From the entrepreneur’s corner (13): Let Romanians be coders and entrepreneurs!
For the last 10 years and from a digital technology angle, Romania has seen little interest from VCs compared to Poland or the Baltic countries. One of the reasons is that majority of coders have no entrepreneurial ethos, and Romanians still prefer cashing salaries and having an employee status; the regulatory environment is another one. However, there are signs that venture capital activity in the country is picking up the pace, and I’ve already noted a few interesting early-stage investors. Tech entrepreneurship is also on a rise, as more and more incubators and accelerators have robust cohorts. Needless to say we have a locally-born unicorn, which shall hopefully transform, within a matter of weeks, into a decacorn; and an IPO by next year (and even sooner) won’t surprise anyone as Daniel is riding a dragon. With tech hubs and education facilities in major Romanian cities, the premises of a stronger local tech ecosystem are here. Nevertheless, the VC funnel’s reality is tougher than elsewhere, so be prepared.
Starting a company from the ground-up is hard. One would ask: What does it take to build a great company? What kind of skills do I need to endure the tough, energetic months spent building a business or chasing a dream?
All starts with the passion of the entrepreneur(s) and some initial capital. Some would say that without venture capital or investors you won’t make it; this is not true. I know that the struggle of the early stages of starting a business is real, and it’s not easy to grow without external funding. Especially when some investment decisions are likely (still) influenced more by the current geopolitical brouhaha than balance sheet concerns. Therefore, in this 5 min-post, I’ll focus on bootstrapping and entrepreneurship.
”You have to swim, or you’ll sink fast”, says Aytekin Tank, whose simple idea grew into a thriving product with 4.5m users and over 140 employees (you can read his story here.) This is the mentality I’d like to see among Romanian entrepreneurs; and bootstrapping will make you a better entrepreneur. Budget constraints breed creativity, and force you to stay focused on the essentials.
When you’re a bootstrapped founder, you’re wearing, in the early phases, all the startup functions’ hats. You take care of strategy, product development, marketing, product-market fit, pre-sales, sales, PR, customer services and rest. And when it’s the time to hire, make sure you have at minimum six months of their first year salary in the bank (or a year’s.) While you start taking off your hats, start spending more and more time on solving the strategic issues. Read as much as you can about entrepreneurship, and learn the skills you need, but remember that perfection takes too much time. As your money is always tight, you have to move fast. Release your product or service, get customer feedback, adapt, then repeat and keep refining. The lean, fast-moving startup model works best when you build an authentic team culture.
Don’t be afraid of competitors. As I’ve said in a previous post, a startup’s success = having copycats; it also means the learning that went into product development, the failures you overcame, the passion you’ve put into assembling a team, so that a startup ripping your idea off only has a partial understanding and will repeat many of your mistakes.
Entrepreneurship comes with ”continuous existential threats that must be navigated with grace while continuing to offer an increasingly superior service, both to what you offered previously and what your competitors seek to replicate.” (Chris Herd)
As a founder and entrepreneur, you have to build a team. Here are some advices: find complementary skills; establish co-founder equity (vesting with cliff); for less than 10 employees, hire generalists (may be specialists but also doing other jobs); be aware that some of the best talent will wait for the product-market fit; decide on the remote (developers) Vs. in-house/office model, but avoid having a 2nd class citizens attitude; work on your outsourcing (repeatable) Vs. in-house strategy; have a hiring plan, keep everybody at 80% and utilize HR tools; establish clear lines of reporting, adapt as you grow; create a performance improvement plan; when firing, document, be kind, clear, empathetic, communicate — you don’t have to get a reason; don’t make compensation a negotiation, but be generous and fair; set ESOP in the beginning; “the ones that got you here aren’t necessarily the ones to get you there ” is a saying; avoid the blurred lines between managers and founders; embrace the “you’re not at work to find your spouse” culture, keep everything professional (you might have to fire them one day.) And have fun growing your team!
Additionally, you should stick to a (successful people’s) routine, and include in your morning agenda pursuits like: daily exercising, learning something new, making new connections, prioritizing the tasks ahead, setting aside some time to merely think or meditate, and spending time with your loved ones.
Finally, you should ask yourself: are you an entrepreneur at heart or more suitable for a comfortable lifestyle without much risk? Everything is a tradeoff. And if in the process you’re doing great and getting an email from a VC, and if you’re not raising any time soon, just do as you like but don’t be arrogant; save the address, or, better, have a meeting/coffee with a decision maker at the VC firm so you know each other. Even if you change your mind on bootstrapping, and suddenly realize that you need to raise capital or are planning to, this goes well without saying as long as you bring the right investors to the table, and also learn how to do it. Get a mentor and at least a co-founder, and you’ll get there; a team of one will never make it.
As a side comment: Looks like the local tech ecosystem is under a new pressure, as the leader of the party that won the recent Euro elections made a comment about the necessity of taxing the coders (Romania still has some favorable taxation terms for the IT companies) … Well, we all know we don’t live in an equitable country, and you never escape of taxes. As an option, some other EU countries have even better terms for the (tech) startups; think Estonia, the Netherlands… At least I’m happy I was not one of their voters. With this one, definitely I take sides.
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