What is your background and how did you became a founder of Metalab?
I studied Information design, in Graz, the second largest city in Austria. I was confronted with all kinds of media art, well known media artist, generative art, metiatic art.
What I loved the most was the communities and the working space where we used to work and collaborate all days.
When I finished school, I came back to Vienna, the city where I was born.
I was lacking such a space to work and meet people. Accidentally, i bumped into some people who were in the process of starting the Metalab. I didn’t know anyone, I had read it on the web. The idea was to create a physical space for different associations, i got involved, it took half a year to find the place.
There, I met some people who wanted to start a company in the web. At the same time, I was called up for civilian service. I decided to quite my job and find something to do in my spare time.
I was paid just enough not to starve.
We wanted to make it easier to people to publish online. Make software that make it easier. We happened to find some funds. Paul created a kind of Y combinator for Europe : YEurope. They fundraised. This model doesn’t really work if you have only 2 companies in.
What is your start up, about ?
Soup is not very interesting right now but very cool in 2 months !
Soup is a very simple multimedia blog. Something between Twitter and a regular blog. Easy content, short content, multimedia content : pictiures, quotes, vidéos, images…presented in a bloglike way. You can put it on your own domain. A simple multimedia blog.
Now, Soup is going to be the place where you can create all sort of media and make it visualized in the really pertinent way of displaying. In October, it’s online. We are moving away from presenting it as a blog.
What is interesting in the accelerator model ?
The model of Y combinator is to give enthusiastic hackers, programmers, coders just enough money so they can spend the summer working on their idea with no constraints, no day job. Usually, selected people move out from their city, rent a big house together and spend 3 months working, and at the end, let’s see what happen…There is a big investor event where Y combinator gathers all the relevant investors.
Either the company has failed to launch a product, then they just had a nice summer experience and it didn’t cost a lot of money, or they receive a fund at the investor presentation.
It was pretty much the same in Vienna, with Y Europe, although that we didn’t have the same community of Silicon Valley. It was tough to start something like Y Combinator.
Y Europe did a fellow funding round with us, they provided us a lawyer and a n accountant for free. But their personal experience was limited in the web startups. They weren’t successful web startup founders themselves, so they didn’t really have the hands on experience.
What is the deal with the investors?
Y Combinator takes 3 to 8% equity in the company in return for 5 000 $ per founders + 5 000 for the company. So, for a 3 persons company, that is 25 000 $ for the startup.
And Y Europe did it similarly, in return they also provided advices and they tried to provide the network, but it is hard in Austria to find a real VC community, interested by the web.
This investment enabled us at soup to start working full time on our project.
Then you have been in SeedCamp in London, what is it ?
We were unlucky because in fall 2008, just when we where at the Seed Camp week in London, the banking crisis started. We were dreaming about what we could do and the money to raise for that…but the bad news came and the topic shifted to : “oh my god, what is happening, will our industries still exist next week? Is everything exploding right now?”.
Otherwise, the seed camp model is :
- A one day mini seed camp,
- then 1seed camp week,
- then you received the money and you are invited to stay in London for a couple of months. You have an investor presentation at the end and there is a trip to Silicon Valley which is also very helpful. You get introduced to all investors, people know your name and your company, they can help you.
The biggest thing is not the money but the network.
The people behind seed camp are Europe’s biggest Venture Capitalists, institutional investors whereas behind Y combinator they are private entrepreneurs. This make the difference : there is this comedy of VC making the decision…
Seed Camp’s organization is doing a very good job for the startups around Europe. They have their mini seed camp in every cities, including Kiev in Ukraine for example, where you wouldn’t expect anyone to do that. It is a one day event where startups come, they get mentored by investors, product designers, marketing people, legal people, whatever the startups can need. And you can just really seat down across the table from someone who started lastfm or mysql one of the big web european companies. Then you have half an hour to get feedbacks and get connections.
What is the difference between a seed camp and an accelerator?
The seed camp provides lots and lots of values upfront. As they go out in many cities getting some startups to apply and providing all this mentoring for free, they don’t take any equity for that. After these small events around Europe, there is one week happening in september in London which is a week of mentoring with hight profile people.
At the end of this week there is a presentation and then they decide, which companies to fund. Out of 100 startups they help, 5 get money from seed camp in return for a share. Y Combinator, or any other accelerator, they don’t help any company they don’t get a share on. They have more companies than seed Camp, 20 or 25 twice a year, but they don’t do this huge evangelization. Seed Camps realize that, it is necessary in Europe. You need to connect the network much more because there are many languages, different cultures, you need to spread the word more before funding.
Why isn’t Austria a place where you would develop your company ?
In Austria, there is hardly any Angel investors interested by the web startups, a successful entrepreneur who want to invest in the web space, it doesn’t exist.
Some of the LastFM founders were from Austria, but they had their big success in London.
We decided to go back to vienna, work a little more and then try again, we got a local grant by the governnment, very small amount but better than nothing.
That is the weird situation in Vienna. There are government grant programs for multimedia projects, creative industries exist in Austria. The down side is that there is some jury who decide which project to fund and their decision just can’t be as good as an investor putting his own money.
So it is cool that it exists, otherwise, there would be no way of getting a company up the ground. You need 50 000 – 100 000 euros to build up the prototype, to gather a team during one year. It would be much better to gather a VC scene in Austria. In Europe it exists only in London and Berlin. I don’t know about Paris, probably not so much…
What are the next steps for Soup?
Soup is facing a change. What we did 2 years ago was revolutionary, brand new, but now the world has changed. So we are working on taking a new step. We are going to relaunch this fall.
We will go to Silicon Valley again in September to try rising money there. We have an expended vision and new ideas, we will see how the network we built over these years will help us to get to the next step. We want to become the next Facebook, even bigger than facebook ! (smile).
If I rise a fund, I move to the US. I like here, but if it’s best for the company, why would I make it hard for ourselves?
Are the US and their VCs the only keys to a real success ?
I think now cloud computing, open source, seed camp, make it doable to start here in Austria and you can keep development here, but if you need capital to grow, and not every company does, then you probably should look outside of your borders. If you don’t need capital because you have incoming revenues immediately because it is something that pays for itselves because it is some be to be services that is easy to generate revenue from the ver start then do it in your country by all means.
In one month in Vienna, there is a conference organized by an american Amy Hoy, she will have a talk about bootstrap companies who take no investment, like 37 signals, where every user of the product is also a paying user. She has a very dogmatic view like, if you even have to use the word “monetization” then your idea is wrong and you should do something that earn money from their own and not rely on VC, external money, these bubble of growing fast and seeing after how can they make money.
This is one point of view, but Youtube wouldn’t be youtube today if you had to pay 5$ to charge one vidéo…They would have made some money early, but wouldn’t have reach that scale.
To go deeper :
Paul Graham (YCombinator) — http://paulgraham.com/articles.html
Marc Andreessen –http://blog.jedchristiansen.com/2009/10/15/a-marc-andreessen-blog-archive/
Paul Buchheit — http://paulbuchheit.blogspot.com
Eric Ries — http://startuplessonslearned.com
Dave McClure — http://500hats.typepad.com
Sean Ellis — http://startup-marketing.com