Location, location, location

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Location, location, location is a key success factor with consumer retail businesses. I argue it is a critical success factor with technology startups in Europe as well. Recently I've seen this first hand how location has impacted multiple startups. Location hits hard on multiple areas (priority depends on each situation):

  • Ability to recruit. Millennials needs to be either near public transportation or short trip drives with Car2Go or other ride share options. They also require access to urban on-demand services like food delivery. Of course this means being located in larger, 'hipper; cities across Europe. So while there might be cheaper rent in the suburbs, these startups find recruiting younger talent almost impossible. 
  • Access to capital. Often used with Silicon Valley which has the highest concentration of venture capital on the planet. In fact, it is the same for Europe. Investors are extremely local. They much prefer 'backyard' deals whenever possible. The firms that have been successful across Europe all have deep local presence in those areas. Thus capital is highly concentrated. So where a startup is located matters. An entrepreneur is always fundraising even when they don't need money. Thus being located where the capital is means you are a quick metro ride away from updating a VC over a cup of coffee. (it works). All those entrepreneurs I've bumped into boarding planes from Frankfurt to Berlin know exactly what I mean.
  • Concentration of knowledge and talent. Cities like to label themselves as 'centers' of something in order to attract businesses and talent. But the reality is, large businesses concentrate their research centers and labs around startups and capital. By default, these locations then become the 'innovation centers' for industries that explore, build, and adopt the next generation technologies and products. The best talent, the best ideas, and the willingness to fail to get it right.

Experiences shape our personal thinking. My experiences recently have confirmed that location for startups matters a lot in Europe. What has been your experience with location?

 

Acquisition

Today's topic is always the best one to discuss. I'm excited to announce that a startup in the Bolt Capital family has been acquired.

Portadi has been acquired by OneLogin, the leader in Cloud Identity and Access Management (IAM). The companies share similar views which we at Bolt Capital support: SaaS owns the enterprise. API are the glue for connecting SaaS apps. Employees have more control over administering and using the right tools for the job, but governed and secured by the IT department. 

The marriage of these Silicon Valley companies will bring Portadi to a larger audience faster, and move into the enterprise were OneLogin has a significant footprint. More via TechCrunch article.

Dusan and Tomas, the founders of Portadi, are rock star entrepreneurs. They have unlimited energy and a will to succeed. Combined with hard work, it allowed them to build Portadi into an amazing company. I started using v1 of the product in 2014 and honestly have used it everyday since. It is 100% embedded into my daily work. 

Here is Dusan's CEO annoucement: http://blog.portadi.com/onelogin-acquired-portadi/ 

Crunchtime

I love NBA playoff basketball, especially when there is a highly competitive series that comes down to a final game 7. I woke up at 4am in Frankfurt to watch the end of the Warriors and Thunder series. I sure hope you watched the entire series. It was fantastic competition. With the Warriors down 3-1 games and on the brink of elimination, they fought back with two wins in a row. And ultimately the series got boiled down into a 12-minute last quarter of game 7 to determine the winner. Called Crunchtime in the world of sports and this is when superstars become legends, new stars are born, and aspiring stars get exposed (insert your own clich√©). 

There is a very fine line between winning and losing. Not unlike sports, the same is true with startups that succeed and the ones that fail. I saw a few things during game 7 that ring true with young companies.

First was execution. It was a major factor, if not the defining factor, in the Warriors winning the game. They ran their plays, passed the ball around and stuck with the same formula they found to be successful throughout the entire series. Startups build a product, market and sell it, and maybe even pivot, all with the goal of finding a repeatable model. Once they do, they exploit it to their advantage and execute like crazy just like the Warriors did.

Second was fight. I was shocked how it appeared that the Thunder stopped fighting with about a minute left in the game. Its was like they accepted an outcome of losing even when the game winner was not determined. Startups have to fight for everything - first customers, the best employees, VC funding, etc. They can never give up and never stopped until the clock hit zero, no matter how bad things seem to be. So many times startups come within seconds of failure only to climb out the hole and win. 

Finally was team effort. Everyone contributed for the Warriors by making shots and key defensive plays. Because of their execution and fight, each Warrior player was empowered and expected to provide a meaningful contribution. But when it was time for the Warrior's leader to step up and take responsibility, Steph Curry took and made the big shot. No startup wins on the back of one person. It is always a team effort. And no startup will win without a leader (leadership team) to make the critical decisions at the right time to bring the win home. 

What do you believe startups can learn from sports? 

A Common Language

My new home of Frankfurt is trying to make a name for itself in the Fintech startup community. Recently, the city and State of Hessen put out a request for proposals to create a Fintech center, and in conjunction hosted an event for the submitters to present their proposals to the public. Moreover, every week there are numerous startup and technology meetups, CEO interviews, panel discussions, and thought leadership articles.

But there is a problem. There is no common language. 99% of startup and tech events are in German, while Fintech is international. Startups in general are international. And like it or not, that common language is English. In addition, having recorded content in German limits its distribution to other parts of the world, dramatically limiting Frankfurt's ability to promote itself as a startup hub and thus attracting entrepreneurs along the way. Unless a company's only market is Germany, then entrepreneurs will need to present their business in English, sell customers in English, raise money in English, and hire in English. Talent from all over flock to startups with these commonalities.

Everyone in Frankfurt and the surrounding areas has been accommodating with me, and I appreciate it. But there are many people that don't speak German and thus don't get involved with startups here. When in Berlin, Paris, Barcelona, Amsterdam and other startup hubs, 99% speak English as the common language, but in Frankfurt it is the opposite. 

Thus, if Frankfurt is going to be taken seriously as a Fintech center and a startup hub, then a good starting point is a common language.

Right or Wrong?

A bunch of well known VCs were asked 'what's the biggest change to technology in the next 5 years'. It's worth the 2-minute watch to get their answers. They saved the best for last. 

My answer is sensors. I believe the phase of experimentation is coming to an end with the realization of powerful use cases and benefits, both in the industrial world as well as the consumer market. What is your answer?