Me: I do a startup.
Friend: Great! When do you start up?
There is a particular strange coincidence we did not manage to put into our press release today when we announced that we are finally launching our product.
The reason for that is that it had no value at all for the media — but it sure does have a lot of emotional value for us.
Our startup was born exactly three years ago today. On March 21st of 2014, I walked into the Garage48 co-working space in Tallinn to work with whatever I was working with back then. It could have been Multiverse.im — a chatroom with disappearing messages, what a silly idea, right?
As I walked to my table that morning, I immediately realized that it was going to be difficult to get anything done that day since there was a Garage48 Fintech hackathon happening at the HUB. As the event did not seem to have the highest participation level and there was free food, I decided to go and pitch. I pitched an idea I had had seven years ago: an easy accounting system that also business owners could understand. I promise you, this is still an idea, you can win hackathons with.
The event ended with me winning it with an idea called Chief Financial Wizard (combining Chief Financial Officer and the Installation Wizard you might remember from early versions of Windows). It was not an easy win for me as it was a close fight with the second place, held by a university student who wanted to build an app for handling paper receipts…
So, anyway, the next morning I walked into the co-working space, working now in a fintech startup. Since the CFO and accountant of Garage48 — Karin — was sitting next to me, I recruited her to join me in this venture, as it’s an overstatement to say that my knowledge about the accounting industry was vague. Being the winner of the Grand Prix of 200 EUR, we also exchanged the price for me staying in the hub for free for two months.
We did some interviews with some of the mentors from the hackathon and figured out our initial product. As the hackathon was just a one-day event, we decided to go and build it in the next Garage48 event in Belarus. Karin had to go there anyway, and I used the weekend to build the prototype.
We also researched the industry and realized that the problem of making accounting software that people would understand is solved in the international markets. Most new generation SaaS accounting software is easy enough to understand (but an accounting soft, that business owners would love has not emerged yet). Or perhaps it’s just me trying to appear smarter in the future. I’m pretty sure we realized that an accounting system is a pretty big thing to build from scratch and without prior knowledge of the matter.
So we pivoted into one of the components of our original product idea, which was budgeting. We started to build budgeting software that would work on smartphones. We made it during the whole summer, finalized it by September 2014 and quickly learned this — 1 out of 10 people got excited about our product, but the monetization strategy of the product was similar to something like SlideShare where you’d need thousands of free users to start earning from premium users. Stuff like these is notoriously difficult to build from such small ecosystems (I can hear you shouting Prezi already :)), and we received zero interest from local investors who just kept repeating that they do not understand where the money would be coming from.
During the summer we were selected to the two day Startup Wiseguys summer camp in the middle of the Estonian forest and were mentored real hard and real good. At the summer camp, we were together with people from GoWorkaBit, interviewed them and Gerli, the COO of GoWorkAbit, said along the lines of: “I like your budgeting solution, but I need this like two times a year. But could you guys fix the receipts’ mess? It’s a disaster.”
Startups are pretty unintuitive — sometimes you have to do stuff that does not make sense. We decided to do something that somehow made sense to us — finalize the budgeting product and launch it. And pivot into handling paper receipts immediately after.
Margus Simson from Ziraff (now working for Let’s Do It World, go Margus!) was a mentor at the first hackathon, and he was once again our first customer. Or let’s put it this way — out of the first three clients he was the only one that sent us four receipts.
Our MVP looked like this — Margus would e-mail pictures from his phone and on that day sat in a Statoil gas station in Laagri, outside the rain was falling, country music was coming from the speakers, I drank caffe latte and inserted the data from the first four receipts into the database. With these four receipts, we would “automatically” generate two reports — one business cost report and one transportation cost report. Margus could then print the reports out.
Margus was also not a big iPhone nor Android fan; he preferred the good ol’ Nokia with WinPhone which for us meant that we started our development with a web application, not native apps. A road I can highly recommend to you.
By January 2015 we had the initial webapp ready, and boy, was that a blessing. For the first time in almost a year, people would immediately understand what it is we’re doing — we could just show it to them! There was an event where they would mix corporates with startups and we got introduced to some nice people from KPMG. I was not really sure what company it was, but I had definitely seen the logo in several big cities all around the world. They invited us to our office and we would soon find out that here the highest level of service is required from us. Fortunately for us, they had with them a person who would provide us with thislist of things they need from us to comply with them. We departed on friendly terms. We were too early for them but now we had a to-do list of stuff you can’t Google.
In the summer of 2015 KPMG contacted us again and said they were pretty excited about the possibility to handle paper receipts digitally and asked us how far had we reached.
Fortunately for us, I’d met Amid Moradganjeh in a startup event in which we were both mentors. Amid really liked our idea and was ready to redesign it. If you did not know it — Amid is amazing. He did the new design for us and we had some good news to share with KPMG — our product would be ready for private beta on October 1st 2015.
Our biggest focus was general usability and stickiness — meaning the app would have to be so good that people would immediately understand all the questions AND they would come back some time later in the month. Starting in September 2014 and launching in October 2015, we had achieved what we wished for. Our initial north star of metrics was “users who had uploaded 10 receipts” and pretty soon we were proven that all the paying users would reach it in no time.
The cloud I
Well, our app was ready. The cloud where accountants would see all the receipts for the company had a bit more rustic design and the best way to use it was to just print the whole webpage with the data and receipts out.
This was actually an improvement. I remember a time when Siim Maivel from Investly was making pictures of receipts and I would go over them in database one by one to enable access also for the accountant who was sitting next to us.
The initial methodology for building the cloud was simple. I would go and first make the sell to the business owner. If the business owner would agree, I would go and sell it to the accountant. Then I would go home and build what I promised them and what was given as feedback. The initial feedback loop was about 2 months so most of the clients would eventually go cold, but we would get their feedback into the product and that helped us further.
Latvian startup people have this joke about Estonian startup people that somehow we are really into double sided markets. As a slow Estonian (that’s another eastern block joke about Estonians), I’m beginning to think that they might be right.
In the summer of 2015 I had somehow figured out that as a startup entrepreneur I should definetly go and check out Silicon Valley. So I bought myself tickets to San Francisco and found a place to stay — something called Startuphouse.
As it turned out, I was kinda like someone who would pitch Uber in California in the year 2019. The idea was real old, first companies like ours emerged already in 2007 and 2008. I knew about the amount of competition, but was not aware that our company would have perhaps been news in California eons ago. This year in October someone in the valley referred to OpenAi as old news with: “Dude, that’s like two months old”.
Silicon Valley is materialistic in a very natural way. Every second in California is beautiful but if you divide rent with the amount of seconds it bought you, you’d be amazed. I just did the calculation and got 3 cent’s a minute and people said I got a good deal on my rent. I had little opportunities to pitch my idea but could make an analysis of a market where a product such as ours has existed for 10 years already.
I could see what works and what doesn’t and how a developed market has shaped the product. I also visited the Quickbooks conference (I’ve now been doing it for two years) in San Jose, which gave a pretty good insight into what is going on. To our surprise our app was among the easiest ones to use also on the US market. Nevertheless, I had little success pitching our awesome super ninja startup with a 10 year old business idea. Despite this, Sean Percival, then working for the 500 startups accelerator, told me in the incredible Mountain View office of 500 that I should go back to Europe and be the Expensify of Europe. That’s what most people from 500 I meet tend to tell me.
Anyway, there are 5 countries in Europe where it’s lucrative to open a business like ours and fortunately one of them is Estonia, so I could leave the land of milk, cookies and unicorns, victoriously return to Estonia and make a real important face at startup events, since I’ve actually visited Silicon Valley.
Before ending this chapter, I’d like to talk about this place called Startuphouse in San Francisco. I still remember my first evening over there. I was utterly amazed since I never figured I could actually find so many people I would have so much in common and who could teach me so much. There are real smart people around that house. One thing I came back with was a clear plan on what to do with the company. Even better, the plan included a budget! I’m not really sure why it is like that but the West Coast is a really good place for making plans, even when the plans are for Estonia.
Back in Estonia
The good news — a local angel had approached us already before and indicated interest to investing. It only took half a year to also find other interested parties, negotiate the terms and close the deal. Nevertheless, we managed to register (that’s a whole other epic story) our company on 18th of March 2016, which is pretty close to our original birthday of 21. of March.
With the money (60 000 EUR) we raised, we were finally able to build the things we were unable to build ourselves. I still keep the warm-warm memory (from feb 2016) of me shouting and beating the table in the physical world, trying this way to somehow talk some sense into a PostgreSQL table, which happened to be our production authentication database. Fortunately our funding has helped us to get help from NodeSWAT, a local top-notch production shop. So me shouting at imaginary, only in digital world existing database tables now happens much less frequently.
I talk about we, but haven’t talked about the team yet. As the initial success of our super-rocketship-startup has been just happening in such a slow motion, there have actually been quite a number of people who have been at times helping us out but eventually departed. By september 2016 I was the only one in the company. I guess at several points I wanted to depart as well, but there were just these strange little things that kept me going.
In October 2015 a common friend introduced me to Joonas. We had one phone call and one meeting, basically after the meeting I took a boat and left Estonia to fly to San Francisco, returning in 2.5 months. We kept the business going — Joonas was making contacts in Estonia with accounting agencies and I was building the product in SF. As the development process took time, Joonas told me that he had heard about Eduard who had done an app that could read text from video. I still remember long talks we had with Eduard over Skype. I was in pretty sunny corner of Hower and Mary street in SF and Eduard was somewhere in the cold and dark Estonian winter and we used to talk really slowly about how two systems could communicate with each other.
So these are our three founders. For now we’ve been working together for over a year, the guys actually managed to finish the university right before our funding actually came through. Well, Joonas did, Eduard finished everything else, but still wanted to refine his idea about a one pixel camera further before giving the paper in.
In the mean time Joonas has, besides sales, learned quite a few traits — he’s pretty much a qualified QA engineer and customer support person. And our recruiting specialist. Eduard has also gained some super powers — he built our Android app and in the end finalised the iOs app as well. While doing this, both guys are still somehow able to beat me in table tennis.
Our new cloud service is set to launch tomorrow morning, on the 21st of March. The date was selected since we missed the beginning of the month (which was the original plan) and on the 20th of every month accountants in Estonia have to declare taxes, so we assumed that we should not disturb them before the 20th. As it happens, this is also our birthday.
So were ready to finally launch our product. Coincidentally on the exact day 3 years after starting the project on a one day hackatlon, which was called Garage48, but perhaps more suitingly could have been called Garage 26280.
On our side we are really exited to work already on pushing the product out of Estonia and are crossing our fingers, that this is just the beginning of a great adventure.