Gunnar Holmsteinn talks

6 reasons for bootstrapping before accepting VC money

Tue, 04 May 2010 20:55:00 +0100

Today we at CLARA closed a 1 million dollar round of funding that will provide the working capital we need to scale up and get us ready for world dominance. Until now we have been making every penny count in bootstrap mode. I’m writing this to explain my thoughts about bootstrapping, what it has done for us and why others should do the same.

When I first heard that we should “Bootstrap” it left a huge question mark on my face. I immediately thought about my statistics courses in the university; why in the world would my start up need to to derive estimates of confidence intervals for estimators of parameters of some statistical distributions. I actually thought about some of the R programs I wrote and started thinking how that could be applied. I eventually said that there was no need for that anytime soon, maybe a few years down the road. That left an even bigger question mark on the face of the guy I was chatting with.

It turns out that Bootstrapping is also a phrase in business finance. It’s about keeping a tight fist on all your expenses and knowing that Cash Flow is more important than your mother. Something we’ve always been keen on doing but never had the correct lingo for it. In the past two years, we’ve put a huge emphasis on doing stuff that people, especially the people that pay us, like. The team has been very focused on organic growth and building our company the way we want.

In my mind, starting with little to no cash and working your way up is a very healthy start for a young company having to figure out how to make a great product.

Here are my Top 6 reasons why I think it’s important to start by bootstrapping:

#1: Vision

We managed to justify a greater evaluation of our company simply by waiting. The founding members will still hold a majority stake in the company for years to come. This is not all done with out help so we will of course continue to learn from the best around and surround ourselves with big thinking leaders.

When we started CLARA we knew exactly what we wanted to achieve. We didn’t write the typical mission statement because we found that was too forced. Instead we had two mantras that we still look at today when we are thinking about our next moves.

First: we want to help companies understand their customers.

Second: we want to make the environment for market research better by developing the technology needed.

This is our vision. Staying true to it is more important to us than anything else. These mantras are embraced by every member of our team which help with every decision they have to make throughout our development.

#2: Building

By bootstrapping we’ve had the freedom to build the company our way, not just copying some culture from outside ‘owners’. We have a simple rule banning cords on the floor because that interferes with all the skateboarding and just recently we cracked open a wall to fit in our new bar. Those things, and hundreds more like them, form the companies culture; our culture.

#3: Proof

When you show results, asking for money gets a lot easier. There are loads of people out there with great business plans who say that all they need is X amount of millions so they can build the most awesome products you’ll ever see. That’s not gonna happen, unless they’ve already made someone very rich. By building cash flow and getting solid reoccurring revenues, you are not only getting the money, you are also getting the best proof there is that you have something worth investing in.

#4: Options

Once you don’t need money, you’re in a great position to talk to investors. There’s nothing more frustrating to them than someone not needing their money, and that’s a good thing. We got to pick the very best investor that suited our “super awesome growth strategy”^{©. Our new boardmember brings in a vast amount of knowledge in the high-tech start up scene and a great international network since their venture fund invests in the US, Europe and Asia.}

#5: Team

When bootstrapping, you’re making sure that your team members don’t become too spoiled and careless. The team understands that their paycheck totally depends on their efforts and it really makes them sprint to perfection!

I’m truly honored to work with such a great team. I love you guys!

No homo.

#6: Debt-Free

By bootstrapping, we’ve never had to owe anything to anyone. At one point we had the option to borrow money from the banks, but chose not to because we knew we could pull through. When you are running a company in an economy where a greater majority of companies are legally bankrupt, the young debt-free start-up is the prettiest girl at the ball.

Being dept free is awsome when negotioting, whether it’s lowering the rent at your new office or talking to some VC’s. Put yourself in the shoes of a VC investor, would you invest in an tail of old dept? Or would you look at the young energetic start-up that only needs money to grow, expand and scale their proven technology

How to bootstrap?

I sincerely recommend focusing on organic growth and building up your start-up the Bootstrapping style, here are a few tips from what we’ve done over the past 2 years.

To save money, we’ve …
… applied to every grant there is, and received all of them, minus one
… borrowed desks and chairs from a great friend!
… bought used computers
… bought used sub-par servers, and thats actully helped us write even better and faster code!
… borrowed (read: stole) internet from a neighbor… eaten noodles!… never paid rent, by jumping between incubators
… stolen pens and a stabler at client meetings
… used cheap post-it notes and scotch tape
… Ikea!!
… attended all lectures and cocktail parties known to man that have free food and drinks
… only hired people we desperately need, and brought them in as shareholders as well
… drunk beer with very smart people, instead of paying for expensive consultants

… and loads of other stuff!

Interdisciplinary Start-ups

Wed, 28 Apr 2010 14:49:19 +0100

I just came from an talk at the Reykjavik University. Two young students decided on their own to host a series of lectures on the importance of having a interdisciplinary background. They asked me to talk about three things:

About CLARA, our startup.
How we use software in our field.
How is it going? What have you learned?

Here are the slides from my talk:

Interdisciplinary Start-ups on Prezi

Innovit Entrepreneurship Competition

Sun, 25 Apr 2010 18:24:00 +0100

The Golden Egg, Innovit’s Entrepreneurship Competition ended the other day with the following winners:

In third place we saw Nude Magazine, A great new Icelandic online fashion magazine and in first place where ReMake Electric, saving you loads of money and making your house safer by bringing us the next generation of electric safety. Unfortunately not everybody can get the great runner-up, this years runner up was the Transmit Team with Brand Asset management program Brand Capital. I’m looking forward to the Beta!

I was asked to talk my experience during the last two years and share my thoughts on what we thought was important in starting a startup.

The following five points are things that I believe have helped us a lot;

1. Talk.

Whenever you get the chance, talk about your idea with all the enthusism you’ve got. You will get better at explaining your ideas, get great advice about your next steps and people will gladly introduce you to people who can help you.

2. Speed.

Do everything as fast as you can and in as little time as you can. Build a prototype and throw it out there to get feedback. Fix it as fast as you can and iterate. You should always have something new to say to the people asking you, especially if they are investors, they love progress.

3. Honesty.

Although you want to hype your idea or product, building to high expectations is never, ever, a good thing. You should be very proud of the what you got today and talk very highly of those things.

4. Team.

When everything is going great, you will run out of time and will need more talent to join you. When you get to that point, hire people that are way smarter then you.

5. Have Fun

Starting a company is just about the most difficult thing I can think of. It’s going to take way more time then you can ever imagine. So you’ve got to have some fun while doing so.

This is translated from Icelandic. This is also just a short recap. I hoping to spend some more time on writing this.

Ministry of Ideas Explained

Wed, 31 Mar 2010 12:26:00 +0100

I’ve been getting loads of questions about the Ministry of Ideas. It recently opened it’s portal to English speakers so I’ll try to explain it a bit in this post.

A few weeks after this small economic thing we had in Iceland one of our serial entrepreneurs, Guðjón Már, called a group of peers and asked them to meet at a local pub. We talked about all the great things that could come of this and decided to meet weekly, the topics for each meetup where to be posted at our facebook page.

This was the beginning of the Ministry of Ideas. A think tank focusing on the brighter side of a total economic meltdown. A grassroot organization set up to communicate knowledge and facilitate networking among Icelandic entrepreneurs. Operating without any constraints, strings to financiers or favors to politicians.

During this past year the Ministry has exceeded everyones expectations, with loads of powerful stuff originated within, and spun of to make the world, starting with Iceland, just a little bit better. Those project include;

An TEDxReykjavik event bringing great Icelandic minds together for some talks.
Society Initiative (Samfélagið Frumkvæði). An online meeting place for A) Ideas B) Location and C) Knowledge.
A one pager to the leaders of the G20 nations. Outlining how Iceland is the perfect country for prototyping a more sustainable world. It got Obama to say; “let’s check Iceland out”
House of Ideas. The mission is to create 500 new jobs in two years. The University of Reykjavik and the Academy of Arts are running the show. So far so great!
Ministry of Ideas dot is - Getting great ideas into the right channels for execution. I’ll explain in more detail:

The Ministry of Ideas dot is

It’s purpose is to get the truckloads of great ideas in front of the right people, and make them happen!

You simply post your idea, it’s as simple as posting a new status on Twitter or Facebook. Then your idea gets it’s own life, people can agree or disagree, they can enter arguments or counter-arguements against it. People can even vote arguments helpful, or not. The purpose here is to bring the discussion up to a greater level. Have people discuss it from both sides and let newcomers make up their own mind.

On to the next great bit of The Ministries Garden, or whatever a thing like this is called, Social-voting?… The active users, those who take part in the discussions, vote on ideas and comment, get ‘Karma-Points’, a made up quantity that is used to get a better idea about who cares the most and has the most to say about certain topics.

Once a week, the most prominent ideas get a chance to be featured in a radio talk show in front of about 40% of the nation. Thais gets more people excited, or worried, about the idea and brings another wave of civilized discussion. When ideas are thoroughly though out, they are brought to a dicision maker. If it’s an idea on schools, the gyus with the most related ‘Karma-Points’ get an hour long meeting with the Minister of Education.

If it’s an idea about creating a Start-up competition that ends with an prototype (but not a business plan) it’s brought to the attention af a VC, an incubator and maybe a Ministry. And that, me deer friends is exactly what happend today!

Prototyping

An idea i posted only 7 weeks ago gained great traction and is now in the hands of Auður Capital, who runs BJÖRK VC. Innovit, Innovation and Enrepreneurship Center and the Minister of Industry.

Here’s a short video where I explain the concept in Icelandic.

If you look at the bigger picture here it’s not that we have a voting system. Democracy is, hopefully, not new to most of us. It’s the process and getting great ideas in front of those who can make it happen.

Global Entrepreneurship Congress

Mon, 15 Mar 2010 12:34:00 +0000

A great friend and mentor, Andri Heiðar Kristinsson founder and CEO of Innovt, is currently in Dubai attending the Global Entrepreneurship Congress. It’s a brilliant gathering of the entrepreneur ecosystem from around the world. Topics included raising the awareness levels among a new generation of entrepreneurs in the Arab world.

I was booked for another conference in San Fransisco so I didn’t get a change to attend this one. However I had a small role in their opening ceremony via video. A few months back Hillary Clinton, Richard Branson and I created a short video explaining the Global Entrepreneurship Week.

One Young World in the University of Iceland

Wed, 24 Feb 2010 00:58:08 +0000

I have a great opportunity to talk to a great audience at the University of Iceland about our experience at One Young World. Here is the prezi!

OYW on Prezi

The One Young World Summit

Sat, 13 Feb 2010 15:12:00 +0000

I just arrived from the One Young World Summit where young people from all over the world came together to discuss the worlds problems in search of better ways. I’m truly thankful for the chance to attend this conference, about 1000 delegates where chosen from over 15.000 who applied.

Kofi Annan, Archbishup Desmund Tutu, Boris Jonson, Oscar Morales, Bob Geldof, John Kerry, Clarence Seedorf, Wyclef Jean and HRH Haakon of Norway where among the councellors of One Young World and listend to our Ideas.

I talked about the following points:

In Iceland we hve this small economic thing
Leave us alone and well take our icy weather back
I would rather want to focus on the brighter side of a complete economic meltdown
A few weeks after the economic downturn we founded the Ministry of Ideas
Gathering great ideas and finding the right channels for execution and implementation
The National Assembly with .5% of icelanders in a single room, what matters?
Iceland as a country for prototypng a sustainable society
Baracks Obama interest on our One Pager!
How can we start Ministries of Ideas all over our ONE world?

Overall a great experience!

PR association lunch meeting

Sat, 12 Dec 2009 19:07:00 +0000

Andrés Jónsson invited me to talk at a lunch meeting at the Public Relations association of Iceland. Andrés is currently one of the only PR guys in Iceland that gets it - I truly hope he’ll be able to open up more Icelandic eyes to the world of social media

My talk was on how Icelandic companies where using social media and and how that has been rapidly changing over the past few months. However, I feel that we can change this a whole lot faster! I also showed them our new product, Vaktarinn, and got a feeling that most of them would give it a spin.

PS. I ordered “loku”, which i thought was a sandwich but turned out to be some kind of marginally good fish, can’t say I recommend it.

University Ventures

Thu, 19 Nov 2009 20:03:00 +0000

The University of Iceland has, from the beginning of CLARA, always been helpful! We received one of our first grants from the Rector’s Fund and our first office space at Innovit was inside the University.

Therefore it has always been great to go back there and talk about our venture with the students.

I talked about our long and hard journey from the the classroom to the founding of our company to today. With great emphasis on openness! Openness it has helped us get great input, raise awareness and get people so interested our idea that they quit their “high-salery/low-fun” job and join our exciting adventures!

Global Entrepreneurship Week

Mon, 16 Nov 2009 00:00:00 +0000

I had the privalge of working with the Kaufman foundation to help with the Global Entrepreneurship Week

For one week, millions of young people around the world join a growing movement of entrepreneurial people, to generate new ideas and to seek better ways of doing things. Countries across six continents come together to celebrate Global Entrepreneurship Week, an initiative to inspire young people to embrace innovation, imagination and creativity. To think big. To turn their ideas into reality. To make their mark.

Hillary Clinton, Richard Branson and I made a short video explaining the concept:

999 Social Media Conference

Wed, 09 Sep 2009 15:24:00 +0100

Here are my slides (or more precisly my Prezi) at the 999 Social Media Conference:

I talked about three things;

1) Some trends we have noticed in the change of the how we look at marketing. How the content creation and media is going from the mass media to us, how companies should involve their customers in a conversation instead of looking at them as an audience listening to there message. Then a few words about the differences between the traditional Market Research and the way of Listening.

2) A few do’s and dont’s in a story form. The Dell Hell story as the first huge example of how not to do things and the story of how Scott Monty used is Jedi Social Skills to extinsh a potential PR fiasco for Ford

3) Finally a case study from the first Icelandic company to systematically listened to the online discussion: news, blogs, comments and forums. A prime example about how to listen there customers thoughts and worries.

Would love to hear your thoughts!

What is a Brand?

Fri, 13 Mar 2009 14:05:00 +0000

The definitions of a what a brand is are endless.

I asked this question in a lecture at the University of Reykjavik

I have a feeling that a brand is the collective of what people think about a brand, how people feel about a brand and what people say about a brand. And notice, this explanation doesn’t include the marketing director or brand managers, nor what he writes in the brand statement or any presentations.

How do you define a brand?

The Future of Market Research

Thu, 05 Mar 2009 17:32:00 +0000

I love opening up discussions about what comes next in the market research sector. How can we know more about our consumers and what means do we need to take to get a better understanding of their behavior?

A was asked to be a guest lecturer in the University of Iceland for students mastering in marketing.

The future of market research

View more presentations from Gunnar Hólmsteinn.