„If you love wines, you have to download the app right now,“ Marek Zámečník, the host of the latest Startup Grind Bratislava session, appealed on the attendees. Who wouldn‘t like wine, right? Suddenly, peers on my left and right opened up the App Store or Google Play to check the miracle Marek was talking about.
Not sure if they eventually used it or even downloaded it, but this crowdsourced, big data driven and the almost-everyone-favourite-alcohol-oriented app has a great viral potential.
You are at a dinner with your friends, enjoying the evening and drinking good wine. Suddenly, one of the friends wants to learn more about the wine, its background, its price. Pulling out her smartphone from the pocket, she opens an app and scans the wine label. Several seconds later, she starts to throw every little piece of information at you, and you sit there asking what the app does he have. A minute later, you are downloading Vivino. The virality feature was one of the main sales points for the venture capitalist and angel investor Martin Hauge to put money in the Vivino team.
I first met Martin S. Hauge at the Up Venture conference in Vienna last year. The passion he was speaking about his investments as angel investor was inspirational and kind of sweet. NoIsolation, Automile and, of course, Vivino, to name few. He genuinely enjoyed what he was doing. Nonetheless, the path to an investor was neither easy nor straightforward.
„There have been some bumps on the road. I dropped of high school, run away from home when I was 17 years old. Sick and tired of everything, I jumped on a ship and became an engine boy. I cleaned floors on a ship sailing back and forth in the Pacific Ocean,“ Martin invites us into his story.
When your everyday job is cleaning up oil spills, you start dreaming of something else. Fortunately, at least from today‘s perspective, his sailing career was interrupted by an injury after he had fallen into a day tank. Having been in a hospital in Japan on his own, he had quite a lot of time to think things over.
He went back to school and received the master‘s degree in technology. „I got a proper corporate job as my parents wanted. [sigh] Aaaaaah, corporate jobs, you know, it’s not that exciting.” The „real job” lasted only for a few years.
While having a beer with a friend, they got a business idea. Not very sophisticated, but worth testing. In those times, you could buy a bankrupt company in the court for 1 Krone, revitalize it and sell afterward. They gave it a try. „We bought our first company for 1 Krone and immediately discovered that we needed a working capital.” That‘s when Martin‘s first round of fundraising took place ever. And successfully. They turned the company around and proudly sold it.
This was the moment that triggered Martin‘s entrepreneurial soul. Later on, in his early 30s, he launched his first startup. And in 2003, he retired his entrepreneurial career to pursue the career of a venture capitalist and angel investor.
Today, he is the Chairman of the Board at Frog Capital, Board Member at Creandum (the first institutional investor in Spotify), as well as a Chairman, Board Member or Managing Partner at several startups. He often visits Slovakia and the region around as he has a lot of connections here. His son, Martin Joachim Hauge is one of the co-founders of 0100 Ventures in Bratislava and an entrepreneur himself.
On March 2nd, 2017, Martin Hauge came to Slovakia for several reasons. Apart from mentoring and advising some of the projects, he was also a guest at the Startup Grind Bratislava.
Over the course of the evening, we could have learned some valuable lessons Martin willingly shared with us. Who is a good entrepreneur? What are the key features of a potential unicorn startup? What makes a world-class founder? What is the book he gave away the most? All these and many more questions were answered during very open and honest discussion.
Read 12 insightful takeaways from the talk with Martin Hauge.
The answers were edited for clarity and comprehension. Everything in the [square brackets] is editor‘s explanatory note. The article is brought to you in cooperation with Startup Grind Bratislava.
1. Being on the edge makes the team stay together
„[What made us stick together at the beginning was that] We were afraid of turning bankrupt. Because the companies were bankrupt when we took them over, we were on the verge of turning in to the court as a bankrupt estate again. You don’t leave the office at that point. You learn how to solve problems, how to stay alive and fight. I know how it feels to be close to a payday for your employees and not having the money in the bank. You don’t sleep very well. You only know that you have to fix it.“
2. Always manage your expectations
As a startup, you don‘t want to disappoint your investors, customers, employees. You might have your only chance, and if you don‘t stick to your promise, they can leave you.
„There is one saying I made mine, which is ‚Underpromise, overdeliver.‘ I see it over and over again. I meet an entrepreneur, they show me a slide about how much money they are going to make in the next three months if they get some investment. It always points towards heaven. Better go and promise 50 but deliver 100. If you promise 50 and deliver 80, you are still a hero. If you promise 100 and deliver 80, you are not a hero. You have overpromised.“
3. Let your people feel good at your office
„Make sure that you have an attractive place for people to be. When I walked in here [the 0100 Campus], I got that feeling – this is the place I would like to work as well. Make sure that when you as an entrepreneur create an environment for people, you make it a nice place. Make it friendly, open and sharing.”
4. How to identify a big opportunity
Creandum, where Martin was a General Partner, was the first institutional investor to Spotify, together with Northzone. How did they know where that opportunity can lead to?
„We picked up the information about Spotify from a guy who later became a co-investor. Two things determined the decision to invest in the company. First was the market opportunity. At those days, there was a huge problem with illegal copying of music, the record labels were not making that much money as they could have. The music consumption was out of control. Something had to happen. And the music market is big enough for a billion-dollar company, which is now almost proven. The other thing that was determining for us to make the decision, was the world-class founders – Daniel Ek and Martin Lorentzon.”
5. On a world-class founder
An inevitable follow-up question after the previous advice is how Martin defines the world-class founders.
„These guys were not the first-time entrepreneurs, they had done it before. That is an advantage. You don’t necessarily need to be a second- or third-time entrepreneur to be successful but there are a couple of things that are very important. One of them is the mix between the founders. They have to be able to work together, but they also have to complement each other. The competence that they have together should be more than the competence of each one of them summed up. They also need to have something I call ‚the recruitment power‘. That‘s the ability to attract people better than themselves to work on their venture. If the recruitment power is missing, for me it means to turn off. When I look people in the eyes, I always ask myself ‚Would I work for this guy?‘. If I don’t want to work for him, then probably you don’t want to work for him either.”
And that is a problem.
6. The definition of an entrepreneur
According to Martin, „a good entrepreneur is one that climbs up a high mountain, finds a cliff 600 meters above the ground, jumps off the cliff and bet that he is going to solve the problem of landing before he hits the ground.”
7. Launched is better than perfect
Not sure how much truth is there in this story, but a lesson can be learned anyway: if you haven’t figured it out, a temporary workaround can pave a way to a working solution.
„I am sitting around a table with a bunch of guys, one of them pulls out his phone and says ‚I have an app that can recognize wine bottles‘. ‚Uuuu, sounds interesting.‘ We tested it and took pictures of wine bottles. It didn’t recognize a single one of them. We put it aside, kept drinking and had a good night. When I woke up, I was thinking about the app. If you can recognize a wine bottle at a table with friends, you can spin something around the idea. A few days later, I was with the CEO of that startup, confronting him with the fact that it didn’t work. His reply? ‚You know, when you take a picture, we need some time because we send the picture to India and then they google it…‘ If you can’t make it, you fake it.”
That is what has evolved into the Vivino app today.
8. OKR system as a must
„One of the secrets [of Vivino success] is that we brought in the OKR system. OKR, Objective and Key Results, is an infrastructure you build to control your company from when it‘s very small until it’s very big. For me, OKR is a must in all the companies I invest in. It is highly recommended to everyone. Take a look at it.“
9. What does it take to scale B2C companies to the global level?
„Is it that simple to scale a company, just by using OKR? Why don’t people scale B2C companies from Slovakia but they manage it from Denmark, which is a comparable market? What are the ingredients?“
„You just take a huge market, solve a big problem, find some fantastic entrepreneurs, mix it with some OKRs, and you have a big success. [laughing] Honestly, it is a long path, you need a lot of factors to come your way, but most of all you have to be able to attract good people. It is so important.“
10. Angel investor about Slovakia
„I am an angel investor, and I am here [in Slovakia] looking for opportunities. It is a great place to look at. I have two reasons for that. The first one is the opportunity that is here and the up and coming environment. I have got a network here and know some people, which might be helpful to me in a case when I find a startup I want to invest in. The other thing is that this small town of Bratislava and the state of Slovakia is not discovered yet by the big players who can probably outcompete me, so I am not telling anyone about it. I am keeping it to myself and I want to pick the gemstones from this startup environment. It is not really true, of course, I am kidding. I am talking about you. But the competitive situation down here, when it comes to investments, is very different from what is in Berlin, London, or Stockholm.”
11. „What is the book you have gifted the most to others?“
„It’s a book I was given when I started in Creandum. The title is Done Deals: Venture Capitalists Tell Their Stories [by the author Udayan Gupta]. It‘s a history of venture capital. I got it 13 years ago. If you want to learn about the venture capital environment, 90% of what is in the book is still valid today. It’s a good reading.“
12. The worst advice Martin hears often in the world of startups is…
„‘The risk is too high.‘ As I said, you have to be able to jump off the cliff and bet you are able to solve the problem with the landing before you hit the ground. When people tell me ‚It’s too risky‘, the conversation is over.“
Photo: Startup Grind Bratislava