Today we have with us is Joakim Gronvall, who is the co-Founder and CEO of Travel Startup Triple, based out of Stockholm, Sweden. Joakim is a serial entrepreneur where he played the role of co-founder, Yell.ru and Bilddagboken AB. Joakim has also invested in companies as a Seed Investor and mentored startups to success. We are glad to have him with us where he will share his experience as an entrepreneur, about his startup Triple and his advises to all startups as an investor.
Hi there! I’m Joakim, CEO of Triple which I founded together with my co-founders Petri and Sebastian here in Stockholm in 2016. Triple is a marketplace where passionate and outgoing people can organize their own activities, and earn money by acting as hosts in their home towns; showcasing their personal and unique experiences ‘off the beaten path‘. Hosts share their passion or craft, and connect through the platform with travellers to give them a taste of the city they live in through the eyes of a local. Triple enables tourists to feel like locals when they travel, discover private activities in various cities, rate hosts, and experience hassle free payments when booking, all through the platform. We just announced the news that we acquired another company, and this comes at a time of growth for us, as we increase our market share within travel experience.
Just before I came back to Sweden and started Triple, I was living in Russia where I held the position of acting CEO and Co-Founder at company Yell.ru, and before that I was co-founder of a company Bilddagboken AB which was sold to Wyatt Media Group at the beginning of 2008.
How were the first days of starting a business and what were the most basic hurdles you face — personally and professionally? What changes you see now? People often give up, so what will be your advice to keep on going.
In the beginning of starting a business it’s all about vision and focus. You have to stay true to the vision while still leaving room to pivot and change your product or strategy. I think a lot of young entrepreneurs see the problem and rush to solve it without doing basic research such as market size or benchmarking their business model. It’s natural, and since they are usually young and haven’t yet acquired many fixed costs, so they can afford to make more mistakes and pay more time for their learnings. A lot of people think that one of the biggest bottlenecks in early stage companies is money, but I would say that it is time. Money is just a means for you to buy your company more time or to make it do more in less time. Once you realize that time is the real bottleneck, you can focus better by making decisions based on how much time the company has left in its “bank account”.
I also recommend challenging yourself by modelling your business “engine” as detailed as you can. Does the business model make sense? If these assumptions come true, what will it look like in five years? This is a great way of pushing yourself to see your business as just numbers and to get away from the emotional interest everyone has in their idea or vision.
Tell us more about the team, the current status of Triple and its future.
I’m super happy about the team that we’ve built at Triple. There is nothing more amazing than when experienced people are all pushing their focus areas forward. As entrepreneurs and early stage employees you usually have a very general knowledge base of different areas. This makes the tasks less effective and more time-consuming, but allows you to more easily change big things because there are fewer people involved. As you start to hire specialists in their area, the area will become more effective and you will see the company speeding up by magnitudes. When you do take this step, make sure you have enough trust in them to let them loose. It’s always better to let them do what you hired them for and judge them on the results, than to try to involve yourself or judge them on the paths they take to reach their goals.
Which route will you recommend growing to our aspiring entrepreneurs — funding or building organically? What are the upsides and downsides you see in both the cases?
I think it’s very important to build your business long-term. Try to imagine yourself running the business without end. Building a business usually takes at least five years, if you don’t see yourself working with your business for at least that amount of time, try to find something else where you can engage yourself. When you have a good understanding of where you want to end up, the question is if you need funding to get there or if you believe you can get there on your own. Funding in itself is not a goal or a choice. Instead, you can see it as a very expensive high risk bank loan that someone expects you to pay back. And you will pay it back with either money or reputation.
By growing organically you are usually bound by some limitation, be it marketing spend, workload, product development speed or anything else. You can overcome some of these limitations by raising money but remember that the main currency is time. If you increase your payroll too quickly or spend too much on marketing before getting the basics right, it will be very expensive to continue running your company and that can become your downfall.
From a Database Architect, to become a serial entrepreneur and invested in many startups. We would like to know how you value a startup & what are the factors which you consider while doing the valuation, as most of the startups you have invested are the early stage startups. How do you size the possible “maximum” value (at exit) of the startup to do your calculation?
I see myself as a seed investor and I invest mostly in the team and the idea. I invest money where I see that my experience is useful and help the founders make the right decisions based on experience, or get in touch with the right people to open doors otherwise out of reach. I seldom take a lead role and I make a quick decision if the valuation is reasonable, and never invest more than I can afford to lose completely. That being said, there should of course be a big enough market and high enough chance for the company to succeed to make sure it is a good multiple on the investment.
When building my own companies I don’t have the luxury of this however. There are two ways of making headway into the possible value of a startup at an exit phase. The easy way is to make a top-down approach to the valuation. Simply find a market size through research, draw a competitor landscape to see which players are in the space. If no one is, try to understand why. After this you make an educated guess on how much of this market you will be able to get, what your profit margin will be etc. If all this seems to make sense, you can start to build your model from the bottom up instead. This is a lot more time-consuming, but helps you understand all the steps and required milestones to reach the revenue and market share you are aiming for. How many customers do you need, what are the average order, what would it cost to acquire etc. Sometimes you just have to accept that there is just not a business model there, even though the market size and your first assumptions seem to make sense.
Pitching to an investor and getting successful is not an easy task. As per a survey conducted by Gust — angel investors invest in 1 out of 40 companies they see, which is around 2.5 percent. The presentation time for a pitch usually varies between 12 and 18 minutes. How would you recommend the entrepreneurs to prepare themselves to try and fall in this percentage group?
There is no easy answer here. Pitching is always hard but a few things you can do to increase your chances. Since time is your main concern, I know I’m repeating this so much, but I really believe this, the more research you can do beforehand on the investor you are looking at, the better. Just as when you are purchasing traffic or marketing, you are always trying to target the right audience. The same is true with investors, the better the targeting matches what you offer, the higher your conversion rate will be. There are some other questions to look at as well such as e.g. Is this an investor that likes to take a lead role, or does he want to join already set terms? The more you can learn and the more information you can give the investor beforehand will help you both to save time and to increase your chances in the meeting. Last and most important, even though you should try to portray your business in a good way, don’t build expectations you cannot fulfil later, by implying or twisting numbers in a way that may be misinterpreted. You will get a good feeling by getting the first or the second meeting, but the investors will be disappointed when they start digging into your numbers or doing their own market research. As they realize that the picture you are trying to paint is not what it seems, they will start to doubt everything you say. And in this business, trust, reputation and track record is just as important, if not more important, as your business idea.
The following is a generic question, but the answer usually varies from investor to investor. What exactly excites you about a startup?
Since I am first-hand an entrepreneur myself I get excited about ideas on solving problems where the solution is as easy to understand as the problem. I’m always on the lookout for ideas where the customer will gain something from using the new business. I don’t invest in businesses focusing on lowering margins on a market or making something that already exists more effective.
Entrepreneurs are usually very passionate, but yet sometimes obsessed with their innovation. Investors are usually market-driven personalities. Now, you have been in both sides of the table — as a founder and an investor — how do you handle the conflicting characters. Good, if you can share some examples as well.
All businesses need to have a market and a working business model. Coming up with an idea is rather easy, the hurdle is how to understand how it would work and how to make it real. When we started Triple we started testing out the idea on people through small and extensive surveys. After, you have verified your idea you need to verify the economy of your business. This is just about number-crunching and making educated assumptions in the beginning. As you gather more data and start to see your actual you should often re-visit your model and make sure that the business still makes sense. If you skip this step, it usually doesn’t matter how good of an idea you have, investors want to understand that you have done your homework. They will do their own and make their own assumptions as well to see if they can support your model of the future. In the end though, it is all just a model, and you need to understand how you can reach or make your assumptions. As an investor, I often get approached by founders with great ideas, but they are lacking this part that makes an idea into a business.
One of the common aspect of why a startup or business fails is disharmony among the co-founders, which is unavoidable when a company grows. As you have already founded and invested in startups, have you come across such situations and if yes, how do you handle?
It’s normal that co-founders disagree, have different ideas or even leave startups at any stage. What is usually harmful for the business doesn’t have to be this in particular, but how you have planned for whether this would happen. Having too much of your cap table owned by passive or inactive owners might weigh you down moving forward. Also, losing a key skill set in a vital time of the business life might also be extremely dangerous. However, if what to do for when situations like this arise is stipulated in a shareholders agreement or similar document, you can pre-empt what will happen, possibly avoiding a lot of bad blood and arguments, and instead focus on how you will carry out the changes that need to be done. Everyone will know what they are entitled to and there will be no one feeling that they have been treated unfairly.
As per your views — what is the current status of the startup ecosystem? 2016 was not a great year for startups, as many have shut down operations and from then investors have also got cautioned & picky while planning to invest on startups. What are your views on this?
Difficult to comment on this, all I can say is that startups come and go and the only thing constant is change.