The obvious focus for investing in the coming year is anything that supports living and working at home. I never enjoyed investing in the obvious.

I view the world through the lenses of technology accessibility. Once the technology becomes accessible enough for founders to take advantage of, startups are created.

Luckily, running startup accelerators means you get a firsthand glimpse into exactly that. What are the nascent technologies founders are playing around with? And what can they do with it?

Reflecting on the past year, I have seen two sparks that are worth watching in 2021. 

Blockchain pitches that are not about coins. 

Blockchain has long been a theme for me. However, every year disappoints. The people who insisted on paying with bitcoins have vanished. And the first widespread consumer adopted blockchain app remains elusive.

Still, this year was the first time the pitch decks did not centralize around a token and used complicated blockchain language. Instead, the focus was on the customer’s needs. This development has been long awaited. I see it as a strong indicator that blockchain is maturing as an infrastructure. Consequently, we should see a lot more startups leveraging blockchain technology in 2021. 

Protein extraction from low impact plants.

In 2019, researchers from DTU in Copenhagen extracted protein from plain grass. Protein extraction from plants is nothing new. However, the plant matter. The most common plant-based protein is soya. The problem with soya is its relatively large environmental impact.  

But grass is not growing where protein is needed the most. But the extraction technology pioneered by the researchers at DTU could be applied for other types of plants. Among them the cheap and plentiful casava. This year, we saw just such a startup in our program. This could be a sign of a tsunami of protein extraction from local plants. The benefits are potentially both in terms of costs and the environment. And cheap and nutritious protein could underpin a new generation of functional foods. Perhaps already in 2021.

Happy new year, everyone.

Consider the problem of common onions. Most people face these bulbs daily because common onions are part of most dishes. The problem is that they are tricky to cut into the neat small squares made by chefs. It requires multiple difficult cuts on several dimensions of the onion. And the risk of getting hurt is significant. But perhaps the worst part of cutting onions is the gas they release. It hurts and makes you cry.

For most people, cutting a single onion requires between 2 – 5 minutes and causes physical pain. Not to mention the embarrassment of crying in front of children.

But there is a better way. Imagine a machine that can cut an onion in 10 seconds with absolutely zero physical irritation. That would be a game-changer. And it is called a blender.

The blender was invented in 1922. While the blender chops onions remarkably faster than the knife skills of most people allow, few people use a blender for chopping onions. And the reason is obvious. Rarely do one just chop onions.

The efficiency of processes
Onions are an essential part of most dishes. But they are a part, only. The thing is that cooking is a process. Put differently, cooking requires multiple steps. And the efficiency of a process is a function of the smoothness of the transitions between the various steps in the process. Some say that a good process flow.

Many aspiring startup founders are equipped with some technology and on the lookout for problems to solve. Sometimes, these founders identify some inefficiency that seems ripe for fixing. Something that their technology could solve. But if the founders are outsiders, they risk identifying a problem that only exists in isolation. Like someone with little experience in cooking looking at people chopping onions

These founders build a product to solve the problem. But they build the equivalent of an onion chopping machine. VCs call it: a feature not a product.
The problem is that the product does not solve the problem. Because the problem is to cook the dish. And the onion is just a part of this process. Even though a blender improves the step of chopping onions, it introduces friction in between the steps.

Instead of smoothly going from cutting meat and smashing garlic into onion chopping, one must open the cupboard, remove the toaster that is in the way, take out the blender, find the blender lid, plug it into the power socket, chop the onions, clean the blender, put it back into the cupboard behind the toaster. The friction is simply too great to justify the saved tears and extra knife movements.

A great example of such a product came from Accelerace alumni startup Pixelz. Initially, the company was called ‘Remove the Background’. As the name abundantly indicated, the company offered background removal from product photos.

But the founders soon realized that webshops do much more than just remove the background. Surely, that was one of the more unpleasant tasks. But it was only a part of a process of general photo editing. The process also includes retouching, color matching, depth correction, and collage creation.

Sending the photos to Pixelz for just background removal and then waiting for them to come back to continue the editing was like sending onions to chopping mid cooking and waiting for them to come back before one can resume the dish making.

Luckily, the founders were quick at realizing their lacking product-market-fit and adjusted their product to solve the entire problem. That of photo editing. Consequently, they renamed to Pixelz and currently serves the world’s biggest apparel brands.

But how do founders avoid making an onion chopper?
Founders must understand how their customers do their work today. And not just on a conceptual basis. They must understand the minutest detail of their workflow. That includes what tools they use, how long time they spend at the various steps, and who else is involved. Furthermore, they must understand how the customer perceives each step. Which parts do they enjoy and what parts do they dislike. Only by understanding the details of the workflow, can founders define the endpoints of the process and design a product that offers a radically more enjoyable process.

Conclusions made
• Onion chopping is unformattable.
• Onion chopping is only part of the process of creating a dish.
• The efficiency of a process is a function of the smoothness of the transitions between each step.
• The use of a blender to chop onions introduces friction and delay in the process.
• Successful founders understand the processes of their customers and design products that improve the process and not just a step in the process.

If you want to learn more about how to do startups right, then join Accelerace or Overkill Ventures where I serve as General Partner .

Some say time is money. It is not. Money is time. And when startup founders run out of money, they run out of time. 

Time is Opportunity. And startups are defined by Opportunity. When Opportunity disappears, so does the startup. But every day the startup lives, Opportunity lives on.

But what exactly is Opportunity?

Opportunity is the freedom to perform actions of your choosing. Some actions will make great use of the time. And some actions will be a waste of the same time. 

Imagine being given chips to a casino valid for one night. One could spend the night posing in the bathroom mirror. Or one could spend the night playing the blackjack table. Or perhaps seducing the waiter.

The chips provide Opportunity. But the value of Opportunity is defined by the actions of the player. 

Great startup founders understand the value of Opportunity. And when startups fail, it is often because the founders wasted Opportunity. Like posing in the bathroom mirror rather than laying down chips on the blackjack table.

In the context of early-stage startups, one use of time is more valuable than anything else. To obtain original insight. Insight about future customers, the psychological makeup of their users, and their future needs.

When Templafy entered Accelerace in 2013, the founders had spent the past year obtaining original insight. And it was this insight that led to the product-market-fit that made them the global leader within template management SaaS. 

The founders knew that enterprises were considering switching from desktop-based Microsoft office to cloud-based versions such as Google Docs and MS 365. But at a more granular level, they knew that this change would leave the brand manager with no chance of controlling templates across the organization. At even further insightfulness, they understood that brand managers hate to police their colleagues about the correct use of templates. In effect, the founders had obtained insight into the very psychological makeup of their customers. 

At the same time, the Templafy founders had refrained from other things. When they entered Accelerace, they did not have a pitch deck. They had no incorporated entity. They had no brand t-shirts. They had not been to a single startup conference. They had no website. Eventually, they did turn their attention to these things. But they understood how to spend their time.

When startup founders allocate time, many look to successful startups for clues. And today many new SaaS startups would look at Templafy. But that would be a mistake. Today, Templafy knows its customers to the minutest and most intimate degree. Put differently, they already have original insight. This means that they can focus on other and more visible things. Such as experimenting with pricing models, doing content marketing, and employee branding. 

Mistakenly, many founders think such action courses success. They do not. Such actions amplify success. Instead, success is coursed by having original insight and then acting on it. But obtaining original insight requires the founders to focus their time on this activity.

How? By living with your customer. To see what their day is like. To understand which pages that open upon the start of their browser. To understand what the agenda in internal meetings are like. Understand what decision they can make, and which require approval. To understand their fears and their pride. Joys and sorrows. To understand what will happen to them in two, five, and seven years. And then understand how you can play a role in shaping this future.

Spend your time wisely, it may cost you Life.

If you want mentorship in spending your time right, then apply to our acceleration programs Accelerace and Overkill.

Covid-19 is taking its toll on many startups. Many founders were already struggling to get their businesses off the ground before the virus hit. To them a natural catastrophe just hit. Opinion leaders are busy being optimistic and “glass half full”. But that does not acknowledge the devastating and brutal reality for the individual founders affected. Let alone, what it can feel like emotionally. Overcoming some of the darkest periods of my own startup journey, I wrote this poem (if it can be called that). I am not sure it helps startups founders in their suffering, but at least it can help portrait how founders can feel like.

Two worlds exist. One of causality and one of probability. In the world of causality, action creates reaction. In the world of probability, action creates opportunity.

The world of causality is kind. Like a garden. The world of probability is wicked. Like an ocean.

The world of causality rewards us for effort, and never fails to do so. It is the world we were taught as kids. Practice, and you will learn, our guardians proclaimed. And so, we did.

We learned to walk, ride a bike, and read through pure effort, and the kind laws of causality rewarded us. Over time, we built self-confidence through the law of causality. We learned that if we wanted, we could make it happen.

But beyond the borders of our familiar garden of causality, lies the wicked sea of probability. It is the world our parents did not dare to mention. For they too feared it.

The sea of probability is a place where nothing is certain. Throw a rock in water, and sometimes it sinks, sometimes it floats. The rules are in constant flux, and the motions unpredictable as the waves.

The world of probability does not reward effort. Instead, it rewards resilience. Resilience is different from effort because resilience assumes defeat. Effort does not.

Resilience is the capacity to sustain unjust defeat. To throw a line into the sea a thousand times and not catching anything. Seeing the person next to you catch something on their first attempt. And get up the next day to do a thousand throws with unchanged enthusiasm.

The world of startups is that place. I know because I was floating in the middle of it.

The unfairness and uncertainty of the wickedness depleted the self-confidence I once had. And I found myself naked in the darkness of the sea screaming for meaning. But my cry went unheard, and the pain of inexplicable abandonment consumed me.

At that moment, I resurrected. I realized that my suffering stemmed from desperately holding on to the kindness of the garden. I had to embrace the wickedness. To make it my world and rebuild myself as a master of its seas.

Some words are used so much that we forget to ask what they mean. One of these words is ‘innovation’. But what is innovation in the context of startups? What do we mean when we say: “they have an innovative product!” Or perhaps more frequently among investors “there is not enough innovation!”. I asked myself this question, and here is the answer.

Startups innovate. We all know that. But have you ever asked yourself what innovation really is?

After having witnessed hundreds of startups during the past decade I have finally realized what startup innovation is.  

Startup innovation has two main components. Those are Novelty and Value. Put differently, innovation is really the outcome of mixing novelty and value.

Novelty is objective newness. Most founders have the urge to introduce something new to the world. To ensure eternal legacy by having been “the first”. Like Henry Ford’s first assembly line, Steve Jobs’ first smartphone or Elon Musk’s first reusable rocket. Sometimes novelty can be patented. Most often though founders just claim novelty.

Value is a subjective assessment by the customer. Most founders assume that their product is valuable. The reason is that value is subjective. And because the founders love their product, they also blindly assume the customer will.

Because innovation is the outcome of novelty and value, the level of innovation is a function of the individual levels of novelty and value. Both novelty and value come on a spectrum. A product can be more or less novel. Similarly, it can be more or less valuable.

Imagine novelty and value on two different axes.  Then it would look like the matrix below. I call it the innovation matrix:

The matrix has four generic quadrants. The low left corner is the ‘low novel and low value’ quadrant. The top left corner is the ‘high novelty and low value’ quadrant. The top right corner is the ‘high novelty and high value’ quadrant.

Because innovation is a function of novelty and value. Any innovation can be defined by its place in the matrix. In this light, we now know what we mean by “a high degree of innovation”. What we mean is that the product has a high degree of novelty and the customer place a big value on it.

How does this help?

In my experience, different places in the innovation matrix define the main challenge of the startup.

Obviously, the main challenge for startups in the low left quadrant is to move out of this quadrant. I call it the ‘Pit of eternal pivoting. The reality is that a lot of startups are in this quadrant. They are attempting something that has already been tried multiple times, and they have not adequately developed customers and validated their value proposition.

These companies need to start talking to customers to understand how their products can be more valuable in the eyes of their customers. Also, they need to clearly position themselves in relation to their competitors. Often done by focusing on unique features and branding these.

For startups in the top left corner, the challenge is that they have made something that does on Kickstarter, but not anywhere else. I call it the gadget quadrant. The product has high novelty, but it does not solve a serious problem for anyone.

These companies quickly need to develop a product line of adjacent products that together will solve a bigger problem. Or find a niche customer segment who actually need it.

For startups in the top right corner, the challenge is that none understands what they do. I call it ‘New categories. Those who do understand are skeptical of the claims. It is almost too good to be true, and customers are wary and want lots of proof.

These companies need to produce expensive showcasing (Like the Tesla Roadster, test-flying a reusable rocket, going through clinical trials). The time and money required to verify these claims and educate the market is expensive. Consequently, the founders must learn the art of raising large sums of money.

For startups in the low right corner, the challenge is simple. To beat the competition. Often these startups face fierce competition because customers are willing to pay for this product or service. (think food delivery, scooter sharing, and CRM software).

These companies need to build a high-performance culture and headhunt the best managers. A big war chest to starve out competition also helps.

When evaluating startups, I mentally place them in this matrix, and it helps me understand the actual level of innovation, and how to best the help founder team based on the challenges imposed by their place in the Innovation Matrix. I hope it helps you as well. 

To get help on your challenges, contact Accelerace and Overkill Ventures where I serve a Partner.