This is the second part of my blog series about launching your own startup in Europe. You can read the first part about Dream Big and Start Small, Work to Learn Not to Earn, and Join the Community is here.
4. Find the right location
When I started my first company in Berlin, I lived and worked in my apartment with one of my co-founders. There was no need for an office, we built our product right from our living room. The apartment was incredibly cheap, and we had such a fun time. We were living in Mitte, right in the very center of Berlin and constantly had people stopping by for a chat. That’s how “the early days” look for a lot of founders and I believe if you rent a space in the center of a startup hub, you will find it much easier to connect with like minded people and share ideas. It’s inspiring and motivating.
The main hub for starting a tech business is currently San Francisco. It’s an amazing city, full of people working at tech businesses, and ready to start the next big thing. But, the challenges you will face there as a first-time entrepreneur are huge. The costs of living are incredibly high and you will compete with the world’s most successful tech businesses for talent. Then if you’re successful in finding them, you will spend more money for recruiting talented people than in any other city in the world. Jason Evanish wrote a great post about 25 Things I wish I knew before moving to San Francisco.
If you are a first-time entrepreneur, San Francisco is most likely not the best city for you to start your company. Luckily, San Francisco isn’t the only city in the world, there are other great places nowadays to start a business. New York, Tel Aviv, London, and Berlin are vibrant tech hubs too. Depending on your new business, location does matter. If you are an internet/software business, take care you pick a location that helps you to start. We chose Berlin based on the following:
Does Berlin host and attract world-class talent?
We wanted to keep a healthy balance of young and talented people, but also very experienced ones. The success of Wunderlist helped us to attract top talent, but Berlin also provided an additional motivating factor for people to join us. Thanks to its underground music scene, cutting-edge art galleries, stylish bars and low rent Berlin has enormous international appeal. Over the past couple of years Berlin has attracted talented developers, designers, marketers and creative people from all across the globe.
What are the costs of living (and working) in Berlin?
Berlin has one of the highest and at the same time cheapest living standards of all capitals worldwide. Living and working next door in the city center is still affordable, even though the city is growing at a fast pace.
What companies do we compete with in terms of recruiting?
When we started our business, only a few global tech businesses were also located in Berlin – most famously SoundCloud. There already was a lot of talent in Berlin, and it was relatively easy to hire. Nowadays, it is starting to be more challenging, as you are competing with a lot more startups, but it’s still incomparable to San Francisco.
Does the mindset of Berlin’s culture fit to our mission?
One unique thing about San Francisco, is its energizing culture around building new companies. Everyone talks about it, everyone is part of it. It’s a lot more vibrant, but Berlin is catching up. We decided to go for Berlin also because we want to shape Berlin’s startup culture, always with the goals to expand to the US at a later stage.
In Berlin, most startup are based in Mitte, Prenzlauer Berg and Kreuzberg. Try to rent an apartment in one of those districts. Or if you're on a tight budget, Wedding is a great choice to find something affordable yet still central. Those districts are not only right at the epicentre of the community, but also very beautiful and lively.
5. Identify good and bad ideas, early
As founders we all have a ton of new product ideas, each and every day. Some of them sound promising, but only a few have the real potential to become a successful, fast-growing and highly profitable business.
Before we started with Wunderlist, we had juggled a few different product and business ideas, but in the end we followed solving a problem we all shared: having one utility to organize both our personal life and business. We never used to-do apps before, but we sure used project management systems to organize our projects, and to coordinate work and communication with clients. We’ve tried many solutions, but were never satisfied. We quickly started building our own solutions, and realized, if we do this right, this could become its own business.
Most of the project management tools we’ve used were highly profitable products, but equally hard-to-use, ugly and poorly integrated. Those were problems we thought we are able to fix, but there was an even bigger opportunity in this market – many didn’t see. Most project management systems are powerful solutions to organize projects of any kind, but they lack intuitive design, and what’s more complicated pricing and poor integration prevented people using them in their private lives. No one really used a project management solution at home, but there sure was a need.
That’s where we saw our opportunity of inventing a utility that’s as simple as a to-do app, but as powerful as a project management tool. It also helped us to start lean and simple, and grow Wunderlist into something bigger. Wunderlist, as you know it, was our MVP, our simplest approach to solve a problem that’s huge – helping people to organize their private and business life. A simple solution, with the potential of serving hundreds of millions of happy users. Once we reached that proof point we were able to grow our product step by step to get closer to our vision.
So, how do you actually pick the one idea, that has the chance to change the world?
I believe it starts with the ability to identify your own problems, and think about clever and smart solutions. One big problem, can be solved by thousands simple solutions, it’s your job to find the best one. You need to become your biggest critics. Challenge every single idea with your team to the extreme. Be aware that most ideas that seem great in the first place, are either already taken or not so great once you’ve challenged them further. Try to play devil’s advocate. A great idea also doesn’t necessarily mean doing something entirely new. Sometimes it’s even better to just do something better. In our case, we took an entirely different approach to productivity software, without reinventing the wheel.
We didn’t focus on productivity methodology, but rather on making productivity simple, human and fun to use. We also learned that it’s important to get a working prototype into the hands of people really early in order to get feedback. Being open to feedback is something you have to learn, but don’t listen to everyone. Learn to identify the nay-sayers and ignore them. Find people that give you honest and valuable feedback. Don’t wait for an idea everyone likes, because most likely it doesn’t exist. What were the most ridiculous startup ideas that eventually became successful?
Kevin Systrom gave an inspiring talk about Instagram and he explained the reasons why it became such a success. I think you can nail it down to these 3 precise problems Instagram fixed:
- Before Instagram, capturing beautiful images was hard. The camera of the iPhone and the invention of photo filters on mobile phones solved this problem.
- Before Instagram, uploading photos was hard. Again, the mobile phone and Instagram’s smart uploading process solved this problem.
- Before Instagram, sharing images was hard. The integration of Tumblr, Facebook, Foursquare, Twitter made sharing photos incredibly easy.
As you can see, often it’s about identifying the problems, but also about finding clever ways to fix them. It’s a difficult and long process. There are certain methods that can help you to set up your process and processes that lead you to fast ideation and iteration. Make sure you check out http://theleanstartup.com, it’s one of the best books to identify and develop great new ideas. Another one I can really recommend is http://www.businessmodelgeneration.com/book. Both books can help you and your team to sort out which idea is worth exploring and which is the one you should settle with in order to start your business. As a founder, all methods and books aside, I can also only encourage you to trust your own gut. With Wunderlist we solved a big problem we all had in our own lives. It just felt right to start our business based on that idea.
6. Understand trends and markets
When we’ve launched Wunderlist, Dropbox and Evernote have been the two fastest-growing cloud businesses. Both had a great traction, and demonstrated that it’s possible to scale a productivity app to a huge customer base. Both companies helped pushing the trend around the cloud – amongst users, journalists and especially investors. The cloud itself is a huge topic in the tech industry, and it helped us tremendously to gain attention and to grow into the business we are today. But when we initially started raising money – for building a new project management tool – investors fell asleep. Seriously, when I just mentioned the word “Project Management”, their eyes started rolling. No one believed in it.
But when we’ve redefined the story to “to-dos in the cloud”, the reaction was quite different. We’ve explained how Dropbox and Evernote have invented a new type of market – a market that scales, and a market that’s profitable. There was a trend around cloud business, and now also around productivity apps. When you build your own business, try to understand what the trends currently are, and build a story around it. When I came to Berlin the trending topics were all ecommerce, communities and software-as-a-service, and it then became social, mobile and cloud. Trends can help you to get attention, but be cautious. Trends are temporary and your goal should be to build a company that lasts.
As an entrepreneur you start a company with long-term goals. You want to create something that stays and adds value to people’s lives, both your customers and your employees. The challenge is to balance the awareness for trends and momentum without making yourself or your product a slave of those. It’s like surfing. You can’t change the ocean, so you need to observe and read the water and get on your feet in the exact right moment to ride the wave.
Niklas Zennström, co-founder of Skype, invested in Wunderlist one year after we’ve launched it. He started Skype in Sweden. One of the first things he talked with me about was “World Domination”. I didn’t quite get it in the beginning, so he said the following:
“Look at Skype. If we would have been successful in Sweden, we wouldn’t have been successful at all. Build Wunderlist in a way so it can be used all over the world, in every country and every language. Dominate the world.”
This has been a key piece of advice for me. Right after launching Wunderlist, we open-sourced the first version to get additional help from our community. It took just a few days until Wunderlist had been translated into more than 20 languages. It’s now a global product, in US, Asia, Europe and Africa. It was an important learning for us, that Germany, even though we started here, is not our only market. Our market is the world, we build a product for everyone.
The more we grew, the more we also understood about the differences of countries and cultures. Our top countries today are the US (by far), Germany, United Kingdom, Netherlands, China and Japan, but all those countries have key differences. Germany for example – it’s easy to scale and grow, it’s harder to satisfy and monetize though. US, is much easier to monetize, but it’s really tough to gain attention.
Do your homework before you start with your idea, understand how big your market is, understand in which countries you can grow the fastest. Build a brand and a product that works globally, not just in your country. Really, the world is your market.