LET'S TALK ABOUT: The Struggles of Startups
Thursday, September 07, 2017
When talking about successful startups, we often ignore that they were struggling at the beginning of their path. This is normal and part of the overall learning process. Obstacles require innovative thinking; if dealt with properly, these obstacles usually evolve into development and progress.
I have talked to Jorma Jürisaar, co-founder of the app "Weps," which helps you create a website with little effort. The user is asked a few yes-no questions and voilà, the website is built within 15 minutes.
Is this principle the future?
INTERVIEW
Hi Jorma, thank you for taking the time to meet me. Can you start by letting us know how the idea of Weps came about?
Before Weps, I was a student at Tallinn University of Technology. I actually started with Weps, or what became Weps in the end, before that, during high school.
Really?
Yeah. I was 17 at the time, I think. At the beginning, I simply ran a small web agency, making website for others, which brought me little money. From that, the idea kind of grew. One of my mates and I realised that people want the same website all the time. So we created basic website building blocks. This seemed to be a good idea and we started selling it. At one point, though, we understood that we can automate the whole process; that’s when this AI mechanism (editor’s note: AI = Artificial Intelligence) started coming into play.
So there is a chat and the user is asked what they want their website to look like?
Exactly. So you are asked, for instance, whether you want a map, whether you would like to show a video, what your favourite colour is, etc. These are the questions the web developer would ask you anyway.
And then Weps evolved into what it is now?
Yes. We didn’t have a proper starting point, so to speak.
I imagine that running a startup and going to university at the same time can be challenging.
Definitely. I actually had to drop out of university. It didn’t make sense to continue.
How is Weps funded?
Last year in September, we were in Berlin at the Axel Springer Plug and Play Accelerator. That’s when we got our first funding of €25,000. We were three guys living in a two-bedroom apartment, eating pasta every day for three months and trying to survive somehow (laughs). When the demo day came, we were really optimistic that we were going to raise one million for this project – that didn’t really happen. We had really high expectations. In January, however, all the investors from the Accelerator just dropped out. So we were basically at zero again. Luckily, though, one local Estonian investor who co-founded PlayTech, one of the biggest tech companies in Estonia, found us and invested €100,000 into Weps. And that’s the money we have, as of now.
Where do you get your revenue from then?
From our customers. It’s a subscription-based model.
How many customers do you have?
At the moment, we have 160 paying customers. And we have around 1,500 users who have tried Weps out. We allow you to build a website for free; if you want to publish it, you have to become a paying customer.
What do you think customers appreciate about Weps?
That it’s so simple and intuitive. You are asked a few questions and the website is built within two minutes. Moreover, you cannot do anything wrong; we guarantee our customers that they’ll get a very good website. This idea is working well. We are limiting the options users have so that the website, in the end, cannot be messed up. People like that.
At which “stage” do you think Weps is right now?
The focus is on finding partners. If you want to bring a product like ours to market, you have to spend a lot of money on marketing; which is difficult as a startup. You really have to build up a brand credibility. We are struggling to get through to our targeting customers directly.
Do you already have some success stories to share?
The second largest hosting provider in Estonia is going to incorporate Weps into their offering. This will be an important distribution channel for us. What is more, we have a collaboration with a local printing shop in India. The problem in newly industrialising countries, however, is that people want stuff, but cannot pay for it digitally; they only use cash. So we need local resellers (or rather sales agencies) as well, who can accept cash payments and then pay us.
How did this collaboration happen?
We actually contacted an Indian investor on LinkedIn who then asked us when we were coming to India with our product. It makes sense to expand to emerging markets. In developing countries, there is still a lot of potential, especially for online products.
What do you think is the biggest issue with finding an investor?
Such partnerships – getting a big enterprise customer, for instance – require an enormous amount of time and effort. If you are not a big company with millions of revenue, investors don’t care about you that much. It’s easy to get lost in the system. But luckily, we’ve survived so far. Some ideas work, some ideas fail; but that’s part of the game.
How do you go about finding investors? I wouldn't know where to start.
There is no standard procedure for that, really. We’ve tried so many things. At first, we had some friends who had friends who had friends who were rich. So we talked to them, but that didn’t really work at all. A lot of rich people or investors do not want to put money into startups, because it is risky. It’s easier to buy a property somewhere. In the end, I think, we paid more to get in touch with investors than we got back from them.
So you applied for a place in the Tehnopol Incubator?
Yes. While they don't invest any money in you, they help you with networking and mentorship. That helped us a bit when we went to pitch in front of the Estonian Business Angels Network (EstBAN) that regularly holds these pitching events. You basically present your idea in front of a bunch of investors. If you were convincing, they might give you their business card.
How do you prepare for these events?
You need to have a proper prototype. To raise money with just an idea is almost impossible. That might work if you have a previous track record; but if you are two young guys with little experience, you better show some numbers. The money we received at the Accelerator helped us insofar, as it brought about some credibility. People started thinking “it’s probably worth talking to these guys.” The Accelerator also helped us comprehend what the ecosystem is like.
Do you wish there were more investors overall?
It’s not like there is a shortage of investors; there are many who would like to invest in startups. But you have to be excellent to persuade them that you, and your idea, are worth it.
How did your current investor, Rain, approach you after you came back from Berlin?
He had been following our path for quite a while. People at home knew that Weps was in Berlin, trying to find investors. Because we got some press coverage and won the €25,000, we became more credible. That’s when Rain contacted us. We managed to close the investment – from first contact to money in our account – within two weeks; which is amazing. Usually, it takes about three or four months.
You must have been relieved.
Definitely. Our payroll was actually five days late and we were quite broke. And then this guy comes along and offers a bunch of 20-year-olds €100,000 (laughs).
What did you use that money for?
We bought some MacBooks (laughs).
Apart from giving you financial support, how does Rain help you?
Rain is an amazing guy. He’s actually been through this startup process as well; he, too, started off really young and now he is a big player. What I appreciate about Rain is that he doesn't tell you what to do. He simply gives you valuable feedback and advice.
How many people work at Weps?
Two full-time founders, one developer, one part-time founder who helps out, but is full-time focusing on other projects. Were eight at the beginning, which was too much. So we had to size it down. It’s enough to do what we need to do at the moment: looking for partnerships and making sure that the product works.
So you don’t really have teams working on different projects, correct? You and your partner are doing a little bit of everything?
We’ve been through a lot of different phases of project management. In the beginning, it was just one of the co-founders and I working on the system during school breaks. Then, we started university and skipped all the lessons because of Weps. Once we had some people involved, it was very hectic; you can imagine that it’s difficult to manage eight people all of a sudden.
When was it particularly challenging to have a team of eight?
That was when one part of the team was in Berlin, and the other part was in Tallinn. This created a certain distance between us. We had a bunch of issues, which I tried to fix when I got back from Berlin.
How did you do that?
We tried out different systems. For instance, we tried having departments so that some people were going to be responsible for sales, others for marketing, etc. But since the tasks are ever-changing, this system didn't work. We need people who can adapt to new tasks; you never know what is going to work and what isn’t. You cannot really plan ahead. And it is easier to prepare for changes in a small and agile team. Plus, we have fewer people on the payroll.
Were the other six who worked for you friends? Or did you post proper job ads?
Some of the team-mates did come through job ads, but I also talked to friends in school about my ideas and asked them to come on board in case they were qualified. To be honest though, working with friends is not a good idea.
How so?
You have to be really careful not to lose your friends. You have to keep in mind that I, as their boss, had to tell them what to do; which results in a lot of tensions. It’s all okay if times are good. But once the shit hits the fan and you need to criticise each other, it’s difficult.
Would you say university helped you in setting up a company?
Not at all. I was good with computers from an early age on. What we learnt in university did not help me develop the product or lead the company.
Didn’t it provide you with useful connections though?
It’s true that TTÜ is fairly close to startups, which is great. They regularly host lectures at MEKTORY, for instance. I cannot really say, however, that it’s given me good connections.
You mentioned MEKTORY. What role did it play?
MEKTORY definitely was of great assistance. It really encourages students to start companies. So summing up, MEKTORY helped, the university itself did not.
Do you work together with other startups?
We do not necessarily cooperate with them, but we share experiences and tips & tricks with other startups in this building. It’s nice to see that others are going through the same struggles you are going through.
Who are your competitors?
We have different sets of competitors. There are direct competitors, on the one hand, that have a similar chatbot onboarding. One of them is Heek, our main competitor. Even though they received a massive investment, they haven't really gotten any further than we have. Then there are more traditional web-building competitors, on the other hand, like Wix and Squarespace. Our great advantage is that we have the chatbot. Still, they compete for the same ad space and the same target customers.
Weren’t you a bit worried when you learnt that there were others who came up with the same idea of the chatbot onboarding?
To be honest with you, we were. At the end of the day, though, it doesn't matter too much what your competitors are doing. You have to follow it, but you should focus on improving your own product every day. Also, the very fact that someone else has thought of this idea is a good sign.
You have to elaborate on that.
It shows that the idea is good. It’s not just a random idea, but might actually work. Having competition, in that sense, is useful.
The chatbot itself could be used for customer services in general…
…which is why we are experimenting with different chatbots and are selling them like an agency. It’s not scalable and not as nice as a proper product, but it’s really good for customer discovery.
Are you optimistic?
You have to be. In a startup, something goes wrong at least once an hour. It is challenging, but also exciting. Staying somehow optimistic in this mess is the only way to achieve something; I know that it sounds cliché (laughs). But it’s true. You get used to the variety and insecurity. And even if you fail, you can say that you had the courage to try. This, in itself, becomes a really good selling point. I’m not worried.
Did your experience in Germany make you appreciate the digital advances of Estonia a bit more? Germany is said to be rather bureaucratic.
Most definitely. One of the prerequisites for getting the €25,000 investment was to start a company in Germany. The process was so long; it took two months to get the company registered. Plus, we had to get papers back and forth, and one of our co-founders had to fly to Berlin for a signature. In the end, it was faster for the Accelerator to come up with a legal excuse to put money into Weps as a company registered in Estonia than it was for us to get the company going in Germany.
In what ways is running a company easier in Estonia than in Germany?
In Germany, we had to mail in a lot of stuff; scanning, faxing, signing, and printing takes a lot of time. In Estonia, you just use your ID card to log in on your computer or your phone. And we actually managed to get at least five people to sign up for e-Residency. Just by talking about it (laughs)!
So do you think people from abroad know that Estonia is one of the most digitally advanced countries in the world?
I think it depends on who you are talking to. If the person works in business or IT, they probably know that Estonia is very developed in that way. They might not be aware of the exact benefits, but they do regard us as a high-tech country. But then there are also some who do not have any idea of what Estonia is like.
Generally speaking, do you think there is a “made in Estonia” label?
I don’t think so. Still, the advantage of being in Estonia is that it is so small. It took us half a year to know everyone in the startup community. It is easy to find connections; which, at the same time, can be a disadvantage as well. You can easily get your foot in the door, but what’s behind it is a really small room.
How does the Estonian state support startups?
The state is very open to startups. Startups are regularly included in government decision-making to discuss ideas. In fact, the government sees us an opportunity to grow, which is why it is eager to support us.
Does that mean that the government is flexible with legislation?
Yes. When Uber came to Estonia, instead of outright banning it, the government changed the law so that Uber would become legal. They are also open to change the traffic laws so that self-driving cars can be legal on the streets. These are only two out of many examples, though.
Do you look up to other entrepreneurs whose path you find particularly impressive?
I get this question a lot and I really don't like it, because I never know what to reply (laughs).
I thought it would be a great question (laughs)!
I don’t really have a role model in that sense. Elon Musk, Steve Jobs, Richard Branson: they all have their quirks. I do not admire them as individuals, but what they altogether embody. It’s their mindset – that you have to pursue your goals no matter what others think – that impresses me.
Let’s move away from the individual level then. Is there a company whose success you attempt to imitate?
There’s Starship. They create small robots that deliver packages to you, and received an investment from Daimler. At the moment, they are testing it in the United States, where the robots deliver pizza, for example.
Do you think there is some opposition to such developments? Some might argue that technology is a job killer.
It is not really perceived as a job killer; people don't think that far ahead. There were solely some conservatives, for one, that rejected Uber for various reasons. Luckily, though, the innovative people had a greater say in most matters.
Is there anything you want to achieve by 2020?
We used to have strict plans, and developed a business model that should be achieved after a specific amount of time. When you introduce these plans to the investors, they know that you will never be able to realise them. Today, we have a general vision of what we want to do, but since we are still – whether we like it or not – trying to figure out what the exact product is we want to sell, it is sheer impossible to come up with sophisticated “roadmaps.”
How do you stay motivated?
Sometimes it is also important to take some time off. Last summer, we booked meeting rooms from 7:00 a.m. to 11:00 p.m. I came to the office really early, writing code until 2:00 a.m. Before we launched our first version of Weps, I was in the office for three or four days straight. Working that hard is not really healthy if you do it for a longer period than three months. You have to find a balance, because you basically think about your startup all the time, so it’s hard to simply “switch off.” It is fairly easy to get lost in your own little startup bubble.
Have you ever had the feeling that you worked a lot for nothing?
To an extent, yes. That was at the very beginning. We were working more than 50 hours for one customer who only paid us €100. So we basically worked for €2 per hour. But then again, this is part of the learning process; you become more efficient from that.
You seem really mature for your age; it actually scares me a little that you’re younger than me (laughs). Were there, despite your assured appearance, nonetheless moments in which your young age was an obstacle?
Definitely. In April or May last year, when I was doing a pitch – I was 19 then – some of the investors asked me how old I was. While they were somewhat impressed, they also didn’t really take me seriously. However, once you can present some success, you instantly gain credibility. It’s funny that you mention it, though; my friends often tell me that I sound like a 60-year-old sometimes (laughs).
Can you give an example of how your mindset shifted in this process of being solely responsible for a company?
You start thinking about money differently. When you are part of a system in which one million dollars is not really that much at all, you appreciate it more.
Many of us – including me – have created websites before, without really knowing what should be kept in mind. My final question would be: What advice can you give us?
It is crucial to understand what the website is for. Once you have figured that out, check whether you have the knowledge to build the website yourself, or whether you need professional assistance. And if you want a simple website, go for Weps. Also, looks don't matter that much. Before starting Weps, I was finical and wanted the design to look perfect. But now – talking about shifting mindsets again – I just want to get it done. The quality of the product is much more important than the design. Still, many startups make the mistake of focusing too much on looks. Design is just part of the optimisation process.
Jorma, thanks a million for the interview and all the best for the future!
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