimote and Kontakt.io are based in Krakow. I don’t blame them for the lack of recognition. They have a business to build and limited funding. Some local journalists, from what I heard, are trying to scare the public with the tracking abilities of the beacons. Easy, unless the beacons are able to track GSM signals, simply turn off the WIFI and the Bluetooth on your devices. Problem solved! They have a golden opportunity for easy public outreach with the implementation of beacons in MOCAK a local contemporary art museum. Yet, the signage in the museum is minimal and no substantial publicity in Polish has been put out.

Krakow was recently named #7 in Travel + Leisure’s top 10 global cities to visit. As a result, I am anticipating a bump in tourist numbers. Wouldn’t it be great if we had beacons in all the major museums and certain public spaces to showcase a locally built technology? It would provide many opportunities to get user cases and get people to go back home talking about beacons in Krakow.

Same Old Problem

Poland is in a peculiar situation for people who want to operate a business. With a population of about 40 Million and another 10 to 20 Million Polish speakers distributed world-wide, it is quite enough to do everything locally and earn a good living. For founders of lifestyle startups, it is possible to do everything in Polish and earn a pretty comfortable living. But, you wouldn’t be a startup, you would be a SME. There is nothing wrong about that, but you just have a ceiling on your ability to grow.

However for the outliers who would like to embrace the startup definition and grow rapidly, you have to get rid of your Polish language right away. Sure you can speak it between the employees and local vendors, but you will need to do everything in English.  After all, English is the lingua franca of the startup and the business  world. This means, your landing page will have to be in English and all your social media and press communications will have to be in English. OK, you may have a Polish version of your landing page, but English must be the default setting.  

Some of the English I’ve seen on the landing pages are horrible. It felt like they took their Polish content and just used Google Translate. If a customer or investor comes to your landing page and sees that, they are going to know something about your startup. Before you publish anything, you should employ a wonderfully communicative native speaker who understands technology and business, like me,  take a look at it. That said, I am however quite impressed by the English levels of many of the founders and VCs here. Ela Madej of Amicus, Piotr Wilam of Innovation Nest, Pawel Nowak of Contellio, and Jakub Krzych of Estimote all have done amazing well in their language training.

I think the Polish startup community is moving in a positive direction. In the last year, there has been a $1 million exit. Many startups have moved from their coworking space into their own offices. However, there are still a bit to go before they can think about the “U” word. They need smart investing, more diversity in terms of population and types of startups. Whatever happens, it’s time to stop shouting,’Hey, there are high tech startups in Poland too’ and start solving major global problems. Poland has produced people like Skłodowska-Curie, Copernicus, and Wojtyla. Who’s going to be next?

Thank you for reading another one of my posts done just for you!  If you liked what you read please share it by using one of the buttons up top and check out other posts in this blog.  I don’t want you to miss out on future posts so please follow me on Twitter @Eurodude23.  If you haven’t done it already, please like my Facebook fan page by clicking here!  See you next time!

Peter Szymanski tells us about Investors Introductions

Paul Chen

For a start-up to get off the ground it needs funding. There are generally two ways to do it, either save up and bootstrap it or getting money from investors.  Unless you have a nicely paying job, won the lottery, or have rich relatives, you probably will have to do the latter. What are effective ways to raise funds? We got some advice from a successful entrepreneur.

Peter Szymanski is an entrepreneur and attorney born in Warsaw but is currently based in Silicon Valley.  He has fourteen years of experience as an entrepreneur, CEO, attorney, and angel investor. Peter was also a board member of a fund for social entrepreneurship in San Francisco. He has raised more than $35M as a startup executive, and advised on more than 500 financings, helping entrepreneurs raise more than one billion dollars for their startups during his career.  He has worked with two Polish startups, Intelclinic and Fido:labs, helping them grow their business. Currently, he is the brain behind Silicon Valley Counsel. It is an encyclopedia organized by topics targeted towards entrepreneurs of all levels.  It contains shareable advice in under 140 characters.  This advice is based on full length articles written by some of the most well known entrepreneurial minds of our time like Marc Andreessen, Peter Thiel and our own Piotr Wilam. These articles are correctly referenced and linked.  

This past month Peter did a tour of Poland making a stop at Bitspiration in Warsaw and a Hive 53 Swarm in Krakow. The following is based on his presentation at Bitspriation.

Poland is in the midst of one of the most prosperous periods of its thousand plus years of history. In the last few years Poland has remained the fastest growing economy in the EU. Between 2014 and 2020 8.61 Billion Euros will have been invested in Polish research and development plus innovation.  There are over five hundred start-ups listed on AngelList.  And more and more start-ups like UxPin, Estimote, and Brainly have secured over a million dollars in their seed rounds. Internet and smart device penetration in Poland is set to jump in the next decade. It may be surprising to learn that population wise, Poland is in the top 10 worldwide for smartphones usage (22M people) and top 15 for internet use (25M people).  Therefore, the time to launch a technology start-up in Poland is now.  

However, you need funding. What to do?

Step 1: You need a Pitch Deck

A pitch deck contains about 15 pages of material.  The topics that should be covered include purpose, problem, solution, application and team.  An average investor spends less than four minutes on each pitch deck. You should explain why your start-up exists then talk about the rational behind the product then end with some information on the team. Raising your fund in a round will take more time than you will expect so be patient.  

Step 2: Finding the right Investor

So you got an awesome pitch deck prepared, what now? You will need to get to know some investors. Googling investors in your area or country or top investors in Silicon Valley is a nice idea. And you might think about sending them an email with your pitch deck.  However, since they get hundreds and in the Valley, thousands of pitches, your email will probably not be read at all.  The best way to get an investor to notice you is through warm introductions.  If you are lucky enough to be friends with Peter or a well known start-up founder like Marcin Treder of UxPin, then they may be happy to make some introductions for you, but likely only if they already know you. If not, you should attend some free and paid start-up events and network. The quality of networking is a bit better at paid events.

When you do meet a well known entrepreneur, don’t just ask for an introduction right away. You need to develop a relationship with him or her first. Allow them some time and more meetings to get to know your start-up and you as a person. Remember, when an entrepreneur introduces you to an investor, they are putting their brand on the line.  Don’t be too business oriented, the best results come from informal talks about something that interest them. Once they know you better, they might introduce you to an investor that is better suited to your situation.

Once you are introduced to an investor there are 10 things that you need to know:

1. You should exhibit an extensive knowledge of your market and be ready to back every hypothesis you make with statistics and trends. And you should have a proven track record of executions. They don’t all have to be successful. The investor needs to know if you can actually do the thing you set out to.  
2. You should have a road map to rapid growth and explain how you intend to keep the customers that you have acquired.  A good business is one that is able to hold on to existing customers.
3. You need to be able to explain how you intend to scale your business so you have the capability to grow from the local to the global.
4. When you have returning customers, your revenue stream is more predictable and when you are able to scale, growth comes naturally.
5. You should be able to control your distribution and keep your price competitive. With that you are able to do quality control to retain your customers and keep them happy.
6. Founders with a longer track record is a more secure investment.  If that is not your case, it’s better if you can do more with lower number of hires. It keeps the level of complexity low.
7. In the beginning of the process you should show that you can understand what your customers need, be able to give it to them, and collect money from them upon delivery.
8. You should be able to distill your pitch down to an elevator pitch which should last between 60 to 100 seconds with the focus on frequency, density, and pain. In other words how often does the problem occur, how many people have it, and what’s the problem with current alternatives.
9. You should decide whether you are building cheaper typewriters or improving typewriters to word processors. Investors are more interested in the latter.
10. You should be aware of whether your start-up exist because you have a passion (consumer) for something or you want to solve a problem (enterprise).  

Peter goes on to advise you that the way you can judge an investor isn’t how he treats his star investment, but how he deals with his average or worst investment. That is how you can judge his leadership skills.  

Most importantly, investors are people not ATMs. If a start-up is able to maintain a good relationship with them, the ROI for both parties will likely be more than just wonderful profit.

Peter adds that there are top-notch investors like Innovation Nest in Poland that are very active in the Poland startup ecosystem, and with global ties and excellent reputations. Building relationships with such funds is a great way to meet other investors as well.

Thank you for reading another one of my posts done just for you!  If you liked what you read please share it by using one of the buttons up top and check out other posts in this blog.  I don’t want you to miss out on future posts so please follow me on Twitter @Eurodude23.  If you haven’t done it already, please like my Facebook fan page by clicking here!  See you next time!

This is a repost of an article that originally appeared in Polish on web.gov.pl with permission.

My pick of the Top 10 Startups of the ChallengeUP IoT Accelerator

Paul Chen

Throughout this week at the Hubraum facility in Krakow, startup teams have been receiving valuable mentorship from experienced professionals from Twitter, Cisco, Intel, and Deutsche Telekom.  In general, the mentors are quite impressed by the maturity of this batch of startups.

Min-Kin Mak, Head of hub:raum Berlin was also impressed by their creativity. Throughout today and tomorrow, the startups will be making their pitches to executives and partners of the particitants of the ChallengeUp Accelerator in a closed session. Before tomorrow’s evening, we will know which 12 startups will advance on to the six months of intense mentoring in various European locations. The selected startups will talk to Deutsche Telekom, Cisco, and Intel about future steps over the weekend. The other 12 will not leave Krakow empty-handed. They will go home with some homework to make their value proposition even stronger as well as some wonderful connections in the industry. Everything will culminate in a sort of demo day/ pitch-off at a major tech conference in London this December.  The conference has yet to be decided.

Here is my TOP TEN from the batch of 24 startups in no particular order.

Semseye - A solution, built on the most advanced algorithms for intelligent video processing, provides the opportunity to increase efficiency in any retail business area.

DeviceHub.net - IoT web platform that gathers data, summarises it and gives you the possibility to remotely control your connected devices.

Admetsys - a first-of-its-kind artificial pancreas for hospital and surgical care, leveraging adaptive learning algorithms and counterbalancing treatment of insulin and glucose.

Oort - A technology based on intelligent devices that lets you control your whole living environment with a single app. It’s simple, universal and created to bring comfort & peace of mind for its users.

Tag2Sense - Custom-Designed sensors are able to sense environmental factors such as temperature, light, humidity, barometric pressure, vibration, shocks and location. It transmits this data in near real-time providing an essential picture of what’s happening inside of the shipment.

Senic - Nuimo: a programmable controller for your computer and connected devices.

Waylay - helps companies with remote machinery and devices to increase operational efficiency and build a service business model.

M2MGO - IoT-Application platform is designed to drive the progress and innovation of the IoT solutions! M2MGO features all components needed for creating a professional, state of the art IoT application.

PalleTech - connects cargo, warehouse and fleet information through smart pallets and an Industrial Internet of Things platform.

N-Join - Transforms any factory into a smart factory, increasing efficiency and reducing environmental impact in the process.

Thank you for reading another one of my posts done just for you!  If you liked what you read please share it by using one of the buttons up top and check out other posts in this blog.  I don’t want you to miss out on future posts so please follow me on Twitter @Eurodude23.  If you haven’t done it already, please like my Facebook fan page by clicking here!  See you next time!